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2023 Report6 1 0 2 t r o p e r l a u n n a Renascor Resources Limited annual report 2016 s t n e t n o c Highlights and achievements Chairman’s letter Review of operations Directors’ report Auditor’s independence declaration Financial statements Directors’ declaration Independent auditor’s report Shareholder information Corporate directory 3 5 6 26 40 42 77 78 80 84 j s t c e o r P r o c s a n e R A U S T R A L I A Carnding Warrior Gairdner Arno Farina Frome Olary Eastern Eyre Adelaide Perth Munglinup 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 person as defined by the 2012 edition of the Australasian code for reporting of exploration results, mineral resources and ore reserves (the JORC code, 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. i s t n e m e v e h c a & s t h g i l h g H i Renascor Resources Limited annual report 2016 Renascor’s past financial year was highlighted by its activities at its Arno Graphite Project in South Australia’s Eyre Peninsula, where Renascor quickly established the Siviour Graphite Deposit as a potential near-term supplier of high-quality, coarse-flake graphite. Key achievements during the year included: Acquisition Renascor secured the rights to the project area in December 2015 through an agreement to acquire 100% of the issued capital of Eyre Peninsula Minerals Pty Ltd (EPM). EPM is an unlisted company that has an option to acquire four exploration licences that comprise the Arno Graphite Project. The project tenements included several graphite prospects, including the area where Renascor defined the Siviour Graphite Deposit. Siviour discovery Renascor’s maiden drilling program in the Arno project area in January 2016 resulted in the discovery of extensive zones of thick, near surface high-grade graphite at Siviour. The near flat-lying orientation, substantial true thickness and shallow depth of graphite mineralisation suggest the Siviour mineralised body is unique within the region and favoured in terms of both its potential size and strip-ratio. Initial Mineral Resource estimate Renascor’s maiden JORC-compliant Mineral Resource estimate for Siviour, released in March 2016, marked Siviour as the largest reported graphite deposit in Australia. With the graphite- mineralised body largely open at shallow depths along strike, Siviour contains a JORC compliant Mineral Resource estimate of 16.8Mt @ 7.4% TGC for 1,243,200t of contained graphite (reported above a cut-off grade of 3% TGC), including high-grade mineralisation of 5.9Mt @ 10.0% TGC for 590,000t of contained graphite (reported above a cut-off grade of 8% TGC). 3 Siviour Mineral Resource estimate as of 16 March 2016 Category Indicated Inferred Total Tonnes of mineralisation (millions) 6.8 10.0 16.8 TGC 8.1% 6.9% Contained graphite (tonnes) 550,800 690,000 7.4% 1,243,2000 Note: Cut-off grade of 3% total graphitic carbon. High-quality coarse flake graphite Renascor has identified an abundance of coarse flake graphite at Sivour, with high-grade samples from drill holes at Siviour returning over 80% in the high-value super-jumbo (+500μm), jumbo (+300μm) and large (+180μm) categories. With mineral process test work currently in progress at Sivour, previous preliminary bench flotation and gravity tests over a core sample from an adjacent prospect suggest ample scope to produce a premium graphite product at Siviour. As Renascor commences the new financial year, the results from 2016 provide a firm basis to further advance the Siviour Deposit, with work currently underway to increase the confidence in, and size of, the Siviour Mineral Resource estimate and to establish flow sheet parameters through comprehensive mineral processing test work. Renascor expects these work programs to assist in the preparation of a scoping study to be completed later this year. i s t n e m e v e h c a & s t h g i l h g H i 4 r e t t e l ’ s n a m r i a h C Dear Shareholder, It is with great pleasure that I present Renascor’s Annual Report for the year ended 30 June 2016. Renascor made a number of significant breakthroughs during the year, commencing with our acquisition of the rights to the Arno Graphite Project in South Australia’s Eyre Peninsula. From our evaluation of early stage exploration work at Arno, we recognised an opportunity to define a valuable graphite resource with minimal expenditure. Our initial drilling at Arno offered immediate returns, as we discovered extensive zones of thick, near-surface graphite at the Siviour deposit. In March, our maiden mineral resource estimate for Siviour marked Siviour as Australia’s largest reported graphite JORC Mineral Resource. Subsequent work programs have further confirmed the potential value of Siviour. Further drilling has shown that the graphite mineralisation defined within the existing mineral resource extends at shallow depth. Preliminary petrographic and metallurgic studies suggest Siviour contains an abundance of high-quality, coarse-flake graphite. Although, Siviour is a recent discovery, our work undertaken during the year suggests Siviour is unique within the region and favoured in terms of both its potential size and strip-ratio. We recently appointed a new board member, Dick Keevers, who has advanced multiple producing mines from discovery phase through development. This expertise, which complements our management team’s developmental experience, including in South Australia, further strengthens the Renascor team. As we continue our development of Siviour in the current year, there is strong reason to believe the work undertaken to date, together with continued developmental activities, may further establish Siviour as a significant graphite project and provide a catalyst for the re-rating of the company by the equity markets. 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 year. I also extend my sincere thanks to you, our shareholders, for your continued support. Yours faithfully, Stephen Bizzell Chairman 5 Renascor Resources Limited annual report 2016 j s t c e o r p f o w e i v e R Port Augusta South Australia Kimba Whyalla Port Lincoln Adelaide Waddikee Campoona Oakdale Cleve Cowell Arno Graphite Project Kookaburra Gully Uley Port Lincoln Arno Project Tenements Other Renascor Tenements Graphite mine Graphite deposits Major roads Railway 0 50 100 km Adelaide Arno Graphite Project The Arno Graphite Project consists of four granted exploration licences, ELs 5618, 5204, 5496 and 5714, covering 1,372km2 in the Eyre Peninsula, an established graphite region in South Australia. The project is located within 150km of Port Lincoln and Whyalla and approximately 500km driving distance from Adelaide. The Uley graphite mine, owned by Valence Industries Limited (ASX: VXL), is located approximately 140km to the south, and the immediate area hosts several additional graphite deposits including Kookaburra Gully, being developed by Lincoln Minerals Limited (ASX: LML), the Waddikee and Campoona, being developed by Archer Exploration Limited (ASX: AXE), and the Oakdale graphite deposit, being developed by Oakdale Resources Limited (ASX: OAR). The area also benefits from significant infrastructure advantages, including established workforces in the nearby port cities of Whyalla (population 23,000), Port Lincoln (population 15,000) and Port Augusta (13,000), as well as the established population centres of Arno Bay, Cleve, Cowell and Tumby Bay. Renascor’s licences are located within 10km of a major highway and within 20km of an operating railway servicing Port Lincoln. The project area is connected to South Australia’s main power grid and is serviced by ports at Port Lincoln and Whyalla. 6 EYRE PENINSULA j s t c e o r p f o w e i v e R Mineral Resource at Siviour Renasor commenced its maiden drill program in the Arno project area in January 2016. The 24-hole, 1550m reverse circulation drilling program focused on the Siviour prospect and resulted in an Indicated and Inferred Mineral Resources estimate for Siviour as shown below in table 1. A nominal cut-off grade of 3% TGC has been established for Siviour based on the potential mining methods and costs of open-cut mining operations that could be undertaken for mineralisation of this type. Table 1: Siviour Mineral Resource estimate as of 16 March 2016 Category Indicated Inferred Total Tonnes of mineralisation (millions) 6.8 10.0 16.8 Note: Cut-off grade of 3% total graphitic carbon. TGC 8.1% 6.9% 7.4% Contained graphite (tonnes) 550,800 690,000 1,243,2000 Siviour Mineral Resource breakdown by cut-off grades Table 2 below shows the Siviour total Mineral Resource at varying cut-offs. As noted below, Siviour contains a significant high-grade resource at an 8% cutoff: 5.9Mt @ 10.0% TGC for 590,000t of contained graphite. Table 2: Siviour Mineral Resource by cut-off grade Cut-off grade TGC Tonnes of mineralisation (millions) 3% 4% 5% 6% 7% 8% 9% 10% 16.8 15.9 14.5 11.4 8.5 5.9 3.8 2.5 TGC 7.4% 7.6% 7.9% 8.5% 9.2% 10.0% 10.8% 11.5% 7 Renascor Resources Limited annual report 2016 j s t c e o r p f o w e i v e R S SIV017 SIV018 Calc-silcate Siviour: Section 631800 East SIV019 SIV020 SIV021 SIV022 Graphite schist High-grade graphite zone Cover sequence Open 6245700 6245800 6245900 6246000 6246100 N 0 -100 The Siviour deposit is shallow, tabular and near flat-lying, with most of the graphite mineralisation occurring beneath only 10m to 25m of cover. As shown in Figure 3, Section 631800E, the westernmost section drilled of the Indicated Resource, shows a thick, shallow graphite-mineralised zone that is near flat lying over the southern and central portions of the prospect before dipping gently to the north. Siviour in comparison to other graphite resources in Australia As shown below in Figure 4, the Siviour deposit is the largest reported JORC resource in Australia, with ample scope for expansion. Australian Graphite Deposits Halberts Yalbra Mt Dromedary South Kookaburra Gully Campoona Central Uley Pit 2 Mt Dromedary Central Koppio Siviour (8%) Campoona Shaft Wilclo South Uley Stockpiles Oakdale East Barracuda Longtom Wahoo Oakdale Emporer Siviour (3%) 5 10 15 20 25 30 35 Deposit size - Million Tonnes Figure 3. Siviour prospect: Geological cross-section for north-south Section 631800E C G T % e d a r G 20 18 16 14 12 10 8 6 4 2 0 Figure 4. Scatter plot showing grade (%TGC) and tonnage of Siviour (at 3% and 8% cut-off grades) with the exploration target estimate and reported resources for Australian graphite deposits. 8 j s t c e o r p f o w e i v e R Extensions to Siviour Deposit Following completion of its initial drilling at Siviour, Renascor identified multiple high conductivity anomalies at Siviour in areas along-strike, suggesting high potential to expand the initial size of the Siviour deposit. As shown in Figure 5, a ground electromagnetic (EM) survey identified potential extensions to Siviour in areas along- strike to the east, west and north of the Indicated Resource. 631000m E 632000m E 633000m E 634000m E SIV053 SIV052 SIV042 SIV049 SIV058 SIV041 SIV048 SIV057 SIV036 SIV050 SIV056 SIV040 SIV051 SIV055 SIV043 SIV039 SIV047 SIV054 SIV037 SIV038 SIV044 SIV046 SIV045 Indicated Resource SIV060 SIV05 SIV059 SIV061 SIV062 SIV066 Exploration target SIV065 SIV064 SIV063 Conductivity (Siemens) 2.00 0.20 0.06 0.0 Contour Interval 1.0 S 6 2 4 7 0 0 0 m N 6 2 4 5 0 0 0 m N Figure 5. Location of recent drill collars over ground electromagnetic image at Siviour. 0 500 metres 1000 Signifi cant graphite intersection In July 2016, Renascor completed a 2,100m reverse circulation drill program targeting these EM anomalies and intersected thick intervals of shallow, high grade graphite in areas along-strike to the east and west of the Siviour Graphite Deposit. To the west, Renascor’s drilling confirm that the mineralised graphite body located within the Siviour Indicated Resource is continuous at least an additional 1km to the west and remains open to the north and west of the current drilling limits. Results from the July 2016 program included multiple intersections of thick, shallow high-grade graphite, including: • Siv054: 25m @ 9.0% TGC (from 13 to 38m) • Siv055: 28m @ 7.1% TGC (from 28 to 56m) • Siv056: 23m @ 8.7% TGC (from 49 to 72m). 9 Renascor Resources Limited annual report 2016 j s t c e o r p f o w e i v e R The drill results suggest a north dipping tabular graphitic horizon in this western area. As shown in the south-north cross-section in Figure 6, the mineralised horizon typically has a broad higher-grade, +5% TGC cut-off and a narrow +3% TGC grade halo particularly in the hanging wall of the deposit. This generally flat-lying orientation is consistent throughout both the areas drilled to the west of the Indicated Resource and within the Indicated Resource area. Shown in cross-section below Figure 6. Siviour -- Plan view showing recent drill holes over EM conductive zones and cross-sections with TGC Drilling to the immediate east of the existing Indicated Resource at Siviour (in areas outside of JORC Mineral Resource estimate), included some of the thickest intervals of graphite drilled to date, with results including: assay results (5%TGC cut-off • Siv061: 35m @ 8.2% TGC (from 44m to 79m), with a 74m in dark red and 3% TGC cut- graphite zone from 5m to 79m off in light red) over Section • Siv062: 35m @ 8.7% TGC (from 17m to 52m), with a 56m 631600E). graphite zone from 5m to 61m • Siv063: 23m @ 9.2% TGC (from 16m to 39m) This thick, eastern graphite zone remains open and offers potential for significant extensions to the Siviour Deposit. Renascor expects the recent drill results will form the basis of an updated Mineral Resource estimate for Siviour to be released later this year. 10 j s t c e o r p f o w e i v e R Graphite flake size and mineral processing test work In addition to establishing Siviour as a premium graphite resource in terms of its size and grade, initial testing undertaken during the year identified an abundance of coarse flake graphite from petrographic analysis of high-grade drill samples, with over 80% in the high-value super-jumbo (+500μm), jumbo (+300μm) and large (+180μm) categories. Nine high-grade samples from four recent reverse circulation holes at Siviour were examined by Pontifex and Associates. Photomicrographs prepared from these samples (see Figures 7 - 10) have returned flake graphite with lengths of up to 1,600μm and over 60% of graphite flakes recording lengths of over 500μm. Complete results are described below in table 3. Drill hole Depth (m) Total Graphite flake Flake length > Flake length > graphitic carbon1 length range 200 microns 500 microns (microns) Siv001 Siv001 Siv001 Siv002 Siv002 Siv002 Siv004 Siv004 Siv014 63 68 73 82 92 97 56 72 18 16.9% 100 to 1,600 82.5% 9.1% 100 to 1,000 82.5% 10.6% 100 to 1,000 87.5% 15.1% 100 to 1,200 10.1% 100 to 1,000 4.3% 100 to 600 12.3% 50 to 1,400 10.8% 100 to 800 17.2% 10 to 1,500 75% 80% 75% 85% 75% 85% Table 3. Summary of graphite flake analysis from drill chips at Siviour prospect 65% 60% 70% 65% 60% 50% 80% 65% 40% The abundance of coarse flake graphite identified in petrographic analysis of Siviour drill samples suggests that the graphite- mineralised zones at Siviour have the potential to produce significant quantities of premium-priced coarseflake graphite in concentrate. While it is expected that the proportion of coarse flake graphite will be diminished in mineral processing, Renascor is encouraged by the high proportion of coarse-flake graphite in the high-grade drill samples at Siviour. 11 Renascor Resources Limited annual report 2016 j s t c e o r p f o w e i v e R While mineral processing test work has not yet been undertaken on the high-grade graphite zones at Siviour, preliminary flotation tests from the adjacent Paxtons prospect have produced favourable graphite recoveries and purity of concentrates, including producing flake graphite in the super-jumbo (+500μm) category. Flotation and gravity tests were performed in 2014 on samples from an historical core hole (CRA090) drilled on the eastern margin of Paxtons, located approximately 2km to the southeast of the Siviour Inferred Resource. The hole, which was drilled to test for uranium and not originally assayed for graphite, intersected 24m of graphitic mineralisation, which subsequent assaying has shown included 12.4m @ 8.34% TGC from 67.7m. ALS Metallurgy performed bench flotation and gravity tests over a 2.5kg core sample from CRA090, obtaining carbon (graphite) recovery of 87% and producing 93% purity of concentrates with flake size of up to 600μm. 500μm 500μm Figure 7. Photomicrograph of graphite flakes (in white) from Figure 8. Photomicrograph of graphite flakes (in white) from Siv014 (17m to18m) Siv002 (92m to 93m) 500μm 500μm Figure 9. Photomicrograph of coarse graphite flakes (in white) Figure 10. Photomicrograph of graphite flakes (in white) from from Siv004 (56m to 57m) Siv001 (73m to 74m) 12 j s t c e o r p f o w e i v e R Acquisition of EPM Renascor secured the rights to the Arno Project in December 2015 through an agreement to acquire up to 100% of the issued capital of Eyre Peninsula Minerals Pty Ltd (EPM). EPM is an unlisted company that has an option to acquire the four exploration licences that comprise the Arno Graphite Project. By virtue of having met exploration commitments and having issued shares to EPM shareholders, Renascor currently holds a 49% interest in EPM. Renascor acquired 20% of EPM in exchange for having completed $400,000 in exploration expenditure by 21 June 2016. Renascor acquired an additional 29% interest in EPM from EPM shareholders in exchange for 38,666,667 ordinary shares in Renascor, which Renascor issued on 11 July 2016. In August 2016, Renascor exercised an option to acquire (subject to shareholder approval) the remaining shares in Renascor and thereby increase its ownership interest in EPM to 100%. Subject to obtaining shareholder approval at Renascor’s upcoming annual shareholder meeting, Renascor will acquire the remaining shares in EPM in exchange for 42,068,884 ordinary shares in Renascor and 15,000,000 unlisted options at $0.05 per option and expiring three years from the date of issue. EPM option to acquire Ausmin EPM’s primary asset is an option to acquire Ausmin Development Pty Ltd (Ausmin), which owns the underlying rights to the exploration tenements that comprise the Arno Graphite Project. The option can be exercised at any time prior to 30 September 2018, and can be extended to December 2019 and to December 2020 by payment of $150,000 and $250,000, respectively. To exercise the option, EPM must complete a bankable feasibility study in relation to the commercial development of graphite on the project tenements and issue to the owners of Ausmin a 22% equity interest in a listed vehicle holding the project. After exercise of the option, the Ausmin shareholders are entitled to an overriding 1% gross royalty on minerals produced from the project tenements. 13 Renascor Resources Limited annual report 2016 j s t c e o r p f o w e i v e R A U S T R A L I A W E S T E R N A U S T R A L I A Perth Munglinup Location: Tenements: Area: Target: Albany Fraser Range (Western Australia) E74/517, E74/518, E74/523, E74/531, E74/538, E74/544, E74/545 579 km2 Graphite, lithium and nickel sulphide Munglinup The Munglinup project is located within the Albany-Fraser Range province of Western Australia between the regional towns of Esperance and Ravensthorpe. See Figure 11. Renascor considers the project area to offer high prospectivity for graphite, lithium and nickel sulphide and it has identified multiple drill-ready targets. Figure 11. Significant mines and deposits in relation to Renascor’s Munglinup Project. Mt Thirsty Cobalt/Nickle Deposit Mount Marlon Lithium Deposit Maggie Hays Nickle Deposit Mt Henry Gold Mine Munglinup Tenements Rathensthorpe Mt Cattlin Lithium Mine Halbert’s Graphite Esperance 14 0 20 40 km j s t c e o r p f o w e i v e R Graphite prospects Renascor has identified multiple drill-ready targets for coarse flake, high-grade graphite of the type located within the adjacent Halbert’s deposit. Halbert’s is among Australia’s highest-grade graphite deposits, with a reported JORC-compliant measured and indicated resource of 1.47Mt at a fixed carbon content of 18.2%2. Sixty-seven percent (67%) of the recoverable graphite from Halbert’s is reportedly coarse flake (+150μm, with 35% of recoverable graphite classified as jumbo flake (+300μm)3. The regional structure that hosts the Halbert’s deposit, the Halbert’s Shear Zone, extends through Renascor’s new project area over approximately 25km strike extent. See Figure 12. Limited previous drilling within this structure, on E74/518 in Munglinup Central (to the immediate south of the Halbert’s graphite deposit) intersected high-grade graphite, including narrow graphite zones containing up to 34.9% TGC4 . To the immediate north of the Halbert’s deposit, the Halbert’s Shear Zone extends for approximately 20km to the north on E74/517 and E74/531. A recently completed electromagnetic (VTEM) survey over this northern extension has identified several prospective conductive targets that Renascor considers high priority targets for Halbert’s-style graphite deposits. 0 5 km Munglinup Ultramatic Halbert’s Shear Zone (interpreted) Young River Ultramatics Figure 12. Munglinup project, showing VTEM and SKYTEM late channel conductivity for central portion, superimposed on a background of magnetics. Halbert’s Graphite Munglinup Central Drill collars 2 As reported in Geological Survey of Western Australia (GSWA) Mineral Resources Bulletin 26, in 2015, graphite mineralisation in the Halbert’s Main Zone has a ‘resource estimate’ subsequently upgraded to a JORC compliant measured and indicated resource by Clifford (2009) to 1.47Mt at a fixed carbon content of 18.2% TC (total carbon) over a strike length of 555m to an average depth of 55m. This resource calculation for Halbert’s Main Zone was based on an in situ ore density of 1.91 t/m3 with a fixed carbon cutoff of 5% TC, and a minimum true thickness of 1.0m for tabular graphite bodies.’ 3 Mineralisation Report in Support of Application for Mining Lease for M74/24, October 2009. 15 Renascor Resources Limited annual report 2016 j s t c e o r p f o w e i v e R Lithium prospects The Munglinup project area is located approximately 70km from the Mt Cattlin spodumene and tantalum mining operation and is considered prospective for lithium-cesium- tantalum (LCT) pegmatites of the type associated with the Mt Cattlin mine. The area is mapped as the Munglinup gneiss, with remnants of the Lake Johnston Archean greenstone interpreted through the area. Although LCT pegmatites are uncommon, they are typically hosted within Archean greenstones. Accordingly, Renascor considers portions of its Munglinup project area with mapped and interpreted Archean greenstone as potential targets for LCT pegmatite development. Figure 13. Regional EM image for Munglinup Project with interpreted greenstone trends (Western Mining Services 20135). Renascor has identified a zone of anomalous lithium geochemistry from a roadside auger soil-sampling program undertaken by AngloGold Ashanti (ASX: AGG) in connection with a gold exploration program in 20106. The AngloGold program included 115 samples within Renascor’s E74/538, an area that has been previously mapped to include Archean greenstones. The AngloGold samples underwent multi-element testing and included assaying for lithium. The lithium results include a set of elevated assays over the Young River lithium prospect, an approximately 4km trend, with peak value for lithium of 74.9 ppm, defined on a north-south oriented traverse near the eastern limit of the tenement. See Figure 14. 4 GSWA Bulletin 26. See also Lithex Resources Limited ASX release dated 5 July 2013. 5 Western Mining Services, J. Hronsky, 2013. Report to Lithex Resources Ltd, Review of the NiS Potential of Lithex Resources Ltd Munglinup Exploration Project. 6 Fletcher, Damian and Howard, Brendan 2010, Anglogold Ashanti Australia Limited Annual Report Viking Project – Viking Group 4 (WAMEX A088744). 16 In addition to the Young River area, aeromagnetic data define large areas of enhanced magnetic response consistent with possible remanent Archean greenstones, in particular in areas to the area immediate west of the elevated lithium zone at Young River. A large area of subdued magnetic relief to the southwest of the lithium anomalous zone is also interpreted as a possible granitic intrusion that may represent a source for late stage pegmatitic intrusion along the strong north-easterly trending structural fabric. See Figure 15. Renascor considers these magnetic areas to offer additional potential for locating lithium mineralisation associated with pegmatites. j s t c e o r p f o w e i v e R Figure 14. Young River lithium prospect – soil geochemical results. Figure 15. Young River prospect, showing elevated lithium geochemical samples on regional aeromagnetic image. 17 Renascor Resources Limited annual report 2016 j s t c e o r p f o w e i v e R Nickel prospects Renascor also considers the project area to offer high-priority nickel sulphide prospects. The project tenements are situated in an untested area that is considered to be the southern extension of the Lake Johnston Greenstone belt, the structural setting for Poseidon Nickel Limited’s Maggie Hays and Emily Ann nickel sulphide deposits, located approximately 50km to the north of E74/544. See Figure 11. In 2013, Lithex Resources Limited (ASX: LTX) commissioned a review of the project’s nickel sulphide potential by Western Mining Services Pty Ltd. See Lithex Resources ASX release dated 9 September 2013. The Western Mining Services review concluded that, on a regional scale, the Munglinup project tenements host significant strike length of nickel sulphide prospective ultramafic rocks within an underexplored strike extension of the Lake Johnston Greenstone belt, a known nickel sulphide mineralised province. Limited nickel exploration drilling undertaken by Lithex within E74/518 supports the nickel sulphide prospectivity, with four (of four) holes drilled in a reconnaissance, graphite-targeted drill program in 2013 intersecting widespread hydrothermal veining and alteration, with associated low level copper, potassium and lead anomalism. According to Western Mining Services, the anomalous mineralisation from the Lithex drilling is consistent with the distal expression of a nickel sulphide deposit. Accordingly, Renascor considers that conductive zones within the identified Greenstone belt offer high potential for nickel sulphides, in addition to graphite. Eastern Eyre 18 j s t c e o r p f o w e i v e R A U S T R A L I A A U S T R A L I A Farina S O U T H Warrior A U S T R A L I A Gairdner Olary Eastern Eyre Perth Arno Adelaide Location: Tenements: Area: Target: Southern Gawler Craton (South Australia) ELs 4721, 5012 and 5236 (100%) 1,200 km2 Copper and associated mineralisation Eastern Eyre 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 16. 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. Figure 16. Olympic Dam copper belt, showing location of Eastern Eyre project. 19 Renascor Resources Limited annual report 2016 j s t c e o r p f o w e i v e R The project area includes large portions of the Roopena-Angle Dam fault corridor, a largely untested zone that extends over approximately 40 kilometres. See Figure 17. Renascor considers this structure to be a major conduit for mineralisation sourced from the adjacent Hiltaba-age granites immediately east of the fault. These granites are associated with mineralisation at the major deposits (e.g., Olympic Dam and Prominent Hill) within the Olympic Dam copper belt. Within the Angle Dam fault trend, at the 1050 East prospect, Renascor has intersected high-grade copper-cobalt-silver mineralisation, with results including 13m @ 1.45% Cu, 66 ppm Ag and 0.17% Co (from 215m), including a massive sulphide interval of 8m @ 2.2% Cu, 92 ppm Ag and 0.26% Co. Renascor considers unexplained gravity, magnetic and geochemical anomalies within the Angle Dam fault structure, as well as the parallel Roopena fault structure, as particularly prospective targets for economic copper ore bodies. Renascor’s initial exploration work at Eastern Eyre, including the discovery of high grade, massive sulphide at 1050 East and the discovery of widespread copper mineralisation at Extension Tank, has highlighted the importance of the major fault structures in the project area. In particular, recent results suggest that the Angle Dam fault offers significant untested targets for economic concentrations of copper. Within this structure, in addition to 1050 East and the area immediately east of Extension Tank, Renascor has identified additional untested gravity, magnetic and geochemical drill targets. Warrior Figure 17. Eastern Eyre project, Eastern Eyre project, showing identified gravity, magnetic and geochemical targets. 20 A U S T R A L I A A U S T R A L I A S O U T H A U S T R A L I A Perth Warrior Warrior Gairdner Farina Olary Arno Adelaide j s t c e o r p f o w e i v e R Location: Tenements: Area: Target: Gawler Craton (South Australia) ELs 4570 and 4707 (100%, subject to 1% net smelter royalty) 310 km2 Sandstone-hosted uranium Warrior 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 to create low cost opportunities to identify a valuable resource under present market conditions. Through the use of additional core drilling and a prompt fission neutron 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. Renascor anticipates commencing drill-testing following indications of a recovery in the uranium price. 21 Renascor Resources Limited annual report 2016 j s t c e o r p f o w e i v e R A U S T R A L I A A U S T R A L I A S O U T H A U S T R A L I A Perth Carnding Warrior Gairdner Farina Olary Adelaide Location: Tenements: Area: Target: Gawler Craton (South Australia) EL 4707 (100%, subject to 1% net smelter royalty) 162 km2 Gold Carnding Farina The Carnding project area consists of two tenement blocks located approximately 75km from the high-grade Challenger gold mine in the north of South Australia. See Figure 19. The project area contains several areas prospective for Challenger- style gold deposits. The project area covers Archaean, Mulgathing Complex, rocks that also host the nearby Challenger gold mine. The geology in this area is considered to be prospective for Archaean gold deposits, similar to Challenger, possible Proterozoic IOCGs and sandstone-hosted uranium in the younger Mesozoic and Cainozoic sediments. The project area contains numerous gold prospects that Renascor identified from historical surface sampling and limited shallow drilling. Among these prospects is the Sunshine prospect, a gold-in- calcrete anomaly where previous drilling interested 2m @ 6.66 g/T Au (from 60m). The prospect is open to the north and Renascor considers it prospective for high- grade Challenger-style gold deposits. Figure 19. Carnding project 22 j s t c e o r p f o w e i v e R A U S T R A L I A A U S T R A L I A S O U T H A U S T R A L I A Perth Warrior Gairdner Farina Farina Olary Adelaide Location: Tenements: Area: Target: Adelaide Fold Belt (South Australia) ELs 4822 and 5586 (100%) 1,305 km2 Sedimentary and near-surface oxide copper Farina The Farina Project is made up a large, copper- prospective ground position 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 Beltstyle, sedimentary copper deposits and near-surface oxide copper deposits. 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 has focused on historical copper occurrences at the Callanna prospect. Results included strongly anomalous gold values (maximum 2.6 g/t Au) 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% Cu and 0.4 g/t Au with strongly anomalous rare earths and molybdenum, suggesting a possible granitic intrusive association. 23 Figure 20. Farina Project, showing geology and historical copper occurrences. Renascor Resources Limited annual report 2016 ’ t t r r o o p p e e r r s r ’ s o r t c o e t r c i D e r i D 25 Renascor Resources Limited annual report 2016 t r o p e r ’ s r o t c e r i D 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 2016. 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 and developing mining 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 was responsible for developing sales strategy, executing trades and swaps and negotiating all off-take 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. 26 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 former 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), Hot Rock Ltd (2009 to 2014), Diversa Ltd (since 2010), Stanmore Coal Ltd (since 2009), Titan Energy Services Ltd (2011 to 2015), Armour Energy Ltd (since 2012) and UIL Energy Ltd (since 2014). Special responsibilities Chairman of the board Member of the Audit and Risk Management Committee Richard Keevers, Non-Executive Director (Appointed 22 July 2016) Mr. Keevers has over 40 years of experience in the resource sector, having previously held senior executive positions with Broken Hill South Limited and Newmont Mining Limited. Mr Keevers’ experience includes advancing multiple producing mines from discovery phase through development, including the Telfer gold and copper mine, the Phosphate Hill phosphate mine and the Baal Gammon copper mine. Mr Keevers also was a substantial shareholder of and served as an executive director for Pembroke Josephson Wright Limited, an Australian share brokerage firm. Mr Keevers has served on boards of several ASX-listed resource companies, and he is currently a non- executive director of Santana Minerals Limited. Mr Keevers also serves as chairman of unlisted Eyre Peninsula Minerals Proprietary Limited Richard is a graduate of the University of New England, NSW (BSc, Geology), and is a fellow of Australasian Institute of Mining and Metallurgy. Special responsibilities Nil t r o p e r ’ s r o t c e r i D Andrew Martin, Non-Executive Director Chris Anderson, Non-Executive Director Andrew Martin is a director of 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 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 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 Chris Anderson is an experienced geophysicist with over 40 years in mineral exploration in Australia and abroad. His recent experience includes an instrumental role in the 2005 discovery of the Carrapateena copper-gold- uranium mine in South Australia. His earlier experience includes acting as Placer Pacific’s Exploration Manager for Eastern Australia, where he was instrumental in the discovery of the Kalkaroo copper-gold-molybdenum deposit in South Australia. Mr Anderson’s significant international experience includes 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. 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 the Governance Institute of Australia. 27 Renascor Resources Limited annual report 2016 t r o p e r ’ s r o t c e r i D Directors’ Shareholdings The following table sets out each director’s holdings and their relevant interest in shares, options and performance rights in the Company as at the date of this report. Director Fully Paid Ordinary Shares Listed Share Options Performance Rights David Christensen Geoffrey McConachy Andrew Martin Stephen Bizzell Chris Anderson Richard Keevers Meetings of directors 14,618,667 7,959,667 23,834,988 17,152,335 12,070,113 20,195,334 666,667 541,667 791,667 1,166,667 1,500,000 - - - - - - - The numbers of meetings of the Company’s board of directors and of each board committee held during the year ended 30 June 2016, and the numbers of meetings attended by each director were: Full meetings of directors Audit Committee meetings Director Stephen Bizzell David Christensen Geoffrey McConachy Andrew Martin Chris Anderson A Attended B Held A Attended 8 8 8 8 8 8 8 8 8 8 2 N/A 2 2 N/A N/A B Held 2 N/A 2 2 N/A N/a Richard Keevers (Appointed 22 July 2016) N/A 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 Dividends - Renascor Resources Limited 30 September 2016) were issued in There were no dividends declared or paid during the financial year (2015: Nil). Review and results of operations a) Corporate and Financial • For the year ended 30 June 2016, the loss for the Group after providing for income tax was $890,079 (2015: $4,932,426). This included a write down of capitalised exploration and evaluation expenditure of $265,602 and relinquishment of five tenements during the period. • On 9 July 2015 the retail component of an accelerated non-renounceable entitlement offer (ANREO) was completed with the issue of 20,650,612 paid ordinary shares raising $419,012 before costs. On 9th July 38,725,310 free attaching listed options (exercisable at $0.03 and expiring on 28 relation to both the institutional and retail components of the ANREO. • During the year 3,276,424 shares were issued to Non-executive Directors as part of the Non-Executive Directors’ Share Plan (NEDSP) approved by shareholders at the AGM held on 26 November 2015. Non- executive directors have received up to 50% of their compensation in shares in the Company and received a cash payment for 50% of their director fees. • On 26 February 2016 the Company completed a transaction to acquire 100% of Sol Jar Property Pty Ltd, the owner of the Munglinup project, a highly prospective graphite-nickel sulphide tenement position in the Albany-Fraser Range province of Western Australia. As consideration the Company issued 18,000,000 ordinary shares and 4,000,000 listed options @ $0.03 and expiring on 30 September 2016. t r o p e r ’ s r o t c e r i D • On 2 December 2015, the Company entered into a binding agreement with Eyre Peninsula Minerals Pty Ltd (EPM) and EPM’s shareholders (EPM JV Agreement) that granted the Company an option to acquire up to 100% of EPM in exchange for exploration expenditure and shares and options in Renascor. EPM, in turn, has an option to acquire Ausmin Development Pty Ltd (Ausmin), an unlisted company that holds the underlying rights to the Arno graphite project. Pursuant to the EPM JV Agreement the company managed the exploration program as agreed with EPM. The Company completed its earn- in commitment during June 2016 and accordingly acquired 20% of EPM’s issued capital. • On 13 May 2016 the Company issued 47,400,003 shares and 11,850,003 free attaching listed options exercisable at $0.03 per share expiring on 30 September 2016, to complete a placement to sophisticated investors raising $711,000 before costs. b) Operations • Renascor’s activities during the past financial year were directed at exploring for, acquiring and developing mineral assets. • Significant activities undertaken during the year included: - The acquisition of the Arno Graphite Project, - The discovery of significant graphite mineralization at the Siviour prospect, - The declaration of the initial Mineral Resource estimate for the Siviour Deposit, and - The identification of high quality, coarse- flake graphite at Sivour • Renascor has maintained a strong exploration portfolio, identifying and maintaining a strong pipeline of targets for the development of graphite, lithium, uranium, gold, copper and other mineral assets. To limit non-essential expenditure, Renascor has also relinquished 5 tenements considered less prospective. 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 Pursuant to the EPM JV Agreement, the Company completed the exercise its first option to acquire an additional 29% of the issued shares of EPM. On 11 July 2016 the Company issued 38,666,667 ordinary shares in Renascor at the closing price of $0.016 valued $618,667 and taking the Company’s holding in EPM to 49%. On 11 July 2016, the Company issued 39,266,668 ordinary fully paid shares and 9,816,668 listed options exercisable@ $0.03 expiring on 30 September 2016. The Shares and options completed the fundraising initiated in May 2016 in raising a further $589,000 before costs. On 11 July 2016, the Company issued 600,001 ordinary fully paid shares to management as a result of the exercise of performance rights held. On 25 August 2016, the Company issued 32,000 ordinary fully paid shares as a result of the exercise of 32,000 listed options @ $0.03 expiring on 30 September 2016 On 29 August 2016 the Company exercised its second option to acquire the remaining 51% of EPM, subject to shareholder approval within 2 months. Pursuant to the EPM JV Agreement the consideration will be Ordinary shares to the value of $2,040,000 plus 15,000,000 unlisted options with an exercise price of 5 cents per ordinary share and expiry 3 years from the date of issue. The value and issue price of each share is calculated using the 20-day VWAP as at the date of exercise of the option which has been calculated as $0.048492. Accordingly, subject to shareholder approval, Renascor will issue 42,068,684 ordinary shares and 15,000,000 unlisted options to subscribe for fully paid ordinary shares in Renascor with an exercise price of 5 cents per ordinary share and expiry 3 years from the issue date. On 5 September the Company announced that it had executed an underwriting agreement that provides the confidence that it will receive total gross proceeds of $1.9m from its listed 3 cent options expiring on 30 September 2016 (“Listed Options”). The underwriting agreement is with Bizzell Capital Partners Pty Ltd (“BCP”), an entity associated with Stephen Bizzell (Chairman of Renascor), pursuant to which BCP has agreed to act as Underwriter to the exercise of the Listed Options and will also have the right to act as Lead Manager to a share placement to raise up to an additional $600,000. 29 Renascor Resources Limited annual report 2016 t r o p e r ’ s r o t c e r i D In the opinion of the directors, no other matter or circumstance has arisen since 30 June 2016 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, development 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. 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 which can be located on the Company’s website Remuneration report – audited (www.renascor.com.au/company) 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: Directors Position Non-Executive Chairman Stephen Bizzell Managing Director David Christensen Geoffrey McConachy Executive Director Andrew Martin Chris Anderson Richard Keevers Non-Executive Director Non-Executive Director Non-Executive Director Other key management personnel: Angelo Gaudio CFO and Company Secretary 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. 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, market sentiment toward the sector and the global economy, and as such increases or decreases may occur quite independent of executive performance or remuneration. 30 t r o p e r ’ s r o t c e r i D The following table shows key performance indicators for the Group over the last five years since the Company has been listed on the ASX: Key performance indicators 2016 2015 2014 2013 2012 Profit/(Loss) for the year attributable to owners ($) ($890,079) ($4,932,426) ($1,513,910) ($528,989) (297,219) Basic earnings per share (cents) Share price (cents) at year end (0.4) 2.0 (3.5) 2.0 (1.3) 3.7 (0.5) 3.5 (0.3) 5.2 Increase/(decrease) in share price (%) (0%) (45.9%) 5.7% (32.7%) (30.7%) Total KMP incentives as a percentage of profit/(loss) for the year (%) - (0.2%) (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. 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. At the AGM held on 27 November 2014, shareholders approved the Non-Executive Directors Share Plan (NEDSP) for non-executive directors to receive up to 50% of their compensation in shares in the Company. Since the 1 October 2014 non-executive directors have received payment for 50% of their director fees through the issue of NEDSP shares issued bi-annually each 6 month period 1 October to 31 March and 1 April to 30 September. The following director fees have applied during the period: Base fees From 1 July 2016 From 1 July 2015 Chair $60,000 p.a. $60,000 p.a. Other non-executive directors $33,000-40,000 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. 31 Renascor Resources Limited annual report 2016 t r o p e r ’ s r o t c e r i D 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. 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. 32 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 were granted rights to shares which 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 have been subject to a corporate share performance (CSP) condition and a personal key performance indicator (KPI) condition. The performance rights were issued for nil consideration and had variable vesting dates, subject to either CSP condition or KPI condition (and the maximum number of shares which may be issued where the relevant conditions are fully satisfied which are converted on a one for one basis). t r o p e r ’ s r o t c e r i D Total $ 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 26 and 27 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. Key management personnel of the Company and the Group 2016 Name Non-executive directors Stephen Bizzell 1 Andrew Martin 1 Chris Anderson 1 Short-term employee benefits long-term benefits Post employment benefits Share-based payments Non- Cash salary monetary benefits and fees Long service leave NEDSP shares1 Super- & performance rights annuation $ $ $ 30,000 16,530 16,500 $ - - - - $ - - - - - 3,470 - 3,470 30,000 1 20,000 1 16,500 1 60,000 40,000 33,000 66,500 1 133,000 Sub-total non-executive directors 63,030 Executive directors David Christensen Geoffrey McConachy Other key management personnel Angelo Gaudio 2 Sub-total executive directors and other key management personnel Total key management 249,600 239,200 18,785 - 14,357 13,759 19,308 19,308 - 302,050 - 272,267 222,952 2 - 0 14,118 - 237,070 711,752 18,785 28,116 52,734 - 811,387 personnel compensation 774,782 18,785 28,116 56,204 66,500 1 944,387 1 At the AGM held on 27 November 2014, shareholders approved the Non-Executive Directors Share Plan (NEDSP) for non-executive directors to receive up to 50% of their compensation in shares in the Company. Commencing on 1 October 2014 non-executive directors have received payment for 50% of their director fees. During the year NEDSP shares were issued as part of tranche#2 for the 6 month period 1 April to 30 September 2015 and tranche#3 for the 6 month period 1 October 2015 to 31 March 2016.with the remaining balance accrued, to be issued in tranche#4 for the 6 month period 1 April to 30 September 2016 during the next financial year. 2 On 15 April 2016, Mr Gaudio terminated his employment agreement with the Company. Cash salary and fees include the payment of annual leave entitlements at termination of $43,607. On 15 April 2016, the Company entered into an agreement with Angelo Gaudio and his company to provide services as Company Secretary and Chief Financial Officer. Services are to be provided at a rate of $8,333 per month plus GST plus expenses. The agreement may be terminated by either party on one months’ notice. 33 Renascor Resources Limited annual report 2016 t r o p e r ’ s r o t c e r i D Key management personnel of the Company and the Group 2015 Name Non-executive directors Stephen Bizzell Andrew Martin Chris Anderson Short-term employee benefits long-term benefits Post employment benefits Share-based payments Non- Cash salary monetary benefits and fees Long service Options Super- & performance rights leave annuation $ 37,500 21,530 20,625 $ - - - - $ - - - - $ $ Total $ - 3,470 - 3,470 22,500 1 15,000 1 12,375 1 60,000 40,000 33,000 49,875 1 133,000 Sub-total non-executive directors 79,655 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 290,703 278,590 17,498 - 12,118 11,614 18,783 18,783 3,302 342,404 3,184 312,1717 214,077 - 8,476 18,751 1,390 242,694 783,370 17,498 32,208 56,317 7,876 897,269 863,025 17,498 32,208 59,787 57,751 1,030,269 The relative proportions of remuneration that are linked to performance and those that are fixed are as follows: Name 2016 2015 2016 2015 2016 2015 Fixed remuneration At risk - STI At risk - STI* Non-executive directors of the Company Stephen Bizzell Andrew Martin Chris Anderson Executive directors of the Company David Christensen Geoffrey McConachy 100% 100% 100% 100% 100% 100% 100% 100% 99.0% 99.0% Other key management personnel of the Group Angelo Gaudio 100% 99.4% -% -% -% -% -% -% -% -% -% -% -% -% -% -% -% -% -% -% -% -% 1.0% 1.0% -% 0.6% * Since the long-term incentives are provided exclusively by way of options and or 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. 34 t r o p e r ’ s r o t c e r i D 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 2016 and 2015. 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 f) Share-based compensation termination payment of six months. As at year ended 30 June 2016, his per annum rate, exclusive of superannuation, was payable at a rate of $249,600 per annum. 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 2016, his per annum rate, exclusive of superannuation, was payable at a rate of $239,200 per annum. Angelo Gaudio, Chief Financial Officer and Company Secretary, terminated his employment agreement with the Company on 15 April 2016. On 15 April 2016 the Company entered into an agreement with Angelo Gaudio and his company to provide services as Company Secretary and Chief Financial Officer. Services are to be provided at a rate of $8,333 per month plus GST plus expenses. The agreement may be terminated by either party on one months’ notice. 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 1 30 Nov 2012 28 Feb 2014 30 Nov 2019 $Nil 54th percentile 20% Tranche 1a 28 Feb 2014 28 Feb 2014 30 Nov 2019 $Nil 54th percentile 20% Tranche 1b 28 Feb 2014 28 Feb 2014 30 Nov 2019 $Nil 80% of KPI 80% Tranche 2 30 Nov 2012 30 Jun 2014 30 Nov 2019 $Nil Tranche 2a 28 Feb 2014 30 Jun 2014 30 Nov 2019 $Nil # 54th percentile # 20% # 54th percentile # 20% 80% 80% 20% # 80% # 80% Tranche 2b 28 Feb 2014 30 Jun 2014 30 Nov 2019 $Nil 80% of KPI * 80% * 20% Tranche 3 30 Nov 2012 30 Jun 2015 30 Nov 2019 $Nil # Below 50th percentile # Nil% # 100% Tranche 3a 28 Feb 2014 30 Jun 2015 30 Nov 2019 $Nil # Below 50th percentile # Nil% # 100% Tranche 3b 28 Feb 2014 30 Jun 2015 30 Nov 2019 $Nil 80% of KPI * 80% * 20% # The CSP Performance rights conditions were assessed by the disinterested board members and the TSR Rank achieved for Year Ended 30 June 2014 was determined to be between 50th and 67th percentile and 20% of the CSP proportion of performance shares vested and 80% forfeited for tranche 2a. For Year Ended 30 June 2015 the TSR Rank achieved was determined to be below the 50th percentile with no CSP proportion of performance shares vesting and 100% forfeited for tranche 3a. The vested performance rights were exercised and shares issued on 11 July 2016. * The KPI Performance rights conditions were assessed by the disinterested board members for Years Ended 30 June 2014 and 30 June 2015 and determined to that 80% of KPI proportion of performance shares for tranches 2b and 3b vesting and 20% forfeited. The vested performance rights were exercised and shares issued on 11 July 2016. 35 Renascor Resources Limited annual report 2016 t r o p e r ’ s r o t c e r i D g) Equity instruments held by key management personnel Options holdings Listed options are held directly, indirectly or beneficially by key management personnel* as at year ended 30 June 2016: 2016 Name Listed options Balance at at the start acquired during the reporting year of the year Eercised during the reporting year Expired during the year Balance at the end of the year Vested and exercisable at the end of the reporting year number number# number number number number Directors of the Company David Christensen Geoffrey McConachy Andrew Martin Stephen Bizzell Chris Anderson Richard Keevers 250,000 375,000 625,000 500,000 1,000,000 - Other key management personnel of the Group Angelo Gaudio 250,000 - - - - - - - - - - - - - - - - - - - - - 250,000 375,000 625,000 500,000 1,000,000 - 250,000 375,000 625,000 500,000 1,000,000 - 250,000 250,000 * 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 holdings Details of performance rights held directly, indirectly or beneficially by key management personnel* as at year ended 30 June 2016: Approved to be granted during the reporting year Exercised during the as compensation reporting year Lapsed Balance at Vested the end of at the end during the reporting year the year of the yesr reporting period Vested and Vested and exercisable at not exercisable the end of the at the end of the reporting period number number number number number number number 2016 Name Balance at the start of the year number Directors of the Company David Christensen 280,000 Geoffrey McConachy Andrew Martin Stephen Bizzell Chris Anderson 270,000 - - - Other key management personnel of the Group Angelo Gaudio 116,667 666,667 - - - - - - - - - - - - - - 28,000 252,000 252,000 252,000 27,000 243,000 243,000 243,000 - - - - - - - - - - - - 11,666 105,001 105,001 105,001 66,666 600,001 600,001 600,001 - - - - - - - * 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. 36 t r o p e r ’ s r o t c e r i D g) Equity instruments held by key management personnel conitinued Shareholdings Details of equity instruments (other than options and rights) held directly, indirectly or beneficially by key management personnel* as at year ended 30 June 2016 are as follows: 2016 Ordinary Shares - Balance at the start of the year Issued during reporting year as Recieved during the year on the exercise of compensation 2 Performance Rights Ordinary Shares - Other changes during the year Balance at the end of the year Directors of the Company Ordinary Shares David Christensen Geoffrey McConachy Andrew Martin1 Stephen Bizzell Chris Anderson Richard Keevers 12,700,000 7,050,000 22,182,929 13,007,583 9,257,166 - Other key management personnel of the Group - - 985,392 1,478,085 812,947 - Ordinary shares Angelo Gaudio 6,715,000 - - - - - - - - - - - - - - - 12,700,000 7,050,000 23,168,321 14,485,668 10,070,113 - 6,715,000 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. 2 Shares issued as part of Non-executive directors Plan (NEDSP) in lieu of payment of 50% of director fees for the period from 1st April 2015 through 31 March 2016 and as approved by shareholders at Annual General Meeting held on 26 November 2015. 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 $54,134 (2015: $77,978) from Euro which has been capitalised as Exploration Expenditure during the financial year. An amount of $5,235 (2015: $13,736) was owing to Euro at 30 June 2016. 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 $72,600 (2015: $51,150) from CGAA of which $72,600 (2015: $51,150) has been capitalised as Exploration Expenditure during the financial year. An amount of $11,300 (2015: $8,910) was owing to CGAA at 30 June 2016. Mr S. Bizzell is a director of Bizzell Capital Partners Pty Ltd (BCP). BCP has provided corporate advisory and underwriting services to the company in relation to a capital raising. During the financial year the Company incurred expenses of $72,600 (2015: $15,000) from BCP which was included as a cost of the capital raising during the financial year. An amount of $Nil (2015: $Nil) was owing to BCP for capital raising services at 30 June 2016. Mr D. Christensen has an equity interest in Arion Legal. Arion Legal has provided legal services to the company. During the financial year the Company incurred expenses of $6,770 (2015: $9,690) from Arion Legal of which $6,770 was included as a legal expense during the financial year. An amount of $Nil (2015: $Nil) was owing to Arion Legal at 30 June 2016. 37 Renascor Resources Limited annual report 2016 t r o p e r ’ s r o t c e r i D Mr R Keevers is a director and also has an equity interest in Eyre Peninsula Minerals Pty Ltd (EPM). The Company has an agreement with EPM and EPM’s shareholders that grants the Company the option to acquire up to 100% of EPM in exchange for exploration expenditure and shares and options in Renascor. The Company has acquired 49% of EPM by meeting its exploration expenditure requirements and issued shares to EPM shareholders on 11 July 2016 (See note 26, in the notes to the consolidated financial statements. for details). Mr Keevers received 20,195,334 shares in connection with the shares issued to EPM shareholders. On 29 August 2016, the Company notified EPM of its intention to exercise its remaining option to acquire the balance of the issued capital of EPM, and it is expected that this will be completed during the fourth quarter of 2016. End of remuneration report - audited 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 9 June 2015 (listed options) 18 June 2015 (listed options) 9 July 2015 (listed options) 26 February 2016 (listed options) 13 May 2016 (listed options) 9 July 2016 (listed options) 30 September 2016 30 September 2016 30 September 2016 30 September 2016 30 September 2016 30 September 2016 Exrecise price of shares Number under option $0.03 $0.03 $0.03 $0.03 $0.03 $0.03 12,500,000 15,750,000 10,475,310 4,000,000 11,850,003 9,816,668 64,391,981 Date Performance Rights approved Expiry date Exrecise price of shares 30 November 2012* 30 November 2019 28 February 2014* 30 November 2019 $Nil $Nil Number of Performance Rights held Nil Nil Nil * No performance rights were granted as remuneration to the directors and the most highly remunerated officers during the year. Details of performance rights held by key management personnel are disclosed on page 37. 600,001 shares of the Company were issued on 11 July 2016 on the exercise of vested performance rights and 32,000 shares of the Company were issued on 25 August 2016 on the exercise of listed options 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. 38 t r o p e r ’ s r o t c e r i D 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 Notes 30 June 2016 $ 30 June 2015 $ 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 Total fees for non-audit services 7,076 7,076 7,076 6,929 6,929 6,929 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. Corporate Governance The board of directors of the Company (“Board”) is responsible for the corporate governance of the Company. 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 believes that good corporate governance enhances investor confidence and adds value to stakeholders. The Board continually monitors and reviews its policies, procedures and charters with a view to ensure its compliance with the ASX Corporate Governance Council’s “Corporate Governance Principles and Recommendations, 3rd Edition” to the extent considered appropriate for the size of the Company and its scale of its operations. The company’s Corporate Governance Statement is available on the Company’s website www.renascor.com.au/company. 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 40. This report is made in accordance with a resolution of directors. David Christensen Director Adelaide Date: 30 September 2016 39 Renascor Resources Limited annual report 2016 n o i t a r a l c e d e c n e d n e p e d n i ’ s r o t i d u A Auditor’s independence declaration Annual Report 2016 RENASCOR RESOURCES LIMITED | 16 Auditor’s independence declaration (to be inserted) Tel: +61 8 7324 6000 Fax: +61 8 7324 6111 www.bdo.com.au BDO Centre Level 7, 420 King William Street Adelaide SA 5000 GPO Box 2018 Adelaide SA 5001 Australia DECLARATION OF INDEPENDENCE BY MICHAEL HAYDON TO THE DIRECTORS OF RENASCOR RESOURCES LIMITED As lead auditor of Renascor Resources Limited for the year ended 30 June 2016, I declare that, to the best of my knowledge and belief, there have been: No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Renascor Resources Limited and the entities it controlled during the period. Michael Haydon Director BDO Audit (SA) Pty Ltd Adelaide, 29 September 2016 BDO Audit (SA) Pty Ltd ABN 33 161 379 086 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (SA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees). 40 s t n e m e t a t s l a i c n a n F i 41 Renascor Resources Limited annual report 2016 s t n e m e t a t s l a i c n a n F i Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2016 Revenue Other Income Administration and consulting 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 2016 $ 30 June 2015 $ 27,996 26,317 12,000 (129,559) (4,158) (427,155) (10,288) (30,596) (265,602) (62,717) 41,556 (121,304) (7,296) (500,131) 300 (30,225) (4,266,131) (75,512) (890,079) (4,932,426) - (890,079) - (4,932,426) - - Total comprehensive income for the year (890,079) (4,932,426) Loss is attributable to: Owners of Renascor Resources Limited Total comprehensive income for the year is attributable to: Owners of Renascor Resources Limited Non-controlling interest (890,079) (4,932,426) (890,079) (4,932,426) - - (890,079) (4,932,426) Cents Cents Earnings per share for loss attributable to the ordinary owners of the Parent Entity: Basic earnings per share Diluted earnings per share 29 29 (0.4) (0.4) (3.5) (3.5) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 42 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Consolidated statement of financial position As at 30 June 2016 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 s t n e m e t a t s l a i c n a n F i Consolidated Notes 30 June 2016 $ 30 June 2015 $ 8 9 862,488 154,720 15,887 1,075,336 224,803 23,355 1,033,095 1,323,494 10 11 7,287 5,977,606 9,596 3,534,046 5,984,893 3,543,642 7,017,988 4,867,136 13 14 15 345,763 132,007 242,337 154,979 477,770 397,316 70,750 70,750 57,630 57,630 548,520 454,946 6,469,468 4,412,190 17 18(a) 18(b) 13,235,479 1,041,506 (9,407,517) 11,903,316 1,026,312 (8,517,438) Equity and reserves attributable the owners of Renascor Resources Limited 4,869,468 4,412,190 Non-controlling interests 26 1,600,000 - Total equity 6,469,468 4,412,190 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 43 s t n e m e t a t s l a i c n a n F i Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Consolidated statement of changes in equity For the year ended 30 June 2016 Consolidated Share-based Payments Contributed equity Notes $ Reserve $ Accumulated Losses $ Balance at 1 July 2014 10,803,970 1,018,436 (3,585,012) 8,237,394 Loss for the year Total comprehensive income Transactions with owners in their capacity as owners: Contributions of equity - - net of transaction costs 17(b) 1,099,346 Share-based payments 18(a) - 1,099,346 - - - 7,876 7,876 (4,932,426) (4,932,426) (4,932,426) (4,932,426) - - - 1,099,346 7,876 1,107,222 Non- Total controlling $ Total equity $ 8,237,394 (4,932,426) (4,932,426) 1,099,346 7,876 1,107,222 $ - - - - - - - - - - Balance at 30 June 2015 Balance at 1 July 2015 Loss for the year Total comprehensive income Transactions with owners in their capacity as owners: Contributions of equity, 11,903,316 1,026,312 (8,517,438) 4,412,190 - 4,412,190 11,903,316 1,026,312 (8,517,438) 4,412,190 - - (890,079) (890,079) (890,079) (890,079) - - - 4,412,190 (890,079) (890,079) net of transaction costs 17(b) 1,332,163 Recognition of non-controlling interest of Eyre Peninsula Minerals Pty Ltd 26 - Amount recognised during the current period for Share-based payments 18(a) - 15,194 1,332,163 15,194 - 1,332,163 - 1,332,163 - - - - 1,600,000 1,600,000 15,194 - 15,194 1,347,357 1,600,000 2,947,357 Balance at 30 June 2016 13,235,479 1,041,506 (9,407,517) 4,869,468 1,600,000 6,469,468 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 44 s t n e m e t a t s l a i c n a n F i Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Consolidated statement of cash flows For the year ended 30 June 2016 Consolidated Notes 30 June 2016 $ 30 June 2015 $ 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 (Deposits received) 74,463 (631,200) 28,733 192,942 10,000 94,433 (697,114) 26,077 118,627 15,000 Net cash inflow (outflow) from operating activities 28 (325,062) (442,977) Cash flows from investing activities Cash held in subsidiary on acquisition Payments for property, plant and equipment Proceeds from sale of tenement Payments for exploration expenditure 46,876 - - (931,935) - (3,433) 62,500 (1,047,063) Net cash inflow (outflow) from investing activities (885,059) (987,996) 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 - - (138,429) 1,135,702 - - (48,669) 1,130,000 Net cash inflow (outflow) from financing activities 997,273 1,081,331 Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period (212,848) 1,075,336 (349,642) 1,424,978 Cash and cash equivalents at end of year 8 862,488 1,075,336 The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 45 s t n e m e t a t s l a i c n a n F i Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements Note Contents Page 1 Summary of significant accounting policies 2 Financial risk management 3 Critical accounting estimates and judgments 4 Segment information 5 Revenue 6 Expenses 7 Income tax expense 8 Current assets - Cash and cash equivalents 9 Current assets - Trade and other receivables 10 Non-current assets - Property, plant and equipment 11 Non-current assets - Exploration and evaluation, development and mine properties 12 Non-current assets - Deferred tax assets 13 Current liabilities - Trade and other payables 14 Current liabilities - Provisions 15 Non-current liabilities - Provisions 16 Non-current liabilities - Deferred tax liabilities 17 Contributed equity 18 Reserves and retained earnings 19 Dividends 20 Key management personnel disclosures 21 Remuneration of auditors 22 Commitments and contingent liabilities 23 Related party transactions 24 Subsidiaries 25 Interests in joint ventures 26 Business Combinations 27 Events occurring after the reporting period 28 Reconciliation of profit after income tax to net cash outflow from operating activities 29 Earnings per share 30 Share-based payments 31 Parent Entity financial information 32 Application of new and revised Accounting Standards 46 47 53 56 56 57 57 58 59 59 60 61 61 62 62 62 62 63 64 65 65 66 67 67 68 68 69 70 70 71 72 75 76 s e t o N Renascor Resources Limited ABN 90 135 531 341 annual report 2016 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 $5,977,606 (30 June 2015: $3,534,046). The Group has incurred a loss after tax for the year of $890,079 (2015: $4,932,426) and operations were funded by a net cash outflow of $212,848 (2015: $349,642). At 30 June 2016, the Group had net current assets of $555,325 (30 June 2015: $926,178). 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. On 11 July 2016, the Company completed the fundraising initiated in May 2016 and raised a further $589,000 before costs. On 5 September the Company announced that it had executed an underwriting agreement that provides the confidence that it will receive total gross proceeds of $1.9m from its listed 3 cent options expiring on 30 September 2016. The funds raised will primarily be used to fund the advancement of its Arno graphite project and, in the opinion of the directors, removes any significant uncertainty about the Company’s ability to continue as a going concern for at least the next 12 months from the date of authorising the financial report for issue and into the foreseeable future. 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 2016 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. 47 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 1 Summary of significant accounting policies d) Revenue recognition continued b) Principles of consolidation continued ii) Joint arrangements 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). 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. 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. The following specific recognition criteria must also be met before revenue is recognised: Interest Revenue Interest income is recognised on a time proportion basis using the effective interest method. Government grants Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received and the Group will comply with all the attached conditions. Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to exploration and evaluation expenditure are offset against exploration and evaluation assets. c) Foreign currency translation i) Functional and presentation currency 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. 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. ii) Transactions and balances f) Trade receivables 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. 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. 48 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements s e t o N 1 Summary of significant accounting policies h) Business combinations continued g) Income tax continued 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. 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. 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. 49 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 1 Summary of significant accounting policies continued h) Business combinations continued 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. 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 50 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. Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements 1 Summary of significant accounting policies continued 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. 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 corporate 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. s e t o N 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 30. 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. 51 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 31 has been prepared on the same basis as the consolidated financial statements, except as set out below. i) Investments in subsidiaries Investments in subsidiaries are accounted for at cost, less any impairment, in the financial statements of the Parent Entity. t) R&D Tax Incentives R&D tax incentives are considered more akin to government grants because they are not conditional upon earning taxable income and the group accounts for any R&D Tax incentives received as government grants under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance. Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 1 Summary of significant accounting policies continued 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. 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 29). 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. 52 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements s e t o N 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 2016 $ 30 June 2015 $ 862,488 154,720 1,075,336 224,803 1,017,208 1,300,139 345,763 345,763 242,337 242,337 a) Market risk i) Cash flow and fair value interest rate risk As at 30 June 2016 and 30 June 2015, 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 2016 30 June 2015 Weighted average interest rate % 1.8 % - % - % Weighted average interest rate % 3.08 % - % - % Balance $ 862,488 154,720 (345,763) 671,445 Balance $ 1,075,336 224,803 (242,337) 1,057,802 Cash and cash equivalents Trade and other receivables Trade and other payables Net exposure to cash flow interest rate risk 53 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 2 Financial risk management continued a) Market risk continued 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 Interest rate risk 1.0% + 1.0% Carrying amount $ Profit $ Other equity $ Profit $ Other equity $ 30 June 2016 Financial assets Cash and cash equivalents Trade and other receivables 862,488 154,720 (8,625) - Financial liabilities Trade and other payables (345,763) - Total increase/(decrease) 671,445 (8,625) - - - - 8,625 - - 8,625 - - - - Consolidated Interest rate risk 1.0% + 1.0% Carrying amount $ Profit $ Other equity $ Profit $ Other equity $ 30 June 2015 Financial assets Cash and cash equivalents Trade and other receivables 1,075,336 224,803 (10,753) - Financial liabilities Trade and other payables (242,337) - Total increase/(decrease) 1,057,802 (10,753) - - - - 10,753 - - 10,753 - - - - 54 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements s e t o N 2 Financial risk management continued 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 c) Liquidity risk Consolidated 30 June 2016 $ 30 June 2015 $ 154,720 154,720 862,488 862,488 224,803 224,803 1,075,336 1,075,336 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 deposits at call of $862,488 (2015: $1,075,336) 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. Group Less than 6 – 12 6 months months Less than 1 year Between Over Total 1 and 5 years 5 years contractual cash flows Carrying Amount (assets)/ liabilities At 30 June 2016 $ Trade payables (345,763) (345,763) $ - - $ - - $ - - $ - - $ $ (345,763) (345,763) (345,763) (345,763) Total Group Less than 6 months 6 – 12 months Less than 1 year Between 1 and 5 years Over Total 5 years contractual cash flows Carrying Amount (assets)/ liabilities At 30 June 2015 $ Trade payables (242,337) Total (242,337) $ - - $ - - $ - - $ - - $ $ (242,337) (242,337) (242,337) (242,337) 55 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 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. 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 30. 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. 56 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements s e t o N 5 Revenue and Other Income a) Revenue Interest income b) Other Income Sundry Income Profit on sale of tenement 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 Consolidated 30 June 2016 $ 30 June 2015 $ 27,996 26,317 12,000 - - 41,556 12,000 41,556 Consolidated 30 June 2016 $ 30 June 2015 $ 771 3,387 4,158 768 6,528 7,296 - 265,602 - 4,266,131 265,602 4,266,131 - - - 373,431 - 53,724 427,155 - - - 427,555 7,876 64,700 500,131 Minimum office lease payments 30,596 30,225 57 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 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 2016 $ 30 June 2015 $ - - - - - - 240,978 (240,978) - (849,055) 849,055 - b) Numerical reconciliation of income tax expense to prima facie tax payable Profit/(Loss) from continuing operations before income tax expense (890,079) (4,932,426) Tax at the Australian tax rate of 30% (2015: 30%) (267,024) (1,479,728) Tax effect of amounts which are not deductible (taxable) in calculating Taxable income: Non-taxable income: - Debt forgiveness - Research and development tax concession 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 Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 30% d) Unrecognised temporary differences Temporary differences for which deferred tax assets have not been recognised: Temporary differences Potential tax benefit @ 30% - (36,407) 53 - - - (57,283 12 2,363 - 303,377 - 1,534,636 - 267,024 1,479,728 - - 8,780,729 7,944,562 2,634,219 2,383,369 - - - - 58 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 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 s e t o N Consolidated 30 June 2016 $ 30 June 2015 $ 862,488 1,075,336 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 a) Fair value risk Consolidated 30 June 2016 $ 30 June 2015 $ 33,064 121,356 300 154,720 16,998 190,942 16,863 224,803 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. 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. 10 Non-current assets – Property, plant and equipment Consolidated Gross carrying amount Balance at 30 June 2014 Additions Depreciation charge Balance at 30 June 2015 Additions Depreciation charge Balance at 30 June 2016 Computer Office furniture equipment and equipment $ $ 10,849 3,433 (6,527) 7,755 1,849 (3,387) 6,217 2,610 - (769) 1,841 - (771) 1,070 Total $ 13,459 3,433 (7,296) 9,596 1,849 (4,158) 7,287 59 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 10 Non-current assets – Property, plant and equipment continued Computer Equipment Cost Accumulated depreciation Net book amount Plant and Equipment Cost Accumulated depreciation Net book amount 11 Non-current assets – Exploration and evaluation expenditure Exploration and evaluation Opening balance Acquisitions through business combinations * Impairments R&D tax refund offset against capitalised exploration and evaluation # Tenement acquisition/(sale) component of exploration and evaluation Expenditure incurred Closing balance Consolidated 30 June 2016 $ 30 June 2015 $ 36,831 (30,614) 6,217 34,982 (27,227) 7,755 4,444 (3,374) 4,444 (2,603) 1,070 1,841 Consolidated 30 June 2016 $ 30 June 2015 $ 3,534,046 2,238,605 (265,603) (121,356) - 6,942,371 - (4,266,131) (190,942) (20,944) 591,913 1,069,692 5,977,605 3,534,046 # Note: Refundable tax incentives (Research and development tax concession) are accounted for as government grants under AASB 120 Accounting for Government Grants and Disclosure of Government Assistance and offset against capitalised exploration and evaluation expenditure. * Note: Acquisitions through business combinations include: 1) Eyre Peninsula Minerals Pty Ltd through business combinations includes $232,160 on acquisition plus recognition of $1,767,352 fair value adjustment on consolidation. 2) Sol Jar Property Pty Ltd - asset acquisition includes $239,043 on acquisition. 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 $461,623 of internal personnel costs (2015: $590,450) and management fees for joint venture tenements of $45,931 (2015: $1,678) 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. 60 s e t o N Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements 12 Non-current assets – Deferred tax assets The balance comprises temporary differences attributable to: Deductible temporary differences - Accruals and other payables - Employee benefits - Expenses deductible over 5 years - Investment in Subsidiary Tax losses Total deferred tax assets Consolidated 30 June 2016 $ 30 June 2015 $ 8,027 60,827 66,553 179,970 855,532 1,170,909 6,917 63,783 58,917 - 620,345 929,932 Set off of deferred tax liabilities pursuant to set off provisions (note 16) (1,170,909) (929,932) Net deferred tax assets Movements: Opening balance at 1 July Credited to profit or loss Closing balance at 30 June 13 Current liabilities – Trade and other payables Trade payables Sundry creditor and accrued expenses Other payables 14 Current liabilities – Provisions Employee benefits - - 929,932 240,978 1,778,987 (849,055) 1,170,909 929,932 Consolidated 30 June 2016 $ 30 June 2015 $ 168,819 176,944 - 345,763 42,759 199,578 - 242,337 Consolidated 30 June 2016 $ 30 June 2015 $ 132,007 154,979 Provision for employee benefits is made for annual leave owed as at 30 June 2016. 61 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 15 Non-current liabilities – Provisions Employee benefits Consolidated 30 June 2016 $ 30 June 2015 $ 70,750 57,630 Provision for employee benefits is made for long service leave as at 30 June 2016 16 Non-current liabilities – Deferred tax liabilities The balance comprises temporary differences attributable to: Assessable temporary differences - Interest receivable - Exploration and evaluation expenditure Total deferred tax liabilities Consolidated 30 June 2016 $ 30 June 2015 $ - 1,170,910 221 929,711 1,170,910 929,932 Set off of deferred tax liabilities pursuant to set off provisions (note 12) (1.170,910) (929,932) Net deferred tax liabilities Movements: Opening balance at 1 July Charged to profit or loss Closing balance at 30 June 17 Contributed equity a) Share capital Ordinary shares (b),(c) Fully paid - - 929,932 (240,978) 1,778,987 (849,055) 1,170,910 929,932 30 June 2016 Shares 30 June 2015 Shares 30 June 2016 $ 30 June 2015 $ 284,466,527 194,839,488 13,235,479 11,903,316 62 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements s e t o N 17 Contributed equity continued b) Movements in ordinary share capital: Date Details Notes Number of shares Issued price $ 1 July 2014 Opening balance 136,400,000 10,803,970 3 Sep 2014 Ordinary shares issued to Currie Resources Pty Ltd – consideration pursuant to Currie Agreement 7 May 2015 Ordinary shares issued to non-executive directors pursuant to Non-Executive Directors Share Plan. 9 Jun 2015 Placement to Acorn Capital - Ordinary shares issued. 18 Jun 2015 Institutional component of accelerated non-renounceable entitlement offer– Ordinary shares issued. 500,000 $0.044 22,000 1,439,488 $33,250 33,250 25,000,000 $0.02 500,000 Less: Transaction costs arising on share issues, net of tax 30 June 2015 Balance 194,839,488 31,500,000 58,439,488 $ 0.02 630,000 1,185,250 (85,904) 11,903,316 9 Jul 2015 Retail component of accelerated non-renounceable entitlement offer – Ordinary shares issued. 14 Oct 2015 Ordinary shares issued to non-executive directors pursuant to Non-Executive Directors Share Plan. 26 Feb 2016 Consideration on acquisition of Sol Jar Property Pty Ltd – Ordinary shares issued. 11 Apr 2016 Ordinary shares issued to non-executive directors pursuant to Non-Executive Directors Share Plan. 13 May 2016 Placement to Sophisticated Investors - Ordinary shares issued. 20,950,612 $0.02 419,012 935,510 $0.018 16,752 18,000,000 $ 0.013 234,000 2,340,914 $0.021 49,748 47,400,003 89,627,039 $0.015 711,000 1,430,512 (98,349) 13,235,479 Less: Transaction costs arising on share issues, net of tax 30 June 2015 Balance 284,466,527 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. 63 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 17 Contributed equity continued d) Listed options Consolidated 30 June 2016 $ 30 June 2015 $ Balance at 30 June 2015 Issued 9 July 2015 pursuant to a Placement Issued 9 July 2015 pursuant to Rights Issue Issued 26 Feb 2016 as part consideration for the acquisition of Sol Jar Property Pty Ltd. Issued on 13 May 2015 pursuant to a Placement. Balance at 30 June 2016 - 12,500,000 26,225,310 4,000,000 11,850,003 54,575,313 - - - - - - The options are listed on the ASX, have an exercise price of $0.03 per share and an expiry date of 30 September 2016. e) Unlisted Options and performance rights Information relating to unlisted 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 30. f) 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. 18 Reserves and accumulated losses a) Reserves Share based payments Movements: Share-based payments Balance 1 July Listed options issued Performance rights granted Balance 30 June Options and performance rights granted arise from: Amount recognised during the period for Listed Options issued to the vendors as part of the consideration on the acquisition of Sol Jar Property Pty Ltd (refer note 24) Amount recognised during the period for Performance Rights/Share Options previously issued to directors and executives (refer note 30(a)) 64 Consolidated 30 June 2016 $ 30 June 2015 $ 1,041,506 1,026,312 1,026,312 15,194 - 1,018,436 - 7,876 1,041,506 1,026,312 15,194 - - 15,194 7,876 7,876 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements 18 Reserves and accumulated losses continued b) Accumulated losses Movements in accumulated losses were as follows: Balance 1 July Net loss for the year Balance 30 June c) Nature and purpose of reserves i) Share-based payments s e t o N Consolidated 30 June 2016 $ 30 June 2015 $ 8,517,438 890,079 3,585,012 4,932,426 9,407,517 8,517,438 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 2016 period. Franking credits available for subsequent financial years based on a tax rate of 30% (2015: 30%) - - Consolidated 30 June 2016 $ 30 June 2015 $ 20 Key management personnel disclosures a) Key management personnel compensation Short-term employee benefits Long-term benefits Post-employment benefits Share-based payments b) Details of remuneration Consolidated 30 June 2016 $ 30 June 2015 $ 793,567 28,116 56,204 66,500 944,387 880,522 32,208 59,788 57,751 1,030,269 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 30 to 38. 65 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 20 Key management personnel disclosures continued 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 costs of $54,134 (2015: $77,978) from Euro which has been capitalised as Exploration Expenditure during the financial year. An amount of $5,235 (2015: $13,736) was owing to Euro at 30 June 2016. 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 costs of $72,600 (2015: $51,150) from CGAA of which $72,600 (2015: $51,150) has been capitalised as Exploration Expenditure during the financial year. An amount of $11,330 (2015: $6,600) was owing to CGAA at 30 June 2016. Mr S. Bizzell is a director of Bizzell Capital Partners Pty Ltd (BCP). BCP has provided corporate advisory and underwriting services to the company in relation to its capital raising. During the financial year the Company incurred costs of $72,660 (2015: $15,000) from BCP which was included as a cost of the capital raising during the financial year. An amount of $Nil (2015: $Nil) was owing to BCP at 30 June 2016. Mr D. Christensen has an equity interest in Arion Legal. Arion Legal has provided legal services to the company. During the financial year the Company incurred costs of $6,770 (2014: $9,690) from Arion Legal of which $6,770 was included as a legal expense during the financial year. An amount of $Nil (2015: $Nil) was owing to Arion Legal at 30 June 2016. Mr R Keevers is a director and also has an equity interest in Eyre Peninsula Minerals Pty Ltd (EPM). The Company has an agreement with EPM and EPM’s shareholders that grants the Company the option to acquire up to 100% of EPM in exchange for exploration expenditure and shares and options in Renascor. The Company has acquired 49% of EPM by meeting its exploration expenditure requirements and issuing shares to EPM shareholders on 11 July 2016 (See note 26 for details). Mr Keevers received 20,195,334 shares in connection with the shares issued to EPM shareholders. On 29 August 2016, the Company notified EPM of its intention to exercise its remaining option to acquire the balance of the issued capital of EPM, and it is expected that this will be completed during the fourth quarter of 2016. 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: 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 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 Total auditors’ remuneration Consolidated 30 June 2016 $ 30 June 2015 $ 35,579 35,579 30,300 30,300 7,076 42,655 6,929 37,229 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. 66 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements s e t o N 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 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 Consolidated 30 June 2016 $ 30 June 2015 $ 1,756,447 585,259 - 1,863,988 926,958 - 2,341,706 2,790,946 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. Non-cancellable operating lease commitments: Within one year Later than one year but not later than five years Later than five years - - - - - - - - The office lease expired on 30 November 2013. The company continues to occupy the office with rent payable monthly in advance on a month to month basis. 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. 67 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 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 Country of incorporation Kurilpa Uranium Pty Ltd Astra Resources Pty Ltd Sol Jar Property Pty Ltd 1 Eyre Peninsula Minerals Pty Ltd 2 Australia Australia Australia Australia Class of Shares Ordinary Ordinary Ordinary Ordinary Enquity holding 2016 % 100 100 100 20* 2015 % 100 100 - - 1 The Company completed a transaction to acquire 100% of Sol Jar Property Pty Ltd, the owner of the Munglinup project, a highly prospective graphite-nickel sulphide tenement position in the Albany-Fraser Range province of Western Australia. As consideration, the Company issued 18,000,000 ordinary shares and 4,000,000 listed options @ $0.03 expiring on 30 September 2016. For accounting purposes the Company has treated the acquisition as an asset acquisition. 2 The Company entered into a binding agreement with Eyre Peninsula Minerals Pty Ltd (EPM) and EPM’s shareholders (EPM JV Agreement) that granted the Company an option to acquire up to 100% of EPM in exchange for exploration expenditure and shares and options in Renascor. EPM, in turn, has an option to acquire Ausmin Development Pty Ltd (Ausmin), an unlisted company that holds the underlying rights to the Arno graphite project. Pursuant to the EPM JV Agreement the company managed the exploration program as agreed with EPM. The Company completed its earn-in commitment during June 2016 and accordingly acquired 20% of EPM’s issued capital. During June 2016 the Company notified EPM of its intention to exercise its option acquire an additional 29% of EPM’s issued capital which was completed subsequent to year end, on 11 July 2016. Pursuant to the EPM JV Agreement the Company had a voting control over the management committee. For accounting purposes the Company has considered that it had effective control over the activities of EPM from the 20 June 2016 and it has been consolidated in the Company’s Financial Reports from that date. The equity in EPM is held by subsidiary, Kurilpa Uranium Pty Ltd. Summarised Financial Information of Subsidiaries with Material Non-controlling Interests Set out below is the summarised financial information for each subsidiary that has non-controlling interests that are material to the Group, before any intragroup eliminations. Note that Eyre Peninsula Minerals Pty Ltd became a controlled entity of the Group during the reporting period ending 30 June 2016 Summarised Financial Position Current assets Non-current assets Current liabilities Non-current liabilities NET ASSETS Carrying amount of non-controlling interests Eyre Peninsula Minerals Pty Ltd 2016 $ 2015 $ 49,763 1,999,512 (49,275) - 2,000,000 1,600,000 - - - - - - There was no revenue, expenditures or cash flow recorded in EPM from the period of acquisition to 30 June 2016 25 Joint Operations Currie Joint Venture On 5 September 2013 the Company entered into a joint venture agreement with Currie Resources Pty Ltd (the Currie Joint Venture Agreement), an unlisted company holding exploration licence applications in the Eyre Peninsula adjacent to the Company’s Eastern Eyre project. The Company had the ability to acquire 100% interest of two exploration licences, subject to the final grant of the licences to Currie. The two licences, EL 5400 and EL 5401, were granted on 30 April 2014 and the Company paid Currie $25,000 and issued 500,000 Renascor shares in exchange for a two-year option during which time the Company would manage and fund all exploration within the optioned areas. On 30 April 2016, marking the end of the two year option period, the Company elected to exit the Currie Joint Venture and relinquished its option to acquire 100% interest in EL 5400 and EL 5401 from Currie Resources Pty Ltd, resulting in the write off of $238,310 capitalised Exploration and Evaluation Expenditure. 68 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements 26 Business Combinations Eyre Peninsula Minerals Pty Ltd s e t o N During December 2015, the Company entered into an agreement with Eyre Peninsula Minerals Pty Ltd (EPM) and EPM’s shareholders (EPM JV Agreement) that granted the Company an option to acquire up to 100% of EPM in exchange for exploration expenditure and shares and options in Renascor. EPM, in turn, has an option to acquire Ausmin Development Pty Ltd (Ausmin), an unlisted company that holds the underlying rights to the Arno graphite project. Pursuant to the EPM JV Agreement, the Company committed to completing $400,000 in exploration expenditure by 21 June 2016 in exchange for shares representing 20% of the issued shares of EPM. The EPM JV Agreement grants the Company two additional options pursuant to which the Company can increase its ownership in EPM to 100%. During June 2016, the Company completed its initial earn-in commitment of $400,000 in exploration expenditure acquiring 20% of EPM. The Company also exercised its option to acquire an additional 29% of the issued shares of EPM in exchange for the issue of 38,666,667 ordinary shares in Renascor on 11 July 2016, at the closing price of $0.016 and valued $618,667 and taking the Company’s holding in EPM to 49%. From completion of the earn-in, the activities and strategic direction of EPM are controlled by management committee. Pursuant to the EPM JV Agreement the Company had a voting control over the management committee. For accounting purposes the Company has considered that it had effective control over the activities of EPM and consolidated EPM in the Company’s Financial Reports from 21 June 2016. On 29 August 2016, the Company exercised its second option to acquire the remaining 51% of EPM, subject to shareholder approval. Pursuant to the EPM JV Agreement, the consideration will be ordinary shares to the value of $2,040,000 and 15,000,000 unlisted options with an exercise price of 5 cents per ordinary share and expiring 3 years from the date of issue. Pursuant to the EPM JV Agreement, the value and issue price of each share is calculated using the 20-day VWAP as at the date of exercise of the option which has been calculated as $0.048492. Accordingly, subject to shareholder approval, Renascor will issue 42,068,684 ordinary shares and 15,000,000 unlisted options to subscribe for fully paid ordinary shares in Renascor with an exercise price of 5 cents per ordinary share and expiry 3 years from the issue date. Details of the acquisition consideration and the net assets are as follows: Net Assets Cash Assets Receivables Exploration and Evaluation Expenditure 2 Payables Consideration 16 June 2016 - Earn-in Exploration Expenditure (20% Equity) Non-controlling interest 1 Fair Value $ 46,876 2,887 1,999,512 (49,275) 2,000,000 400,000 1,600,000 2,000,000 1 2 An 80% interest in Eyre Peninsula Minerals Pty Ltd (EPM) is held by non-controlling interest. The fair value of the non-controlling interests at acquisition date has been recognised at $1,600,000 which was determined with reference to the fair value of net assets of EPM at acquisition date. EPM’s carrying value of Exploration and Evaluation Expenditure was $232,160 at acquisition and as a result of the acquisition, a carrying value adjustment of $1,767,352 was recognised and re-valued up the Exploration and Evaluation Expenditure to its fair value of $1,999,512. There was no business combination for year ended 30 June 2015. 69 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 27 Events occurring after the reporting period Pursuant to the EPM JV Agreement, the Company completed the exercise its first option to acquire an additional 29% of the issued shares of EPM. On 11 July 2016 the Company issued 38,666,667 ordinary shares in Renascor at the closing price of $0.016 valued $618,667 and taking the Company’s holding in EPM to 49%. On 11 July 2016, the Company issued 39,266,668 ordinary fully paid shares and 9,816,668 listed options exercisable@ $0.03 expiring on 30 September 2016. The Shares and options completed the fundraising initiated in May 2016 in raising a further $589,000 before costs. On 11 July 2016, the Company issued 600,001 ordinary fully paid shares to management as a result of the exercise of performance rights held. On 25 August 2016, the Company issued 32,000 ordinary fully paid shares as a result of the exercise of 32,000 listed options @ $0.03 expiring on 30 September 2016 On 29 August 2016 the Company exercised its second option to acquire the remaining 51% of EPM, subject to shareholder approval within 2 months. Pursuant to the EPM JV Agreement the consideration will be Ordinary shares to the value of $2,040,000 plus 15,000,000 unlisted options with an exercise price of 5 cents per ordinary share and expiry 3 years from the date of issue. The value and issue price of each share is calculated using the 20-day VWAP as at the date of exercise of the option which has been calculated as $0.048492. Accordingly, subject to shareholder approval, Renascor will issue 42,068,684 ordinary shares and 15,000,000 unlisted options to subscribe for fully paid ordinary shares in Renascor with an exercise price of 5 cents per ordinary share and expiring 3 years from the issue date. On 5 September the Company announced that it had executed an underwriting agreement that provides the confidence that it will receive total gross proceeds of $1.9m from its listed 3 cent options expiring on 30 September 2016 (“Listed Options”). The underwriting agreement is with Bizzell Capital Partners Pty Ltd (“BCP”), an entity associated with Stephen Bizzell (Chairman of Renascor), pursuant to which BCP has agreed to act as Underwriter to the exercise of the Listed Options and will also have the right to act as Lead Manager to a share placement to raise up to an additional $600,000. 28 Reconciliation of profit after income tax to net cash outflow from operating activities Profit / (loss) for the year Depreciation and amortisation Profit on Sale of tenement R&D Claim received 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: (Increase) / decrease in trade and other receivables (Increase) / decrease in other assets Increase / (decrease) in trade and other payables Increase / (decrease) in provisions Consolidated 30 June 2016 $ 30 June 2015 $ (890,079) 4,158 - 190,942 265,602 (4,932,426) 7,296 (41,556) - 4,266,131 66,500 41,126 (7,524) 7,467 47,725 (9,852) 138,258 5,064 (5,260) 78,389 Net cash inflow / (outflow) from operating activities (325,061) (442,977) Non-cash financing and investing activities Shares and options issued to Vendors of Sol Jar Property Pty Ltd for no cash consideration in respect of Exploration and Evaluation activities (249,394) (22,000) Shares issued to non-executive directors in lieu of 50% of cash director fees from 1 April 2015 to 31 March 2016 pursuant to NEDSP Performance rights issued to executive directors for no cash consideration (66,500) - (33,250) (7,876) 70 s e t o N Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements 29 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 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 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 * Consolidated 30 June 2016 Cents 30 June 2015 Cents (0.4) (0.4) (0.4) (0.4) (3.5) (3.5) (3.5) (3.5) Consolidated 30 June 2016 $ 30 June 2015 $ (890,079) (4,932,426) (890,079) (4,932,426) Consolidated 30 June 2016 Number 30 June 2015 Number 229,059,984 139,658,005 - - Weighted average number of ordinary shares and potential ordinary shares used as the denominator in calculating diluted earnings per share 229,059,984 139,658,005 * 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 30. 71 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 30 Share-based payments a) Share based payments to directors, executives and consultants At the AGM held on 27 November 2014 and 26 November 2015, shareholders approved the Non- Executive Directors Share Plan (NEDSP) for non-executive directors to receive up to 50% of their compensation in shares in the Company. During the year ended 30 June 2016 the Company has issued 3,276,424 ordinary fully paid shares to the non-executive directors pursuant to the NEDSP for the twelve month period from 1 April 2015 to 31 March 2016. Set out below are summaries of options granted to directors, senior management and consultants: Balance 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 & exercisable at end of the year Number Options Grant date Expiry date Exercise price Consolidated – 2016 30 Aug 2010 31 Dec 2014 $0.24 31 Dec 2014 $0.24 27 Oct 2010 Total Weighted average exercise price Consolidated – 2015 30 Aug 2010 31 Dec 2014 $0.24 31 Dec 2014 $0.24 27 Oct 2010 Total - - - $- 1,000,000 700,000 1,700,000 Weighted average exercise price $0.24 - - - $- - - - $- - - - $- - - - $- - - - $- (1,000,000) (700,000) (1,700,000) $0.24 - - - $- - - $- - - - $- - - - $- 1,700,000 share options expired on 31 December 2014 and no contractual life of the above share options remains at the end of the period. (2015: nil 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 (2015: $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 (2015: $Nil). 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: Balance start of the year Number Granted during the year Number Exercised during the year Number Lapsed during the year Number Balance at end of the year Number Vested & exercisable at end of the year Number Performance rights Grant date Expiry date Exercise price Consolidated – 2016 28 Feb 2014 28 Feb 2021 30 Nov 2012 30 Nov 2019 $Nil $Nil Total 116,667 550,000 666,667 Consolidated – 2015 28 Feb 2014 28 Feb 2021 30 Nov 2012 30 Nov 2019 Total $Nil $Nil 274,167 1,292,500 1,566,667 - - - - - - - - - - - - (11,666) (55,000) 105,001 495,000 105,001 495,000 (66,666) 600,001 600,001 (157,500) (742,500) 116,667 550,000 40,834 192,500 (900,000) 666,667 233,334 There was no weighted average remaining contractual life of the above performance rights outstanding at the end of the period (2015: 4.90 years). There was no equity settled share-based payment expense recognised in the current period in respect of the performance rights granted above to directors and executives (2015: $7,876). Any amounts recognised are included under employee benefits expense in the statement of profit or loss and other comprehensive income. 72 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements s e t o N 30 Share-based payments continued b) Exploration and evaluation share based payments During the year ended 30 June 2016, the Company issued 18,000,000 ordinary shares and 4,000,000 listed options @ $0.03 and expiring on 30 September 2016, as consideration for the acquisition of Sol Jar Property Pty Ltd, the owner of the Munglinup project, a highly prospective graphite-nickel sulphide tenement position in the Albany-Fraser Range province of Western Australia. The amount of the equity settled share-based payment recognised in the current period in respect of the ordinary shares issued is $234,000 (2014: $22,000). 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: Options Grant date Expiry date Exercise price 2016 Consolidated – Listed Options 26 Feb 2016 30 Sep 2016 $0.03 2016 Consolidated – Unlisted Options 20 Dec 2010 30 Apr 2012 17 Feb 2015 $0.24 30 Apr 2016 $0.054 Total Balance 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 & exercisable at end of the year Number - 4,000,000 - 750,000 - - 750,000 4,000,000 - - - - - 4,000,000 4,000,000 - (750,000) - - - (750,000) 4,000,000 4,000,000 Weighted average exercise price $0.054 $0.03 $- $0.054 $0.03 $0.03 Options Grant date Expiry date Exercise price Balance 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 & exercisable at end of the year Number 2015 Consolidated – Listed Options - - - - 2015 Consolidated – Unlisted Options 20 Dec 2010 30 Apr 2012 17 Feb 2015 $0.24 30 Apr 2016 $0.054 Total 750,000 750,000 1,500,000 - - - - Weighted average exercise price $0.147 $- - - - - - - - $- (750,000) - - 750,000 - 750,000 (750,000) 750,000 750,000 $0.24 $0.054 $0.054 The weighted average remaining contractual life of the above share options outstanding at the end of the period was 0.25 years (2015: 0.84 years). The amount of the equity settled share-based payment recognised in the current period in respect of the options granted above $15,194 (2015: $Nil). Amounts are recognised and included as exploration and evaluation expenditure within the non-current assets in the statement of financial position. c) Equity raising share based payments There were no equity raising share based payments during the year ended 30 June 2016. 73 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 30 Share-based payments continued d) Fair value of performance rights granted The assessed fair value at grant date of options is allotted equally over the period from grant date to vesting date. Fair values of options at grant date are determined using the Black-Scholes Model. This option pricing model takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradable nature of the option, the share price at grant date, expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option (refer to table below for inputs used). The following table lists the inputs to the models used to value options for the year ended 30 June 2016: Black Scholes Model inputs Options grant date Options expiry date Weighted average exercise price Weighted average life of the options Weighted average underlying share price Expected share price volatility Weighted average risk free interest rate Number of options issued Value (Black-Scholes) per option Total value of options issued e) Fair value of performance rights granted Sol Jar 01/10/2016 30/09/2016 $0.30 1 years $0.14 123.26% 1.98% 4,000,000 $0.0038 $15,194 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. 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 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. f) 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 year covered by the above tables, 4,000,000 listed options were granted, 750,000 unlisted options expired, 433,333 performance rights vested and became exercisable and 66,666 performance rights lapsed. 74 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Notes to the consolidated financial statements s e t o N 31 Parent Entity financial information a) Summary financial information The individual financial statements for the Parent Entity show the following aggregate amounts: 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 Parent entity 30 June 2016 $ 30 June 2015 $ 983,082 4,659,611 1,323,394 3,792,527 5,642,693 5,115,921 428,496 70,750 454,946 397,316 57,630 454,946 5,143,448 4,660,975 13,235,479 1,041,506 (9,133,537) 11,903,316 1,026,312 (8,268,653) 5,143,448 4,660,975 (864,884) (4,928,730) (864,884) (4,928,730) 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 other contingent liabilities as at 30 June 2016. c) Contractual commitments for the acquisition of property, plant or equipment As at 30 June 2016, the Parent Entity had no contractual commitments for the acquisition of property, plant or equipment. d) Guarantees As at 30 June 2016, the Parent Entity had not guaranteed the debts of any subsidiary Company. 75 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 s e t o N Notes to the consolidated financial statements 32 Application of new and revised Accounting Standards 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 2016. 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. Standard/Interpretation beginning on or after financial year ending Likely impact Effective for annual Expected to be reporting periods initially applied in the AASB 9 ‘Financial Instruments’ 1 January 2018 30 June 2019 The Group is yet to undertake a detailed (December 2014), AASB 2014-7 ‘Amendments to Australian Accounting Standards arising from AASB 9’ (December 2014) assessment of the impact of AASB 9. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements. when it is first adopted 30 June 2019 AASB 15 Revenue from 1 January 2018 30 June 2019 The Group is yet to undertake a detailed contracts with customers, AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15 AASB 2014-3 ‘Accounting for 1 January 2016 30 June 2017 acquisitions of interests in joint operations’ AASB 2014-10 ‘Amendments to 1 January 2016 30 June 2017 Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture’ AASB 2015-1 ‘Amendments to 1 January 2016 30 June 2017 Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 assessment of the impact of AASB 15. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted. There will be no impact on the financial statements when these amendments are first adopted because they apply prospectively to acquisitions of interests in joint operations. There will be no impact on the financial statements when these amendments are first adopted because they apply prospectively to sales or contributions of assets occurring after the application date. When these amendments are first adopted there will be no material impact on the transactions and balances recognised in the financial statements. AASB 2015-2 ‘Amendments 1 January 2016 30 June 2017 These amendments affect presentation and to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101’ disclosures only. Therefore on first time adoption of these amendments on 1 July 2016, comparatives will need to be restated in line with presentation and note ordering. AASB 16 Leases 1 January 2019 30 June 2020 The entity is yet to undertake a detailed assessment of the impact of AASB 16. However, based on the entity’s preliminary assessment, the Standard is not expected to have a material impact on the transactions and balances recognised in the financial statements when it is first adopted. 76 Renascor Resources Limited ABN 90 135 531 341 annual report 2016 Directors’ declaration In the directors’ opinion: a) the financial statements and notes set out on pages 42 to 76 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 ii) give a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance for the financial year ended on that date, and b) the remuneration disclosures included on pages 30 to 38 of the directors’ report (as part of the audited Remuneration Report) for the year ended 30 June 2016, comply with section 300A of the Corporations Act 2001. c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable, and 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. n o i t a r a l c e d ’ s r o t c e r i D David Christensen Director Adelaide Date: 30 September 2016 77 t r o p e r ’ s o t i d u a t n e d n e p e d n I Independent auditor’s report to members Tel: +61 8 7324 6000 Fax: +61 8 7324 6111 www.bdo.com.au Level 7, BDO Centre 420 King William St Adelaide SA 5000 GPO Box 2018, Adelaide SA 5001 AUSTRALIA INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF RENASCOR RESOURCES LIMITED Report on the Financial Report We have audited the accompanying financial report of Renascor Resources Limited, which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ Responsibility for the Financial Report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor’s Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Renascor Resources Limited, would be in the same terms if given to the directors as at the time of this auditor’s report. BDO Audit (SA) Pty Ltd ABN 33 161 379 086 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (SA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees). 78 t r o p e r ’ s o t i d u a t n e d n e p e d n I Independent auditor’s report to members Opinion In our opinion: (a) the financial report of Renascor Resources Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2016 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1. Report on the Remuneration Report We have audited the Remuneration Report included in pages 6 to 13 of the directors’ report for the year ended 30 June 2016. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. Opinion In our opinion, the Remuneration Report of Renascor Resources Limited for the year ended 30 June 2016 complies with section 300A of the Corporations Act 2001. BDO Audit (SA) Pty Ltd Michael Haydon Director Adelaide, 30 September 2016 79 Renascor Resources Limited annual report 2016 n o i t a m r o f n i l r e d o h e r a h S Renascor Resources Limited Shareholder information 30 June 2016 The shareholder information set out below was applicable as at 1 September 2016. A. Distribution of equity securities Analysis of numbers of equity security holders by size of holding: Holding 1 – 1000 1,001 – 5,000 5,001 – 10,000 * 10,001 – 100,000 100,001 and over Ordinary Shares Unlisted Options Listed Options 14 20 74 471 388 967 – – – – – – 2 13 7 59 86 167 * Holdings of 10,000 shares or less is regarded as holding less than a marketable parcel of securities. 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 Mr Richard Edward Keevers 2 David Christensen 3 Slri Pty Limited 4 Casalamada Pty Ltd 5 Rookharp Investments Pty Limited 6 St Lucia Resources Capital Fund Pty Limited 7 Mr David Vigolo 8 Cannc Consulting Pty Ltd 9 Douglas Ian Young 10 Geoffrey William Mcconachy 11 Bizzell Nominees Pty Ltd 12 Clasm Pty Ltd 13 Mr John Stephen Finnemore & Mrs Leigh Finnemore 14 Dr Leon Eugene Pretorius 15 CPS Control Systems Pty Limited 16 M & K Korkidas Pty Ltd 17 Mr Steven Vigolo 18 Andrew Robert Joseph Martin 19 Mrs Tracey Ann Mezzino 20 Mr Gregory Michael Josephson & Mrs Mary Margaret Josephson Total 80 Ordinary Shares Number held 18,717,627 12,200,000 11,000,000 10,300,000 10,000,000 9,000,000 8,200,000 8,033,333 7,881,102 7,959,667 6,758,333 5,500,000 5,166,667 5,000,000 4,444,445 4,062,097 3,915,000 3,834,988 3,250,000 3,231,422 Percentage of issued Shares 5.16% 3.36% 3.03% 2.84% 2.75% 2.48% 2.26% 2.21% 2.17% 2.19% 1.86% 1.52% 1.42% 1.38% 1.22% 1.12% 1.08% 1.06% 0.90% 0.89% 147,788,014 40.71% n o i t a m r o f n i l r e d o h e r a h S Renascor Resources Limited Shareholder information 30 June 2016 B. Equity security holders (continued) Quoted equity securities (continued) Name 1 M & K Korkidas Pty Ltd 2 Mr Gregory Michael Josephson & Mrs Mary Margaret Josephson 3 Wythenshawe Pty Ltd 4 Idinoc Pty Ltd 5 Mr Steven John Larkins & Mrs Ann Kathleen Larkins 6 Mr John Stephen Finnemore & Mrs Leigh Finnemore 7 CPS Control Systems Pty Limited 8 Casalamada Pty Ltd 9 Master Terrence Vogiatzis 10 Mr David Phillip Bamford 11 Mr Luke Milojevic 12 Mr Peter Howarth 13 Rookharp Investments Pty Limited 14 Howarth Super Pty Ltd 15 Clasm Pty Ltd 16 Mr John Colin Loosemore & Mrs Susan Marjory Loosemore 17 Martin Place Securities Staff Superannuation Fund Pty Ltd 18 Mr Brian Carl Bartels & Mrs Angela Bartels 19 Gibson Constructions Pty Ltd 20 Andrew Robert Joseph Martin Total Unquoted equity securities Performance Rights Share options There are no unlisted Performance Rights or unlisted options on issue. Listed Options Number held Percentage of listed Options 6,331,051 5,706,947 5,000,000 3,520,000 1,750,000 1,666,667 1,666,667 1,500,000 1,423,000 1,320,000 1,267,462 1,100,000 1,000,000 1,000,000 1,000,000 1,000,000 875,000 833,333 833,333 791,667 9.84% 8.87% 7.77% 5.47% 2.72% 2.59% 2.59% 2.33% 2.21% 2.05% 1.97% 1.71% 1.55% 1.55% 1.55% 1.55% 1.36% 1.29% 1.29% 1.23% 39,585,127 61.51% Number on issue/granted Number of holders N/A N/A N/A N/A 81 Renascor Resources Limited annual report 2016 n o i t a m r o f n i l r e d o h e r a h S Renascor Resources Limited Shareholder information 30 June 2016 C. Substantial holders Substantial holders in the Company are set out below: Name Andrew Martin + Related Interests Richard Keevers + Related Interests Total D. Voting rights Ordinary Shares Number held Percentage 23,834,988 20,195,334 44,030,322 6.57% 5.56% 12.13% The voting rights attaching to each class of equity securities are set out below: a) 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. b) Options and Performance Rights No voting rights. E. Restricted securities There were 38,666,667 ordinary shares, subject to voluntary escrow, on issue as at 1 September 2016. 82 n o i t a m r o f n i l r e d o h e r a h S Renascor Resources Limited Shareholder information 30 June 2016 F. Interests in Tenements The Group held the following interests in tenements as at 1 September 2016: Tenement Name % Interest Application Grant Date Expiry Date Lodged South Australia EL 5822 (Prev EL4721) Iron Baron, SA EL 5012 EL 5236 Cultana, SA Old Wartaka, SA EL 4675 2 (ELA2016/21) Gairdner, SA EL 4836 Lake Harris, SA EL 5733 (Prev EL4570) Warrior, SA EL 4707 2 (ELA2015/234) Carnding, SA EL 4822 1 EL 5586 EL 5585 EL 5584 EL 5228 EL 5322 Willouran, SA Callana Area, SA Cutana, SA Outalpa, SA Wompinie, SA 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % Lake Callabonna, SA 100 % EL 5204 # Malbrom, SA EL 5495 # Lipson Cove, SA EL 5618 # Verran, SA EL 5715 # Malbrom West, SA 0% - option to earn 100% interest 0% - option to earn 100% interest 0% - option to earn 100% interest 0% - option to earn 100% interest # Tenement Holder – Ausmin Development Pty Ltd 1 Tenement under renewal – Form 29 lodged with Department of State Development (DSD) 2 Tenement under subsequent renewal – Form 29 lodged with DSD Western Australia E74/517 E74/518 E74/523 E74/531 E74/538 E74/544 E74/545 Munglinup Project, WA 100 % Munglinup Project, WA 100 % Munglinup Project, WA 100 % Munglinup Project, WA 100 % Munglinup Project, WA 100 % Munglinup Project, WA 100 % Munglinup Project, WA 100 % - - - - - - - - - - - - - - - - - 04-Apr-16 03-Apr-18 13-Sep-12 12-Sep-17 08-May-13 07-May-17 22-Feb-11 21-Feb-16 2 15-Feb-12 14-Feb-17 21-Sep-15 21-Sep-17 28-Mar-11 27-Mar-16 2 17-Jan-12 16-Jan-16 1 07-Apr-15 06-Apr-17 10-Dec-09 09-Dec-16 10-Dec-09 09-Dec-16 01-May-13 30-Apr-17 16-Jul-12 15-Jul-17 05-Apr-13 04-Apr-18 29-Sep-14 28-Sep-19 29-Jan-15 28-Jan-20 05-Feb-16 04-Feb-21 12-Mar-12 11-Mar-17 03-Jul-12 02-Jul-17 18-Sep-12 17-Sep-17 26-Aug-13 25-Aug-18 04-Jul-14 03-Jul-19 04-Jul-14 03-Jul-19 04-Jul-14 03-Jul-19 Northern Territory ELA27517 ELA27518 Nirripi Nth, NT 0 (Application) 29-Jul-09 Nirripi West, NT 0 (Application) 29-Jul-09 - - - - 83 Renascor Resources Limited annual report 2016 ASX Code: RNU Share Registry Link Market Services Limited ANZ Building Level 15, 324 Queen Street Brisbane Qld 4000 Phone: +61 2 8280 7454 Fax: +61 2 92870303 Auditors BDO Audit (SA) Pty Ltd Level 7, BDO Centre 420 King William Street Adelaide SA 5000 Phone: +61 8 7324 6000 Fax: +61 8 7324 6111 Renascor Resources Limited ABN 90 135 531 341 Directors Stephen Bizzell David Christensen Geoffrey McConachy Andrew Martin Chris Anderson Richard Keevers Secretary Angelo Gaudio Administration and Registered Office 36 North Terrace Kent Town SA 5067 Phone: + 61 8 8363 6989 Fax: +61 8 8363 4989 Website: www.renascor.com.au 84
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