ANNUAL REPORT 2015
Sourcing the raw material of the future
CONTENTS
The Company
Graphite and the Market
East Kimberley Project
Itabela Project
Directors’ Report
Auditor’s Independence Declaration
Financial Statements
ASX Information
Corporate Directory
2
4
6
9
12
23
24
58
61
Sayona Mining Limited I Annual Report 2015
1
THE COMPANY
Sayona’s primary objective is to identify and acquire graphite projects with
large flake size potential and offering an achievable pathway to market. Flake
size is a critical element in determining graphite pricing. Jumbo and large flake
sizes attract premium pricing and are expected to be in strong demand, driven
by the growing use in new technologies such as lithium-ion batteries.
The Company has made a strategic entry into the large flake
graphite market by securing option agreements over two graphite
projects, including the earlier stage East Kimberley and
advanced stage Itabela projects. These project represent an
exciting portfolio offering both medium and long term
development potential. Both projects offer an attractive entry into
the graphite market:
! Situated in proven districts for
high carbon purity, large flake
graphite;
! Significant resource potential;
! Situated in well-established
mining districts with excellent
infrastructure including roads,
airports, and labour;
! Close to end-user markets: East
Kimberley to Asia, and Itabela to
the US and European markets;
! Tier one mining jurisdictions with
stable taxes and royalties, and
mining law; and
! Low cost entry via tenement
applications and option-to-
purchase agreements.
2
The Company plans to advance both projects in parallel and transfer knowledge about off-take markets, metallurgy
and processing developed at the more advanced Itabela project, with the team developing the East Kimberley project.
The Company will also consider other graphite projects, capable of meeting strategic benchmarks and adding value
to the Company.
The market for large and jumbo flake graphite is highly concentrated and potential synthetic graphite substitutes are
comparatively very expensive to produce. Both the United States and European Union Governments have classified
graphite as a “critical material” for industrial and national security purposes.
The Company believes that successful exploration results at both the East Kimberley and Itabela projects provides
several near term catalysts for the Company’s share price. Short-term value drivers for Sayona are outlined below.
East Kimberley
Project
Nov./Dec.
Oct.
Geophysics
program at
Corkwood
Results
pending
Corkwood Central
mapping and
sampling program
Jan./Mar.
Resource Studies
– to target a Maiden
JORC resource
Early
2016
Metallurgical
test work
Drilling - drilling
to commence
once statutory
and Native Title
requirements
are completed
Oct.
Confirmation by
an independent
expert of the
extensive
metallurgical
test work
Oct./Nov.
JORC
Resources &
exploration
potential
Nov./Dec.
Preliminary
economic
study
Itabela
Project
Sayona Mining Limited I Annual Report 2015
3
GRAPHITE
Why Graphite?
$12 BILLION
GROWING MARKET
THE BATTERY
MEGA FACTORIES
ARE COMING
FORECAST
DEMAND
FOR GRAPHITE IN
ELECTRIC VEHICLES
TO
INCREASE
OVER 10 YEARS BY
80%
+
4.0
3.5
3.0
2.5
EV Demand
Base (Non-EV)
)
s
n
o
T
n
o
i
l
l
i
M
(
2.0
I
1.5
E
T
H
P
A
1.0
R
0.0G
4
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
2031
2033
... AND THE MARKET
Key Graphite growth markets
NEW GREEN
TECHNOLOGIES
DRIVING
GLOBAL
DEMAND
Lithium Ion Battery Market
Y
R
E
T
T
A
B
i
L
Graphite
Lithium
CONTAINS
01 -20 TIMES MORE
GRAPHITE
THAN LITHIUM
Electric
Vehicles
Battery
Mega-
Factories
4 MILLION
735,000
157,000
2004
2010
2020 (proj.)
Li BATTERY
MEGA-FACTORY
TO
TRIPLE
BY
2020
Sayona Mining Limited I Annual Report 2015
5
EAST KIMBERLEY PROJECT
The East Kimberley project is located within the East
Kimberley region of Western Australia, 240 kilometres south
of Wyndham Port and 220 kilometres south-south-west of
the regional centre, Kununurra.
The East Kimberley project is located within the East Kimberley region of Western Australia, 240 kilometres
south of Wyndham Port and 220 kilometres south-south-west of the regional centre, Kununurra.
The East Kimberley project offers an attractive entry into the graphite market:
! Proven district for high carbon purity, large flake graphite;
! The Kimberley region is a proven province for high purity, large flake graphite.
! The significant scale (up to 20 kilometres strike extent) of the Corkwood graphite target identified from
geological and geophysical anomalies;
! Situated in a well-established mining district, 240 kilometres south of an export port at Wyndham;
! The region has excellent infrastructure including roads, airports, and labour;
! First world country with stable tax and royalties, and mining law; and
! Low cost entry via tenement applications and option-to-purchase agreements.
N
W.A.
Wyndham
Kununurra
East Kimberley Project
100km
)
Close to
Asian
Markets
N.T.
6
The Company’s East Kimberley project includes one granted tenement and three separate tenement applications,
subject to two option-to-purchase agreements. The project covers 278 km2 and comprises two areas, Keller and
Corkwood (See Figure 1). These areas have never been previously explored for their graphite potential.
Wyndham
Kununurra
N
240km
E 80/4915
Violet Hill
E 80/4948
Keller West
y
a
w
h
H i g
t h e r n
N o r
G re at
E 80/4511
Western Iron
E 80/4949
Corkwood
LEGEND
SYA Tenement
Mineral Deposit
Host stratigraphy
Road
Town
Port
Figure 1: East Kimberley project location, tenement boundaries and infrastructure
Terms of the two option-to-purchase agreements, include:
! Attgold Pty Ltd (“Attgold”) – SYA paid Attgold $5,000 on signing and is required to make payments of $30,000
within 6 months and $170,000 within 18 months of signing of the agreement, respectively, to acquire a 100%
interest in the tenements E80/4915, E80/4948 and E80/4949; and
! Western Iron Pty Ltd (“Western Iron”) – SYA paid Western Iron $5,000 on signing and is required to pay $200,000
on or before the six month agreement anniversary to exercise its option to acquire 100% of the graphite interests in
tenement E80/4511. Western Iron will also receive a 1% gross production royalty. Western Iron retains a Back-in
Right to the nickel, copper and iron mineralisation by the payment of $100,000 within 12 months.
Sayona Mining Limited I Annual Report 2015
7
Exploration Activity
Planned Activity
The Company’s initial field reconnaissance identified a number of
graphite outcrops which closely correspond with geophysical targets
reported in search literature. The graphite has a recessive weathering
profile and outcrops poorly.
The recent mapping and sampling programme principally targeted a 10
kilometre strike extent within the central portion of the Corkwood project
(within E80/4511 or the Western Iron Ore Option area), which has never
previously been explored for its graphite potential.
Mapping has identified persistent horizons of graphitic gneiss with up to
5 parallel units locally being present. The principle unit has widths
commonly of 10 metres or more, and ranges up to 50 metres in width.
Secondary units appear narrower, but outcrop is poor and this hinders
their interpretation.
Some of the graphite units have carbonate alteration related to early
stage shearing but the package generally does not appear to have
been affected by post metamorphic intrusions or other events which
could negatively impact graphite flake preservation. Importantly, the
graphite mineralisation is visually similar to that identified further to the
north and south during the company’s first sampling of the project area
in June. A previous petrographic study of these samples identified the
presence of coarse and jumbo flake graphite (see ASX announcement
10 July).
A total of 110 rock grab samples were collected. Results range from
0.65% TGC to 20.2% TGC. The two highest assay results, 20.2% TGC
and 16.8% TGC, come from samples spaced 5 km apart. Sample
locations and selected results are shown in Figure 1 for the northern
areas and Figure 2 for the southern areas.
The graphite mineralisation observed during recent mapping is
coincident with geophysical electromagnetic anomalism. This data, from
past airborne GEOTEM surveying, was reprocessed to help guide the
field programme. Interpretation of the geophysics however suggests a
broader area of conductive anomalism that that observed on the
ground. Given the high degree of cover over the graphite horizons in the
project area, there remains scope for additional mineralisation to be
present under cover.
The Company is planning to drill test the
prospective Corkwood leases during the
fourth quarter, calendar 2015. A staged
exploration approach to target the most
prospective areas is planned, including:
! Geological mapping and sampling
(with further assaying and petrology)
along the graphite target horizons;
! Identification of those areas with
larger graphite flake size – high purity
and or grade/ thickness;
! Acquisition of available digital
electromagnetic geophysical data
and interpretation and modelling;
! Planning for a VTEM survey over the
southern Corkwood area where little
prior geophysical work appears to
have been carried out;
! Drill testing of priority targets to define
thickness and grade of mineralisation,
once statutory and Native Title
requirements have been completed;
and
! Test work on drill and other samples
to determine the grade, recovered
flake size and purity of the graphite
and its suitability for high technology
use.
8
ITALBELA PROJECT
On 4 August 2015, the Company entered into a four-month, exclusive binding term sheet to acquire the Itabela
graphite project. At that point the Company has the option to proceed to a binding sale and purchase agreement.
The term sheet provides for:
- an exclusivity payment of US$60,000 payable in 4 equal instalments after execution of the binding term
sheet; and
- a purchase price of US$3.5 million after signing the binding sale and purchase agreement.
Itabela is an advanced stage graphite project with a substantial catalogue of drilling and pilot scale test work. The
Company believes the project can be fast tracked towards production by completion of a Feasibility Study, permitting
and securing off-take partners.
The key attractions of Itabela, include:
! Extensively drilled - approximately 8,000 metres of auger drilling in ~1000 holes. An internal non-JORC compliant
mineral resource will be converted to a JORC compliant resource during the due diligence period by a Sayona
Competent Person;
! Simple process flowsheet - Itabela has been subject to bench and more than 30 tonnes of pilot scale metallurgical
test work. The pilot testing confirms high recoveries and concentration grades can be achieved using proven,
straightforward flotation technology;
! Simple deposit - the deposit oxidised zone extends from surface down to a minimum of 40 metres depth, is friable
and is expected to be mined without the use of explosives;
! Large mineral rights package – 13 mineral rights totalling 13,316 hectares located in the largest graphite
producing district in the world outside of China. Itabela is located near three open-cut graphite mines in operation
and a history of over 60 years of continuous graphite production;
! Excellent infrastructure - close to established infrastructure including port, power, water, labour, roads and an
airport. The Company expects the well-established infrastructure will assist in delivering low operating and capital
costs; and
! Low tax jurisdiction & financing incentives – The state of Bahia has very attractive tax incentive schemes for new
mineral project developments.
Vitoria Da Conquista
Ilheus
Itabela Graphite Project
Belmonite
50km
Caraiva
Close to
USA
Market
Sayona Mining Limited I Annual Report 2015
9
The Company has commenced a detailed due diligence review of the Itabela project including the preparation of a
JORC compliant Mineral Resource and detailed review of all the metallurgical data produced through the bench and
pilot studies.
The Company believes the Itabela project offers exposure to a near term development opportunity in the graphite
market and has the potential to provide a significant short-term share value uplift. Itabela has a large database of
historical exploration including sampling, mapping, geophysics and drilling. In addition, the project has been subject
to extensive bench and pilot scale (38 tonnes processed) testing.
Itabela comprises 13 exploration permits with a total area of 13,316 hectares and is located in the north-eastern state
of Bahia, Brazil, 800 kilometres north of Rio de Janeiro and 500 kilometres south of the state capital, Salvador. The
nearest town, Itabela, is situated 5 kilometres to the south-east and has an estimated population of 28,500.
Itabela is located in the heart of the largest graphite producing district in the world outside of China. Itabela is located
near three open-cut graphite mines in operation that have a history of over 70 years of continuous graphite production.
The graphite qualities are well known in world markets and are in strong demand both locally and internationally.
Ilheus
N
Canavieiras
Belmonite
Eunapolis
Itabella
Itabela
Graphite
Project
Porto Seguro
Caraiva
25km
Vitoria Da Conquista
Itapetinga
Pedra Azul
Graphite Mine
80km west
Maiquinique
Graphite Mine
Jacinto
Salto de Divisa
Graphite Mine
LEGEND
Itabela tenement
Road
B R A Z I L
Brasilia
Rio de Janeiro
1000km
10
A major advantage of the Itabela deposit is that the mineralisation is hosted from surface and is very friable, deeply
weathered saprolite ore, with large quantities of large flake graphite. The soft material is expected to be easily mined
with no drilling or blasting required. The processing circuit will not incorporate crushing. Minimal grinding and simple
flotation circuits will result in low energy consumption and operating costs. Jumbo and large flake graphite is
recovered in the front end of the circuit, thus preserving the premium characteristics of Itabela’s ore.
Exploration Overview
Itabela is located in the Araçuai Orogen, in the central eastern portion of Brazil. The main graphitic mineralization is
hosted in the sector called Central Core, where pelitic sediments' deposits overlaid synkinematic granites during the
Neoproterozoic and early Cambrian age. Itabela shows high levels of strong metamorphism along with a high degree
of foliation. Mineralization appears in the soft zones with partial anatexis oriented along the north-south to east-west
strike with high degree of dip (sub-vertical to vertical).
In general, mineralization is structurally controlled by the shearing zone along the regional fault. Mineralization is easily
identified visually, showing the presence of graphite flakes.
The project consists of two main target areas, São Rubens and São Manuel, and 8-10 secondary and satellite targets
within a continuous structure over strike length 7.5 kilometres long.
Project Tenements
In general, mineralization is structurally controlled by the shearing zone along the regional fault. Mineralization is easily
identified visually, showing the presence of graphite flakes.
Holder
Process Number
Area (ha)
Status
Grant Date
Expiry Date
Brasil Grafite S.A.
872874/2010
Brasil Grafite S.A.
872737/2010
Brasil Grafite S.A.
872736/2010
Brasil Grafite S.A.
872735/2010
Brasil Grafite S.A.
872734/2010
Brasil Grafite S.A.
872733/2010
Brasil Grafite S.A.
872732/2010
Brasil Grafite S.A.
872329/2010
Brasil Grafite S.A.
872328/2010
934
947
932
985
800
989
994
918
948
Exploration Permit
17/12/2010
15/05/2017
Exploration Permit
17/12/2010
15/05/2017
Exploration Permit
17/12/2010
15/05/2017
Exploration Permit
17/12/2010
15/05/2017
Exploration Permit
17/12/2010
15/05/2017
Exploration Permit
17/12/2010
15/05/2017
Exploration Permit
17/12/2010
15/05/2017
Exploration Permit
13/10/2010
Exploration Permit
13/10/2010
9/04/2017
9/04/2017
Brasil Grafite S.A.
871722/2010
2,000
Exploration Permit
18/08/2010
18/07/2015
Brasil Grafite S.A.
871524/2013
Brasil Grafite S.A.
871053/2011
Brasil Grafite S.A.
871052/2011
952
937
980
Exploration Permit
1/07/2013
11/12/2016
Exploration Permit
25/03/2011
12/12/2017
Exploration Permit
25/03/2011
27/08/2017
Sayona Mining Limited I Annual Report 2015
11
DIRECTORS’ REPORT
Your Directors present their report on the consolidated entity (group) consisting of Sayona Mining
Limited and its controlled entities for the financial year to 30 June 2015. The information in the
following operating and financial review and the remuneration report forms part of this directors’
report for the financial year ended on 30 June 2015 and is to be read in conjunction with the following
information.
Directors
The Directors of the Company during or since the end of the financial year are listed below. During
the year there were 4 meetings of the full Board of Directors. The meetings attended by each Director
were:
DIRECTOR
D.C. O’Neill
P.A. Crawford
A. C. Buckler
J. S. Brown
P. van Riet-Lowe (Resigned 7 July 2014)
W. Osterberg (Resigned 7 July 2014)
ELIGIBLE TO
ATTEND
4
4
4
4
-
-
ATTENDED
4
3
4
4
-
-
The Company does not have an Audit Committee. The role of the Audit Committee has been
assumed by the full Board. The size and nature of the Company’s activities does not justify the
establishment of a committee at this time.
Information on Directors and Company Secretary
The names and qualifications of current Directors are summarised as follows.
Dennis C O’Neill
Director (Executive)
Qualifications
Experience
Bachelor of Science - Geology
Board member since 2000. Over 40 years’ experience in exploration
project and corporate management. He held positions with a number of
Australian and multinational exploration companies and has managed
exploration programs in a diverse range of commodities and locations.
Interest in Shares
69,255,241 ordinary shares, 2,000,000 options
Directorships
Listed Companies
in Other
Altura Mining Limited
Former directorships in
last 3 years
Nil
Paul A Crawford
Director (Executive) & Company Secretary
Qualifications
Experience
Bachelor of Business – Accountancy; CPA; Master of Financial
Management; Graduate Diploma in Business Law; Graduate Diploma in
Company Secretarial Practice.
Board member since 2000. 35 years of commercial experience,
including various technical and management roles within the minerals,
coal and petroleum
industries. Principal of his own corporate
firm, providing accounting, corporate governance,
consultancy
business advisory and commercial management services.
Interest in Securities
75,930,974 ordinary shares, 2,750,000 options.
Directorships
Listed Companies
in Other
Nil
Former directorships in
last 3 years
ActivEX Limited
12
Allan C Buckler
Director (Non-Executive)
Qualifications
Experience
Certificate in Mine Surveying and Mining, First Class Mine Managers
Certificate and a Mine Surveyor Certificate issued by the Queensland
Government’s Department of Mines
Appointed to the Board on 5 August 2013. Over 35 years’ experience in
the mining industry and has taken lead roles in the establishment of
several leading mining and port operations in both Australia and
Indonesia. Significant operations such as PT Adaro Indonesia, PT
Indonesia Bulk Terminal and New Hope Coal Australia have been
developed under his leadership.
Interest in Securities
83,081,394 ordinary shares, 2,000,000 options
Directorships
Listed Companies
in Other
Altura Mining Limited, Interra Resources Limited
Former directorships in
last 3 years
Nil
James S Brown
Director (Non-Executive)
Qualifications
Graduate Diploma in Mining from University of Ballarat
Experience
Appointed to the Board on 12 August 2013. Over 25 years’ experience
in the coal mining industry in Australia and Indonesia, including 22
years at New Hope Corporation. He was appointed as Managing
Director of Altura in September 2010. His coal development and
operations experience includes the New Acland and Jeebropilly mines
in South East Queensland, the Adaro and Multi Harapan Utama
operations in Indonesia and Blair Athol in the Bowen Basin in Central
Queensland.
Interest in Securities
1,648,295 ordinary shares, 400,000 options
Directorships
Listed Companies
in Other
Altura Mining Limited
Former directorships in
last 3 years
Nil
Dividends
No dividends were declared or paid during the financial year.
Share Options
At the date of this report the unissued ordinary shares of Sayona Mining Limited under option are as
follows:
Grant Date
Expiry Date
Exercise
Price
No. under Option
8 July 2015
30 June 2016
0.5 cents
8 July 2015
31 December 2016
1.0 cents
8 July 2015
30 June 2017
1.5 cents
14 August 2015
30 December 2016
3.0 cents
4 September 2015 30 December 2016
3.0 cents
7 September 2015 30 December 2016
3.0 cents
6,000,000
6,000,000
6,000,000
72,320,000
30,563,700
8,032,781
Options holders do not have any rights to participate in any issue of shares or other interests of the
Company or any other entity.
Sayona Mining Limited I Annual Report 2015 13
There have been no options granted over unissued shares or interests of any controlled entity within
the Group during or since the end of the reporting period.
For details of options issued to directors and executives as remuneration, refer to the remuneration
report.
No options have been exercised during the financial year or since year end to the date of this report.
Indemnification of Directors and Auditors
The consolidated group has paid insurance premiums to indemnify each of the Directors against
liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of
their conduct while acting in the capacity of Director of the Company, other than conduct involving a
wilful breach of duty in relation to the Company The contracts include a prohibition on disclosure of
the premium paid and nature of the liabilities covered under the policy.
The Company has not given an indemnity or entered into any agreement to indemnify, or paid or
agreed to pay insurance premiums in respect of any person who is or has been an auditor of the
Company or a related body corporate during the year and up to the date of this report.
Proceedings on behalf of the Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene
in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf
of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Auditor Independence
A copy of the auditor’s independence declaration as required under section 307C of the Corporations
Act 2001 is attached.
Non-Audit Services
There were no non-audit services provided by the Company’s auditors in the current or previous
financial year.
Corporate Governance Statements
The Company’s Corporate Governance Statement is available to view publically on the Company’s
website at www.sayonamiming.com.au.
14
OPERATING AND FINANCIAL REVIEW
Principal Activity
The consolidated group’s principal activity during the financial year has been the identification,
assessment and acquisition of suitable mineral exploration assets. During the period the Company
undertook exploration activity on a number of projects.
There were no significant changes in these activities during the financial year.
Business Model and Objectives
During the last few financial years, the Company’s objective has been focused on implementng its
restructuring plan with a view to restoring value to shareholders.
This has entailed recapitalising the Company and assessing projects on a worldwide basis with a
view to acquiring an advanced exploration/development project to add to its portfolio of assets. At the
date of this report these objectives have been achieved.
The objective now is to implement the Company’s business model of evaluating and developing its
portfolio of exploration assets.
Operating Results
The entity’s consolidated operating loss for the financial year after applicable income tax was
$566,530 (2014: $114,148 profit). Exploration and evaluation expenditure during the year totalled
$310,394 (2014: $126,620).
Review of Operations
During the year, the Company continued working through its restructuring plan with a view to
restoring value to shareholders.
The Company has been actively assessing projects on a worldwide basis with a view to acquiring an
advanced exploration/development project to add to its portfolio of assets. During the year, Directors
assessed the acquisition of a number of projects both in Australia and elsewhere.
During the first half of the year the, the Company entered into a heads of agreement with Freedom
Minerals Pty Ltd, Great Sandy Pty Ltd and Kalamazoo Resources Pty Ltd (“Talga”). The parties
entered into this agreement to record the basis on which they may enter into an Option Agreement in
relation to iron ore rights within some of the tenements under the control of Talga. At the completion
of due diligence procedures the Company paid to Talga a signing fee of $50,000 and $45,455 for the
reimbursement of costs for a Native Title Heritage Survey. The company has therefore exercised its
right under this heads of agreement and as a result entered into an option agreement with Talga.
Under the terms of the option agreement the company had been granted the option to acquire a 70%
interest in the iron ore rights of the tenements controlled by Freedom Minerals Pty Ltd and Great
Sandy Pty Ltd. The Company could only exercise its option under this agreement by performing the
following:
• Complete a minimum ten (10) hole drilling programme of at least 1,000 meters anywhere
within the tenements 45/3679, E45/3857, 45/4136 and 45/4137;
• Pay to Talga the sum of $599,000;
• Grant to Talga 25,000,000 ordinary share options which the holder may exercise at any
time within three (3) years from grant date at an issue price of $0.025 per share.
Field work comprising drilling, sampling and analysis was completed late December. The aim of the
programme was to define a high grade (60% Fe) DSO iron ore resource. The drilling confirmed the
existence of a stratigraphically conformable northerly dipping Lode style of iron ore mineralisation
down to a vertical depth of 139 metres and downhole widths up to 17 metres. Analytical results
received were disappointing and a review of the project resulted in the Company withdrawing from
the agreement.
Sayona Mining Limited I Annual Report 2015 15
Subsequent to the end of the year, the Company announced a strategic entry into the large flake
graphite market by securing a large ground position in the East Kimberley region of Western
Australia. The Kimberley region is a proven province for high purity, large flake graphite.
The market for large and jumbo flake graphite is highly concentrated and potential synthetic graphite
substitutes are comparatively very expensive to produce. Both the US and EU Governments have
classified graphite as a “critical material” for industrial and national security purposes.
The East Kimberley project offers an attractive entry into the graphite market:
• Proven district for high carbon purity, large flake graphite;
• The significant scale (up to 20 kilometres strike extent) of the Corkwood graphite target
identified from geological and geophysical anomalies;
• Situated in a well-established mining district, 240 kilometres south of an export port at
Wyndham;
• The region has excellent infrastructure including roads, airports, and labour;
• First world country with stable tax and royalties, and mining law; and
• Low cost entry via tenement applications and option-to-purchase agreements.
The project area is located within the East Kimberley region of Western Australia, 240 kilometres
south of Wyndham Port and 220 kilometres south-south-west of the regional centre, Kununurra.
The project includes one granted tenement and three separate tenement applications, subject to two
option-to-purchase agreements. The project covers 278 km2 and comprises two areas, Keller and
Corkwood (See Figure 1). These areas have never been previously explored for their graphite
potential
Terms of the two option-to-purchase agreements, include:
• Attgold Pty Ltd (“Attgold”) – SYA paid Attgold $5,000 on signing and is required to make
payments of $30,000 within 6 months and $170,000 within 18 months of signing of the
agreement, respectively, to acquire a 100% interest in the tenements E80/4915, E80/4948
and E80/4949; and
• Western Iron Pty Ltd (“Western Iron”) – SYA paid Western Iron $5,000 on signing and is
required to pay $200,000 on or before the six month agreement anniversary to exercise its
option to acquire 100% of the graphite interests in tenement E80/4511. Western Iron will also
receive a 1% gross production royalty. Western Iron retains a Back-in Right to the nickel,
copper and iron mineralisation by the payment of $100,000 within 12 months.
Corporate
In December 2013 Sayona initiated legal proceedings in the High Court in London against Mantle
Diamonds Plc for the recovery of USD $500,000 retained by Mantle as part of warranties and
indemnities provisions of the Sale and Purchase agreement for their purchase of the Lerala Diamond
mine.
On 24 September 2014 the Company settled its legal proceedings against Mantle Diamonds Limited.
Agreement with Mantle and Kimberley Diamonds Limited provided a mutual release of claims by the
parties and payment to Sayona of cash and scrip in Kimberley totalling US$340,000.
Financial Position
At 30 June 2015, the Company's Statement of Financial Position shows total assets of $876,127, of
which $737,545 was cash, total liabilities of $53,626 and net assets of $822,501. Committed
exploration & evaluation expenditure in the next 12 months totals $72,116. We refer to significant
events after balance date in this report and and note 23 in the financial report for non-binding
commitments
In August 2015, the Company announced its intention to undertake a partially underwritten,
accelerated non-renounceable rights issue to raise up to $2.57 million. The rights issue was fully
underwritten and completed on 4 September 2015.
The Directors believe that the group is in a stable financial position.
16
Significant Changes in the State of Affairs
Significant changes during the year include:
• On 24 September 2014 the Company settled its legal proceedings against Mantle Diamonds
Limited. Agreement with Mantle and Kimberley Diamonds Limited provided a mutual release
of claims by the parties and payment to Sayona of cash and scrip in Kimberley totalling
US$340,000. Settlement occurred on 1 October 2014.
• On 24 December 2014 the Company issued 6,000,000 shares at $0.005 each to settle
director fees outstanding from prior years.
• On 6 February 2015 the Company entered into a Heads of Agreement with Attgold Pty Ltd to
acquire a 100% in a number of graphite tenements in Western Australia.
Significant Events After Balance Date
Key events since balance date have been:
• On 3 July 2015 the Company appointed Mr Corey Nolan as Chief Executive Office.
• On 7 July 2015, the Sayona East Kimberley Pty Ltd entered into an Option and Sale
Agreement with Western Iron Ore Pty Ltd ("Western") to acquire 100% of the graphite interest
in tenement E80/4511.
The option is exercisable within 6 months but can be abandoned by Sayona at any stage of
the exercise period. The agreement provides for a back-in option for Western under certain
conditions for minerals other than graphite. The contingent commitments for the Group are:
- option fee of $5,000 on signing the agreement;
- an exercise price of $200,000 payable one business day after giving an option exercise
notice;
-
-
to meet minimum statutory expenditure obligations relating to the tenement, up to a limit
of $63,000; and
to pay statutory fees such as rates and rent up to a limit of $17,000.
• On 8 July 2015, the Company granted 18,000,000 options with various exercise conditions to
Mr Nolan. Refer to the Directors' Report for details of these options.
• On 4 August 2015, the Company entered into a four-month, exclusive binding term sheet to
acquire the Itabela graphite project.
It is solely at Sayona Group's discretion whether to proceed to a binding sale and purchase
agreement. The contingent commitments for the Group are:
- an exclusivity payment of US$60,000 payable in 4 equal instalments after execution of
the binding term sheet; and
- a purchase price of US$3.5 million after signing the binding sale and purchase
agreement.
• On 5 August 2015, the Company announced its intention to undertake an accelerated non-
renounceable rights issue to raise up to $2.57 million. The rights issue entailed a 1 for 4
entitlement offer at an issue price of $0.025 per share, together with 1 free attaching option,
exercisable at $0.03 and expiring 30 December 2016, for every new share applied for.
• On 14 August 2015, the Company completed the accelerated component of the rights issue,
issuing 72,320,000 new shares and listed options to raise $1,080,000.
• On 4 September 2015, the Company completed the underwritten retail component of the
rights issue raising $764,092.
• On 9 September 2015, the Company issued 1,224,116 shares and listed options as a
placement in respect of underwriting oversubscriptions.
• On 9 September 2015, the Company issued 1,603,522 shares and 6,808,666 listed options in
part settlement of raising management and underwriting fees.
Sayona Mining Limited I Annual Report 2015 17
Other than as set out in this report and the attached financial statements no matters or circumstances
have arisen since 30 June 2015, which significantly affect or may significantly affect the operations of
the Company, the results of those operations, or the state of affairs of the Company in subsequent
financial years.
Future Developments, Prospects and Business Strategies
During the year, the Company has assessed the acquisition of a number of projects in various
jurisdictions. A decision to make a strategic entry into the large flake graphite market has seen the
Company assemble a portfolio of exploration assets to achieve this outcome.
The Company’s strategic focus is on the exploration, evaluation and potential for development of
these assets. The assets range from early stage exploration to advanced projects with potential for
advancement to production.
To achieve these outcomes the Company is likely to require additional capital. The form of this
funding is currently undetermined and likelihood of success unknown. Consequently it is not possible
at this stage to predict future results of the activities.
Business Risks
The following exposures to business risks may affect the Group’s ability to achieve prospects above
are:
• exploration and evaluation success on individual projects;
•
•
the ability to raise additional funds in the future; and
the Group’s ability to identify and acquire an interest in additional projects, if required.
Environmental Regulation
The Company’s operations are subject to environmental regulation under the
Commonwealth and the States of Western Australia.
law of the
The Directors monitor the Company’s compliance with environmental regulation under law, in relation
to its exploration activities. The Directors are not aware of any compliance breach arising during the
year and up to the date of this report.
18
REMUNERATION POLICY
The financial position of the Company over the recent years resulted in the suspension of a number
of remuneration arrangements.
The Company’s remuneration policy ordinarily seeks to align Director and executive objectives with
those of shareholders and the business, while at the same time recognising the development stage of
the Company and the criticality of funds being utilised to achieve development objectives. The Board
believes that the current policy has been appropriate and effective in achieving a balance of
objectives.
The Board’s policy for determining the nature and amount of remuneration for KMP of the
consolidated group is based on the following:
• The remuneration policy is to be developed and approved by the Board.
• KMP may receive a base salary, superannuation, fringe benefits, options and performance
incentives.
• The remuneration structure for KMP is based on a number of factors including length of
service, particular experience of the individual concerned and overall performance of the
group.
• Performance incentives are generally only paid once predetermined key performance
indicators (KPIs) have been met.
•
Incentives paid in the form of options or rights are intended to align the interests of the
directors and company with those of the shareholders.
• The Board reviews KMP packages annually by reference to the consolidated group’s
performance, executive performance and comparable information from industry sectors.
the
forecast growth of
The performance of KMP is measured against criteria agreed annually with each party and is based
predominantly on
the consolidated group, project milestones and
shareholders’ value. All bonuses and incentives must be linked to predetermined performance
criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses
and options. Any change must be justified by reference to measurable performance criteria. The
policy is designed to attract the highest calibre of executives possible and reward them for
performance results leading to long-term growth in shareholder wealth.
All remuneration paid to KMP is valued at the cost to the company and expensed.
The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and
responsibilities. The Board collectively determines payments to the non-executive directors and
their remuneration annually, based on market practice, duties and accountability.
reviews
Independent external advice is sought when required. The maximum aggregate amount of fees that
can be paid to non-executive directors is subject to approval by shareholders at the annual general
meeting.
KMP are also entitled and encouraged to participate in the employee share and option arrangements
to align directors’ interests with shareholders’ interests.
Options granted under the arrangement do not carry dividend or voting rights. Each option is entitled
to be converted into one ordinary share once the interim or final financial report has been disclosed
to the public and is measured using a binomial lattice pricing model which incorporates all market
vesting conditions.
KMP or closely related parties of KMP are prohibited from entering into hedge arrangements that
would have the effect of limiting the risk exposure relating to their remuneration.
In addition, the Board’s remuneration policy prohibits directors and KMP from using the Company’s
shares as collateral in any financial transaction, including margin loan arrangements.
Engagement of Remuneration Consultants
The Company does not engage remuneration consultants.
Sayona Mining Limited I Annual Report 2015 19
Performance Based Remuneration
KPIs are set annually, in consultation with KMP. The measures are specifically tailored to the area
each individual is involved in and has a level of control over. The KPIs target areas the Board believes
hold greater potential for group expansion and shareholder value, covering financial and non-
financial as well as short and long-term goals. The level set for each KPI is based on budgeted figures
for the Group and relevant industry standards.
Relationship between Remuneration Policy and Company Performance
The remuneration policy has been tailored to increase goal congruence between shareholders,
directors and executives. The Company has been working on the restructuring plan approved by
shareholders at a general meeting held in March 2011. This plan focused on recapitalising the
Company and acquiring an advanced exploration/development project, with a view to restoring value
to shareholders.
The relative inactivity during this period makes any analysis of the Company’s performance over this
period meaningless. Consequently no summary of performance has been included in this report.
Employment Details of Members of Key Management Personnel
The following table provides employment details of persons who were, during the financial year,
members of KMP of the consolidated group. The table also illustrates the proportion of remuneration
that was performance and non-performance based and the proportion of remuneration received in
the form of options.
Key
Management
Personnel
Position held at 30
June 2015 & change
during period
Contract Details
Proportion of Remuneration:
Related to
performance
Not related to
performance
Options
Salary & Fees
Total
D O'Neill
Executive Director
P Crawford
Executive Director
Company Secretary
A Buckler
Non-executive
Director from 5
August 2013
J Brown
Non-executive
Director from 12
August 2013
P van Riet-
Lowe
Non-executive
Chairman resigned 7
July 2014
W Osterberg
Non-executive
Director resigned 7
July 2014
No fixed term,
termination as
provided by
Corporations
Act
No fixed term,
termination as
provided by
Corporations
Act
No fixed term,
termination as
provided by
Corporations
Act
No fixed term,
termination as
provided by
Corporations
Act
No fixed term,
termination as
provided by
Corporations
Act
No fixed term,
termination as
provided by
Corporations
Act
-
-
-
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
20
There are no formalised contracts of employment with any member of KMP
Changes in Executives Subsequent to Year-end
On 3 July 2015 the Company appointed Mr Corey Nolan as Chief Executive Office.
Remuneration Expense Details
There was no remuneration benefit or payment made to any member of KMP of the consolidated
group during the current year or comparative year.
Securities received that Are Not Performance-related
Members of KMP may receive securities that are not performance-based as part of their remuneration
package.
Options and Rights Granted as Remuneration
No options or shares were granted as remuneration in the current year or the 2014 year.
The following options were granted as remuneration subsequent to year end.
KMP
Granted
No.
Vested
No.
Grant
Date
Date
Exercisable
Exercise
price
Value per Option
at Grant Date
Total
Value
C Nolan
6,000,000 6,000,000 8.07.2015
C Nolan
6,000,000 6,000,000 8.07.2015
C Nolan
6,000,000 6,000,000 8.07.2015
From vest to
30.06.16
From vest to
31.12.16
From vest to
30.06.17
0.5 cents
0.02941 cents
$1,765
1.0 cents
0.02221 cents
$1,333
1.5 cents
0.02326 cents
$1,396
The options entitle the holder to one ordinary share in the Company for each option held. Option
values at grant date were determined using the binomial valuation method and has been determined
in accordance with applicable Australian Accounting Standards.
KMP Shareholders
The number of ordinary shares held by each KMP of the Group during the financial year is as follows:
Key Management Personnel (i)
Balance
1 July 2014
Remun-
eration
Other
Changes
Balance
30 June
2015
Dennis O'Neill
Paul Crawford
Allan Buckler
James Brown
Peter van Riet-Lowe
Wayne Osterberg
Total
29,772,482
19,208,691
81,081,394
1,248,295
26,698
13,953
131,351,513
-
-
-
-
-
-
-
37,482,759
53,972,283
-
-
(26,698)
(13,953)
67,255,241
73,180,974
81,081,394
1,248,295
-
-
91,414,391 222,765,904
Other Transactions with KMP and/or their Related Parties
There were no other transactions conducted between the Group and KMP or their related parties,
other than those disclosed above, that were conducted other than in accordance with normal
employee, customer or supplier relationships on terms no more favourable than those reasonably
expected under arm’s length dealings with unrelated persons.
There are no amounts owed to or from any member of KMP as at 30 June 2015.
Sayona Mining Limited I Annual Report 2015 21
The Directors’ Report, incorporating the Remuneration Report, is signed in accordance with a
resolution of the Board of Directors.
Dennis O’Neill
Director
Signed: 28 September 2015
Brisbane, Queensland
Paul Crawford
Director
22
To the Directors of Sayona Mining Limited
Annual Report 2015 23 FINANCIAL
STATEMENTS
2015
24 CONTENTS
Statement of Profit and Loss and
Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Director’s Declaration
Independent Auditor’s Report
26
27
28
29
30
55
56
Sayona Mining Limited I Annual Report 2015 25 SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
STATEMENT OF PROFIT AND LOSS AND COMPREHENSIVE INCOME
for the year ended 30 June 2015
Consolidated Group
Note
2015
$
2014
$
Revenue and other income
2
55,219
39,427
Administrative expenses
Restructure costs written back
Occupancy costs
Write-off of receivable for deferred sale consideration
Exploration expenditure expensed during year
Net loss on financial asset at fair value through profit and loss
Foreign exchange losses
Write-back (Impairment) of receivable for deferred sale
consideration
Profit or (Loss) before income tax
Tax expense
Profit or (Loss) for the year
Other comprehensive income
(230,484)
-
(39,201)
-
(310,394)
(41,670)
-
(310,070)
190,738
(34,493)
(37,179)
(126,620)
-
(5,998)
-
398,343
(566,530)
114,148
-
-
(566,530)
114,148
3
3
3
4
Items that will be reclassified subsequently to profit or loss
when specific conditions are met:
Exchange differences on translation of foreign controlled
entities
4(c)
Other comprehensive income for the year
-
-
22,563
22,563
Total comprehensive income or (loss) attributable to
members
(566,530)
136,711
Earnings per Share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
6
6
(0.14)
(0.14)
0.03
0.03
Dividends per share (cents per share)
-
-
The accompanying notes form part of these financial statements.
26
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
STATEMENT OF FINANCIAL POSITION
As at 30 June 2015
Consolidated Group
Note
2015
$
2014
$
8
9
10
11
737,545
13,059
117,693
6,296
1,201,357
367,625
-
5,164
874,593
1,574,146
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other financial assets
Other assets
Total Current Assets
NON-CURRENT ASSETS
Property, plant and equipment
12
1,534
4,031
Total Non-Current Assets
1,534
4,031
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Borrowings
876,127
1,578,177
13
14
53,626
-
103,896
115,250
Total Current Liabilities
53,626
219,146
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
53,626
219,146
822,501
1,359,031
15
16
50,069,511
(4,527,230)
(44,719,780)
50,039,511
(4,527,230)
(44,153,250)
822,501
1,359,031
The accompanying notes form part of these financial statements.
Sayona Mining Limited I Annual Report 2015 27
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2015
Note
Share
Capital
Accumulated
Losses
$
$
Foreign
Currency
Translation
Reserve
$
Option
Reserve
Total
$
$
Consolidated Group
Balance at 1 July 2013
48,358,511
(44,528,397)
(4,549,793)
260,999
(458,680)
Profit attributable to members of the entity
Other comprehensive income for the year
Total comprehensive income for the year
Reserve transferred to accumulated
losses
-
-
-
-
114,148
-
-
22,563
114,148
22,563
-
-
-
114,148
22,563
136,711
260,999
-
(260,999)
-
Shares issued during the year
Transaction costs
15
1,718,500
(37,500)
-
-
-
-
Balance at 30 June 2014
50,039,511
(44,153,250)
(4,527,230)
Loss attributable to members of the entity
Other comprehensive income for the year
Total comprehensive income for the ye ar
-
-
-
(566,530)
-
(566,530)
Shares issued during the year
Transaction costs
15
30,000
-
-
-
-
-
-
-
-
Balance at 30 June 2015
50,069,511
(44,719,780)
(4,527,230)
-
-
-
-
-
-
-
-
-
1,718,500
(37,500)
1,359,031
(566,530)
-
(566,530)
30,000
-
822,501
The accompanying notes form part
of these financial statements.
28
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
STATEMENT OF CASH FLOWS
for the year ended 30 June 2015
Consolidated Group
Note
2015
$
2014
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
(571,486)
21,123
(622,088)
39,427
Net cash provided by (used in) operating activities
17
(550,363)
(582,661)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
Proceeds from settlement of deferred sale consideration
-
227,660
(5,172)
-
Net cash provided by (used in) investing activities
227,660
(5,172)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of borrowings
(127,652)
(78,500)
Net cash provided by (used in) financing activities
(127,652)
(78,500)
Net increase (decrease) in cash held
(450,355)
(666,333)
Cash at beginning of financial year
1,201,357
1,867,893
Effect of exchange rates on cash holdings in foreign
currencies
(13,457)
(203)
Cash at end of financial year
8
737,545
1,201,357
The accompanying notes form part of these financial statements.
Sayona Mining Limited I Annual Report 2015 29
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and notes represent those of Sayona Mining Limited and
Controlled Entities (the “consolidated group” or “group”).
The separate financial statements of the parent entity, Sayona Mining Limited, have not been
presented within this financial report as permitted by the Corporations Act 2001.
Financial information for Sayona Mining Limited as an individual entity is included in Note 25.
Basis of Preparation
These general purpose financial statements have been prepared in accordance with the Corporations
Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting
Standards Board and International Financial Reporting Standards as issued by the International
Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under
Australian Accounting Standards. Material accounting policies adopted in the preparation of these
financial statements are presented below and have been consistently applied unless stated
otherwise.
Except for cash flow information, the financial statements have been prepared on an accruals basis
and are based on historical costs, modified, where applicable, by the measurement at fair value of
selected non-current assets, financial assets and financial liabilities.
Principles of Consolidation
The consolidated financial statements incorporate all of the assets, liabilities and results of the parent
(Sayona Mining Limited) and all of the subsidiaries (including any structured entities). Subsidiaries
are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through
its power over the entity. A list of the subsidiaries is provided in Note 26.
The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements
of the Group from the date on which control is obtained by the Group. The consolidation of a
subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances
and unrealised gains or losses on transactions between group entities are fully eliminated on
consolidation. Accounting policies of subsidiaries have been changed and adjustments made where
necessary to ensure uniformity of the accounting policies adopted by the Group.
Income Tax
The income tax expense/(income) for the year comprises current income tax expense/(income) and
deferred tax expense/(income).
Current income tax expense charged to profit or loss is the tax payable on taxable income. Current
tax liabilities/(assets) are measured at the amounts expected to be paid to/(recovered from) the
relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the year as well unused tax losses.
Current and deferred income tax expense/(income) is charged or credited outside profit or loss when
the tax relates to items that are recognised outside profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled and their measurement also reflects the
manner in which management expects to recover or settle the carrying amount of the related asset or
liability. With respect to non-depreciable items of property, plant and equipment measured at fair
value and items of investment property measured at fair value, the related deferred tax liability or
deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered
entirely through sale.
30
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Tax (continued)
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to
the extent that it is probable that future taxable profit will be available against which the benefits of the
deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates,
and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the
reversal of the temporary difference can be controlled and it is not probable that the reversal will
occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-
off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur in
future periods in which significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
Property, Plant & Equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated
depreciation and any accumulated impairment. In the event the carrying amount of plant and
equipment is greater than the estimated recoverable amount, the carrying amount is written down
immediately to the estimated recoverable amount and impairment losses are recognised either in
profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal
assessment of recoverable amount is made when impairment indicators are present.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in
excess of the recoverable amount from these assets. The recoverable amount is assessed on the
basis of the expected net cash flows that will be received from the asset’s employment and
subsequent disposal. The expected net cash flows have been discounted to their present values in
determining recoverable amounts.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow
to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are
recognised as expenses in profit or loss during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful
lives to the consolidated group commencing from the time the asset is held ready for use. Leasehold
improvements are depreciated over the shorter of either the unexpired period of the lease or the
estimated useful lives of the improvements. The depreciation rates used for plant and equipment are
in the range between 20% and 40%.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of
each reporting period. An asset’s carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount.
These gains and losses are recognised in profit or loss in the period in which they arise.
Exploration and Development Expenditure
Exploration, evaluation and development expenditures incurred are capitalised in respect of each
identifiable area of interest. These costs are only capitalised to the extent that they are expected to be
Sayona Mining Limited I Annual Report 2015 31
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Exploration and Development Expenditure (continued)
recovered through the successful development of the area or where activities in the area have not yet
reached a stage that permits reasonable assessment of the existence of economically recoverable
reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit or loss in the
year in which the decision to abandon the area is made. A regular review is undertaken of each area
of interest to determine the appropriateness of continuing to capitalise costs in relation to that area of
interest.
When production commences, the accumulated costs for the relevant area of interest are amortised
over the life of the area according to the rate of depletion of the economically recoverable reserves.
The term "Joint Operation" has been used to describe "farm-in" and "farm-out" arrangements.
Where the company has entered into joint operation agreements on its areas of interest, the earn-in
contribution by the joint operation partner is offset against expenditure incurred. Earn-in contributions
paid, or expenditure commitments incurred by the company to acquire a joint venture interest are
expensed when incurred up to the time an interest is acquired.
Restoration Costs
Costs of site restoration are provided for over the life of the project from when exploration
commences and are included in the costs of that stage. Site restoration costs include the dismantling
and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of
the site in accordance with local laws and regulations and clauses of the permits. Such costs have
been determined using estimates of future costs, current legal requirements and technology on an
undiscounted basis.
Any changes in the estimates for the costs are accounted for on a prospective basis. In determining
the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due
to community expectations and future legislation. Accordingly, the costs have been determined on
the basis that the restoration will be completed within one year of abandoning the site.
The company currently has no obligation for any restoration costs in relation to discontinued
operations, nor is it currently liable for any future restoration costs in relation to current areas of
interest. Consequently, no provision for restoration has been deemed necessary.
Leases
Lease payments for operating leases, where substantially all the risks and benefits remain with the
lessor, are charged as expenses in the periods in which they are incurred. Incentives under operating
leases are recognised as a liability and amortised on a straight-line basis over the life of the lease
term.
Impairment of Assets
At the end of each reporting period, the Group assesses whether there is any indication that an asset
may be impaired. The assessment will include consideration of external and internal sources of
information. 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 recognised immediately in profit or
loss.
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.
32
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Interests in Joint Arrangements
Joint arrangements represent the contractual sharing of control between parties in a business venture
where unanimous decisions about relevant activities are required.
The only joint operations the Group has entered into are "farm-in" and "farm-out" arrangements as
discussed in note 1 under Exploration and Development Assets.
Fair Value of Assets and Liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-
recurring basis after initial recognition, depending on the requirements of the applicable Accounting
Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a
liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing
market participants at the measurement date.
Fair Value of Assets and Liabilities (continued)
As fair value is a market-based measure, the closest equivalent observable market pricing information
is used to determine fair value. Adjustments to market values may be made having regard to the
characteristics of the specific asset or liability. The fair values of assets and liabilities that are not
traded in an active market are determined using one or more valuation techniques. These valuations
techniques maximise, to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or
liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in the
absence of such a market, the most advantageous market available to the entity at the end of the
reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the
payments made to transfer the liability, after taking into account transaction costs and transport
costs).
For non-financial assets, the fair value measurement also takes into account a market participant's
ability to use the asset in its highest and best use or to sell it to another market participant that would
use the asset in its highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-
based payment arrangements) may be valued, where there is no observable market price in relation
to the transfer of such financial instrument, by reference to observable market information where such
instruments are held as assets. Where this information is not available, other valuation techniques are
adopted and, where significant, are detailed in the respective note to the financial statements.
Financial Instruments
Initial Recognition and Measurement
Financial assets and financial liabilities are recognised when the entity becomes a party to the
contractual provisions of the instrument. This is equivalent to the date that the Group commits itself to
either the purchase or sale of the asset (ie trade date accounting is adopted).
Financial instruments are initially measured at fair value plus transactions costs, except where the
instrument is classified "at fair value through profit or loss" in which case transactions are expensed to
profit or loss immediately.
Classification and Subsequent Measurement
Financial instruments are subsequently measured at fair value, amortised cost using the effective
interest method, or cost.
Sayona Mining Limited I Annual Report 2015 33
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments (continued)
Amortised cost is calculated as the amount at which the financial asset or financial liability is
measured at initial recognition less principal repayments and any reduction for impairment, and
adjusted for any cumulative amortisation of the difference between that initial amount and the maturity
amount calculated using the effective interest method.
Classification and Subsequent Measurement (continued)
The effective interest method is used to allocate interest income or interest expense over the relevant
period and is equivalent to the rate that discounts estimated future cash payments or receipts
(including fees, transaction costs and other premiums or discounts) over the expected life (or when
this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying
amount of the financial asset or financial liability. Revisions to expected future net cash flows will
necessitate an adjustment to the carrying amount with a consequential recognition of an income or
expense item in profit or loss.
The Group does not designate any interests in subsidiaries as being subject to the requirements of
Accounting Standards specifically applicable to financial instruments.
i. Financial assets at fair value through profit or loss
Financial assets are classified at “fair value through profit or loss” when they are held for trading for
the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are
designated as such to avoid an accounting mismatch or to enable performance evaluation where a
group of financial assets is managed
by key management personnel on a fair value basis in accordance with a documented risk
management or investment strategy. Such assets are subsequently measured at fair value with
changes in carrying amount being included in profit or loss.
ii. Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market and are subsequently measured at amortised cost. Gains or
losses are recognised in profit or loss through the amortisation process and when the financial asset
is derecognised.
iii. Available-for-sale investments
Available-for-sale investments are non-derivative financial assets that are either designated as such or
that are not classified in any of the other categories. They comprise investments in the equity of other
entities where there is neither a fixed maturity nor fixed or determinable payments.
They are subsequently measured at fair value with any remeasurements other than impairment losses
and foreign exchange gains and losses recognised in other comprehensive income. When the
financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously
recognised in other comprehensive income is reclassified into profit or loss.
Available-for-sale financial assets are classified as non-current assets when they are not expected to
be sold within 12 months after the end of the reporting period. All other available-for-sale financial
assets are classified as current assets.
vi. Financial Liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at
amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and
when the financial liability is derecognised.
34
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments (continued)
Impairment
A financial asset (or group of financial assets) is deemed to be impaired if, and only if, there is
objective evidence of impairment as a result of one or more events (a "loss event") having occurred,
which has an impact on the estimated future cash flows of the financial asset(s).
In the case of available-for-sale financial assets, a significant or prolonged decline in the market value
of the instrument is considered to constitute a loss event. Impairment losses are recognised in profit
or loss immediately. Also, any cumulative decline in fair value previously recognised in other
comprehensive income is reclassified to profit or loss at this point.
In the case of financial assets carried at amortised cost, loss events may include: indications that the
debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in
interest or principal payments; indications that they will enter bankruptcy or other financial
reorganisation; and changes in arrears or economic conditions that correlate with defaults.
For financial assets carried at amortised cost (including loans and receivables), a separate allowance
account is used to reduce the carrying amount of financial assets impaired by credit losses. After
having taken all possible measures of recovery, if management establishes that the carrying amount
cannot be recovered by any means, at that point the written-off amounts are charged to the
allowance account or the carrying amount of impaired financial assets is reduced directly if no
impairment amount was previously recognised in the allowance account.
When the terms of financial assets that would otherwise have been past due or impaired have been
renegotiated, the Group recognises the impairment for such financial assets by taking into account
the original terms as if the terms have not been renegotiated so that the loss events that have
occurred are duly considered.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the
asset is transferred to another party whereby the entity no longer has any significant continuing
involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised
when the related obligations are either discharged, cancelled or expire. The difference between the
carrying value of the financial liability extinguished or transferred to another party and the fair value of
consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in
profit or loss.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are
presented in Australian dollars which is the parent entity’s functional currency.
Transaction and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-
end exchange rate. Non-monetary items measured at historical cost continue to be carried at the
exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported
at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the profit or loss,
except where deferred in equity as a qualifying cash flow or net investment hedge.
Sayona Mining Limited I Annual Report 2015 35
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial Instruments (continued)
Exchange differences arising on the translation of non-monetary items are recognised directly in
other comprehensive income to the extent that the underlying gain or loss is recognised in other
comprehensive income otherwise the exchange difference is recognised in the profit or loss.
Group companies
The financial results and position of foreign operations whose functional currency is different from the
Group’s presentation currency are translated as follows:
• assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
•
•
retained earnings are translated at the exchange rates prevailing at the date of the transaction.
income and expenses are translated at average exchange rates for the period; and
Exchange differences arising on translation of foreign operations with functional currencies other than
Australian dollars are recognised in other comprehensive income and included in the foreign
currency translation reserve in the statement of financial position. The cumulative amount of these
differences is reclassified into profit or loss in the period in which the operation is disposed of.
Employee Benefits
Short-term employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee
benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12
months after the end of the annual reporting period in which the employees render the related
service, including wages, salaries and sick leave. Short-term employee benefits are measured at the
(undiscounted) amounts expected to be paid when the obligation is settled.
The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are
recognised as a part of current trade and other payables in the statement of financial position. The
Group’s obligations for employees’ annual leave and long service leave entitlements are recognised
as provisions in the statement of financial position.
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be
settled wholly within 12 months after the end of the annual reporting period in which the employees
render the related service. Other long-term employee benefits are measured at the present value of
the expected future payments to be made to employees. Expected future payments incorporate
anticipated future wage and salary levels, durations of service and employee departures and are
discounted at rates determined by reference to market yields at the end of the reporting period on
government bonds that have maturity dates that approximate the terms of the obligations. Any
remeasurements for changes in assumptions of obligations for other long-term employee benefits are
recognised in profit or loss in the periods in which the changes occur.
The Group’s obligations for long-term employee benefits are presented as non-current provisions in
its statement of financial position, except where the Group does not have an unconditional right to
defer settlement for at least 12 months after the end of the reporting period, in which case the
obligations are presented as current provisions.
Equity Settled Compensation
The Group operates an employee share and option plan. Share-based payments to employees are
measured at the fair value of the instruments issued and amortised over the vesting periods. Share-
based payments to non-employees are measured at the fair value of goods or services received or
the fair value of the equity instruments issued, if it is determined the fair value of the goods or services
cannot be reliably measured, and are recorded at the date the goods or services are received.
36
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Equity Settled Compensation (continued)
The corresponding amount is recorded to the option reserve. The fair value of options is determined
using the binomial lattice pricing model. The number of shares and options expected to vest is
reviewed and adjusted at the end of each reporting period such that the amount recognised for
services received as consideration for the equity instruments granted is based on the number of
equity instruments that eventually vest.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks, other
short-term highly liquid investments with original maturities of three months or less, and bank
overdrafts. Bank overdrafts are reported within short-term borrowings in current liabilities in the
statement of financial position.
Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will result and that outflow can be
reliably measured.
Provisions are measured using the best estimate of the amounts required to settle the obligation at
the end of the reporting period.
Issued Capital
Ordinary shares are classified as equity. Transaction costs (net of tax, where the deduction can be
utilised) arising on the issue of ordinary shares are recognised in equity as a reduction of the share
proceeds received.
Where share application monies have been received, but the shares have not been allotted, these
monies are shown as a payable in the statement of financial position.
Share options are classified as equity and issue proceeds are taken up in the option reserve.
Transaction costs (net of tax where the deduction can be utilised) arising on the issue of options are
recognised in equity as a reduction of the option proceeds received. When these options are
exercised, the relevant balance in the reserve is transferred to issued capital.
Revenue and Other Income
Interest revenue is recognised using the effective interest method. All revenue is stated net of the
amount of goods and services tax.
Borrowing Costs
All borrowing costs are recognised in profit or loss in the period in which they are incurred.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount
of GST incurred is not recoverable from the Australian Taxation Office (ATO).
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 ATO 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 ATO are presented as operating
cash flows included in receipts from customers or payments to suppliers.
Sayona Mining Limited I Annual Report 2015 37
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Trade and Other Payables
Trade and other payables represent the liabilities for goods and services received by the entity that
remain unpaid at the end of the reporting period. The balance is recognised as a current liability with
amounts normally paid within 30 days of recognition of the liability.
Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
Earnings per Share (EPS)
Basic earnings per share
Basic earnings per share is calculated by dividing the loss attributable to equity holders of the parent
entity, excluding any costs of servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the financial year, adjusted for any bonus elements in
ordinary shares issued during the year.
Diluted earnings per share
Diluted earnings per ordinary 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.
Adjusting Events
The weighted average number of shares outstanding during the period and for all periods presented
is adjusted for events, other than the conversion of potential ordinary shares that have changed the
number of ordinary shares outstanding without a corresponding change in resources.
The consolidation of shares in November 2013 was an adjusting event.
Critical Accounting Estimates and Judgements
The directors evaluate estimates and judgments incorporated into the financial report based on
historical knowledge and best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and economic data, obtained both
externally and within the group.
Key Judgments:
Exploration and evaluation expenditure
The Group capitalises expenditure relating to exploration and evaluation where it is considered likely
to be recoverable or where the activities have not reached a stage that permits a reasonable
assessment of the existence of reserves. During the year exploration and evaluation expenditure
totalled $310,394. This was written-off during the year and no expenditure was capitalised.
New Accounting Standards for Application in Future Periods
Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable
to the Group, together with an assessment of the potential impact of such pronouncements on the
Group when adopted in future periods, are discussed below:
AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting
periods commencing on or after 1 January 2018).
The Standard will be applicable retrospectively and includes revised requirements for the
classification and measurement of financial instruments, revised recognition and derecognition
requirements for financial instruments.
38
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)
New Accounting Standards for Application in Future Periods (continued)
The key changes that may affect the Group on initial application include certain simplifications to the
classification of financial assets, upfront accounting for expected credit loss, and the irrevocable
election to recognise gains and losses on investments in equity instruments that are not held for
trading in other comprehensive income.
The directors do not anticipate that the adoption of AASB 9 will have an impact on the Group’s
financial instruments, including hedging activity.
NOTE 2: REVENUE AND OTHER INCOME
Interest received from unrelated parties
Foreign exchange gains
Total revenue and other income
2015
$
2014
$
21,123
34,096
55,219
39,427
-
-
39,427
NOTE 3: PROFIT/(LOSS) FOR THE YEAR
Profit before income tax include the following specific expenses:
(i) Expenses:
Included in expenses are the following items:
Net loss on financial asset at fair value through profit and
loss
Foreign exchange losses
Exploration expenditure expensed during year
Write-off of receivable for deferred sale consideration
Rental expense on operating lease
Depreciation
(ii) Significant Revenue and Expenses
The following significant revenue and (expense) items are
relevant in explaining the financial performance:
Exploration & evaluation expenditure expensed during the
year
Write-back (Impairment) of recoverable for deferred sale
consideration (a)
Restructure costs written back/(expensed)
41,670
-
310,394
-
35,427
2,497
-
5,998
126,620
37,179
31,238
1,141
(310,394)
(126,620)
-
-
398,343
190,738
(a) On 24 September 2014, the Company entered into an Agreement with Mantle Diamonds Limited
and Kimberley Diamonds Limited to settle the legal proceedings. The Agreement provided for a
mutual release of claims by the parties and payments to the Company totalling US$340,000.
Settlement occurred on 1 October 2014.
Sayona Mining Limited I Annual Report 2015 39
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 4: INCOME TAX EXPENSE
2015
$
2014
$
(a) The prima facie tax on profit/(loss) from ordinary activities is
reconciled to the income tax as follows:
Prima facie tax payable/(benefit) on profit/(loss) from
ordinary activities before income tax at 30% (2014: 30%).
(Australia domestic rate)
Adjust for tax effect of:
Tax losses and temporary differences not brought to
account
Non-allowable items
Effects of different tax rates on foreign tax losses / (gains)
Income tax expense attributable to entity
(169,959)
34,244
172,905
(3,675)
(2,946)
-
-
(24,851)
(5,718)
-
Weighted average effective tax rate
0.00%
0.00%
(b) Deferred tax assets and liabilities not brought to account,
the net benefit of which will only be realised if the conditions
for deductibility set out in Note 1 occur:
Temporary differences
Tax losses - Revenue
Tax losses - Capital
Net unbooked deferred tax asset
8,288
5,494,181
6,736,405
12,238,874
4,459
5,253,585
6,736,405
11,994,449
The Company has unconfirmed, Australian carry forward losses for revenue of $18,286,308 (2014:
$17,753,304) and for capital of $22,454,683 (2014: $22,454,683). In addition, the economic entity has
USA carry forward losses which are quarantined under Australian tax legislation and are only
available to be offset against future taxable income derived in the USA.
The tax benefits will only be obtained if the conditions in note 1 are satisfied; the economic entity
derives future assessable income of a nature and of an amount sufficient to enable the benefit from
the deductions for the losses to be realised and if the economic entity continues to comply with the
conditions for deductibility imposed by the relevant tax legislation.
(c) Tax effects relating to each component of other
comprehensive income:
Exchange differences on translating foreign controlled
entities
Exchange differences on translating foreign controlled
entities
Before Tax
$
2015
Tax
Expense
$
Net of
Tax
$
-
-
-
Before Tax
$
2014
Tax
Expense
$
Net of
Tax
$
22,563
-
22,563
40
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 5: KEY MANAGEMENT PERSONNEL COMPENSATION
Refer to the remuneration report contained in the directors report for details of the remuneration paid
or payable to each member of the Group's key management personnel (KMP) and other information
for the year ended 30 June 2015.
(a) The names of key management personnel of the Group who have held office during the financial
year are:
Key Management Personnel
Position
Dennis O’Neill
Paul Crawford
Allan Buckler
James Brown
Peter van Riet-Lowe
Wayne Osterberg
Managing Director
Director - Executive
Director - Non-executive
Director - Non-executive
Director - Non-executive (Resigned 7 July 2014)
Director - Non-executive (Resigned 7 July 2014)
(b) The totals of remuneration paid to KMP of the Company
and Group during the year are as follows:
2015
2014
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share-based payments
Total KMP compensation
Short-term employee benefits
$
-
-
-
-
-
$
-
-
-
-
-
These amounts include fees and benefits paid to the directors.
Post-employment benefits
These amounts are the superannuation contributions made during the year.
Other long-term benefits
These amounts represent long service benefits accruing during the year.
Share-based payments
These amounts represent the expense related to the participation of KMP in equity-settled benefit
schemes as measured by the fair value of the option, rights and shares granted on grant date.
NOTE 6: EARNINGS PER SHARE
The earnings figures used in the calculation of both the basic
EPS and the dilutive EPS are the same as the profit or (loss) in
the statement of profit or loss and other comprehensive
income.
Weighted average number of ordinary shares outstanding
during the year used in the calculation of basic EPS
Weighted average number of dilutive securities outstanding.
Weighted average number of ordinary shares and potential
ordinary shares outstanding during the year used in the
calculation of diluted EPS
2015
No.
2014
No.
408,625,220
-
392,846,770
-
408,625,220
392,846,770
Sayona Mining Limited I Annual Report 2015 41
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 6: EARNINGS PER SHARE (continued)
The Company completed a share consolidation in November 2013. In accordance with Australian
Accounting Standards, the weighted average number of shares issued during the prior year was
adjusted to calculate the EPS for the corresponding period.
At balance date there are no securities considered as potential ordinary shares in determination of
diluted EPS.
NOTE 7: AUDITORS' REMUNERATION
Remuneration of the auditor of the parent entity for:
- auditing or reviewing the financial reports
- other assurance services
2015
$
2014
$
28,400
-
28,400
39,500
4,500
44,000
Other assurance services in the prior year relate to the review of
the Company's proforma financial report submitted to the ASX in
2013.
NOTE 8: CASH AND CASH EQUIVALENTS
Cash at bank and on hand
Short-term bank deposits
Cash at bank and on hand
127,195
610,350
87,634
1,113,723
737,545
1,201,357
The effective interest rate on short-term bank deposits was
2.25% (2014: 3.3%). These deposits have an average maturity of
60 days. A short-term deposit of $10,000 is secured against a
bank guarantee for $10,000 (Refer note 19).
Reconciliation of cash
Cash at the end of the financial year as shown in the statement
of cash flow is reconciled to items in the statement of financial
position as follows:
Cash and cash equivalents
737,545
1,201,357
NOTE 9: TRADE AND OTHER RECEIVABLES
Current (unsecured):
Deferred sale consideration (a)
Other Debtors
-
13,059
361,164
6,461
13,059
367,625
The Group has no significant concentration of credit risk exposure to any party.
(a) On 1 October 2014 the Company received settlement of the deferred sale consideration from the
sale of its former Lerala diamond mine. The settlement consideration comprised US$200,000
cash and shares in Kimberley Diamonds Limited valued at US$140,000.
42
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 10: OTHER FINANCIAL ASSETS
Current:
2015
$
2014
$
Financial assets at fair value through profit and loss (a)
117,693
-
(a) These assets comprise ASX listed shares in Kimberley Diamonds Limited, received as part of
settlement of the Company's deferred sale consideration for its former Lerala diamond mine.
Shares are held for trading for the purposes of short-term profit taking. Changes in fair value are
included in profit or loss.
NOTE 11: OTHER ASSETS
Current:
Prepayments
NOTE 12: PLANT & EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Total plant and equipment
2015
$
2014
$
6,296
5,164
5,172
(3,638)
1,534
4,031
-
(2,497)
1,534
5,172
(1,141)
4,031
-
5,172
(1,141)
4,031
38,126
15,500
-
53,626
25,896
15,000
63,000
103,896
Reconciliation of the carrying amounts for property, plant and equipment:
Balance at the beginning of year
Additions
Depreciation expense
Carrying amount at the end of year
NOTE 13: TRADE AND OTHER PAYABLES
Current:
Trade creditors
Sundry creditors and accrued expenses
Related parties
Total trade & other payables (unsecured)
Financial liabilities at amortised cost classified as trade and other payables:
Financial liabilities as trade and other liabilities (refer Note 20)
53,626
103,896
NOTE 14: BORROWINGS
Current:
Unsecured loan Flamenco (Pty) Ltd - expense funding
Secured loan Flamenco (Pty) Ltd - working capital (a)
-
-
-
30,270
84,980
115,250
(a) Under a Deed of Loan and Security between Sayona Mining Limited (formerly DiamonEx
Limited) and Flamenco (Pty) Ltd, Flamenco provided a working capital loan of US$80,000,
secured against all monies owing to Sayona from Mantle Diamonds Plc. Loans were repaid in
October 2014 following settlement of the deferred sale proceeds with Mantle Diamonds.
Sayona Mining Limited I Annual Report 2015 43
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 15: ISSUED CAPITAL
2015
$
2014
$
411,534,809 (2014: 405,534,809) fully paid ordinary shares
50,069,511
50,039,511
Ordinary shares
Balance at the beginning of the reporting period
Shares issued during the year:
24 December 2014 - 6,000,000 ordinary shares at
$0.005 each (a)
Transaction costs relating to share issues
Balance at reporting date
Balance at the beginning of the reporting period
Shares issued during the year:
24 December 2014
Share consolidation undertaken during the previous year:
5 November 2013 (b)
Balance at reporting date
50,039,511
30,000
-
50,069,511
48,358,511
1,718,500
-
(37,500)
50,039,511
No.
No.
405,534,809
6,000,000
884,450,924
859,250,000
-
-
(1,338,166,115)
411,534,809
405,534,809
(a)
(b)
Issued 24 December 2014 at $0.005 each to settle director fees outstanding from prior years.
In November 2013, the Company completed a share consolidation. The consolidation involved
the conversion of every 4.3 fully paid ordinary shares into one fully paid ordinary share. The
consolidation was approved by a resolution of shareholders at the Company's Annual General
Meeting held on 23 October 2013.
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in
proportion to the number of shares held. At shareholders' meetings each ordinary share is entitled to
one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.
The company does not have authorised capital or par value in respect of its issued shares.
Capital management policy
Exploration companies such as Sayona Mining are funded by share capital during exploration and a
combination of share capital and borrowings as they move into the development and operating
phases of their business life.
Management controls the capital of the Group in order to maintain a sustainable debt to equity ratio,
generate long-term shareholder value and ensure that the Group can fund its operations and
continue as a going concern. The Group’s debt and capital include ordinary share capital and
financial liabilities, supported by financial assets.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and
adjusting its capital structure in response to changes in these risks and in the market.
There are no externally imposed capital requirements.
There have been no changes in the strategy adopted by management to control the capital of the
Group since the prior year.
44
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 16: RESERVES
Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising on translation of a
foreign controlled subsidiary.
Options reserve
The options reserve records amounts recognised as expenses on valuation of employee share
options, equity based payments for services and the net proceeds from the issue of entitlement
options to all shareholders.
NOTE 17: CASH FLOW INFORMATION
(a)
Reconciliation of Cash Flow from Operations with Loss
from Ordinary Activities after Income Tax:
Profit/(Loss) from ordinary activities after income tax
Non-cash flows in profit from ordinary activities:
Depreciation
Restructure costs written back
Impairment of receivables writeback
Write-off of deferred sale consideration receivable
Loss on financial asset at fair value through profit and
loss
Unrealised foreign exchange (gain)/loss
Changes in operating assets and liabilities:
(Increase)/Decrease in receivables
(Increase)/Decrease in prepayments
(Decrease)/Increase in creditors and accruals
Cash flows from operations
(b) Non-cash Financing and Investing Activities
2015
$
2014
$
(566,530)
114,148
2,497
-
-
-
41,670
1,141
(190,738)
(398,343)
37,179
-
-
5,998
(6,598)
(1,132)
(20,270)
(550,363)
3,833
(4,389)
(151,490)
(582,661)
(i) During the year, 6,000,000 shares were issued at $0.005 each to settle director fees
outstanding from prior years.
(ii) During the year, the Company received shares in Mantle Diamonds Limited to the value of
$159,363 as partial settlement of the claim against Mantle Diamonds Limited and Kimberley.
The value of these shares was written down to market value of $117,693 at 30 June 2015.
(iii) During the 2014 year, 18,750,000 shares were issued at $0.002 per share in settlement of
underwriting fees, pursuant to underwriting agreements entered into in relation to a
placement.
NOTE 18: RELATED PARTY TRANSACTIONS
(a) The Group's main related parties are as follows:
Key Management Personnel:
Any persons having authority and responsibility for planning, directing and controlling the
activities of the Group, directly or indirectly, including any director (whether executive or non-
executive) of the Group, are considered key management personnel.
Sayona Mining Limited I Annual Report 2015 45
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 18: RELATED PARTY TRANSACTIONS (continued)
(b) Transactions with related parties:
Transactions between related parties are on normal commercial terms and conditions, no more
favourable than those available to other parties unless otherwise stated.
During the current year, the parent entity engaged Cambridge Business & Corporate Services,
an entity controlled by Mr Paul Crawford, a director of the company to provide accounting,
company secretarial, financial management and other services. No fees were incurred during
the current year (2014: nil). No amount was owed by the company at 30 June (2014: nil).
During the current year, 3,000,000 shares were issued at $0.005 each ($15,000) to each of
Messrs O'Neill and Crawford to settle director fees outstanding from prior years. No amount was
owed to either party at 30 June 2015.
NOTE 19: COMMITMENTS
(a) Operating lease commitments
2015
$
2014
$
Non-cancellable operating leases contracted for but not
recognised in the financial statements:
Not later than 1 year
Between 1 year and 5 years
Total commitment
37,116
9,369
46,485
35,690
46,485
82,175
The property lease is a non-cancellable lease with a 3 year term, with rent payable monthly in
advance. The lease agreement provides for lease payments to be increased by the lower of the
change in the consumer price index (CPI) or 4% per annum.
The lease is supported by a bank guarantee for $10,000. The bank guarantee is in turn supported by
a charge over a term deposit of $10,000, refer Note 8.
(b) Exploration commitments
The entity must meet minimum expenditure commitments on granted exploration tenements to
maintain those tenements in good standing. If the relevant mineral tenement is relinquished the
expenditure commitment also ceases.
The following commitments exist at balance date but have not
been brought to account.
Not later than 1 year
Between 1 year and 5 years
Total commitment
2015
$
2014
$
30,000
170,000
200,000
-
-
-
This commitment arises from a Heads of Agreement dated 6 February 2015 with Attgold Pty Ltd to
enter into an option agreement to acquire mining tenements. The option agreement is currently being
drafted. Sayona has paid $30,000 since 30 June 2015 as provided in the Heads of Agreement. Both
parties intend to execute the option agreement.
Refer to note 23(ii) in relation to an Option and Sale Agreement with Western Iron Ore Pty Ltd.
46
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 20: FINANCIAL RISK MANAGEMENT
The totals for each category of financial instruments, measured in accordance with AASB 139:
Financial Instruments: Recognition and Measurement as detailed in the accounting policies to these
financial statements are detailed in the table outlining financial instruments composition and maturity
analysis in part (b) of Note 20.
Financial Risk Management Policies
The Group’s financial instruments mainly comprise cash balances, listed investments, receivables,
payables and borrowings. The main purpose of these financial instruments is to provide finance for
group operations.
The Board of the company meets on a regular basis to analyse exposure and to evaluate treasury
management strategies in the context of the most recent economic conditions and forecasts.
The Board has overall responsibility for the establishment and oversight of the company's risk
management framework. Management is responsible for developing and monitoring the risk
management policies.
Specific Financial Risk Exposures and Management
The main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk
and market risk, consisting of interest rate risk, foreign exchange risk and equity price risk. These
risks are managed through monitoring of forecast cashflows, interest rates, economic conditions and
ensuring adequate funds are available.
(a) Credit Risk
Credit risk arises from exposures to deposits with financial institutions and sundry receivables.
Credit risk is managed and reviewed regularly by the Board. It arises from exposures to joint venture
partner receivables and through deposits with financial institutions. The Board monitors credit risk by
actively assessing the rating quality and liquidity of counter parties:
• only banks and financial institutions with an ‘A’ rating are utilised; and
• all joint venture partners are rated for credit worthiness taking into account their size, market
position and financial standing.
The carrying amount of cash and cash equivalents recorded in the financial statements represent the
Company's maximum exposure to credit risk. Refer Note 8.
(b) Liquidity Risk
Liquidity risk is the risk that the company will not be able to meet its financial obligations as they fall
due. This risk is managed by ensuring, to the extent possible, that there is sufficient liquidity to meet
liabilities when due, without incurring unacceptable losses or risking damage to the Company's
reputation.
The Board manages liquidity risk by sourcing long-term funding, primarily from equity sources, rather
than from borrowing.
Financial liability and financial asset maturity analysis
The table below reflects an undiscounted contractual maturity analysis for financial assets and
financial liabilities and reflects management's expectations as to the timing of termination and
realisation of financial assets and liabilities.
Sayona Mining Limited I Annual Report 2015 47
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 20: FINANCIAL RISK MANAGEMENT (continued)
Consolidated Group
2015
Financial assets
Cash & cash equivalents (i)
Receivables (ii)
Held for trading instruments
Financial liabilities
Payables (ii)
Borrowings (ii)
Net cash inflow on financial
instruments
2014
Financial assets
Cash & cash equivalents (i)
Receivables (ii)
Financial liabilities
Payables (ii)
Borrowings (ii)
Net cash inflow on financial
instruments
1 year or
less
$
1 to 2
years
$
More than 2
years
$
Total
$
737,545
13,059
117,693
868,297
53,626
-
53,626
814,671
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 year or
less
1 to 2
years
More than 2
years
$
1,201,357
367,625
1,568,982
103,896
115,250
219,146
1,349,836
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
737,545
13,059
117,693
868,297
53,626
-
53,626
814,671
Total
$
1,201,357
367,625
1,568,982
103,896
115,250
219,146
1,349,836
(i) Floating interest with a weighted average effective interest rate of 2.25% (2014: 3.3%)
(ii) Non-interest bearing
(c) Market Risks
(i) Interest Rate Risk
The Group's exposure to interest rate risk, which is the risk that a financial instrument's value will
fluctuate as a result of changes in market interest rates, arises in relation to the company's bank
balances.
This risk is managed through the use of variable rate bank accounts.
(ii) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from currency
movements, primarily in respect of the US Dollar and in prior years, the Botswana Pula. No derivative
financial instruments are employed to mitigate the exposed risks. This is the Group's current policy
and it is reviewed regularly, including forecast movements in these currencies by the senior executive
team and the Board.
48
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 20: FINANCIAL RISK MANAGEMENT (continued)
These foreign exchange risks arose from
- Previous Group activity and expense funding in Botswana which were denominated in
Botswana Pula,
- Previous Group activity in USA which were denominated in US dollars,
- Amount receivable on the deferred sale settlement, denominated in US dollars,
-
Loan funds in US dollars.
- Cash held in US dollars.
The Group's exposure to foreign currency risk at the
reporting date was as follows:
Cash and cash equivalents
Receivables
Borrowings
Net exposure
Cash and cash equivalents
Receivables
Borrowings
Net exposure
(iii) Other price risk
USD
2015
88,741
-
-
88,741
USD
2014
-
340,000
(80,000)
260,000
BWP
2015
-
-
-
-
BWP
2014
-
-
(247,018)
(247,018)
Other price risk relates to the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market prices (other than those arising from interest rate risk or
currency risk) of securities held.
The risk is concentrated in one company in the mining industry. These represent shares received as
part of the Mantle deferred sale settlement (refer note 9).
(d) Sensitivity analysis
If the spot Australian Dollar rate weakened / strengthened by 5 percent against the US Dollar, with all
other variables held constant, the Group's post-tax result for the year would have been $5,773 higher
/ lower (2014: $13,809).
At balance date, the Group had no exposure to the Botswana Pula. If the spot Australian Dollar rate
weakened / strengthened by 5 percent against the Botswana Pula, with all other variables held
constant, the Group's post-tax result for the prior year would have been lower/higher $5,190.
The Group has performed sensitivity analysis relating to its exposure to interest rate risk. At year end,
the effect on profit and equity as a result of a 1% change in the interest rate, with all other variables
remaining constant would be +/- $7,375 (2014: $11,164).
At year end, if the equity price of the held for trading investments weakened / strengthened by 10
percent, the effect on profit and equity would have been +/- $11,769.
(e) Fair Values
The aggregate fair values and carrying amounts of financial assets and liabilities are disclosed in the
statement of financial position and notes to the financial statements. Fair values are materially in line
with carrying values, due to the short term nature of all these items. Refer to note 27 for detailed
disclosures regarding the fair value measurement of the Group's financial assets and financial
liabilities.
Sayona Mining Limited I Annual Report 2015 49
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 21: CONTINGENT LIABILITIES
There were no material contingent liabilities at the end of the reporting period.
NOTE 22: SHARE BASED PAYMENTS
On 24 December 2014, 3,000,000 shares were issued at $0.005 each ($15,000) to each of Messrs
O'Neill and Crawford to settle director fees outstanding from prior years.
The weighted average fair value of those equity instruments determined by reference to market price
was $0.0028. These shares were issued to related parties and are detailed in Note 18.
During the previous financial year, the Company issued 18,750,000 shares to related parties in
settlement of underwriting fees associated with a placement of shares. The issue of shares was
approved by shareholders in a General Meeting.
The weighted average fair value of those equity instruments determined by reference to market price
was $0.002. These shares were issued to related parties.
No options are currently granted are over ordinary shares in the Company.
NOTE 23: EVENTS AFTER BALANCE SHEET DATE
Key events since the end of the financial year have been:
(i)
On 3 July 2015 the Company appointed Mr Corey Nolan as Chief Executive Office.
(ii) On 7 July 2015, the Sayona East Kimberley Pty Ltd entered into an Option and Sale
Agreement with Western Iron Ore Pty Ltd ("Western") to acquire 100% of the graphite interest
in tenement E80/4511.
The option is exercisable within 6 months but can be abandoned by Sayona at any stage of
the exercise period. The agreement provides for a back-in option for Western under certain
conditions for minerals other than graphite. The contingent commitments for the Group are:
- option fee of $5,000 on signing the agreement;
- an exercise price of $200,000 payable one business day after giving an option exercise
notice;
-
-
to meet minimum statutory expenditure obligations relating to the tenement, up to a limit
of $63,000; and
to pay statutory fees such as rates and rent up to a limit of $17,000.
(iii) On 8 July 2015, the Company granted 18,000,000 options with various exercise conditions to
Mr Nolan. Refer to the Directors' Report for details of these options.
(iv) On 4 August 2015, the Company entered into a four-month, exclusive binding term sheet to
acquire the Itabela graphite project.
It is solely at Sayona Group's discretion whether to proceed to a binding sale and purchase
agreement. The contingent commitments for the Group are:
- an exclusivity payment of US$60,000 payable in 4 equal instalments after execution of the
binding term sheet; and
- a purchase price of US$3.5 million after signing the binding sale and purchase agreement.
(v) On 5 August 2015, the Company announced its intention to undertake an accelerated non-
renounceable rights issue to raise up to $2.57 million. The rights issue entailed a 1 for 4
entitlement offer at an issue price of $0.025 per share, together with 1 free attaching option,
exercisable at $0.03 and expiring 30 December 2016, for every new share applied for.
(vi) On 14 August 2015, the Company completed the accelerated component of the rights issue,
issuing 72,320,000 new shares and listed options to raise $1,080,000.
50
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 23: EVENTS AFTER BALANCE SHEET DATE (continued)
(vii) On 14 August 2015, the Company completed the accelerated component of the rights issue,
issuing 72,320,000 new shares and listed options to raise $1,080,000.
(viii) On 4 September 2015, the Company completed the underwritten retail component of the
rights issue raising $764,092.
(ix) On 9 September 2015, the Company issued 1,224,116 shares and listed options as a
placement in respect of underwriting oversubscriptions.
(x) On 9 September 2015, the Company issued 1,603,522 shares and 6,808,666 listed options in
part settlement of raising management and underwriting fees.
This financial report was authorised for issue on 28 September 2015 by the Board of Directors.
NOTE 24: JOINT ARRANGEMENTS
Talga Iron Ore Project:
During the year the Company entered into a Heads of Agreement with the Talga Syndicate
(comprising Freedom Minerals Pty Ltd, Kalamazoo Resources Limited and Great Sandy Pty Ltd) to
acquire a 70% interest in the iron ore rights within tenements in the East Pilbara district of Western
Australia.
During the year, $244,733 was expended and subsequently expensed on the joint operation. The
Company withdrew from the arrangement in June 2015.
East Kimberley Graphite Project:
In February 2015 the Company entered into a Heads of Agreement with Attgold Limited to acquire a
100% in tenements E80/4915, E80/4948 and E80/4849. Under the agreement, the Company is
required to make pay $30,000 in August 2015 and a further $170,000 in February 2016. The August
2015 payment was made subsequent to year end. Refer to note 19.
During the year, $62,912 was expended and subsequently expensed on the joint operation.
NOTE 25: PARENT ENTITY INFORMATION
The following information relates to the parent entity, Sayona Mining Limited. This information has
been prepared using consistent accounting policies as presented in note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Contributed equity
Accumulated losses
Total equity
2015
$
2014
$
875,153
1,534
1,574,706
4,031
876,687
1,578,737
53,626
-
219,146
-
53,626
219,146
50,069,511
(49,246,450)
50,039,511
(48,679,920)
823,061
1,359,591
Sayona Mining Limited I Annual Report 2015 51
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 25: PARENT ENTITY INFORMATION (continued)
Statement of Profit or Loss and Other Comprehensive
Income
Total loss for the year
Total other comprehensive income
Total comprehensive loss for the year
Guarantee
2015
$
2014
$
(566,530)
-
(566,530)
(208)
-
(208)
In October 2013, the parent company entered into an operating lease in relation to office space. The
lease is supported by a bank guarantee for $10,000. The bank guarantee is in turn supported by a
charge over a term deposit of $10,000, refer note 8.
Contingent Liabilities
There are no material contingent liabilities at the end of the reporting period.
NOTE 26: INTERESTS IN SUBSIDIARIES
Information about principal subsidiaries
-
Lake Exploration Pty Ltd, incorporated in Australia. The parent entity holds 100% (2014: 100%)
of the ordinary shares of the entity, carried at nil recoverable amount. The company has been
dormant.
- DiamonEx (USA) Limited, incorporated in Wyoming, USA. The parent entity holds 100% (2014:
100%) of the ordinary shares of the entity, carried at nil recoverable amount. The company has
been dormant for over 4 years and will be liquidated.
- Sayona East Kimberley Pty Ltd, incorporated in Australia on 18 June 2015. The parent entity
holds 100% of the ordinary shares of the entity, carried at recoverable amount of $1. The
company holds options on graphite tenements in Western Australia, which occurred after 30
June 2015.
These subsidiaries have share capital consisting solely of ordinary shares which are held directly by
the Group.
There are no significant restrictions over the Group's ability to access or use assets and settle
liabilities of the Group.
NOTE 27: FAIR VALUE MEASUREMENT
The Group measures and recognises the following assets and liabilities at fair value on a recurring
basis after initial recognition:
-
financial assets held for trading.
The Group does not subsequently measure any liabilities at fair value on a non-recurring basis.
52
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 27: FAIR VALUE MEASUREMENT (continued)
Fair Value Hierarchy
AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair
value hierarchy, which categorises fair value measurements into one of three possible levels based
on the lowest level that an input that is significant to the measurement can be categorised into as
follows:
Level 1
Level 2
Level3
based
Measurements
on
quoted prices (unadjusted) in
active markets
identical
assets or liabilities that the
entity can access at
the
measurement date.
for
based
on
Measurements
inputs other
than quoted
prices included in Level 1 that
are observable for the asset or
liability, either directly or
indirectly.
Measurements
on
unobservable inputs for the
asset or liability.
based
The Group does not measure any assets or liabilities at fair value using Level 2 or Level 3 inputs.
Valuation Techniques
The Group selects a valuation technique that is appropriate in the circumstances and for which
sufficient data is available to measure fair value. As the Group only has one financial asset measured
at fair value using Level 1 inputs, it adopts a Market approach valuation that uses prices and other
relevant information generated by market transactions for identical or similar assets.
The following tables provide the fair values of the Group’s assets and liabilities measured and
recognised on a recurring basis after initial recognition and their categorisation within the fair value
hierarchy:
30 June 2015
(Level 1)
(Level 2)
(Level 3)
$
$
$
Recurring fair value measurements
Held for trading financial assets
117,693
-
-
There were no held for trading financial assets at 30 June 2014.
NOTE 28: SEGMENT REPORTING
The Group operates internationally, in the mineral exploration industry. Segment reporting is based
on the whole of entity. Geographical segment information is as follows:
Primary Reporting: Geographical Segments
Australia
USA
Consolidated
Group
2015
2014
2015
2014
2015
2014
$
$
$
$
$
$
55,219
39,427
55,219
39,427
-
-
-
55,219
39,427
-
55,219
39,427
REVENUE
Revenue
Total revenue from ordinary
activities
Sayona Mining Limited I Annual Report 2015 53
SAYONA MINING LIMITED
AND CONTROLLED ENTITIES
ABN 26 091 951 978
Notes to the Financial Statements
for the financial year ended 30 June 2015
NOTE 28: SEGMENT REPORTING (continued)
Australia
USA
Consolidated Group
2015
2014
2015
2015
2014
2015
$
$
$
$
$
$
(566,530)
(208)
- 114,356 (566,530)
114,148
-
-
-
-
-
-
(566,530)
(208)
- 114,356 (566,530)
114,148
RESULT
Profit/(loss) from ordinary
activities before income tax
expense
Income tax expense
Profit/(loss) from ordinary
activities after income tax
expense
ASSETS
Segment assets
876,127 1,578,177
LIABILITIES
Segment liabilities
53,626
219,146
-
-
-
876,127 1,578,177
-
53,626
219,146
There were no transfers between segments reflected in the revenues, expenses or result above. The
pricing of any intersegment transactions is based on market values.
Segment accounting policies are consistent with the economic entity.
NOTE 29: COMPANY DETAILS
The registered office and principal place of business is:
Sayona Mining Limited
283 Given Terrace
Paddington Queensland 4064
54
SAYONA MINING LIMITED
ABN 26 091 951 978
DIRECTORS’ DECLARATION
The directors of the company declare that:
1.
The attached financial statements and notes are in accordance with the Corporations Act 2001
and:
(b)
comply with Australian Accounting Standards which, as stated in accounting policy
Note 1 to the financial statements, constitutes compliance with International Financial
Reporting Standards (IFRS); and
(c)
give a true and fair view of the financial position as at 30 June 2015 and of the
performance of the consolidated group for the year ended on that date.
2.
3.
In the directors' opinion there are reasonable grounds to believe that the company will be able
to pay its debts as and when they become due and payable; and
The directors have been given the declarations by their Chief Executive Officer and Chief
Finance Officer required by section 259A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors.
Dennis O’Neill
Director
Paul Crawford
Director
Dated this: 28 th day of September 2015
Sayona Mining Limited I Annual Report 2015 55
56 Sayona Mining Limited I Annual Report 2015 57 ASX INFORMATION
Following is additional information required by the ASX Limited and not disclosed elsewhere in this
report. The following information is provided as at 1 October 2015.
1.
Shareholding:
Distribution of Shareholders Number:
Category Number
(Size of Holding)
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - and over
Total
Ordinary Shares
(Number)
2,221
670
229
431
269
3,820
Listed Options
(Number)
11
28
7
38
89
173
The number of shareholdings held in less than marketable parcels is 3,320.
Twenty Largest Holders - Ordinary Shares
1. P Point Pty Ltd
2. Terryjoy Pty Ltd
3.
4.
Paul Anthony Crawford + Robyn Lynelle Crawford
EM Enterprises (Qld) Pty Ltd
5. Mr John Michael Moore
6.
Christopher Paul Dredge + Nanette Alexandra Dredge
7. Rookharp Investments Pty Ltd
8. Mr Gary Jiarui Zhou
9.
Mr John Frank Bosca + Mr Joseph Bosca + Mr Peter
Antonio Bosca
10. Hartco Nominees Pty Ltd
11. Comsec Nominees Pty Limited
12. John & Leigh Finnemore
13. Uob Kay Hian Private Limited
14. Christopher Paul Dredge
15. Sirod Pty Ltd
16. Brian Menzies Pty Ltd
17. Miss Emily Margaret O'Neill
18. Leanne Rambert
19. Mr Neil Francis Stuart
Number of
Shares Held
80,755,813
80,755,813
% of Total
Issued
Capital
15.61%
15.61%
70,888,270
13.70%
67,052,816
10,036,486
12.96%
1.94%
8,567,414
8,000,000
7,550,000
5,126,510
4,651,162
4,409,758
4,000,000
4,000,000
3,906,976
3,750,000
3,703,875
3,000,000
3,000,000
2,785,410
1.66%
1.55%
1.46%
0.99%
0.90%
0.85%
0.77%
0.77%
0.76%
0.72%
0.72%
0.58%
0.58%
0.54%
20.
Jeffrey
Paul
Biggs
+
Robyn
Maree
Biggs
2,620,690
0.51%
58
Twenty Largest Holders - Options
1. Rookharp Investments Pty Ltd
2. Melbourne Capital Limited
3. Brian Menzies Pty Ltd
4.
5. Uob Kay Hian Private Limited
6. Bizzell Capital Partners Pty Ltd
7. M & K Korkidas Pty Ltd
John & Leigh Finnemore
8.
Phillip Alexander Purdie + Carol Ann Purdie
9. Mrs Peta Louise Klein
10.
Mr John Frank Bosca + Mr Joseph Bosca + Mr Peter
Antonio Bosca
11. Bisup Pty Ltd
12. BT Portfolio Services Ltd
13. P Point Pty Ltd
14.
Paul Anthony Crawford + Robyn Lynelle Crawford
15. DGCS Pty Ltd
16.
17.
Christopher Paul Dredge + Nanette Alexandra Dredge
Mr Lindsay George Dudfield + Mrs Yvonne Sheila Doling
Dudfield
18. EM Enterprises (Qld) Pty Ltd
19. Kabila Investments Pty Limited
20. Limits Pty Limited
Number of
Shares Held
8,000,000
6,000,000
4,000,000
4,000,000
4,000,000
3,708,666
3,100,000
% of Issued
Capital
7.21%
5.41%
3.61%
3.61%
3.61%
3.34%
2.79%
2,800,000
2,500,000
2,025,302
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
2.52%
2.25%
1.83%
1.80%
1.80%
1.80%
1.80%
1.80%
2,000,000
1.80%
2,000,000
2,000,000
2,000,000
2,000,000
1.80%
1.80%
1.80%
1.80%
The names of the substantial shareholders listed in the Company’s register:
Shareholder
P Point Pty Ltd
Terryjoy Pty Ltd
Paul Anthony Crawford + Robyn Lynelle Crawford
EM Enterprises (Qld) Pty Ltd
Number of
Shares Held
80,755,813
80,755,813
% of Issued
Capital
15.61%
15.61%
70,888,270
67,052,816
13.70%
12.96%
Voting Rights
Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a
meeting has one vote on a show of hands.
There are no voting rights attaching to the Options, but voting rights as detailed above will attach to
the ordinary shares issued when the Options are exercised.
2.
Unlisted Securities
The following unlisted options are on issue:
Grant Date
8 July 2015
8 July 2015
8 July 2015
Expiry Date
30 June 2016
31 December 2016
30 June 2017
Exercise Price No. under Option
0.5 cents
1.0 cents
1.5 cents
6,000,000
6,000,000
6,000,000
Sayona Mining Limited I Annual Report 2015 59
3.
Registers of securities are held at the following address:
Computershare Investor Services Pty Limited
117 Victoria Street
West End Qld 4101 Australia
4.
Securities Exchange Listing
Quotation has been granted for all the ordinary shares issued by the Company on all Member
Exchanges of the ASX Limited.
5.
Restricted Securities
The Company has no restricted securities on issue.
6.
Schedule of Tenements
Tenement Id
Name
Current Interest
Status
E80/4915
E80/4948
E80/4949
E80/4511
Keller North
Keller West
Corkwood
Western Iron
872874/2010
Brasil Grafite S.A.
872737/2010
Brasil Grafite S.A.
872736/2010
Brasil Grafite S.A.
872735/2010
Brasil Grafite S.A.
872734/2010
Brasil Grafite S.A.
872733/2010
Brasil Grafite S.A.
872732/2010
Brasil Grafite S.A.
872329/2010
Brasil Grafite S.A.
872328/2010
Brasil Grafite S.A.
871722/2010
Brasil Grafite S.A.
871524/2013
Brasil Grafite S.A.
871053/2011
Brasil Grafite S.A.
871052/2011
Brasil Grafite S.A.
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Option to acquire
Application
Application
Option to acquire
Option to acquire
Option to acquire
Option to acquire
Option to acquire
Option to acquire
Option to acquire
Option to acquire
Option to acquire
Option to acquire
Option to acquire
Option to acquire
Option to acquire
Option to acquire
PREVIOUS DISCLOSURE - 2012 JORC CODE
Certain Information relating to Mineral Resources, Exploration Targets and Exploration Data associated with the Company’s projects in this
June 2015 Quarterly Report has been extracted from the following ASX Announcements:
8 July 2015 – Strategic Entry into the Graphite market
9 July 2015 – Geophysics Highlights Prospective Targets
10 July 2015 – Jumbo and Large Flake Graphite Identified at East Kimberley project
20 July 2015 – Drill Target and Metallurgy Program
21 August 2015 – High Grade Graphite Mineralisation Identified at Corkwood
19 September 2015 – Superior Quality Graphite Demonstrated at Itabela Project
28 September 2015 – Itabela Produces High Value Expandable Graphite
Copies of these reports are available to view on the Sayona Mining Limited website www.sayonamining.com.au. These reports were issued in
accordance with the 2012 Edition of the JORC Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.
The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market
announcement. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been
materially modified from the original market announcement.
60
Sourcing the raw material of the future
CORPORATE DIRECTORY
ASX Code
SYA
Directors
Mr Dennis O’Neill – Managing Director
Mr Paul Crawford – Executive Director
Mr Alan Buckler – Non-executive Director
Mr James Brown – Non-executive Director
Company Secretary
Mr Paul Crawford
Registered Office
Unit 68
283 Given Terace
Paddington Qld 4066
Ph: +61 7 3369 7058
Email: info@sayonamining.com.au
Website: www.sayonamining.com.au
Auditors
Hayes Knight
Level 23, 10 Eagle Street
Brisbane Qld 4000
Ph: +61 7 3229 2022
Share Registry
Computershare Investor
Services Pty
117 Victoria Street
West End Qld 4101
Ph: 1300 787 272
Limited
Lawyers
Collin Biggers & Paisleyt
Level 35
1 Eagle Street
BRISBANE QLD 4000
Ph: +61 7 3002 8700
Lawyers
GRT Lawyers
Level 2
400 Queen Street
BRISBANE QLD 4000
Ph: +61 7 3309 7000
www.sayonamining.com.au
Suite 68
283 Given Terrace
Paddington QLD 4064
+61 7 3369 7058
info@sayonamining.com.au
www.sayonamining.com.au
ANNUAL REPORT 2015