S2 RESOURCES LTD
ABN 18 606 128 090
Financial Report
for the
Year Ended 30 June 2019
Financial Report 2019
Contents
Corporate Directory .............................................................................................................................................. 1
Consolidated Statement of Profit or Loss and Other Comprehensive Income .................................................. 17
Consolidated Statement of Financial Position .................................................................................................... 18
Consolidated Statement of Changes in Equity ................................................................................................... 19
Consolidated Statement of Cash Flows .............................................................................................................. 21
Notes to the Consolidated Financial Statements ............................................................................................... 22
Directors’ Declaration ......................................................................................................................................... 59
Auditor’s Independence Declaration ................................................................................................................. 60
Independent Auditor’s Report ........................................................................................................................... 61
FINANCIAL REPORT 2019
Financial Report 2019
Corporate Directory
Directors
Jeff Dowling
Mark Bennett
Anna Neuling
Grey Egerton‐Warburton
Non‐Executive Chairman
Managing Director
Executive Director
Non‐Executive Director
Company Secretary
Anna Neuling
Principal and Registered Office
Auditor
Share Registry
4/24 Parkland Road
Osborne Park, Western Australia 6017
Telephone: +61 8 6166 0240
Facsimile: +61 8 6270 5410
Website: www.s2resources.com.au
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco, Western Australia 6008
Telephone: (08) 6382 4600
Computershare Investor Services Pty Limited
Level 2, 45 St Georges Terrace
Perth, Western Australia 6000
Telephone: 1300 787 575
Stock Exchange Listing
S2 Resources Ltd shares are listed on the Australian Securities Exchange.
ASX Code
S2R
FINANCIAL REPORT 2019
1
Financial Report 2019
Directors Report
The Directors of S2 Resources Ltd ("Directors") present their report on the consolidated entity consisting of S2 Resources
Ltd (“the Company” or “S2”) and the entities it controlled at the end of, or during, the year ended 30 June 2019 (“Group”).
Directors
The names and details of the Directors in office during the financial year and until the date of this Report are as follows.
Directors were in office for the entire year unless otherwise stated.
Jeff Dowling
Mark Bennett
Anna Neuling
Grey Egerton‐Warburton
Principal Activities
The principal continuing activity of the Group is mineral exploration.
Dividends
No dividends were paid or proposed to be paid to members during the financial year.
Review of Operations
Operating Result
The loss from continuing operations for the year ended 30 June 2019 after providing for income tax amounted to
$8,288,971.
The loss results from $5,093,484 of exploration expenditure incurred and expensed, $60,446 of exploration impairment
expense, $118,994 of share‐based payments expenses, $1,093,981 of administration costs, $604,429 of business
development costs including travel, $101,376 of depreciation costs, $356,169 of net income and other net gains, share
of our associate’s consolidated statement of loss being $915,715, impairment of our associate’s investment of $586,270
and income tax expense of $70,445. The exploration expenditure incurred and expensed mainly relates to the Company’s
projects in Finland and Nevada.
Significant Changes in the State of Affairs
In November 2018, the Group acquired a 19.99% strategic stake in Todd River Resources Ltd (ASX:TRT) at $0.08987
per share for $2,720,815.
On 30 November 2018, Dr Mark Bennett, was appointed as Non‐Executive Director of TRT as per the Company’s
Subscription Agreement with TRT.
During the financial year ended 30 June 2019, 1,000,000 GT Gold Corp. shares and 3,000,000 Westgold Resources Ltd
shares were disposed of and the Company received net proceeds of $5,837,940. The Company realised a total gain of
$957,748. For more information in relation to the movement of the gain, please refer to note 8 (page 42) of the financial
report.
FINANCIAL REPORT 2019
2
Financial Report 2019
Directors Report (cont)
After Balance Date Events
In September 2019, the Group had entered into the following arrangement with Todd River Resources Ltd (ASX:TRT):
On 10 September 2019, the Group had participated in Todd River Resources Ltd’s (ASX:TRT) placement by
purchasing 11,959,700 shares at $3.1 cents per share increasing its investment by $370,751.
The Group has also committed to take up its full entitlement under TRT’s 1‐for‐3 underwritten non‐renounceable
pro‐rata Entitlement Offer which will result in an issue of 14,078,099 shares to the Group at $3.1 cents per share.
The Entitlement Offer will end on 24 September 2019.
The Group will also participate as a sub‐under writer which is capped at a maximum of up to approximately
$854,167 or 27,533,783 new shares.
Other than the after balance date events stated above, there has been no matter or circumstance that has arisen since
30 June 2019 that has significantly affected, or may significantly affect:
the Group’s operations in future financial years;
the result 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 Group will continue its drilling activities in Finland until the end of 2019 and continue exploration activities in Nevada
and Australia for the foreseeable future. The Group will also seek other exploration opportunities that will add value to
the Group’s portfolio of assets.
Environmental Regulation
The Group’s operations are subject to environmental regulation under the laws of Sweden, Finland, the State of Nevada,
the Australian Commonwealth and the State of Western Australia. The Board of Directors (“Board”) is of the view that
all relevant environmental regulation requirements have been met.
FINANCIAL REPORT 2019DIRECTORS REPORT
3
Financial Report 2019
Directors Report (cont)
Information on Directors
Mark Bennett – Chief Executive Officer and Managing Director
Experience and Expertise
Dr Bennett was the managing director and CEO of Sirius Resources NL (“Sirius”) from its inception until its merger with
Independence Group NL, and was non‐executive director of Independence Group following the merger until June 2016.
He is a geologist with 28 years of experience in gold, nickel and base metal exploration and mining. He holds a BSc in
Mining Geology from the University of Leicester and a PhD from the University of Leeds and is a Member of the
Australasian Institute of Mining and Metallurgy, a Fellow of the Geological Society of London, a Fellow of the Australian
Institute of Geoscientists and a Member of the Australian Institute of Company Directors.
He has worked in Australia, West Africa, Canada, USA and Europe, initially for LionOre Mining International Limited and
WMC Resources Limited at various locations including Kalgoorlie, Kambalda, St.Ives, LionOre's nickel and gold mines
throughout Western Australia, the East Kimberley, and Stawell in Victoria. His more recent experience, as Managing
Director of Sirius, S2 Resources and as a director of private Canadian company True North Nickel, has been predominantly
in Western Australia (the Fraser Range including Nova‐Bollinger, and the Polar Bear project in the Eastern Goldfields),
Quebec (the Raglan West nickel project), British Columbia, Sweden, Finland, and Nevada.
Positions held include various technical, operational, executive and board positions including Managing Director, Chief
Executive Officer, Executive Director, Non‐Executive Director, Exploration Manager and Chief Geologist.
Dr Bennett is a two times winner of the Association of Mining and Exploration Companies "Prospector Award" for his
discoveries which include the Thunderbox gold mine, the Waterloo nickel mine and most recently the world class Nova‐
Bollinger nickel‐copper mine.
In addition to his technical expertise, Dr Bennett is very experienced in corporate affairs, equity capital markets, investor
relations and community engagement and has led Sirius from prior to the discovery of Nova all the way through feasibility,
financing, permitting and construction, and latterly through the schemes of arrangement to merge with Independence
and to demerge S2.
Other Directorships
Non‐Executive Director of Todd River Resources Ltd since 30 November 2018.
Former Directorships in the Last Three Years
Dr Bennett has had no directorships of any other public listed company in the last three years.
Number of interests in shares and options held in S2 Resources Ltd
Options
Shares
19,500,000
5,635,869
Jeff Dowling – Non‐Executive Chairman
Experience and Expertise
Mr Dowling was Sirius’ Non‐Executive Chairman until 21 September 2015 and is a highly experienced corporate leader
with 36 years' experience in professional services with Ernst & Young. Mr Dowling held numerous leadership roles
within Ernst & Young which focused on the mining, oil and gas and other industries.
FINANCIAL REPORT 2019DIRECTORS REPORT
4
Financial Report 2019
Directors Report (cont)
His professional expertise centres around audit, risk and financial management derived from acting as lead partner on
large public company audits, capital raisings and corporate transactions. Mr Dowling's career with Ernst & Young
culminated in his appointment as Managing Partner of the Ernst & Young Western Region for a period of 5 years.
Mr Dowling has a Bachelor of Commerce from the University of Western Australia and is a fellow of the Institute of
Chartered Accountants, the Australian Institute of Company Directors and the Financial Services Institute of Australasia.
Mr Dowling is a member of the Group’s Audit & Risk Committee and Chairman of the Remuneration & Nomination
Committee which was formed on 19 July 2016.
Other Directorships
Non‐Executive Director of NRW Holdings Ltd since 22 August 2013.
Non‐Executive Director of Fleetwood Corporation Ltd since 1 July 2017.
Non‐Executive Director of Battery Minerals since 21 June 2019.
Former Directorships in the Last Three Years
Non‐Executive Chairman of Battery Minerals since 25 January 2018 to 20 June 2019.
Number of interests in shares and options held in S2 Resources Ltd
Options
Shares
4,750,000
700,000
Anna Neuling – Executive Director
Experience and Expertise
Ms Neuling was the Company Secretary and Chief Financial Officer of Sirius Resources NL from the company's inception
in 2009 until 22 September 2013 where she was appointed as Executive Director – Corporate and Commercial until its
merger with Independence Group that occurred on 21 September 2015.
Ms Neuling worked at Deloitte in London and Perth prior to joining LionOre Mining International Limited in 2005, until
its takeover by Norilsk Nickel. She holds a degree in mathematics from the University of Newcastle (UK).
She is a Fellow of the Institute of Chartered Accountants in England and Wales and has held a number of senior executive
positions in the resources industry, including CFO and Company Secretarial roles at several listed companies.
Ms Neuling is a member of the Group’s Audit & Risk Committee and Remuneration & Nomination Committee which was
formed on 19 July 2016.
Other Directorships
Ms Neuling has no directorships of other public listed companies.
Former Directorships in the Last Three Years
Ms Neuling has had no directorships of any other public listed company in the last three years.
Number of interests in shares and options held in S2 Resources Ltd
Options
Shares
11,500,000
675,000
FINANCIAL REPORT 2019DIRECTORS REPORT
5
Financial Report 2019
Directors Report (cont)
Grey Egerton‐Warburton – Non‐Executive Director
Experience and Expertise
Mr Egerton‐Warburton is an experienced corporate financier, with a strong background in natural resources, having spent
16 years with Hartleys Limited, for many years as head of corporate finance. He has extensive experience in equity capital
markets, acquisitions, divestments and domestic and international change of control transactions, having led a
substantial number of capital raisings, takeovers and mergers for many ASX listed companies, across many sectors. Prior
to a career in corporate finance, Mr Egerton‐Warburton practiced at a tier one national law firm.
Mr Egerton‐Warburton currently serves as Deputy Chair of the Womens and Infants Research Foundation (WIRF), the
charitable arm of King Edward Memorial Hospital in Perth, Western Australia.
While at Hartleys, Mr Egerton‐Warburton worked closely with Sirius Resources NL as its corporate advisor from mid‐2012
until the completion of the merger between Sirius and Independence Group NL.
Mr Egerton‐Warburton is the Chairman of the Group’s Audit & Risk Committee and a member of the Remuneration &
Nomination Committee which was formed on 19 July 2016.
Other Directorships
Mr Egerton‐Warburton has no directorships of other public listed companies.
Former Directorships in the Last Three Years
Mr Egerton‐Warburton has had no directorships of any other public listed company in the last three years.
Number of interests in shares and options held in S2 Resources Ltd
Options
Shares
3,250,000
1,030,400
FINANCIAL REPORT 2019DIRECTORS REPORT
6
Financial Report 2019
Directors Report (cont)
Meetings of Directors
The number of meetings of the Board and of each Board Committee held during the year ended 30 June 2019 and the
number of meetings attended by each Director were:
Name
Mark Bennett*
Anna Neuling
Jeff Dowling
Grey Egerton‐Warburton
Directors’
Meetings
Audit & Risk
Committee
Remuneration
& Nomination
Committee
18
18
18
18
3
3
3
3
1
1
1
1
* Dr Bennett had attended the Audit & Risk and Remuneration & Nomination committee meetings by invitation and is
not a member of either committee.
Indemnifying of Officers or Auditor
During the year the Group paid a premium in respect of insuring Directors and Officers of the Group against liabilities
incurred as a Director or Officer. The insurer shall pay on behalf of the Group or each Director or Officer all losses for
which the Director or Officer is not indemnified by the Group arising from a claim against a Director or Officer individually
or collectively.
The Group had not, during or since the financial year, indemnified or agreed to indemnify the auditor of the Group against
a liability incurred as an auditor.
Options & Rights
Unissued ordinary shares of the Company under options or rights at the date of this Report are as follows:
Options
Number
28,450,000
50,000
400,000
400,000
200,000
1,000,000
9,050,000
7,750,000
2,650,000
2,700,000
50,000
Grant Date
14/09/2015
09/10/2015
23/10/2015
28/11/2015
18/04/2016
29/04/2016
07/10/2016
17/10/2017
20/10/2017
28/11/2018
05/03/2019
Expiry Date
Exercise Price $
14/09/2019
09/10/2019
23/10/2019
28/11/2019
17/04/2020
28/04/2020
06/10/2020
16/10/2021
19/10/2021
27/11/2022
04/03/2023
0.31
0.31
0.31
0.31
0.31
0.35
0.61
0.23
0.23
0.14
0.11
There were no shares issued since the end of the financial year on the exercise of options. No person entitled to exercise
an option had or has any rights by virtue of the option to participate in any share issue of any other body corporate.
FINANCIAL REPORT 2019DIRECTORS REPORT
7
Financial Report 2019
Directors Report (cont)
Remuneration Report (audited)
This Remuneration Report, which has been audited, outlines the Key Management Personnel (as defined in AASB 124
Related Party Disclosures) (“KMP”) remuneration arrangements for the Group, in accordance with the requirements of
the section 308 (3c) of the Corporations Act 2001 and its Regulations.
The KMP covered in this remuneration report are:
‐ Mark Bennett – CEO and Managing Director
‐
‐
‐
‐
Anna Neuling – Executive Director and Company Secretary
Jeff Dowling – Non‐Executive Chairman
Grey Egerton‐Warburton – Non‐Executive Director
Su‐Mei Sain – Chief Financial Officer
The principles adopted have been approved by the Board and have been set out in this Remuneration Report. This
audited Remuneration Report is set out under the following main headings:
Principles used to determine the nature and amount of remuneration
1.
2. Details of remuneration
3.
Service agreements
4.
Share‐based compensation
The information provided under headings 1 to 4 above includes remuneration disclosures that are required under
Accounting Standard AASB 124, Related Party Disclosures.
1. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
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 which has been set out in detail under the remuneration structure
in this Remuneration Report aligns executive reward with achievement of strategic objectives and the creation of value
for shareholders, and conforms to market best practice for delivery of reward. The Board ensures that executive reward
satisfies the following key criteria for good reward governance practices:
competitiveness and reasonableness;
aligns shareholders and executive interests;
performance based and aligned to the successful achievement of strategic and tactical business objectives;
and
transparency.
Executive Directors
Remuneration to Executive Directors reflects the demands which are made on, and the responsibilities of, the Executive
Directors. Executive Directors’ remuneration is reviewed annually to ensure it is appropriate and in line with the market.
There are no retirement allowances or other benefits paid to Executive Directors other than superannuation guarantee
amounts as required.
The executive remuneration and reward framework has three components:
base pay;
share‐based payments; and
other remuneration such as superannuation and long service leave.
FINANCIAL REPORT 2019
8
Financial Report 2019
Directors Report (cont)
Remuneration Report (audited) (cont)
1. PRINCIPLES USED TO DETERMINE THE NATURE AND AMOUNT OF REMUNERATION
(CONTINUED)
The combination of these comprises the Executive Director's total remuneration.
Fixed remuneration, consisting of base salary and superannuation will be reviewed annually by the Remuneration &
Nomination Committee, based on individual contribution to corporate performance and the overall relative position of
the Group to its market peers.
Non ‐ Executive Directors
Remuneration to Non‐Executive Directors reflects the demands which are made on, and the responsibilities of, the Non‐
Executive Directors. Non‐Executive Directors’ remuneration is reviewed annually. The maximum aggregate for
remuneration of Non‐Executive Directors is $300,000 and was approved by shareholders prior to the demerger of the
Company from Independence Group NL (formerly Sirius Resources NL) on 21 September 2015. For the year ended 30
June 2019, exclusive of superannuation guarantee the annual cash remuneration for the Non‐Executive Director was
$45,000 per annum with the Chairman receiving $75,000 per annum.
Company Performance
As an exploration company the Board does not consider the operating loss after tax as one of the performance indicators
when implementing an incentive based remuneration policy. The Board considers that identification and securing of new
business growth opportunities, the success of exploration and, if appropriate, feasibility activities, safety and
environmental performance, the securing of funding arrangements and responsible management of cash resources and
the Company’s other assets are more appropriate performance indicators to assess the performance of management at
this stage of the company’s development.
Short‐term incentives
To align the remuneration of employees with the company aim of responsible management of cash resources, there were
no short‐term incentives paid or proposed to be paid for the year ended 30 June 2019. The company’s approach in
regards to the use of short term cash incentives will be assessed by the Remuneration & Nomination Committee on an
ongoing basis as the company evolves.
Long‐term incentives
To align the board and management with shareholder’s interests and with market practices of peer companies and to
provide a competitive total remuneration package, the Board introduced a long‐term incentive (“LTI”) plan to motivate
and reward Executives and Non‐Executive Directors. The LTI is provided as options over ordinary shares of the Company
under the rules of the Employee Share Option Plan and the Directors Option Plan as approved in September 2015. No
LTI’s were issued to directors under the plan during the year ended 30 June 2019.
Company performance, shareholder wealth and directors’ and executives’ remuneration
No relationship exists between shareholder wealth, director and executive remuneration and Company performance due
to the nature of the Company’s operations being a non‐producing resources exploration company.
The table below shows the losses and earnings per share of the Company for the last four financial years.
Net loss
Share price at year end (cents)
Loss per share (cents)
2019
(8,288,971)
12
(3.34)
2018
(1,673,903)
16
(0.68)
2017
(10,020,602)
16
(4.12)
2016
(10,823,222)
28.5
(7.12)
FINANCIAL REPORT 2019DIRECTORS REPORT
9
Financial Report 2019
Directors Report (cont)
Remuneration Report (audited) (cont)
2. DETAILS OF REMUNERATION
Year Ended 30 June 2019
The amount of remuneration paid and entitlements owed to KMP is set out below.
CASH REMUNERATION AND ENTITLEMENTS
Cash remuneration
2019
Directors
M Bennett
A Neuling
J Dowling
G Egerton‐Warburton
Other Key Management
Personnel
S Sain
Year Ended 30 June 2018
2018
Directors
M Bennett
A Neuling
J Dowling
G Egerton‐Warburton
Other Key Management
Personnel
S Sain
T Walsh (1)
Salary
$
Post–employment
benefits
(superannuation)
$
325,000
73,003
75,000
45,000
60,791
578,794
20,531
6,935
7,125
4,275
5,775
44,641
Annual leave
entitlement owing
$
23,120
4,856
‐
‐
Total cash
payments and
entitlements
$
368,651
84,794
82,125
49,275
2,365
68,931
30,341
653,776
CASH REMUNERATION AND ENTITLEMENTS
Cash remuneration
Salary
$
Post –employment
benefits
(superannuation)
$
Untaken annual
leave entitlement
owing
$
Total cash
payments and
entitlements
$
325,000
91,443
75,000
45,000
63,638
31,000
631,081
20,049
8,654
7,125
4,275
4,857
‐
44,960
11,871
1,548
‐
‐
862
‐
14,281
356,920
101,645
82,125
49,275
69,357
31,000
690,322
1) Mr Walsh’s short term payments are fees incurred as per his consultancy agreement with the Company.
The fees disclosed are for the period 1 July 2017 to 5 December 2017 when Mr Walsh resigned as Company
Secretary of the Group.
FINANCIAL REPORT 2019DIRECTORS REPORT
10
Financial Report 2019
Directors Report (cont)
Remuneration Report (audited) (cont)
2. DETAILS OF REMUNERATION (CONTINUED)
2019 TOTAL REMUNERATION
Total cash
payments
Options
issued
Total
$
$
$
LTI
% of
remuneration
345,531
79,938
82,125
49,275
‐
‐
‐
‐
345,531
79,938
82,125
49,275
‐
‐
‐
‐
66,566
13,519
80,085
17%
623,435
13,519
636,954
2018 TOTAL REMUNERATION
Total cash
payments
Options
issued
Total
$
$
$
LTI
% of
remuneration
356,920
101,645
82,125
49,275
331,725
103,664
103,664
103,664
688,645
205,309
185,789
152,939
69,357
31,000
690,322
24,879
‐
667,596
94,236
31,000
1,357,918
48%
50%
56%
68%
26%
0%
Directors
M Bennett
A Neuling
J Dowling
G Egerton‐Warburton
Other Key Management
Personnel
S Sain
Directors
M Bennett
A Neuling
J Dowling
G Egerton‐Warburton
Other Key Management
Personnel
S Sain
T Walsh
There were no non‐monetary benefits paid to the Directors or KMP for the year ended 30 June 2019.
Other than those disclosed above, there were no transactions with related parties to the KMP for the year ended 30 June
2019.
FINANCIAL REPORT 2019DIRECTORS REPORT
11
Financial Report 2019
Directors Report (cont)
Remuneration Report (audited) (cont)
3. SERVICE AGREEMENTS
For the year ended 30 June 2019, the following service agreements were in place with the Directors and KMP of S2:
On 4 September 2015, an Executive Services Agreement was entered into between the Company and Managing Director
and Chief Executive Officer Mark Bennett. Under the terms of the Agreement:
Dr Bennett was paid a remuneration package of $325,000 per annum base salary plus statutory superannuation.
Under the general termination of employment provision, the Company may terminate the Agreement by giving
Dr Bennett twelve months’ notice or payment in lieu of notice.
Under the general termination of employment provision, Dr Bennett may terminate the Agreement by giving
the Company three months’ notice or payment in lieu of notice.
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred. On
termination with cause, the Executive is not entitled to any payment.
On 10 September 2015, a letter of appointment was entered into between the Company and Non‐Executive Chairman
Jeff Dowling. Under the terms of the Agreement:
Mr Dowling was paid a remuneration package of $75,000 per annum base salary plus statutory superannuation.
Under the general termination of employment provision, either party may terminate the Agreement by the
giving of written notice.
On 4 September 2015, an Executive Services Agreement was entered into between the Company and Executive Director
Anna Neuling. Under the terms of the Agreement as Executive Director:
Ms Neuling was appointed as Executive Director, including the role of Company Secretary.
Ms Neuling was paid a remuneration package of $120,000 per annum comprising a base salary plus statutory
superannuation for work on a part time basis (based on $300,000 full time equivalent).
Under the general termination of employment provision, the Company may terminate the Agreement by giving
Ms Neuling twelve months’ notice or payment in lieu of notice.
Under the general termination of employment provision, Ms Neuling may terminate the Agreement by giving
the Company three months’ notice or a payment in lieu of notice.
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred. On
termination with cause, the Executive is not entitled to any payment.
On 29 April 2016, a letter of appointment was entered into between the Company and Non‐Executive Director Grey
Egerton‐Warburton. Under the terms of the Agreement:
Mr Egerton‐Warburton was paid a remuneration package of $45,000 per annum base salary plus statutory
superannuation.
Under the general termination of employment provision, either party may terminate the Agreement by the
giving of written notice.
FINANCIAL REPORT 2019DIRECTORS REPORT
12
Financial Report 2019
Directors Report (cont)
Remuneration Report (audited) (cont)
3. SERVICE AGREEMENTS (CONTINUED)
On 8 September 2015, the Company entered into an employment contract with Su‐Mei Sain. Under the terms of the
Agreement:
Ms Sain was appointed in the capacity of Chief Financial Officer and paid a remuneration package of $120,000
per annum base salary plus statutory superannuation for work on a part time basis (based on $150,000 full time
equivalent).
The Company or Ms Sain may terminate the contract at any time by giving the other party 12 weeks notice or
payment in lieu of notice.
The Company may terminate the Agreement at any time without notice if serious misconduct has occurred. On
termination with cause, Ms Sain is not entitled to any payment.
4. SHARE‐BASED COMPENSATION
Option holdings
The numbers of options in the Company held during the year ended by each KMP of S2, including their related parties,
are set out below:
Balance at
the start of
the year
19,500,000
11,500,000
4,750,000
3,250,000
39,000,000
2019
Director
M Bennett
A Neuling
J Dowling
G Egerton‐Warburton
Other Key
Management Personnel
S Sain
Granted
during the
year
Expired
during the
year
Other
changes
Balance at
the year
ended
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
19,500,000
11,500,000
4,750,000
3,250,000
39,000,000
1,700,000
1,700,000
1,400,000
1,400,000
300,000
300,000
As at 30 June 2019, the number of options that have vested and exercisable were 50,450,000 and the number of options
yet to vest and un‐exercisable were 2,750,000.
The option terms and conditions of each grant of options over ordinary shares affecting remuneration of Directors and
other KMP in the year ended or future reporting years are as follows:
Options issued
Grant Date
Expiry date
Directors Option Plan
14 Sep 2015
29 Apr 2016
7 Oct 2016
17 Oct 2017
14 Sep 2019
28 Apr 2020
6 Oct 2020
16 Oct 2021
Exercise
price
$
0.31
0.35
0.61
0.23
Fair value per
option
$
0.13
0.16
0.23
0.08
FINANCIAL REPORT 2019DIRECTORS REPORT
Vested
%
100%
100%
100%
100%
13
Financial Report 2019
Directors Report (cont)
Remuneration Report (audited) (cont)
Options issued
Grant Date
Expiry date
Employee Share Option Plan
14 Sep 2015
7 Oct 2016
17 Oct 2017
28 Nov 2018
5 Mar 2019
14 Sep 2019
6 Oct 2020
16 Oct 2021
27 Nov 2022
4 Mar 2023
Exercise
price
$
0.31
0.61
0.23
0.14
0.11
Fair value per
option
$
0.13
0.23
0.08
0.05
0.04
Vested
%
100%
100%
100%
0%*
0%*
*Options vest a year after grant date. Please refer to note 17 for more information.
The options issued to the Chief Financial Officer during the financial year ended 30 June 2019 were valued using a Black‐
Scholes model and were priced as follows:
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Interest rate
Shareholdings
Series 10
0.09
0.14
80%
4 years
0.00%
2.29%
The numbers of shares in the Company held during the year ended by each KMP of S2, including their related parties, are
set out below:
2019
Balance at the
start of the year
Other changes during
the year
4,695,001
350,000
500,000
550,400
940,868
325,000
200,000
480,000
Balance for
the year
ended
5,635,869
675,000
700,000
1,030,400
Directors
M Bennett
A Neuling
J Dowling
G Egerton‐Warburton
Other Key Management
Personnel
S Sain
50,000
6,145,401
‐
1,945,868
50,000
8,091,269
There were no shares granted to KMP’s during the reporting year as remuneration.
Use of remuneration consultants
No remuneration consultants were engaged or used for the Group during the year ended 30 June 2019.
FINANCIAL REPORT 2019DIRECTORS REPORT
14
Financial Report 2019
Directors Report (cont)
Remuneration Report (audited) (cont)
Voting and comments made at the Company's Annual General Meeting
At the 2018 Annual General Meeting, the resolution to adopt the Remuneration Report for the year ended 30 June 2018
was passed on a poll with 90% of votes cast on the poll voting “For” the resolution to adopt the Remuneration Report.
The Company did not receive any specific feedback at the Annual General Meeting regarding its remuneration practices.
Share trading policy
The trading of shares issued to participants under any of the Group’s employee equity plans is subject to, and conditional
upon, compliance with the Group’s employee share trading policy as per the Group’s Corporate Governance Policy.
Directors and executives are prohibited from entering into any hedging arrangements over unvested options under the
Group’s employee option plan. The Group would consider a breach of this policy as gross misconduct which may lead to
disciplinary action and potentially dismissal.
This concludes the Remuneration Report, which has been audited.
FINANCIAL REPORT 2019DIRECTORS REPORT
15
Financial Report 2019
Directors Report (cont)
Proceedings on behalf of the Group
No person had applied to the court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Group, or to intervene in any proceedings to which the Group is a party, for the purpose of taking
responsibility on behalf of the Group for all or part of those proceedings. No proceedings had been brought or intervened
in on behalf of the Group with leave of the court under section 237 of the Corporations Act 2001.
Auditor
BDO Audit (WA) Pty Ltd was appointed as auditors for the Group in office in accordance with section 327 of the
Corporations Act 2001.
Audit Services
During the year ended 30 June 2019, $37,309 was paid or is payable for audit services provided by the auditors. There
were no non‐audit services performed during the financial year.
Auditor’s Independence Declaration
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 61 of the financial report.
Corporate Governance
The Directors support and adhere to the principles of corporate governance, recognising the need for the highest
standard of corporate behaviour and accountability.
Signed in accordance with a resolution of the Board of Directors.
Mark Bennett
Director
Perth
10 September 2019
FINANCIAL REPORT 2019
16
Financial Report 2019
Annual Financial Report
Consolidated Statement of Profit or Loss and Other Comprehensive Income
for the year ended 30 June 2019
Other income
Corporate salaries and wages
Consulting and legal fees
Share and company registry
Office rental and variable outgoings
Insurance
Business development including travel expenditure
Depreciation expense
Share‐based payments
Gain on disposal of available for sale financial assets
Gain on disposal of WA Gold Projects
Other net gains
Exploration expenditure expensed as incurred
Exploration impairment expense
Share of associate’s loss
Associate impairment expense
Loss before income tax
Income tax benefit/(expense)
Loss after income tax for the year
Other comprehensive income
Items that will not be classified to profit or loss
Changes in the fair value of Investments at fair value through other
comprehensive income
Items that may be classified to profit or loss
Exchange differences on translation of foreign operations
Total comprehensive income/(loss) for the year attributable to the
members of S2 Resources Ltd
Notes
4
17
8
10
9
9
5
8
30 June
2019
$
157,154
(503,769)
(257,504)
(102,971)
(99,790)
(129,947)
(604,429)
(101,376)
(118,994)
‐
‐
199,015
(5,093,484)
(60,446)
(915,715)
(586,270)
30 June
2018
$
213,899
(531,168)
(346,577)
(125,827)
(141,476)
(119,889)
(752,561)
(168,545)
(876,753)
1,893,669
5,919,557
209,139
(5,859,587)
(1,090,320)
‐
‐
(8,218,526)
(1,776,439)
(70,445)
102,536
(8,288,971)
(1,673,903)
(597,921)
1,722,579
3,175
102,379
(8,883,717)
151,055
Loss per share for loss attributable to the members of S2 Resources
Ltd
Basic loss per share (cents)
22
(3.34)
(0.68)
The above consolidated statement of profit or loss and other comprehensive income should be read in
conjunction with the accompanying notes.
FINANCIAL REPORT 2019
17
Annual Financial Report (cont)
Consolidated Statement of Financial Position
as at 30 June 2019
CURRENT ASSETS
Cash and cash equivalents
Restricted cash
Trade and other receivables
TOTAL CURRENT ASSETS
NON‐CURRENT ASSETS
Investments
Investments in associates
Exploration and evaluation
Property, plant and equipment
TOTAL NON‐CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Reserves
Accumulated losses
TOTAL EQUITY
Financial Report 2019
Notes
30 June
2019
$
30 June
2018
$
6
6
7
8
9
11
12
13
14
15
16
11,645,063
365,778
454,872
15,026,119
348,889
403,758
12,465,713
15,778,766
1,875,000
1,241,255
1,028,199
151,878
4,296,332
8,310,859
‐
1,083,153
227,737
9,621,749
16,762,045
25,400,515
660,511
73,049
733,560
546,786
60,521
607,307
733,560
607,307
16,028,485
24,793,208
52,552,523
8,539,513
(45,063,551)
52,552,523
9,973,013
(37,732,328)
16,028,485
24,793,208
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
FINANCIAL REPORT 2019
18
Financial Report 2019
Annual Financial Report (cont)
Consolidated Statement of Changes in Equity
for the year ended 30 June 2019
Attributable to equity holders of the Group
in $ dollars
Share
capital
Other
Reserve
Share
based
payment
Reserves
Foreign
Currency
Translation
Reserve
Fair Value Other
Comprehensive
Income
(“FVOCI”)
Reserve
Accumulated
losses
Total
Balance at 1 July 2018
Total comprehensive income for the year
Transactions with owners, recorded directly in
equity
Contributions by and distributions to owners
Issue of share capital
Capital raising costs
Share‐based payment transactions
Share options exercised
Transfer cumulative gain on sale of investments to
accumulated losses
Total contributions by and distributions to owners
52,552,523
‐
7,786,606 144,517
‐
‐
131,223
3,175
1,910,667
(597,921)
(37,732,328)
(8,288,971)
24,793,208
(8,883,717)
‐
‐
‐
‐
‐
‐
‐
‐
118,994
‐
‐
118,994
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
118,994
‐
‐
3,175
(957,748)
(1,555,669)
957,748
(7,331,223)
‐
(8,764,723)
Balance at 30 June 2019
52,552,523
7,905,600 144,517
134,398
354,998
(45,063,551)
16,028,485
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2019
19
Financial Report 2019
Annual Financial Report (cont)
Consolidated Statement of Changes in Equity
for the year ended 30 June 2018
Attributable to equity holders of the Group
in $ dollars
Share
capital
Other
Reserve
Acquisition
Reserve
Share
based
payment
Reserves
Foreign
Currency
Translation
Reserve
Fair Value Other
Comprehensive
Income (“FVOCI”)
Reserve
Accumulated
losses
Total
52,237,523
6,909,853 144,517
(15,214,601)
28,844
102,379
188,088
1,722,579
(20,843,824)
(1,673,903)
23,450,400
151,055
Balance at 1 July 2017
Total comprehensive income for the year
Transactions with owners, recorded directly in
equity
Contributions by and distributions to owners
Issue of share capital
Capital raising costs
Share‐based payment transactions
Share options exercised
Transfer of retained earnings in relation to sale of WA
Gold Projects
Transfer of acquisition reserve for Sirius Europa to
accumulated losses
Total contributions by and distributions to owners
315,000
‐
‐
‐
‐
‐
876,753
‐
‐
‐
‐
315,000
‐
876,753
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
14,362,583
852,018
15,214,601
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
315,000
‐
876,753
‐
(14,362,583)
‐
‐
102,379
131,223
‐
1,722,579
(852,018)
(16,888,504)
‐
1,342,808
1,910,667
(37,732,328)
24,793,208
Balance at 30 June 2018
52,552,523
7,786,606 144,517
‐
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2019
20
Annual Financial Report (cont)
Consolidated Statement of Cash Flows
For the year ended 30 June 2019
Cash flows from operating activities
Cash paid to suppliers and employees for corporate activities
Cash paid to suppliers and employees for exploration activities
Interest received
Interest and other finance costs paid
Income taxes paid
Net cash used in operating activities
Cash flows from investing activities
Payment of property, plant and equipment
Payment of exploration activities capitalised
Payment for Nevada JV acquisition
Investment in Todd River Resources Ltd
Net proceeds from disposal of investments
Net proceeds for disposal of WA Gold Projects
Net cash derived from investing activities
Cash flows from financing activities
Payments for cash backed guarantees
Cash payments for financing activities
Net increase in cash and cash equivalents
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June
Financial Report 2019
Notes
30 June
2019
$
30 June
2018
$
(1,858,012)
(2,030,871)
(4,928,662)
(5,642,437)
145,260
(18,423)
234,389
(9,128)
‐
(421,597)
(6,659,837)
(7,869,644)
5
20
(15,779)
‐
‐
9
8
10
(2,743,240)
5,837,938
‐
(1,663)
(872)
(173,473)
‐
2,574,078
2,829,437
3,078,919
5,227,507
(15,888)
(15,888)
(41,890)
(41,890)
(3,596,805)
(2,684,027)
215,749
209,139
15,026,119
17,501,007
6
11,645,063
15,026,119
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
FINANCIAL REPORT 2019
21
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
for the year ended 30 June 2019
S2 Resources Ltd (“Company” or “S2”) is a company incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange. The consolidated financial statements of the Group as at and for the year ended to 30
June 2019 comprise the Company and its subsidiaries (together referred to as the “Group” or “consolidated entity” and
individually as a “Group entity”).
The separate financial statements of the parent entity, S2 Resources Ltd, have not been presented within this financial
report. Summary parent information has been included in note 26.
The financial statements were authorised for issue on 10 September 2019 by the Directors of the Company.
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
(a)
Basis of preparation
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting
Standards Board (“AASB”) and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report
containing relevant and reliable information about transactions, events and conditions to which they apply. The financial
statements and notes also comply with International Financial Reporting Standards as issued by the International
Accounting Standard Board (IASB). Material accounting policies adopted in the preparation of this financial report are
presented below. They have been consistently applied unless otherwise stated.
The Group is a for‐profit entity for financial reporting purposes under Australian Accounting Standards. The consolidated
financial statements have been prepared on a going concern basis which contemplates the continuity of normal business
activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of available‐for‐sale financial assets, financial assets and liabilities at fair value through profit or loss,
investment properties, certain classes of property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 1(a)(iii).
(i)
Operating segments
Operating segments are presented using the 'management approach', where the information presented is on the same
basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the
allocation of resources to operating segments and assessing their performance.
(ii)
Adoption of new and revised Accounting Standards
The Group has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the AASB
that are mandatory for the current reporting year. The adoption of these Accounting Standards and Interpretations did
FINANCIAL REPORT 2019
22
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
(ii)
Basis of preparation (continued)
Adoption of new and revised Accounting Standards (continued)
not have any material impact on the financial performance or position of the consolidated entity, except for AASB 9
Financial Instruments.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early
adopted.
AASB 9 Financial Instruments (“AASB 9”)
This note explains the changes in the Group’s accounting policies as a result of the adoption of AASB 9 Financial
instruments, however the prior year financial statements did not have to be restated as a result.
AASB 9 replaces the provisions of AASB 139 Financial Instruments: Recognition and Measurement (“AASB 139”)
that relate to the recognition, classification and measurement of financial assets and liabilities, recognition of
financial instruments, impairment of financial assets and hedge accounting.
The adoption of AASB 9 resulted in minimal changes in accounting policies. The new accounting policies are set
out below.
(a) Impact of adoption
(i) Classification and measurement of financial assets
On the date of initial application, 1 July 2018, the financial instruments of the Group were as follows, with any
reclassification noted.
Measurement category
Original (AASB 139) New (AASB 9)
Carrying amount
Original
$
New
$
Difference
$
Current financial assets
Trade and other
receivables
Non ‐ current financial assets
Equity securities Available‐for‐sale
Amortised cost
assets
Amortised cost
403,760
403,760
Investments
8,310,859
8,310,859
The impact of these changes on the Group’s equity is as follows:
Revaluation
Reserve
$
1,910,667
(1,910,667)
Fair Value Other
Comprehensive
Income Reserve
(FVOCI)
$
‐
1,910,667
‐
1,910,667
Opening balance 30 June 2018 – AASB 139
Reclassify listed available‐for‐sale financial assets
to the Fair Value Other Comprehensive Income
Reserve (FVOCI)
Opening balance 1 July 2018 – AASB 9
FINANCIAL REPORT 2019
‐
‐
Effect on
retained
earnings
$
‐
‐
‐
23
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
Basis of preparation (continued)
(a) Impact of adoption (continued)
Equity investments previously classified as available‐for‐sale
The Group elected to present in other comprehensive income changes in the fair value of all its equity
investments previously classified as available‐for‐sale. As a result, assets with a fair value of $8,310,859 were
reclassified from available‐for‐sale financial assets, recognised under ‘Available‐for‐sale assets’ to ‘Investments’
and fair value gains or losses of $1,910,667 was reclassified from the ‘Fair Value Reserve’ to the ‘Fair Value Other
Comprehensive Income Reserve’ (FVOCI) on 1 July 2018.
(ii) Impairment of financial assets
Prior to the adoption of AASB 9, in accordance with AASB 139, the Group applied an incurred credit loss model.
Upon adoption of AASB 9, the Group has elected to apply the simplified approach to measuring expected credit
losses, which uses the lifetime expected loss allowance for all trade and other receivables.
Due to the nature of the Group’s trade and other receivables, the impact of the expected loss allowance under
AASB 9 against the loss incurred under AASB 139 was not material to the Group.
(b) Revised accounting policies
Investments and other financial assets
Investments and other financial assets are recognised and derecognised on settlement date where the purchase
or sale of an investment is under a contract whose terms require delivery of the investment within the time‐
frame established by the market concerned. They are initially measured at fair value, net of transaction costs,
except for those financial assets classified as fair value through profit or loss, which are initially measured at fair
value.
The Group classifies its financial assets in the following measurement categories:
Those to be measured subsequently at fair value (either through other comprehensive income (OCI), or
through profit or loss); or
Those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual
terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments
in equity instruments that are not held for trading, the classification will depend on whether the Group has made
an irrevocable election at the time of initial recognition to account for the equity investment at FVOCI.
(i) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition
of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial
assets with embedded derivatives are considered in their entirety when determining whether their cash flows
are solely payment of principal and interest.
FINANCIAL REPORT 2019
24
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(a)
Basis of preparation (continued)
(b) Revised accounting policies (continued)
The Group subsequently measures all equity investments at fair value. The fair values of quoted investments are
based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group
establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s
length transactions, involving the same instruments or other instruments that are substantially the same,
discounted cash flow analysis, and pricing models to reflect the issuer’s specific circumstances.
Where the Group’s management has elected to present fair value gains and losses on equity investments in OCI,
there is no subsequent reclassification of fair value gains and losses to profit or loss following the
derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as
other income when the Group’s right to receive payments is established.
Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not
reported separately from other changes in fair value.
(ii) Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of
financial assets is impaired. For trade and other receivables, the Group applies the simplified approach permitted
by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s
historical credit loss experience.
(iii) Use of estimates and judgements
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates
in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates
will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the
next financial year are discussed below.
Share‐based payment transactions
The Group measures the cost of equity‐settled transactions by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is determined by using the Black‐Scholes model taking into account the
terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to
equity‐settled share‐based payments would have no impact on the carrying amounts of assets and liabilities within the
next annual reporting period but may impact profit or loss and equity. Refer to note 17.
Exploration and evaluation costs
Exploration and evaluation costs are capitalised in an identifiable area of interest upon announcement of a JORC 2012
compliant resource and costs will be amortised in proportion to the depletion of the mineral resources at the
FINANCIAL REPORT 2019
25
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Basis of preparation (continued)
(a)
commencement of production. Key judgements are applied in considering costs to be capitalised which includes
determining expenditures directly related to these activities and allocating overheads between those that are expensed
and capitalised. In addition, costs are only capitalised that are expected to be recovered either through successful
development or sale of the relevant mining interest. Factors that could impact the future commercial production at the
mine include the level of reserves and resources, future technology changes, which could impact the cost of mining,
future legal changes and changes in commodity prices. To the extent that capitalised costs are determined not to be
recoverable in the future, they will be written off in the period in which this determination is made.
Significant judgement – Interest in Associates and Impairment
Through the Subscription Agreement between the Company and its associate, Todd River Resources Ltd (“TRT”), the
Company retains a board member on TRT’s board of directors if the shareholding is above 7.5%. For the financial year
ended 30 June 2019, the Group’s shareholding in TRT was 19.99%. If TRT issues new shares, the Company has the right
but not the obligation to participate in the new issue on the same terms as the other participants up to such additional
number of shares in order to maintain its ownership percentage. The Company also has a share services agreement with
TRT to share its offices and staff. Therefore the Company in accordance with AASB 128, determined it has significant
influence over TRT for the year ended 30 June 2019. At each reporting date, the Company reviews for any impairment
triggers that adversely reduces the value of its interest after the asset has been treated under equity accounting (refer
to note 1(i)). The Company takes into consideration a number of impairment triggers such as but not limited to, TRT’s
net assets as at reporting date, exploration activities announced on the ASX and movement in share price.
(iv)
Principles of consolidation
The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by S2 at the end
of the reporting year. A controlled entity is any entity over which S2 has the ability and right to govern the financial and
operating policies so as to obtain benefits from the entity’s activities.
Where controlled entities have entered or left the Group during the year, the financial performance of those entities is
included only for the period of the year that they were controlled. A list of controlled entities is contained in note 26 to
the financial statements.
In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the
consolidated Group have been eliminated in full on consolidation.
Non‐controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are reported
separately within the equity section of the Consolidated Statement of Financial Position and the Consolidated Statement
of Profit or Loss and Other Comprehensive Income. The non‐controlling interests in the net assets comprise their
interests at the date of the original business combination and their share of changes in equity since that date.
(b)
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 the entity operates (“the functional currency”). The consolidated financial statements
are presented in the Australian dollar ($), which is the Company’s functional and presentation currency.
FINANCIAL REPORT 2019
26
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b)
Foreign currency translation (continued)
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are generally
recognised in profit or loss. They are deferred in equity if they relate to 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 the statement of profit or loss, within
finance costs. All other foreign exchange gains and losses are presented in the statement of profit or loss on a net basis
within other income or other expenses.
Non‐monetary items that are measured at fair value in a foreign currency are translated using the exchanges rates at the
date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss. For example, translation difference on non‐monetary assets and liabilities
such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss
and translation differences on non‐monetary assets such as equities classified as available‐for‐sale financial assets are
recognised in other comprehensive income.
(iii) Group companies
The results and financial position of foreign operations (none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation currency are translated into the presentation currency
as follows:
assets and liabilities for each statement of financial position presented are translated at the closing rate at the
date of that statement of financial position,
income and expenses for each statement of profit or loss and statement of comprehensive income are translated
at average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case income and expenses are translated at the dates of the
transactions), and
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities
of the foreign operation and translated at the closing rate.
(c)
Revenue Recognition
Interest income is recognised on a time proportion basis using the effective interest method.
(d)
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
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
FINANCIAL REPORT 2019
27
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(d)
Income Tax (continued)
temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the
national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the
assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for
each jurisdiction.
The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure
the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial
recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary
differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not
affect either accounting profit or taxable profit or loss.
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 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 balances attributable to amounts recognised directly in equity are also recognised directly in
equity.
(e)
Impairment of Assets
At each reporting date, the Group reviews the carrying values of its tangible assets to determine whether there is any
indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset being
the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value.
Any excess of the asset’s carrying value over its recoverable amount is expensed to the Consolidated Statement of Profit
or Loss and Other Comprehensive Income. Where it is not possible to estimate the recoverable amount of an individual
asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs.
(f)
Cash and Cash Equivalents
For the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial
institutions, other short‐term, highly liquid investments that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.
FINANCIAL REPORT 2019
28
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(g)
Trade and Other Receivables
A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of receivables. The amount of the provision is the difference
between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original
effective interest rate. Cash flows relating to short‐term receivables are not discounted if the effect of discounting is
immaterial. The amount of any provision is recognised in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income.
(h)
Trade and Other Payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year
which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.
(i)
Investments in Associates
Principles of consolidation and equity accounting
Associates
Associates are all entities over which the Group has significant influence but not control or joint control. This is generally
the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for
by using the equity method of accounting after being initially recognised at cost.
Equity method
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to
recognise the Group’s share of the post‐acquisition profits or losses of the investee in profit or loss, and the Group’s share
of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or
receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.
When the Group’s share of losses in an equity‐accounted investment equals or excess its interest in the entity, including
any other unsecured long‐term receivables, the Group does not recognise further losses, unless it has incurred obligations
or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates and joint ventures are eliminated to the extent of
the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of
an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where
necessary to ensure consistency with the policies adopted by the Group.
The carrying amount of equity‐accounted investments is tested for impairment each reporting period.
(j)
Exploration and Evaluation
Exploration and evaluation assets acquired
Exploration and evaluation assets comprise of acquisition of mineral rights (such as joint ventures) and fair value (at
acquisition date) of exploration and expenditure assets from other entities. As the assets are not yet ready for use they
are not depreciated. Exploration and evaluation assets are assessed for impairment if:
FINANCIAL REPORT 2019
29
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(j)
Exploration and Evaluation (continued)
sufficient data exists to determine technical feasibility and commercial viability; or
other facts and circumstances suggest that the carrying amount exceeds the recoverable amount.
Once the technical feasibility and commercial viability of the assets are demonstrable, exploration and evaluation assets
are first tested for impairment and then reclassified to mine properties as development assets.
Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is expensed in respect of each identifiable area of interest until such a
time where a JORC 2012 compliant resource is announced in relation to the identifiable area of interest. These costs are
only carried forward to the extent that they are expected to be recouped through the successful development of the area
or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of
economically recoverable reserves.
When the technical feasibility and commercial viability of extracting a mineral resource have been demonstrated then
any capitalised exploration and evaluation expenditure is reclassified as capitalised mine development.
Prior to reclassification, capitalised exploration and evaluation expenditure is assessed for impairment annually in
accordance with AASB 6. Where impairment indicators exist, recoverable amounts of these assets will be estimated
based on discounted cash flows from their associated cash generating units.
The Statement of Profit or Loss and Other Comprehensive Income will recognise expenses arising from excess of the
carrying values of exploration and evaluation assets over the recoverable amounts of these assets.
In the event that an area of interest is abandoned or if the Directors consider the expenditure to be of reduced value,
accumulated costs carried forward are written off in the period in which that assessment is made. Each area of interest
is reviewed at the end of each accounting period and accumulated costs are written off to the extent that they will not
be recoverable in the future.
(k)
Property, plant and equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self‐constructed assets
includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working
condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they
are located and capitalised borrowing costs.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate
items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds
from disposal with the carrying amount of property, plant and equipment and are recognised net within other income in
FINANCIAL REPORT 2019
30
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(k)
Property, plant and equipment
profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained
earnings.
(ii) Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item
if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be
measured reliably. The carrying amount of the replaced part is derecognised. The costs of the day‐to‐day servicing of
property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount substituted for
cost, less its residual value.
Depreciation is recognised in the profit or loss on a straight‐line basis over the estimated useful lives of each part of an
item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future
economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term or their useful
lives unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.
The depreciation rates used for each class of asset are:
buildings
fixtures and fittings
leasehold improvements
plant and equipment
motor vehicles
16.67%
22.5% ‐ 40%
20%
22.5% ‐ 40%
20%
Depreciation methods, useful lives and residual values are reviewed at each financial year‐end and adjusted if
appropriate.
(l)
Leases
The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and
requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets
and the arrangement conveys a right to use the asset.
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the
risks and benefits incidental to ownership of leased assets, and operating leases, under which the lessor effectively retains
substantially all such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the fair value of the leased assets, or if lower,
the present value of minimum lease payments. Lease payments are allocated between the principal component of the
lease liability and the finance costs, so as to achieve a constant rate of interest on the remaining balance of the liability.
Leased assets acquired under a finance lease are depreciated over the asset's useful life or over the shorter of the asset’s
useful life and the lease term if there is no reasonable certainty that the consolidated entity will obtain ownership at the
end of the lease term.
FINANCIAL REPORT 2019
31
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(l)
Leases (continued)
Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight‐line
basis over the term of the lease.
(m)
Interest in Joint Ventures
The Group accounts for 100% of the assets, liabilities and expenses of joint venture activity. These have been
incorporated in the financial statements.
(n)
Provisions
General
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be
reimbursed the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.
The expense relating to any provision is presented in the Statement of Profit or Loss and Other Comprehensive Income
net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the reporting date. The discount rate used to determine the present value reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision resulting from
the passage of time is recognised in finance costs.
(o)
Employee Benefits
(i) Equity Settled Compensation
The Group operates equity‐settled share‐based payment employee share and option schemes. The fair value of the equity
to which employees become entitled is measured at grant date and recognised as an expense over the vesting period,
with a corresponding increase to an equity account. The fair value of shares is ascertained as the market bid price. The
fair value of options is ascertained using a Black–Scholes pricing model which incorporates all market vesting conditions.
The number of shares and options expected to vest is reviewed and adjusted at each reporting date such that the amount
recognised for services received as consideration for the equity instruments granted shall be based on the number of
equity instruments that eventually vest.
(ii) Short‐term obligations
Liabilities for wages and salaries, including non‐monetary benefits, annual leave and accumulating sick leave expected to
be settled within 12 months after the end of the 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.
The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits. All other
short‐term employee benefit obligations are presented as payables.
FINANCIAL REPORT 2019
32
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(o)
Employee Benefits (continued)
(iii) Other long‐term employee benefit obligations
The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end of
the period in which the employees render the related service is recognised in 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 end of the reporting period using the projected unit credit method. Consideration is given to expected future wage
and salary levels, experience of employee departures and periods of service. Expected future payments are discounted
using market yields at the end of the reporting period on national government bonds with terms to maturity and currency
that match, as closely as possible, the estimated future cash outflows.
(iv) Share‐based payments
Share‐based compensation benefits are provided to employees via the Employee Option Plan.
The fair value of options granted under the Employee Option Plan is recognised as an employee benefits expense with a
corresponding increase in equity. The total amount to be expensed is determined by reference to the fair value of the
options granted, which includes any market performance conditions and the impact of any non‐vesting conditions but
excludes the impact of any service and non‐market performance vesting conditions.
Non‐market vesting conditions are included in assumptions about the number of options that are expected to vest. The
total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions
are to be satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected
to vest based on the non‐market vesting conditions. It recognises the impact of the revision to original estimates, if any,
in profit or loss, with a corresponding adjustment to equity.
When the options are exercised, the Company transfers the appropriate amount of shares to the employee. The proceeds
received net of any directly attributable transaction costs are credited directly to equity.
(v) Termination benefits
Termination benefits are payable when employment is terminated before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when
it is demonstrably committed to either terminating the employment of current employees according to a detailed formal
plan without possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage
voluntary redundancy.
Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.
(p)
Issued Capital
Ordinary shares are classified as equity. Costs associated with capital raisings (exclusive of GST) directly attributable to
the issue of new shares or options are shown in equity as a deduction from the proceeds. If the entity reacquires its own
equity instruments, e.g. as the result of a share buy‐back, those instruments are deducted from equity and the associated
shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly
attributable costs associated with capital raisings (net of income taxes) is recognised directly in equity.
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit / (loss) attributable to equity holders of the Group, excluding
FINANCIAL REPORT 2019
33
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(p)
Issued Capital (continued)
(i) Basic earnings per share (continued)
during the financial year, adjusted for bonus elements in ordinary shares issued during the year.
(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 shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
(q)
Goods and Services Tax
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 statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities
which are recoverable from, or payable to the taxation authority, are presented as operating cash flow.
(r)
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 year ended 30 June 2019. The consolidated
entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to
the consolidated entity, are set out below.
AASB 16 Leases
AASB 16 was issued in February 2016. It will result in almost all leases being recognised on the balance sheet, as the
distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the
leased term) and a financial liability to pay rentals are recognised. The only exceptions are short‐term and low‐value
leases. The accounting for lessors will not significantly change.
The standard will affect primarily the accounting for the Group’s operating leases. As at the reporting date, the Group
has non‐cancellable operating lease commitments of $265,688, see note 25. However, the Group has not yet determined
to what extent these commitments will result in the recognition of an asset and a liability for future payments and how
this will affect the Group’s loss and classification of cash flows.
Some of the commitments may be covered by the exception for short‐term and low‐value leases and some commitments
may relate to arrangements that will not qualify as leases under AASB 16.
The application of this standard is mandatory on or after 1 January 2019. At this stage the Group does not intend to
adopt the standard before its effective date.
FINANCIAL REPORT 2019
34
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 2. FINANCIAL RISK MANAGEMENT
The Group’s financial instruments consist mainly of deposits with banks and accounts receivable and payable.
The Group's activities expose it to a variety of financial risks; market risk (including fair value interest rate risk and price
risk), credit risk, liquidity risk and cash flow interest rate risk. The Group's overall risk management program focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the Group. Risk management is carried out by the Board of Directors under policies approved by the Board. The Board
identifies and evaluates financial risks and provides written principles for overall risk management.
The main risks the Group is exposed to through its financial instruments are interest rate risk, foreign currency risk,
liquidity risk, credit risk and price risk.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of
changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily
to the Group’s Australian Dollar current and non‐current debt obligations with floating interest rates. The Group is also
exposed to interest rate risk on its cash and short term deposits.
2019
Floating
interest rate
Fixed interest
rate maturing in
1 year or less
$
$
472,860
‐
472,860
7,425,923
195,000
7,620,923
‐
‐
‐
‐
2018
Floating
interest rate
Fixed interest
rate maturing in
1 year or less
$
$
1,912,527
195,000
2,107,527
7,014,097
‐
7,014,097
‐
‐
‐
‐
Financial Instruments
(i) Financial assets
Available cash on hand
Restricted cash
Total financial assets
(ii) Financial liabilities
Trade and other payables
Total financial liabilities
Financial Instruments
(i) Financial assets
Available cash on hand
Restricted cash
Total financial assets
(ii) Financial liabilities
Trade and other payables
Total financial liabilities
Fixed interest
rate maturing
between 1 and
2 years
$
Non‐interest
bearing
$
Total Weighted
average
effective
interest rate
%
$
‐
‐
‐
‐
‐
3,746,280 11,645,063
365,778
3,917,058 12,010,841
170,778
2.17%
2.69%
660,511
660,511
660,511
660,511
Fixed interest
rate maturing
between 1 and
2 years
$
Non‐interest
bearing
$
Total Weighted
average
effective
interest rate
%
$
‐
‐
‐
‐
‐
6,099,495 15,026,119
348,889
6,253,384 15,375,008
153,889
2.31%
2.51%
546,786
546,786
546,786
546,786
FINANCIAL REPORT 2019
35
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)
Net Fair Values
The net fair value of financial assets and liabilities approximate carrying values due to their short term nature.
Sensitivity Analysis – Interest Rate Risk
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk at the reporting date. This
sensitivity analysis demonstrates the effect on the current period results and equity which could result from a change in
interest rates.
Change in loss:
Increase by 1%
Decrease by 1%
Change in equity:
Increase by 1%
Decrease by 1%
Foreign exchange risk
30 June
2019
$
30 June
2018
$
(82,890)
82,890
(16,739)
16,739
(160,285)
160,285
(247,932)
247,932
Exposure
The Group holds foreign currency cash in Euro, US Dollar and Swedish Krona to operate in Finland, Sweden and the United
States. It also has foreign currency receivables and payables in these countries which are exposed to foreign currency
fluctuations. The Group manages its foreign exchange risk and exposure by purchasing foreign currency for the following
budget year and reviews forecasted exchange rates by various banks on a monthly basis. The Group’s exposure to foreign
currency risk at the end of the reporting year, expressed in Australian dollar, was as follows:
Year ended 30 June 2019
Cash on hand
Restricted cash
Other receivables
Trade and other payables
Year ended 30 June 2018
Cash on hand
Restricted cash
Other receivables
Trade and other payables
EUR
$
3,536,863
19,174
210,805
(300,390)
3,466,452
EUR
$
2,817,022
17,170
4,632
(288,972)
2,549,852
USD
$
1,486,187
79,952
‐
(41,345)
1,527,794
USD
$
3,211,515
41,625
‐
(23,622)
3,229,518
SEK
$
146,060
‐
896
(4,032)
142,924
SEK
$
70,800
14,861
4,342
(63,695)
26,308
Total
$
5,169,110
99,126
211,701
(345,767)
5,134,170
Total
$
6,099,037
73,656
8,974
(376,289)
5,805,378
FINANCIAL REPORT 2019
36
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)
Amounts recognised in profit or loss and other comprehensive income
During the year ended, the following foreign‐exchange related amounts were recognised in profit or loss and other
comprehensive income:
Amounts recognised in profit or loss
Net foreign exchange gain/(loss) included in other income/other
expenses
Total net foreign exchange (losses) recognised in loss before income tax
for the year
2019
$
2018
$
199,015
209,139
199,015
209,139
Net gains/(losses) recognised in other comprehensive income
Translation of foreign operations
3,175
102,379
Sensitivity
As shown in the table above, the Group is primarily exposed to changes in EUR/$exchange rates. The sensitivity of profit
or loss to changes in the exchange rates arises mainly from Euro, US dollar and Swedish Krona denominated financial
instruments and the impact on other components of equity arises from translation of foreign operations.
Impact on
post tax loss
$
(292,582)
292,582
Impact on
other
components
of equity
$
(341)
341
(189,012)
189,012
(5,618)
5,618
EUR/$ exchange rate – increase 10%*
EUR/$ exchange rate – decrease (10%)*
USD/$ exchange rate – increase 10%*
USD/$ exchange rate – decrease (10%)*
*Holding all other variables constant
LIQUIDITY RISK
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting
its obligations related to financial liabilities. Management monitors rolling forecasts of the Group’s cash reserves on the
basis of expected development, exploration and corporate cash flows. This ensures that the Group complies with prudent
liquidity risk management by maintaining sufficient cash and marketable securities and the availability of funding through
the equity markets to meet obligations when due. For the year ended 30 June 2019, the Group had no contractual
financial liabilities.
FINANCIAL REPORT 2019
37
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 2. FINANCIAL RISK MANAGEMENT (CONTINUED)
Credit Risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and other receivables.
The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal
to the carrying amount of these instruments. The cash and cash equivalents are held with bank and financial institution
counterparties, which are rated AA‐ based on Standard and Poor’s rating agency.
The credit risk on other receivables is limited as it is comprised of prepayments and GST recoverable from the Australian
Taxation Office and tax authorities in Scandinavia. The credit risk on liquid funds is limited because the counter party is a
bank with high credit rating. There are no receivable balances which are past due or impaired.
Price risk
Exposure
The Group’s exposure to equity securities price risk arises from investments held by the Group and classified in the
statement of financial position as investments (see note 8). The Group’s investment is publicly traded on the Australian
Stock Exchange (“ASX”).
The Group is not currently exposed to commodity price risk.
Sensitivity
The table below summarises the impact of increases/decreases of the investment’s share price on the Group’s equity
and post‐tax loss for the year. The analysis is based on the assumption that the investment’s share price had increased
or decreased by 10% with all other variables held constant, and that the Group’s equity instrument moved in line with
the indexes.
TSXV index – increase 10%
TSXV index – decrease (10%)
ASX index – increase 10%
ASX index – decrease (10%)
Impact on
post tax loss
Impact on
post tax loss
2019
$
‐
‐
‐
‐
2018
$
‐
‐
‐
‐
Impact on
other
components
of equity
2019
$
‐
‐
(187,500)
187,500
Impact on
other
components
of equity
2018
$
(91,086)
91,086
(740,000)
740,000
There would be no impact on post tax loss as the Group does not recognise any financial assets at fair value through
profit or loss. Other components of equity would increase/decrease as a result of gains/losses on equity securities
classified as investments. As the fair value of investments would still be above cost, no impairment loss would be
recognised in profit or loss as a result of the decrease in the index.
Amounts recognised in statement of profit or loss and other comprehensive income
The amounts recognised in profit or loss and other comprehensive income in relation to the investments held by the
Group are disclosed in note 8.
FINANCIAL REPORT 2019
38
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 3. SEGMENT INFORMATION
For management purposes, the Group has four reportable segments as follows:
Finland exploration activities, which includes exploration and evaluation of mineral tenements in Central
Lapland.
Sweden exploration activities, which includes exploration and evaluation of mineral tenements in Skellefte. As
disclosed in the half year ended 31 December 2018 financial report, the Group had discontinued its exploration
activities in Sweden and any costs incurred relate to relinquishment of tenure and closure of the Swedish office
based in Malå.
US exploration activities, which includes exploration and evaluation of mineral tenements in Nevada.
Australia exploration activities, which includes exploration and evaluation of mineral tenements in Western
Australia.
Unallocated, which includes all other expenses that cannot be directly attributed to either segments above.
Segment information that is evaluated by the CODM is prepared in conformity with the accounting policies adopted for
preparing the financial statements of the Group.
SEGMENT RESULTS
Statement of profit or loss
for the year ended 30 June
2019
Other income
Corporate expenses
Business Development
Depreciation expense
Share‐based payments
Other gain/(losses) ‐ net
Exploration expenditure
expensed as incurred
Exploration impairment
expense
Share of associate's loss
Associate impairment
expense
Loss before income tax
Income tax expense
Loss after income tax for the
year
$
Finland
exploration
activities
‐
‐
‐
‐
‐
Sweden
exploration
activities
‐
‐
‐
‐
‐
‐
US
exploration
activities
‐
‐
‐
‐
‐
‐
Australia
exploration
activities
‐
‐
‐
‐
‐
‐
Unallocated
Total
157,154
(1,093,981)
(604,429)
(101,376)
(118,994)
199,015
157,154
(1,093,981)
(604,429)
(101,376)
(118,994)
199,015
(2,925,806)
9,164
(1,890,118)
(286,724)
‐
(5,093,484)
‐
‐
‐
‐
(60,446)
‐
‐
‐
‐
(915,715)
(60,446)
(915,715)
‐
(2,925,806)
‐
‐
9,164
‐
‐
(1,950,564)
‐
‐
(286,724)
‐
(586,270)
(3,064,596)
(70,445)
(586,270)
(8,218,526)
(70,445)
(2,925,806)
9,164
(1,950,564)
(286,724)
(3,135,041)
(8,288,971)
FINANCIAL REPORT 2019
39
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 3. SEGMENT INFORMATION (CONTINUED)
Statement of profit or loss
for the year ended 30 June
2018
Other income
Corporate expenses
Business Development
Depreciation expense
Share‐based payments
Gain on disposal of available
for sale financial assets
Gain on disposal of WA Gold
Projects
Other gain/(losses) ‐ net
Exploration expenditure
expensed as incurred
Exploration impairment
expense
Loss before income tax
Income tax expense
Loss after income tax for the
year
$
Finland
exploration
activities
‐
‐
‐
‐
‐
Sweden
exploration
activities
‐
‐
‐
‐
‐
US
exploration
activities
‐
‐
‐
‐
‐
Australia
exploration
activities
‐
‐
‐
‐
‐
Unallocated
Total
213,899
(1,268,537)
(748,961)
(168,545)
(876,753)
213,899
(1,268,537)
(748,961)
(168,545)
(876,753)
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
‐
1,893,669
1,893,669
5,919,557
209,139
5,919,557
209,139
(1,093,154)
(3,053,031)
(1,282,779)
(430,623)
‐
(5,859,587)
‐
(1,093,154)
‐
(1,033,028)
(4,086,059)
‐
(57,292)
(1,340,071)
‐
‐
(430,623)
‐
‐
5,173,468
102,536
(1,090,320)
(1,776,439)
102,536
(1,093,154)
(4,086,059)
(1,340,071)
(430,623)
5,276,004
(1,673,903)
SEGMENT ASSETS AND LIABILITIES
The Group’s assets are mostly attributable to the unallocated segment therefore assets attributable to exploration in
Scandinavia, Nevada and Australia is immaterial for disclosure.
NOTE 4. OTHER INCOME
Interest received
30 June
2019
$
30 June
2018
$
157,154
213,899
FINANCIAL REPORT 2019
40
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 5. INCOME TAX
Recognised in the Consolidated Statement of Profit or Loss and Other
Comprehensive Income
Current tax
Deferred tax
Under (over) provided in prior years
Total income tax benefit/(expense) per Consolidated Statement of Profit or
Loss and Other Comprehensive Income (1)
Numerical reconciliation between tax expense and pre‐tax net loss
Net loss before tax
Income tax benefit/(expense) at 27.5%
Income tax benefit/(expense) for overseas entities (at various rates)
Increase in income tax due to:
Non‐deductible expenses
Current year tax losses not recognised
Decrease in income tax due to:
Movement in unrecognised temporary differences
Tax losses utilised during the year
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following:
Previous year tax losses brought forward
Tax revenue losses (2)
Financial Report 2019
30 June
2019
$
30 June
2018
$
‐
‐
‐
271,573
(169,037)
102,536
(8,288,971)
(914,780)
(1,042,125)
1,423,602
998,111
119,975
(584,783)
‐
(1,673,903)
1,025,898
(1,134,933)
390,355
1,100,060
993,502
(2,374,883)
(102,536)
3,736,617
1,845,105
5,581,723
2,569,081
1,167,536
3,736,617
(1) For the financial year end 30 June 2018, the Group’s Scandinavian entities incurred an income tax benefit for the
financial year end 30 June 2018 of $102,536 and this comprised of:
Income tax paid during the financial year end 30 June 2018
Tax credit owing from the Finnish tax authorities*
Exchange differences
Net Tax Payable
Less Tax Provision 30 June 2017
Income Tax Benefit 30 June 2018
$421,597
($249,570)
($2,990)
$169,037
($271,573)
($102,536)
*The tax credit owing from the Finnish tax authorities represents the profit earned in Sweden (ie. the profit earned by
the Branch) to avoid double taxation for the Finnish entity.
(2) Net deferred tax assets have not been brought to account as it is not probable that within the immediate future tax
profits will be available against which deductible temporary differences and tax losses can be utilised.
FINANCIAL REPORT 2019
41
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 6. CASH AND CASH EQUIVALENTS
Current
Cash at bank and in hand
Restricted cash
NOTE 7. OTHER RECEIVABLES
GST refund due
Accrued interest
Prepayment
Income Tax Receivable (1)
Other
Financial Report 2019
30 June
2019
$
30 June
2018
$
11,645,063
365,778
12,010,841
15,026,119
348,889
15,375,008
30 June
2018
$
28,635
25,403
134,898
186,037
79,899
454,872
30 June
2018
$
16,559
13,508
50,612
252,560
70,519
403,758
(1) Please refer to note 5 for more information on the Income Tax Receivable.
The Group has no impairments to other receivables or have receivables that are past due but not impaired. Refer to note
2 for detail on the risk exposure and management of the Group’s other receivables.
NOTE 8. INVESTMENTS AND OTHER FINANCIAL ASSETS
(i) Classification of financial assets at fair value through other comprehensive income
Financial assets at fair value through other comprehensive income (FVOCI) comprise of equity securities which are not
held for trading, and which the Group has irrevocably elected at initial recognition to recognise in this category.
(ii) Equity investments at fair value through other comprehensive income
Equity investments at FVOCI comprise the following individual investments:
Non‐current
Investments
Balance at beginning of the period
GT Gold
Westgold Resources Ltd
30 June
30 June
2019
$
2018
$
910,859
7,400,000
1,188,689
‐
FINANCIAL REPORT 2019
42
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 8: INVESTMENTS AND OTHER FINANCIAL ASSETS (CONTINUED)
Investments
Movement during the period
GT Gold
Westgold Resources Ltd (1)
30 June
2019
$
30 June
2018
$
(910,859)
(5,525,000)
(277,830)
7,400,000
Balance as at 30 June 2019
1,875,000
8,310,859
(1) The balance as at 30 June 2019 of $1,875,000 represents the investment in Westgold Resources Ltd (“Westgold”).
The Group holds 1,000,000 shares in Westgold and the share price as at 30 June 2019 was $1.875 per share.
The table below describes the total gain/(loss) on disposal of the Group’s investments from the initial purchase to the
financial year ended 30 June 2019:
Net
proceeds
$
GT Gold Corp.
Original
cost
$
Westgold Resources Ltd
Net
proceeds
$
Gain
$
Original
cost
$
Net
proceeds
$
Loss
$
Total
Original
cost
$
Gain/
(loss)
$
Sold 30 June 2018
2,574,078
(680,409)
1,893,669
‐
‐
‐
2,574,078
(680,409)
1,893,669*
Sold 30 June 2019
Total gain/(loss) on
disposal
1,813,925
(320,192)
1,493,733
4,024,015
(4,560,000)
(535,985)
5,837,940
(4,880,192)
957,748**
4,388,003
(1,000,601)
3,387,402
4,024,015
(4,560,000)
(535,985)
8,412,018
(5,560,601)
2,851,417
*The gain recognised of $1,893,669 for the financial year ended 30 June 2018 was disclosed in the profit or loss or other
comprehensive income as per AASB 139. AASB 9 became effective from 1 July 2018.
** Please note that due to the change in accounting policies for financial assets, the total gain of $957,748 during the
financial year ended 30 June 2019 was transferred from the fair value other comprehensive income (FVOCI) reserve to
accumulated losses.
(iii) Amounts recognised in profit or loss and other comprehensive income
During the year, the following gains/(losses) were recognised in profit or loss and other comprehensive income.
Gains/(losses) recognised in other comprehensive income
(597,921)
246,976
30 June
30 June
2019
$
2018
$
FINANCIAL REPORT 2019
43
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 8: INVESTMENTS AND OTHER FINANCIAL ASSETS (continued)
The table below describes the movement in the FVOCI reserve the financial year ended 30 June 2019:
Net proceeds
Less carrying value as at 30 June 2018
Gain/(loss) on disposal
Revaluation of investment
Movement of gain/(loss) in OCI
1,813,923
(910,859)
903,064
‐
‐
GT Gold Corp.
Westgold Resources
Ltd
Movement of
gain/(loss) in
FVOCI
7,363,923
(8,310,859)
(622,921)
4,024,015
(5,550,000)
(1,525,985)
25,000
‐
25,000
(597,521)
On disposal of these equity investments, any related balance within the FVOCI reserve is reclassified to retained earnings.
In the prior financial year, the Group had designated equity investments as available‐for‐sale where management
intended to hold them for the medium to long‐term.
The change of accounting policy and the reclassification of certain equity investments from available‐for‐sale to
investments at fair value through other comprehensive income is disclosed in the Basis of Preparation under note 1(a).
(iv) Fair values of other financial assets at amortised cost
Financial assets at amortised cost include the following:
Current – Trade and other receivables
Trade and other receivables
30 June
2019
$
454,872
454,872
30 June
2018
$
403,758
403,758
Due to the short term nature of the trade and other receivables and prepayments, their carrying amount is considered
to be the same as their fair value.
NOTE 9. INTERESTS IN ASSOCIATES
The entity listed below have share capital consisting of ordinary shares and options of which 19.99% of the ordinary
shares are held directly by the Group. The country of incorporation or registration is also their principal place of business,
and the proportion of ownership interest is the same as the proportion of voting rights held.
Name of
entity
Place of
business/
country of
incorporate
% of ownership
interest
Nature of
relationship
Measurement
method
Carrying amount
2019
$
2018
$
Todd River
Resources Ltd
Australia
19.99%
‐
Associate
2019
$
2018
$
Equity
method
1,,241,255
‐
In November 2018, the Group acquired a 19.99% strategic stake in Todd River Resources Ltd (ASX:TRT) at $0.08987 per
share for $2,720,815.
Dr Mark Bennett, Managing Director and CEO of S2 Resources Ltd became Non‐Executive director of TRT.
FINANCIAL REPORT 2019
44
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 9. INTERESTS IN ASSOCIATES
Summarised financial information for associates
The tables below provide summarised financial information of Todd River Resources Ltd that are material to the Group.
The information disclosed reflects the amounts presented in the financial statement of the relevant associates and not
the Group’s share of those amounts. A reconciliation has been provided to reflect the adjustments made by the Group
when using the equity method, including fair value adjustment and modifications for differences in accounting policy.
Summarised balance sheet
Current assets
Non current assets
Total assets
Current liabilities
Non‐current liabilities
Total liabilities
NET ASSETS
Share capital
Reserves
Accumulated losses
Total equity
Reconciliation to carrying amounts
S2R's initial investment 20 November 2018(1)
Loss for the period ‐ Todd River Resources (2)
Group’s share
Less Group’s share
Less impairment expense (3)
Carrying amount
$
$
%
$
$
$
30 June
2019
$
1,674,154
11,544,769
13,218,923
642,361
‐
642,361
12,576,562
18,846,172
2,521,731
(8,791,341)
12,576,562
30 June
2019
2,743,240
4,580,869
19.99%
(915,715)
(586,270)
1,241,255
(1) This includes $22,425 of transaction costs.
(2) The loss for the period has been modified to align TRT’s accounting policies with the Group’s accounting policies. TRT’s
accounting policy is to capitalise all exploration and evaluation expenditure where as the Group expense all ongoing
exploration and evaluation expenditure until such a time where a JORC 2012 compliant resource is announced in relation
to the identifiable area of interest.
(3) The Group’s view was to impair their investment in TRT to the market price of the TRT shares as at 30 June 2019.
FINANCIAL REPORT 2019
45
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 10. DISPOSAL OF WA GOLD PROJECTS
On 13th February 2018, the Group entered into a Heads of Agreement (“HOA”) with Westgold to sell its interest in
the Polar Bear Project (100%), Eundynie Joint Venture (80%) and the Norcott Project (100%) (together, the “WA Gold
Projects”) via the sale of all of the shares in S2’s wholly owned subsidiary Polar Metals Pty Ltd (“Sale”) for A$3 million
cash and 4 million Westgold shares. The sale completed on 23rd February 2018.
Details of the sale of the subsidiary are as follows:
Consideration received
Cash*
Westgold shares 4,000,000 at $1.52per share
Total disposal consideration
Less:
Transaction costs
Carrying amount of net assets sold**
Gain on disposal of WA Gold Projects
$
3,000,000
6,080,000
9,080,000
(508,479)
(2,651,964)
5,919,557
*The cash received for this transaction less cost of sale of $170,563 was $2,829,437.
**The carrying amount of assets and liabilities for Polar Metals Pty Ltd as at the date of sale 13 February 2018 of
$2,651,964 only consisted of the exploration asset.
NOTE 11. EXPLORATION AND EVALUATION
Exploration costs
Movement during the year
Balance at beginning of the year
Exploration expenditure incurred during the year
Exploration expenditure incurred during the year and expensed (i)
Exploration expenditure relating to acquisitions (ii)
Exploration impairment expense (iii)
Disposal of WA Gold Projects (see note 9)
Foreign currency translation differences
Balance at end of the year
30 June
2019
$
30 June
2018
$
1,028,199
1,083,153
1,083,153
5,093,484
(5,093,484)
‐
(60,446)
‐
5,492
1,028,199
4,650,820
5,860,731
(5,859,587)
173,473
(1,090,320)
(2,651,964)
‐
1,083,153
(i) During the year ended 30 June 2019 the exploration expenditure incurred pertains to the following:
Australian Projects
The total exploration expenditure expensed for Polar Bear and Fraser Range projects was $286,724. The Polar
Bear project was owned by the Group’s subsidiary Polar Metals Pty Ltd which was sold to Westgold Resources
Limited on 13 February 2018 as described in note 10. The Group still holds nickel rights to the Polar Bear project.
FINANCIAL REPORT 2019
46
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 11. EXPLORATION AND EVALUATION (CONTINUED)
Finland Projects
Exploration expenditure incurred and expensed for Finland was $2,916,642.
US Projects
Exploration expenditure incurred and expensed for the following projects in the US were:
Ecru $1,850,856
South Roberts ‐ $39,262
(ii) During the year ended 30 June 2018, the Group entered into a joint venture with Renaissance Gold Inc
(“Rengold”), a TSXV listed company to earn in to three of RenGold’s properties located on some of the major
known gold mineralized trends in Nevada, USA. The properties were South Roberts, Pluto and Ecru and each
property had an initial investment of US$25,000. The total cost of acquiring these projects including transaction
costs was $173,473.
(iii) During the year ended 30 June 2019, the Group made a decision to withdraw from the South Roberts Project
and therefore made an impairment expense of $60,446. This decision would result in the Group not earning
into the South Roberts joint venture with Rengold.
During the year ended 30 June 2018, the Group had made a decision to impair the Swedish exploration asset of
$1,033,028 due to its change in focus and resources from Sweden to other opportunities available to the
Company. The Company still retains tenure in Sweden. Also the Group also made a decision to withdraw from
the Pluto Project and therefore made an impairment expense of $60,446. This decision would result in the
Group not earning into the Pluto joint venture with Rengold.
FINANCIAL REPORT 2019
47
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 12. PROPERTY, PLANT AND EQUIPMENT
2019
Cost or deemed cost
Balance at 1 July 2018
Additions
Disposals
Transfers
Exchange differences
Balance at 30 June 2019
Depreciation
Balance at 1 July 2018
Depreciation for the year – expensed
Exchange differences
Disposals
Balance at 30 June 2019
Carrying amounts
at 1 July 2018
at 30 June 2019
Property,
Plant and Equipment
$
Motor Vehicles
Computer Software
Fixtures and fittings
Total
$
$
$
417,539
14,391
‐
‐
(2,698)
429,232
258,144
67,182
(4,793)
‐
320,533
37,263
‐
‐
‐
‐
37,263
19,874
7,453
‐
‐
27,327
159,395
108,699
17,389
9,937
104,339
‐
‐
‐
296
104,635
84,009
11,748
139
‐
95,896
20,330
8,739
$
652,330
23,269
‐
‐
(2,402)
673,197
424,596
101,376
(4,654)
‐
521,319
93,189
8,878
‐
‐
‐
102,067
62,569
14,994
‐
‐
77,563
30,620
24,504
227,734
151,878
FINANCIAL REPORT 2019
48
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 12. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
2018
Cost or deemed cost
Balance at 1 July 2017
Additions
Disposals
Transfers
Exchange differences
Balance at 30 June 2018
Depreciation
Balance at 1 July 2017
Depreciation for the year – expensed
Exchange differences
Disposals
Balance at 30 June 2018
Carrying amounts
at 1 July 2017
at 30 June 2018
Property,
Plant and Equipment
$
Motor Vehicles
Computer Software
Fixtures and fittings
Total
$
$
$
412,902
1,663
‐
‐
2,977
417,542
150,755
106,033
1,356
‐
258,144
37,263
‐
‐
‐
‐
37,263
12,421
7,453
‐
‐
19,874
262,147
159,398
24,842
17,389
103,734
‐
‐
‐
606
104,340
52,752
31,257
‐
‐
84,009
50,982
20,331
$
646,285
2,971
‐
‐
3,077
652,333
254,695
168,545
1,356
‐
424,596
92,386
1,308
‐
‐
(506)
93,188
38,767
23,802
‐
‐
62,569
53,619
30,619
391,590
227,737
FINANCIAL REPORT 2019
49
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 13. TRADE AND OTHER PAYABLES
Trade and other payables (i)
Financial Report 2019
30 June
2019
$
30 June
2018
$
660,511
546,786
(i)
These amounts generally arise from the usual operating activities of the Group and are expected to be settled
within 12 months. Collateral is not normally obtained.
NOTE 14. PROVISIONS
Current
Employee benefits (1)
Income Tax Payable (2)
Carrying amount at start of the year
Provisions made during the year
Carrying amount at end of the year
30 June
2019
$
73,049
‐
73,049
60,521
12,528
73,049
30 June
2018
$
60,521
‐
60,521
338,413
(277,892)
60,521
(1) Employee benefits are provided for all employees of the Group in line with their employment contracts and the
balance for the year ended 30 June 2019 is expected to be settled within 12 months. The measurement and recognition
criteria relating to employee benefits have been included in note 1 to this financial report.
(2) During the financial year ended 30 June 2018, the Group paid an income tax payable for its subsidiary, Sakumpu
Exploration Oy, however a tax refund was due as at 30 June 2019 from the Finnish Tax authorities. The tax refund has
been disclosed as a receivable in note 7 and the refund has been received post 30 June 2019.
NOTE 15. SHARE CAPITAL
Ordinary shares fully paid
Movement in Share Capital
Ordinary shares fully paid
Balance at beginning of year
Shares issued at $0.17 per share*
Cost of issues of shares
Balance at year end
30 June
2019
No. of Shares
30 June
2019
$
30 June
2018
No. of Shares
30 June
2018
$
247,915,179
52,552,523
246,052,451
52,237,523
247,915,179
52,552,523
‐
‐
‐
‐
246,052,452
52,237,523
1,862,727
315,000
‐
‐
247,915,179
52,552,523
247,915,179
52,552,523
*The share price of $0.16910691 has been rounded to two decimal points.
FINANCIAL REPORT 2019
50
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 15. SHARE CAPITAL (CONTINUED)
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group 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.
NOTE 16. RESERVES
Share‐based payments reserve (i)
Other reserve (ii)
Foreign currency translation reserve (iii)
Revaluation reserve (iv)
30 June
2019
$
30 June
2018
$
7,905,600
144,517
134,398
354,998
8,539,513
7,786,606
144,517
131,223
1,910,667
9,973,013
(i) The share‐based payments reserve recognises the fair value of the options issued to Directors, employees and service
providers.
Each share option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by
the recipient on receipt of the option. The options carry neither rights to dividends or voting rights. Options may be
exercised at any time from the date of vesting to the date of their expiry.
(ii) The other reserve recognises the remaining non‐controlling interest (33%) that was purchased from the Sakumpu
vendors on 30 November 2015. Sakumpu Exploration Oy is a registered entity in Finland.
(iii) Exchange differences arising on translation of the foreign controlled entity are recognised in other comprehensive
income and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss
when the net investment is disposed of.
(iv) The revaluation reserve recognises the change in fair value of investments. Please refer to note 8 of these
financials.
FINANCIAL REPORT 2019
51
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 17. SHARE‐BASED PAYMENTS
The following share‐based payments arrangements were in existence during the current reporting year:
Options
Options Series
(1) Issued at 14 September 2015
(2) Issued at 9 October 2015
(3) Issued at 23 October 2015
(4) Issued at 29 November 2015
(5) Issued at 18 April 2016
(6) Issued at 28 April 2016
(7) Issued at 7 October 2016
(8) Issued 17 October 2017
(9) Issued 17 October 2017
(10) Issued 28 November 2018
(11) Issued 5 March 2019
Number
Grant Date
Expiry Date
Exercise
Price $
Fair value at
Grant Date
$
29,250,000
50,000
400,000
400,000
800,000
1,000,000
11,950,000
7,750,000
3,400,000
2,900,000
50,000
14/09/2015
09/10/2015
23/10/2015
29/11/2015
18/04/2016
29/04/2016
07/10/2016
17/10/2017
17/10/2017
28/11/2018
05/03/2019
14/09/2019
09/10/2019
23/10/2019
28/11/2019
17/04/2020
28/04/2020
06/10/2020
16/10/2021
16/10/2021
27/11/2022
04/03/2023
0.31
0.31
0.31
0.31
0.31
0.35
0.61
0.23
0.23
0.14
0.11
0.13
0.13
0.12
0.08
0.14
0.16
0.23
0.08
0.08
0.05
0.04
(1) The 29,250,000 options in series 1 comprised 23,750,000 options issued to the Directors of the Group which
vested immediately, 3,600,000 options issued to employees under the Employee Share Option Plan which vest
one year from grant date and 1,900,000 options issued to service providers which vest one year from grant date.
For the service provider options, the value of services received was unable to be measured reliably and therefore
the value of services received was measured by reference to the fair value of options issued.
(2) The 50,000 options in series 2 which vests one year from grant date was issued to employees under the
Employee Share Option Plan.
(3) The 400,000 options in series 3 which vests one year from grant date was issued to employees under the
Employee Share Option Plan.
(4) The 400,000 options in series 4 which vests one year from grant date was issued to employees under the
Employee Share Option Plan.
(5) The 800,000 options in series 5 comprised of 400,000 options were issued to employees under the Employee
Share Option Plan which vests one year from grant date, and 400,000 options issued to service providers which
vests one year from grant date. For the service provider options, the value of services received was unable to
be measured reliably and therefore the value of services received was measured by reference to the fair value
of options issued.
(6) The 1,000,000 options in series 6 which vested immediately were issued to a Director of the Group.
(7) The 11,950,000 options in series 7 comprised 6,500,000 options issued to the Directors of the Group which
vested immediately, 2,700,000 options were issued to employees under the Employee Share Option Plan which
vest one year from grant date and 2,750,000 options were issued to service providers which vest one year from
grant date. For the service provider options, the value of services received was unable to be measured reliably
and therefore the value of services received was measured by reference to the fair value of options issued.
(8) The 7,750,000 options in series 8 which vested immediately were issued to the Directors of the Group which
vested immediately.
FINANCIAL REPORT 2019
52
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 17. SHARE‐BASED PAYMENTS (CONTINUED)
(9) The 3,400,000 options in series 9 comprised 2,950,000 options issued to employees under the Employee Share
Option Plan which vest one year from grant date and 450,000 options were issued to service providers which
vest one year from grant date. For the service provider options, the value of services received was unable to be
measured reliably and therefore the value of services received was measured by reference to the fair value of
options issued.
(10) The 2,900,000 options in series 10 comprised 2,500,000 were issued to employees under the Employee Share
Option Plan which vest one year from grant date and 400,000 options were issued to service providers which
vest one year from grant date. For the service provider options, the value of services received was unable to be
measured reliably and therefore the value of services received was measured by reference to the fair value of
options issued.
(11) The 50,000 options in series 11 which vests one year from grant date was issued to an employee under the
Employee Share Option Plan.
The weighted average fair value of the share options granted during the year is $0.14.
The total expense of the share based payments for the year was:
Options issued under Directors Option Plan
Options issued under Employee Share Plan
Options issued under Service Provider Plan
30 June
2019
$
‐
108,426
10,568
118,994
30 June
2018
$
642,717
196,717
37,319
876,753
The weighted average contractual life for options outstanding at the end of the year was 1.4 years.
Options were priced using a Black‐Scholes option pricing model using the inputs below:
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Interest rate
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Interest rate
Series 1
0.21
0.31
100.00%
4 years
0.00%
3.10%
Series 6
0.25
0.35
100%
4 years
0.00%
3.35%
Series 2
0.19
0.31
100.00%
4 years
0.00%
3.10%
Series 7
0.44
0.61
80%
4 years
0.00%
2.87%
Series 3
0.19
0.31
100.00%
4 years
0.00%
3.10%
Series 8
0.16
0.23
80%
4 years
0.00%
2.34%
Series 4
0.14
0.31
100.00%
4 years
0.00%
3.35%
Series 9
0.23
0.23
80%
4 years
0.00%
2.34%
Series 5
0.22
0.31
100.00%
4 years
0.00%
3.26%
Series 10
0.09
0.14
80%
4 years
0.00%
2.29%
Series 11
0.07
0.11
80%
4 years
0.00%
1.75%
FINANCIAL REPORT 2019
53
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 17. SHARE‐BASED PAYMENTS (CONTINUED)
The following reconciles the outstanding share options granted in the year ended 30 June 2018:
30 June
2019
No. of Options
30 June
2019
Weighted
average
exercise price
$
30 June
2018
No. of Options
30 June
2018
Weighted
average
exercise price
$
Balance at the beginning of the year
50,750,000
0.36
40,350,000
Granted during the year
Exercised during the year
Expired during the year (i)
Balance at the end of the year
Un‐exercisable at the end of the year
Exercisable at end of the year
(i) Options expired or cancelled during the year
2,950,000
‐
(500,000)
53,200,000
2,750,000
50,450,000
0.14
‐
0.19
0.34
0.14
0.35
11,150,000
‐
(750,000)
50,750,000
3,150,000
47,600,000
0.36
0.23
‐
0.40
0.35
0.23
0.36
For the year ended 30 June 2019, due to employee redundancies and resignations during the financial year, 500,000
employee share options were cancelled.
No amounts are unpaid on any of the shares. No person entitled to exercise an option had or has any rights by virtue of
the option to participate in any share issue of any other body corporate.
NOTE 18. DIVIDENDS
There were no dividends recommended or paid during the year ended 30 June 2019.
NOTE 19. KEY MANAGEMENT PERSONNEL DISCLOSURES
Short term employee benefits
Post‐employment benefits
Long‐term benefits
Share‐based payment
Detailed remuneration disclosures are provided in the Remuneration Report.
30 June
2019
$
578,794
44,641
30,341
13,519
667,295
30 June
2018
$
631,081
44,960
14,281
667,596
1,357,918
FINANCIAL REPORT 2019
54
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 20. RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH USED IN OPERATING ACTIVITIES
Loss for the year
Depreciation
Equity Settled share‐based payment transaction
Exploration expenditure written off
Income tax benefit/(expense)
Other (gain)/losses – net
Gain on disposal of available for sale financial assets
Gain on disposal of WA Gold Projects
Share of associate’s loss
Associate impairment expense
Increase/(Decrease) in trade and other payables
Increase/(Decrease) in provisions
(Increase)/Decrease in receivables
30 June
2019
$
(8,288,971)
101,376
118,994
60,446
70,445
(199,015)
‐
‐
915,715
586,270
13,486
12,529
(51,112)
30 June
2018
$
(1,673,903)
168,545
876,753
1,090,320
(102,536)
(209,139)
(1,893,669)
(5,919,557)
‐
‐
69,967
(421,597)
145,172
Net cash outflow from operating activities
(6,659,837)
(7,869,644)
NOTE 21. NON‐CASH INVESTING AND FINANCING ACTIVITIES
During the financial year ended 30 June 2018, the Group acquired available for sale assets with a fair value of $6,080,000
as consideration for the sale of the WA Gold Projects as per note 10. In relation the transaction costs of the sale, shares
were issued at a value of $315,000 in exchange for services provided. The share consideration and transaction costs are
not reflected in the statement of cashflows.
Consideration of shares from Westgold as per the sale of WA Gold Projects
Transaction costs in relation to the sale of WA Gold Projects – shares issued
NOTE 22. BASIC LOSS PER SHARE
30 June
2018
$
6,080,000
(315,000)
30 June
2019
$
30 June
2018
$
(a)
Reconciliation of loss used in calculating loss per share
Basic loss per share
Loss attributable to the ordinary equity holders used in calculating basic loss per
share
(8,288,971)
(1,673,903)
(b) Weighted average number of shares used as the Denominator
Number
Number
Ordinary shares used as the denominator in calculating basic loss per share
247,915,179
247,915,179
FINANCIAL REPORT 2019
55
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 22. BASIC LOSS PER SHARE (CONTINUED)
(c) Basic loss per share
Basic loss per share
Cents
(3.34)
Cents
(0.68)
Where loss per share is non‐dilutive, it is not disclosed.
NOTE 23. COMMITMENTS
The Group must meet the following operating lease and tenement expenditure commitments to maintain them in good
standing until they are joint ventured, sold, reduced, relinquished, exemptions from expenditure are applied or are
otherwise disposed of. These commitments, net of farm outs, are not provided for in the financial statements and are:
Not later than one year
After one year but less than two years
After two years but less than five years
After five years*
30 June
2019
$
361,920
287,382
702,546
227,232
1,579,080
30 June
2018
$
43,007
202,397
368,044
122,681
736,129
* Per annum
The increase of commitments for the year ended 30 June 2019 is due to granting of exploration licences in Finland.
NOTE 24. RELATED PARTY TRANSACTIONS
On 5 March 2019, the Company entered into a Shared Services Agreement with Todd Resources Ltd (“TRT”). The fees
and costs associated with the agreement include 40% of the Company’s budgeted administrative expenditure per month
in lieu of the office facilities provided by the Company to TRT. The Company also provide personnel on a consulting basis
for geological, GIS, financial and office administration services to TRT as part of the agreement. A total of $123,193 for
administrative expenditure and consulting services had been incurred for the financial year ended 30 June 2019. As at
30 June 2019, the Group has a receivable outstanding from TRT of $49,896.
Other than the Directors and key management personnel salaries and options described in the Remuneration Report,
there were no related party transactions for the year ended 30 June 2019.
NOTE 25. JOINT VENTURES
The Group has interests in the following joint venture operations:
Tenement
Area
Activities
Eundynie
Eundynie
All metals excluding nickel
Nickel
2019
2018
‐
80%
‐
80%
Due to the sale of Polar Metals Pty Ltd to Westgold Resources Limited as announced on 13 February 2018, the Group had
sold all metals rights (excluding nickel) for the Eundynie JV.
FINANCIAL REPORT 2019
56
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 26. PARENT ENTITY DISCLOSURES
Financial position
Assets
Current assets
Non‐current assets
Total assets
Liabilities
Current liabilities
Non‐current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share‐based payments reserve
Fair value and other comprehensive income reserve
Accumulated losses
Total equity
Financial performance
Loss for the year
Other comprehensive income
Total comprehensive income
Financial Report 2019
30 June
2019
$
30 June
2018
$
11,693,967
4,667,728
16,361,695
14,902,074
10,003,974
24,906,048
333,211
‐
333,211
16,028,484
189,819
‐
189,819
24,716,229
52,552,523
7,905,600
354,998
(44,784,639)
16,028,484
52,552,523
7,786,606
1,910,667
(37,533,567)
24,716,229
30 June
2019
$
30 June
2018
$
(8,208,819)
(597,921)
(8,806,740)
(1,366,154)
1,722,578
356,424
The parent entity has entered into an office lease agreement where the following commitments must be met:
Not later than one year
After one year but less than two years
30 June
2019
$
87,188
52,650
139,838
30 June
2018
$
33,341
202,397
235,738
FINANCIAL REPORT 2019
57
Financial Report 2019
Annual Financial Report (cont)
Notes to the Consolidated Financial Statements
NOTE 27. SUBSIDIARIES
Name of entity
Country of incorporation Class of Shares
Equity Holding
Sirius Europa Pty Ltd
Norse Exploration Pty Ltd
Sakumpu Exploration Oy
S2 Exploration Quebec Inc.
S2 Sverige AB
S2RUS Pty Ltd
S2RUS LLC
Nevada Star Exploration LLC
Australia
Australia
Finland
Canada
Sweden
Australia
United States
United States
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2018
100%
100%
100%
100%
100%
100%
100%
100%
2019
100%
100%
100%
100%
100%
100%
100%
100%
NOTE 28. EVENTS OCCURRING AFTER THE REPORTING YEAR
In September 2019, the Group had entered into the following arrangement with Todd River Resources Ltd (ASX:TRT):
On 10 September 2019, the Group had participated in Todd River Resources Ltd’s (ASX:TRT) placement by
purchasing 11,959,700 shares at $3.1 cents per share increasing its investment by $370,751.
The Group has also committed to take up its full entitlement under TRT’s 1‐for‐3 underwritten non‐renounceable
pro‐rata Entitlement Offer which will result in an issue of 14,078,099 shares to the Group at $3.1 cents per share.
The Entitlement Offer will end on 24 September 2019.
The Group will also participate as a sub‐under writer which is capped at a maximum of up to approximately
$854,167 or 27,533,783 new shares.
Other than the after balance date events stated above, there has been no matter or circumstance that has arisen since
30 June 2019 that has significantly affected, or may significantly affect:
the Group’s operations in future financial years;
the result of those operations in future financial years; or
the Group’s state of affairs in future financial years.
NOTE 29. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services
provided by the auditor of the Group:
Audit services
Total remuneration for audit services
30 June
2019
$
37,309
37,309
30 June
2017
$
38,482
38,482
FINANCIAL REPORT 2019
58
Financial Report 2019
Directors’ Declaration
The Directors of the Group declare that:
1. The financial statements and notes as set out on pages 17 to 58 are in accordance with the Corporations Act 2001,
and
(a) comply with Accounting Standards and the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(b) give a true and fair view of the financial position of the Group as at 30 June 2019 and of its performance for the
year ended on that date.
2. The financial report also complies with International Financial Reporting Standards as disclosed in note 1 to the
financial statements.
3. The Director acting in the capacity of Chief Executive Officer has declared that:
(a)
(b)
(c)
the financial records of the Company for the financial year have been properly maintained in accordance with
section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the accounting standards; and
the financial statements and notes for the financial year give a true and fair view.
4. In the opinion of the Directors there are reasonable grounds to believe that the Group will be able to pay its debts as
and when they become due and payable.
5. The remuneration disclosures that are contained in the Remuneration Report in the Directors’ Report comply with
Australian Accounting Standards AASB 124 Related Party Disclosures, the Corporations Act 2001 and the Corporations
Regulations 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Mark Bennett
Director
Perth
10 September 2019
FINANCIAL REPORT 2019
59
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY JARRAD PRUE TO THE DIRECTORS OF S2 RESOURCES LIMITED
As lead auditor of S2 Resources Limited for the year ended 30 June 2019, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of S2 Resources Limited and the entities it controlled during the period.
Jarrad Prue
Director
BDO Audit (WA) Pty Ltd
Perth, 10 September 2019
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 (WA) 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.
60
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of S2 Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of S2 Resources Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 (WA) 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.
61
Carrying value of exploration and evaluation assets
Key audit matter
How the matter was addressed in our audit
At 30 June 2019, the carrying value of the
capitalised exploration and evaluation asset is
disclosed in Note 11.
We have evaluated management’s assessment of
impairment indicators in accordance with AASB
6 including but not limited to the following:
As the carrying value of the capitalised
exploration and evaluation asset represents a
significant asset of the Group, and judgement is
applied by management in considering whether
facts and circumstances indicate that the
exploration and evaluation asset should be tested
for impairment. As a result, the asset requires
assessment for impairment indicators in
accordance with AASB 6 Exploration for and
Evaluation of Mineral Resources(“AASB 6”).
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
Obtaining a schedule of the areas of
interest held by the Group and assessing
whether the rights to tenure of those
areas of interest remained current at
balance date;
Considering the status of the ongoing
exploration programmes in the
respective areas of interest by holding
discussions with management, and
reviewing the Group’s exploration
budgets, ASX announcements and
director’s minutes;
Considering whether any such areas of
interest had reached a stage where a
reasonable assessment of economically
recoverable reserves existed;
Considering whether any facts or
circumstances existed to suggest
impairment testing was required; and
Assessing the adequacy of the related
disclosures in Notes 11 and 1(a) to the
Financial Statements.
Carrying value of investment in associate
Key audit matter
How the matter was addressed in our audit
At 30 June 2019, the carrying value of the equity
accounted investment in associate Todd River
Resources Limited (“TRT”) is disclosed in Note 9.
At each reporting period, the value of the equity
accounted investment in TRT needs to be
assessed for indicators of impairment in
accordance with AASB 128 Investments in
Associates and Joint Ventures (“AASB 128”). If
indicators of impairment exist, the recoverable
amount needs to be estimated.
The assessment of the carrying value of the
equity accounted investment in TRT was a key
audit matter due to the judgment involved in
determining the recoverable amount.
Our procedures included, but were not limited
to:
(cid:127)
(cid:127)
(cid:127)
(cid:127)
(cid:127)
verifying the profit or loss and net assets
of the associate and checking the
calculations for the recognition of
associate loss for the period;
Considering the existence of any
indicators of impairment of the
investment in accordance with AASB
128;
Reviewing ASX announcements, Board of
Directors meetings minutes to assess for
potential indicators of impairment;
Evaluating and assessing the accuracy of
Group’s calculation of the impairment
charge; and
Assessing the adequacy of the related
disclosures in Notes 9 and 1(a) to the
Financial Statements.
Other information
The directors are responsible for the other information. The other information comprises the
information contained in the Financial Report for the year ended 30 June 2019, but does not include
the financial report and our auditor’s report thereon, which we obtained prior to the date of this
auditor’s report, and the Annual Report to Shareholders, which is expected to be made available to us
after that date.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.
When we read the Annual Report to Shareholders, if we conclude that there is a material misstatement
therein, we are required to communicate the matter to the directors and will request that it is
corrected. If it is not corrected, we will seek to have the matter appropriately brought to the
attention of users for whom our report is prepared.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 15 of the directors’ report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of S2 Resources Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Jarrad Prue
Director
Perth, 10 September 2019