ABN : 42 127 042 773
ANNUAL REPORT 2017
CONTENTS
Company Information
Operations and Strategic Review
Directors’ Report
Auditor’s Independence Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Details
Interest in Exploration Leases
Corporate Governance Statement
Company Information – Scotland
AND CONTROLLED ENTITIES
3
4
10
25
26
27
28
29
30
51
52
56
59
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61
Scotgold Resources Limited
Page 2
COMPANY INFORMATION
AND CONTROLLED ENTITIES
Company / Group /
Economic Entity
ABN
Directors
Scotgold Resources Limited and controlled entities
Scotgold Resources Limited, incorporated in Australia - 42 127 042 773
Nathaniel le Roux
Richard Gray
Chris Sangster
Phillip Jackson
Gabriel Chiappini
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Non-Executive Director (resigned 16 May 2017)
Company Secretary
Gabriel Chiappini (resigned 16 May 2017)
Richard Barker (appointed 16 May 2017)
Registered Office
Suite 4, 189 Stirling Highway,
Nedlands,
Western Australia, 6009
Telephone:
+61 8 9463 3260
Email: sgz@scotgoldresources.com
Share Registry
Computershare Investor Services Pty Ltd
Auditor
Bankers
Level 11
172 St Georges Terrace
Perth, WA 6000
Telephone:
+61 8 9323 2000
HLB Mann Judd
Level 4, 130 Stirling Street
Perth, WA 6000
Telephone:
+61 8 9227 7500
Westpac Banking Corporation
1257 Hay Street
West Perth
WA 6005
Securities Exchange
Listing
AIM board of the London Stock Exchange.
AIM Code:
“SGZ”
Nominated Adviser
and Joint Broker
Stockdale Securities Limited
Beaufort House, 15 St Botolph St, London EC3A 7BB
Website
www.scotgoldresources.com
Scotgold Resources Limited
Page 3
OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
OPERATIONS REVIEW
BACKGROUND –
Scotgold Resources Limited (“the Company”) was established in 2007 and is listed on the AIM market of the London
Stock Exchange (AIM:SGZ). The Company delisted from the Australian Securities Exchange on 21 October 2016.
The Company’s principal objectives have continued to be:
a) the advancement of the Cononish Gold and Silver Project in Scotland’s Grampian Highlands;
b) the ongoing exploration of the highly prospective tenements comprising the Grampian Gold Project with
the view to identifying further project opportunities; and
c) the exploration and exploitation of its Portuguese and French projects.
Cononish Gold and Silver Project –
On 15th February 2012, the Board of the Loch Lomond and the Trossachs Parks (“the Parks Board”) issued the
Decision Letter granting planning permission for the development of the Project. The Crown Estate Commissioners
unconditional grant of the Crown Lease was confirmed in May 2012.
During 2014, the Company made an application to vary this planning permission (relating to hours of operation of the
processing plant and work on site) and on 24 January 2015, the Board of the Loch Lomond and the Trossachs National
Park again voted unanimously to approve the Company’s application. As a variation to a condition of the existing
consent, this approval also had the effect of extending the date by which development should commence to January
2018.
In January 2015 the Company completed a Mineral Resource Estimate and subsequently, in August 2015 completed
a Bankable Feasibility Study for the Cononish Project. On 24 February 2016 the Company announced its intention to
conduct a Bulk Processing Trial (“BPT”) and on 27 August 2016 the first official gold pour from the BPT was announced.
Experience from the BPT led to a radical rethink of the tailings disposal methodology and a study was conducted to
determine the suitability of dry stack tailings disposal for the project. The benefits of the dry stack system include
substantially reduced upfront capital costs, scaleability and the potential for significant environmental benefits. The
study determined that dry stacking was feasible and a number of options using this methodology were then modelled
in the Addendum to the Bankable Feasibility Study. In line with ongoing finance discussions, the ‘phased’ approach
was determined as the Company’s preferred option to take the project forward.
Subsequently, the Company has submitted a revised application for planning permission to incorporate the new tailings
disposal methodology. The application has been validated and a decision is expected around year end.
Grampian Gold Project –
The Grampian Gold Project comprises Crown Option agreements covering some 4100 km2 in the south west
Grampians of Scotland and covers some of the most prospective areas of the Dalradian geological sequence in the
UK. This sequence extends westward from the UK to the eastern seaboard of Canada and the Appalachian belt in the
US, and eastward into Sweden and Norway, has been identified by the British Geological Survey as being highly
prospective for both significant gold and base metal deposits. On a more local scale, the Dalradian sequence extends
to the south west from Scotland into Northern Ireland where it hosts other gold resources at Cavancaw (c. 0.8Moz of
gold) and Curraghinalt (c. 4M oz of gold).
The Company continues a regional stream sediment sampling program over the wider Grampian gold project area
whilst evaluating a number of previously identified high grade outcrops in the vicinity of the Cononish project.
Scotgold Resources Limited
Page 4
OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Portuguese and French projects –
In May 2016, the Company announced the acquisition of the Pomar licence area in eastern central Portugal by its
wholly owned Portuguese subsidiary, Scotgold Resources Portugal Ltda. In May 2017, the Company was granted
the Vendrennes PER (Permit Exclusif de Recherche / exclusive exploration licence) in France
CONONISH GOLD AND SILVER PROJECT
During the year ended 30 June 2017, the Company has continued the operation of its Bulk Processing Trial. The
major highlights from this trial have been:
• Production of the first commercially produced Scottish gold;
• Auction sale of ten individual, one fine troy ounce, rounds of first ever commercially produced Scottish
gold realising gross proceeds of £45,579.03. And subsequent sales of gold in concentrate, based upon
spot prices;
• Establishment of a premium market for sale of genuine Scottish, hallmarked gold;
• Establishment of a route to market for sale of Cononish gold in pyrite concentrates and gold rich galena
concentrates; and
•
Initiative to revise the Tailings Storage Facility for the mine development, resulting in significant capital
expenditure savings.
The Company continues to pursue project funding alternatives. Discussions continue with Private Equity groups,
Investment Banks, high net worth individuals, and industry participants.
Subsequent to the release of the Bankable Feasibilty Study (BFS) completed by Bara Consulting Ltd (Bara) in 2015,
the Company commissioned Bara to evaluate the economic impact of a range of technical development options given
the current economic climate and ongoing finance discussions. These included the use of ‘dry stack’ tailings
methodology as a result of the technical feasibility study carried out by Knight Piesold in 2016/7. The use of dry stack
technology has a number of significant benefits including:
• Significantly reduced upfront capital costs, and
•
Improved visual and landscape and other environmental impacts
A number of different scenarios were considered in the study including:
1.
2.
3.
4.
5.
A revised BFS using an updated gold price.
A full scale case based on the BFS but using the modified TSF (dry stack).
A full scale case but also assuming access to a cyanidation plant within Scotland. Note this is the only
option which considered cyanidation as opposed to the currently envisaged sulphide concentrate sale.
A half scale case processing at 3,000 tpm for the life of the mine.
A phased project where build-up to 6,000 tpm is funded from the first phase of 3,000 tpm.
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
The table below shows the assumptions used for each scenario:
Description
Units
Physicals
New Options Evaluated
Original
Base Case
(BFS)
Revised
Base
Case
(BFS)
(1)
Full
Scale
(2)
Full Scale
with
Offsite
CN
(3)
Half
Scale
(4)
Phased
Project
(5)
Production Rate
Tpm
6 000
6 000
6 000
6 000
3 000
Overall Recovery
Dore Recovery
Total Au Sold
Tailings Storage Facility
Type
Stockpile Depleted
Construction Period
Life of Mine (Including
Construction)
Economics
Gold Price
Silver Price
USD/GBP
Rate
Scottish Gold Sold
Exchange
Scottish Gold Premium
Discount Rate
%
%
Oz
93
25
93
25
177 666
177 666
Type
Valley Fill Dry Stack
T
months
Years
-
16
9
-
16
9
93
25
176 074
Dry
Stack
7 000
16
9
93
25
176 074
Dry Stack
7 000
16
9
93
25
175 567
Dry
Stack
7 000
16
17
3 000 / 6
000
93
25
175 762
Dry Stack
7 000
16
10
$/oz
$/oz
$/£
%
%
%
1 100
1 150
1 150
1 150
1 150
1 150
15
1.60
25
0
10
16
1.25
25
0
10
16
1.25
6.6
10
10
16
1.25
6.6
10
10
16
1.25
7.4
10
10
16
1.25
7.4
0
10
Based on the results of the above option study, the Company decided that the Phased Project scenario was the
most favourable overall under current economic conditions in relation to the availability of finance.
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
The table below shows the results for the original BFS and the Phased Project:
FINANCIAL RESULTS COMPARISON
Financial Metric
BFS Aug'15
EBITDA (£)
Gross Cashflow (£)
Net Cashflow (£)
Pre-Tax NPV @ 10% (£)
Pre-Tax IRR (%)
Post-Tax NPV @ 10% (£)
Post-Tax IRR (%)
Operating Margin (%)
Life of Mine (years)
Gold price / oz $
Exchange rate $:£
Gold price / oz £
Payback Period (months)
Peak Funding Req. (£)
67,427,626
43,403,552
35,725,551
22,945,889
45
18,515,172
41
53
8
1100
1.6
687.50
19
18,452,183
Phased Project
100,040,640
79,943,378
67,375,514
42,891,326
80
36,117,874
75
59
9
1150
1.25
920.00
13
7,419,340
The adoption of this strategy has necessitated a revision to the existing planning consent and the requisite application
was submitted to the Planning Authority and validated in August 2017.
Details of the material assumptions considered in the derivation of the production target and forecast financial
information above and the BFS Study Update Executive Summary are provided on Scotgold’s website at
www.scotgoldresources.com.
Cononish Mineral Resources
The Mineral Resource Estimate (“MRE”) is classified as Measured, Indicated and Inferred Mineral Resources,
(adhering to guidelines set out in the JORC Code (2012 Edition)), and is reported at a cut-off grade of 3.5 g/t gold as
is presented in the Table below. The Table also serves as the Company’s Annual Mineral Resource Statement.
Table: Annual Mineral Resource Statement as at 30/06/2017
Cononish Main Vein Gold and Silver Mineral Resources, prepared in accordance with the JORC code (2012
Edition) and reported at a 3.5 g/t Au cut-off as at 12/01/2015, which remain current subject to the depletion of
approximately 4.5kt from the Indicated Resources – Mined Stockpile
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Note: Mineral Resources presented above include Ore Reserves stated below.
There has been no change in the Mineral Resources reported as at 30/06/2016 other than the depletion of the mined
stockpile, the resource will be adjusted on full depletion of the stockpile. Approximately 4.7kt had been depleted to
end June 2017.
An internal review of the Mineral Resource Estimate concluded that the estimation techniques and parameters
employed remained appropriate.
The Cononish mineralisation remains open at depth down plunge and to the west along strike. There is therefore
potential to add to the resource by further extensional drilling.
In addition to the currently defined Mineral Resources, Scotgold believes that there is additional resource
development potential close to the Cononish mine, subject to appropriate and successful further work. Extensive
gold-in-soil anomalies, mineralisation associated with outcrops and trenching and geophysical anomalies close to
the current resource clearly warrant further follow up. In addition, there are indications that other reefs are present in
the area too. At this stage, such indications are highly conceptual and there is no guarantee that further exploration
will define additional Mineral Resources.
Cononish Ore Reserves
As part of initial work towards developing the 2015 BFS, Bara Consulting Ltd completed a thorough review of the
2013 Cononish Development plan in order to identify opportunities to not only improve on the plan but to also improve
the confidence in the plan. As a result of this review, further work was undertaken on the mining methodology,
access design, geotechnical evaluation and overall mine design.
The outcome of this work was that an Ore Reserve Estimate was completed on 25 May 2015, in accordance with the
JORC code (2012 Edition) based on the Mineral Resource Estimate (MRE) issued in January 2015. The subsequent
addendum to the Bankable Feasibility Study resulted in no change to the Ore Reserve. Hence there is no change to
the Ore Reserves reported for the project as of 30/06/2016.
An internal review of the Ore Reserve Statement concluded that the modifying factors used in determining the Ore
Reserve remained appropriate.
Scotgold Resources Limited
Page 8
K TonnesGrade Au g/tMetal Au KozGrade Ag g/tMetal Ag KozIn-situ Dry BD6015.02971.51392.7247414.321758.78952.72Indicated - Mined Stockpile77.9239.092.7254114.324859.91,0432.72757.41821.9532.7261713.426655.31,0962.72Reported at a cut-off grade of 3.5 g/t goldScotgold Resources Limited - Cononish Gold ProjectMineral Resource Estimate as at 12 January, 2015Reported from 3D block model with grades estimated by Ordinary Kriging with 15 m x 15 m SMU Local Uniform Conditioning adjustment. Minimum vein width is 1.2 m.Totals may not appear to add up due to appropriate rounding.ClassificationMeasured - In-situIndicated - In situSub-total M&IInferred - In-situTotal MRE
OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Table: Annual Ore Reserve Statement as at 30/06/2017
As at 25 May 2015 (JORC 2012 Code)
Tonnes (‘000)
Au Grade (g/t)
Au Metal (k oz)
Ag Grade (g/t)
Ag Metal (k oz)
Classification
Proven Probable Total
555
490
11.1
11.1
198
174
47.7
47.2
851
743
(Bara Consulting Limited Ore Reserve Statement dated May 2015)
65
11.5
24
51.5
108
For greater detail on the parameters derived from this work and used for the Ore Reserve estimation process, refer
to the Company’s announcement on 26/05/2015 – Cononish Gold Project Study Update and Reserve Estimate, and
subsequent announcement on 15/03/2017 - Update to Cononish Bankable feasibility study on the Company’s
website.
The ore reserve statement above does not take account of the depletion of part of the surface stockpile through the
BPT. As of 30th June 2017, approximately 4.7kt had been removed from the stockpile and the reserves will be
adjusted on full depletion of the stockpile.
Both the Mineral Resource Estimate and Ore Reserve statement were compiled by suitably qualified Independent
Competent Persons as identified at the time of their release.
Bulk Processing Trial
In February 2016 the Company announced its intention to undertake a Bulk Processing Trial” (BPT) at Cononish.
The principal objectives of the BPT were to demonstrate the marketability and profitability of Scottish gold production
from Cononish. It has also given further confidence to metallurgical test-work already completed and has provided
a basis for a review of the current development plan under the current Bankable Feasibility Study especially in relation
to the tailings disposal methodology referred to above.
The planning application for the BPT was approved by the Loch Lomond & The Trossachs National Park Planning
Authority in April 2016 and a small scale pilot plant was installed and commissioned by June 2016. Subsequent to
the initial phase of BPT operation, a further application was made to extend the life of the bulk processing trial in
order to complete the surface stockpile which was granted in February 2017.
The process employed is purely physical by crushing of the ore and using gravity separation via a centrifugal device
to separate the high grade gold concentrate, similar to the planned full scale plant. However, the flotation circuit
process has been replaced by a spiral bank to generate a sulphide, gold rich concentrate. This concentrate is then
further upgraded via a shaking table and the final gold rich output from both the centrifugal device and spiral are
smelted to produce a small quantity of doré (an impure bullion ‘bar’). As no chemicals are being used on site as part
of the BPT this gold generated can be classified as “ethical”. The majority of the gold however remains in the sulphide
concentrate which for the purposes of the BPT is sold without further processing. Metallurgical recovery and unit
processing costs in the BPT do not achieve the planned results of the full scale gravity/float plant process envisaged
in the Cononish Bankable Feasibility Study however they have given an invaluable confirmation of the performance
of the ore.
The first gold was poured in August 2016 in time for the official opening attended by local dignitaries and community
representatives. An initial offering of ‘Scottish Gold Rounds’ from the first gold produced was well supported with a
significant premium being realised above the spot gold price. Subsequently, ‘Scottish’ gold produced on site has
been sold, again at a significant premium to spot price, to two well known Scottish jewellers.
In addition, sales of gold in concentrate have been sold prior to year-end and are included in the results for the year
ended 30 June 2017. A further shipment containing an estimated 100 troy ounces of gold has been made in August
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
2017 and further production of varying grades and quantities is expected to be shipped in early October and
December with a final shipment, containing the final production from the existing stockpile, expected to be shipped
in early January 2018. Proceeds from sale of concentrates are received net of off-take commissions, discounts,
transport, refining and treatment charges.
GRAMPIAN GOLD PROJECT
The Company continues to actively pursue exploration activities on its substantial land position in the Dalradian group
of the south west Grampians, a terrain highly prospective for both gold and potential base metal occurrences. The
majority (85%) of the area currently under option to Scotgold is located outside the Loch Lomond and the Trossachs
National Park.
Whilst advancing the Cononish project to production, the Company’s strategy has been to conduct early stage
regional exploration over the Grampian Gold project area in conjunction with follow up work on the more advanced
prospects close to the Cononish project area.
The Grampian Gold project encompasses a large area (~4100 km2) of the highly prospective Dalradian sequence.
Basic exploration data, including gravity and airborne magnetics, is available from government surveys but is of a
quality and spacing that does not adequately reflect the prospectivity of the area. This, and the general lack of
previous exploration over the area (other than early stage exploration in the vicinity of the Cononish project), has
dictated the Company’s approach to exploration.
In order to advance its understanding of the regional setting the Company embarked on a regional scale stream
sediment sampling program. In an initial wide spaced regional program, in excess of 750 stream sediment samples
were taken across the project area. Interpretation of these results continues and this program has been followed up
by a more detailed infill sampling program in the anomalous result areas in order to further target areas for detailed
fieldwork and prospecting. To date in excess of 1200 samples have been collected with interpretation of these results
on-going.
In parallel with this regional program, Scotgold continues to evaluate previously identified high grade outcrop samples
identified by previous exploration close to the Cononish project. Initially, the Company conducted a re-sampling
program to verify previously identified occurrences and this program confirmed the presence of a large number of
high grade gold / silver vein outcrops in an area located between two major regional faults, the Tyndrum – Glen Fyne
fault and the Ericht - Laidon fault, and associated with the fractures generated by movement along these faults.
Considerable follow up work has been undertaken to examine the extent of these occurrences through further
fieldwork, detailed rock chip sampling, initial short surface drilling and (in some cases) deeper diamond drilling and
the Company believe that further significant exploration expenditure is justified on many of these prospects when
financing is available.
Scotgold Resources Ltd engaged the services of Dr. Pablo Gumiel and Dr. Monica Arias, of Consulting de Geología
y Minería, S.L., to conduct a structural study and initial analysis of Scotgold’s extensive Geographic Information
System (GIS) database covering the Grampian Gold project. The study aimed to develop a structural model, focused
on the Cononish deposit, to improve the understanding of the evolution of gold and silver mineralisation in the
Tyndrum area. The study then combined the extensive existing geochemical database with structural data from Drs
Gumiel and Arias’ recent fieldwork, using new analytical techniques to assess various aspects of prospectivity and
develop an initial prospectivity map. The map uses techniques that take account of a number of geological
parameters identified in the study as critical to locating potential economic mineralisation, including:
• High grade rock outcrop data
• Fracture density
• Typology (characteristics) of the vein structures / systems
• Other GIS based historic data
Through 3 Dimensional (3D) geological and GIS modelling, a preliminary prospectivity map was developed for the
study area to identify areas of high priority and potential, using a weighted gridding method.
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Based on the resulting prospectivity map, the study identified a series of high priority targets, with 6 targets being
located within a 2.5 km radius of Cononish, including 2 targets outside the Loch Lomond and Trossachs National
Park (LLTNP). A further 5 targets have been identified within the studied area, all of which are outside the LLTNP.
Close to the Cononish deposit, Coire Nan Sionnach and Kilbridge are highlighted as highly prospective, along with
two further parallel anomalies between the Cononish deposit and Coire Nan Sionnach.
The study has distinguished a number of high priority vein systems / structures from those less likely to carry
economic mineralisation and indicates high potential for Cononish style mineralisation in the Glen Orchy option area.
More recently, the Company has conducted a further comprehensive exploration review on a wider scale to better
focus ongoing exploration across the option areas outside Glen Orchy. This has involved a review of the lithological
setting of known mineralisation in combination with the structural features identified in the Gumiel / Arias report to
identify potential for Cononish style mineralization whilst also recognizing that other styles of mineralisation may be
present.
The review has also examined the most appropriate techniques for the ongoing exploration of the wider Grampian
project and has recommended a number of orientation surveys around Cononish as a precursor to their application
on a regional scale.
PORTUGAL - POMAR PROJECT
In May 2016, the Company announced the acquisition of the Pomar licence area in eastern central Portugal by its
wholly owned Portuguese subsidiary, Scotgold Resources Portugal Ltda.
The Pomar licence area includes the historic antimony mines of das Gatas, Pomar and Casalinho, in addition to
numerous small scale trials and occurrences.
Evaluation of styles of mineralization during initial site visits indicated the potential for undiscovered gold prospects
in zones with quartz-only mineralization in addition to the known gold bearing felsic dykes traversing the area and
potential extensions to the known antimony occurrences.
Initial exploration has included soil and rock chip sampling and development of a regional structural model.
Analysis of selected historical soil samples taken have indicated a long (c.1km) As (Arsenic) / Au (Gold) anomaly
along the kilometric scale felsic dykes in the area. Significant Au / Sb (Antimony) / As anomalies have also been
registered around the old workings of Das Gatas, Barroca da Santa, Casalinho, Monte da Goula, and Pomar
workings. Statistical interpretation of the samples indicates a strong correlation between As / Au (for the dykes) and
Au/Sb/As for historic workings and As is indicated as an important pathfinder for future exploration.
Results from selected rock chip samples taken from various locations around the old mines, waste tips and certain
accessible outcrops indicate the presence of high grade gold (and some W) associated with historic antimony veins.
Historic samples for Au along the Felsic dykes need further correlation but their prospectivity is supported by soil
sampling results.
A structural interpretation for the area has been prepared and postulates the mineralised Sb / Au veins as developing
in an extensional fault roughly trending NS and reactivated as a thrust. Based on this interpretation, a number of
areas around the old mines warrant follow up to determine the presence of extensions / repetitions to the know high
grade Sb / Au mineralisation.
Further follow up work is planned to follow up the extent of possible mineralisation associated with the Felsic dykes
with an extended and closer spaced soil sampling program along with initial trenching / diamond saw sampling of
available outcrop to verify previously taken chip samples. Detailed study of the mineralogy and paragenesis of the
Au occurrences in the dykes will further inform their prospectivity.
Further work is planned to determine the nature of the high grade rock chip samples associated with the old workings
and tips, and their possible extensions as postulated by the structural work. This will initially involve regaining access
to and resampling the old workings.
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
FRANCE – VENDRENNES
In May 2017, the Company was granted the ‘Vendrennes’ Permit Exclusif de Recherche (“PER”) / exclusive
exploration licence, applied for in 2015.Two further applications remain under consideration.
The Vendrennes PER substantially covers the ‘Vendée Antimony district’, France’s third largest antimony producing
district which during the 19th and beginning of the 20th century produced over 18,000t of Antimony metal substantially
from the Rochetrejoux vein. Most importantly, the PER includes Les Brouzils, a small high grade open pittable
antimony deposit that was discovered by the BRGM (Bureau de recherches géologiques et minières – the French
Geological Survey) during the 1970’s and 1980’s.
According to BRGM literature (L’Inventaire minier de la France), Les Brouzils hosts a ‘geological resource’ of 9,250t
of antimony metal at a grade of 6.7% Sb to a depth of 100m and is open along strike and at depth.
NOTE: The above statement relating to a historic / foreign ‘geological resource’ and the figures quoted do
not necessarily conform to current internationally recognized resource classification standards (e.g. JORC,
PERC, CIM, SAMREC etc) and cannot thus be classified as a resource (Inferred, Indicated or Measured) under
these codes and is stated for historical information purposes only. No reliance should be placed on these
figures and it is uncertain that following evaluation and/or further exploration work that the estimates stated
above will be able to be reported as mineral resources or ore reserves in accordance with a recognised code.
It will be the Company’s intention to work to verify or otherwise such numbers as soon as it can access the
appropriate data.
Production from a small open pit at Les Brouzils commenced in 1989 under a joint venture between Gagneraud and
the BRGM and produced some 895t of Sb metal in concentrate before closure in 1992 as a result of a significant
decline in the antimony price relating to the disposal of strategic metal stockpiles by the US and USSR. Concentrates
were produced through gravity and flotation and quality was reported as excellent with no deleterious elements
present.
The Company intends to commence work on the Vendrennes PER shortly.
Tenement details
United Kingdom -
The Company holds a lease (100%) from the Crown Estate Commissioners over Cononish Farm, county of Perth,
Scotland UK.
The Company holds a lease (100%) from the landowner over Cononish Farm, county of Perth, Scotland UK.
The Company holds five Mines Royal Option Agreements (100%) with the Crown Estate Commissioners as detailed
below:
Glen Orchy: Location – counties of Perth and Argyll, Scotland UK
Glen Lyon: Location – counties of Perth and Argyll, Scotland UK
Inverliever: Location – counties of Dunbarton, Argyll and Perth, Scotland UK
Knapdale: Location – county of Argyll, Scotland UK
Ochils: Location – county of Clackmannan, Perth, Kinross and Stirling, Scotland UK
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Portugal –
The Company holds a 100% interest in the Pomar Licence which is valid for 3 years from May 2016 (with an option
to extend) in eastern central Portugal, near Castelo Branco though its subsidiary Scotgold Resources Portugal Ltda.
France –
The Company holds a 100% interest in the Vendrennes PER (Permit Exclusif de Recherche or Exploration Licence)
through its subsidiary SGZ France SAS.
No other beneficial interests are held in any farm-in or farm-out agreements.
No other beneficial interests in farm-in or farm out agreements were acquired or disposed of during the period.
Competent Persons Statement:
The information in this report that relates to Exploration Results is based on information compiled by Mr David
Catterall, Pr Sci Nat, who is a member of the South African Council for Natural Scientific Professions. Mr Catterall is
employed as a consultant to Scotgold Resources Ltd. Mr Catterall has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify
as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Mr Catterall consents to the inclusion in the report of the matters based on
his information in the form and context in which it appears.
Note: No new exploration results are presented in this report. All results have been previously notified under JORC
2004 and are contained in Scotgold Annual reports 2008 - 2016 and various corresponding market releases.
The information in this report that relates to the 2015 Mineral Resources for Cononish Gold Project (refer ASX release
- Resource Estimate Update – 22/01/2015) is based on information compiled by Malcolm Titley, a Competent Person
who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Titley is employed by CSA Global (UK)
Limited, an independent consulting company. Mr Titley has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Mr Titley consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
The information in this report that relates to the 2015 Ore Reserves for Cononish Gold Project (refer ASX
announcement dated 26/05/2015) is based on information compiled by Pat Willis, a Competent Person who is
registered as a Professional Engineer (Pr.Eng.) with the Engineering Council for South Africa (ECSA) and a Fellow
in good standing and Past President of the Southern Africa Institute of Mining and Metallurgy (FSAIMM). Mr Willis is
employed by Bara Consulting Limited, an independent consulting company. Mr Willis has sufficient experience which
is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves’. Mr Willis consents to the inclusion in the report of the
matters based on his information in the form and context in which it appears.
Further, the Company confirms it is not aware of any new information or data that materially affects the information
contained in the original announcements and that all material assumptions and technical parameters underpinning
the estimate of Resources and Reserves continue to apply and have not materially changed.
Scotgold Resources Limited
Page 13
OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
STRATEGIC REVIEW
The Company continues to review its corporate structure, policies and practices with a view to maintaining and
enhancing shareholder value. In the current period under review, the following initiatives have been implemented:
i) On 21 October 2016, the Company completed its de-listing from the Australian Securities Exchange
ii) On 25 August 2017 the Company concluded its 1 for 100 consolidation of its shares. Together with the proposed
sale of small shareholdings, the consolidation of shares has resulted in a more attractive and less cumbersome share
structure which is designed to enhance the Company’s marketing and credibility for funding of its development of the
Cononish Gold and Silver Project.
iii) Streamlining of its share register to remove, at the holder’s option, those shareholdings of less than a minimum
value of $500. This has had the result of removing over 200 small shareholdings of a value of less than $500.00 each.
This process is ongoing at the date of this report.
iv) The Company’s accounting function has been successfully migrated to the UK and the operation of the BPT has
allowed the development of management systems that will stand us in good stead for the coming construction and
production at Cononish.
Operationally, the Company’s immediate focus remains the development of the advanced stage Cononish Gold and
Silver Project in Scotland. However, to provide longevity beyond Cononish, and potentially growth in overall production,
the Company is developing a pipeline of projects that we anticipate will meet our criteria. First and foremost of these is
our Grampian Project which consists of 5 Option Agreements ("Exploration Licences") in Scotland and includes the
highly prospective ground in the vicinity of Cononish.
The Company has added diversity to its main focus through the acquisition last year of the Pomar Licence in Portugal
and this year the Company was granted the Vendrennes License in France, with 2 further applications pending.
The fundamental technical work completed on Cononish last year, with the revised Mineral Resource Estimate and
Ore Reserve Estimate, underpinned the Updated Bankable Feasibility Study (BFS) completed in March 2017. Although
this study amply demonstrated the project’s technical and financial viability, funding the new reduced capital has
remained a challenge. Taking advantage of the “enforced” delay, the Company extended the Bulk Processing Trial
(BPT) for a further 12 months and is currently on going. This BPT has met its primary objectives; having celebrated its
official launch the first gold produced was auctioned as “Scottish Gold rounds” and subsequently Scottish gold sales at
a substantial premium of over 30% were concluded with the Scottish jewellery industry. Most importantly the BPT
demonstrated that an alternative tailings facility design could offer significant advantages for the Cononish project and
the Updated BFS incorporated a “Dry Stack” system. This revision further reduced the capital funding requirement
through a phased development approach, as well as reducing environmental impacts and facilitating progressive
rehabilitation. The revision does however necessitate a new planning application. The Company has gained extensive
experience through its previous successful applications and given the improved aspects of the new design, is optimistic
that a positive determination will be made, currently expected in December 2017.
The Updated BFS also demonstrated the increased value of Cononish given the improved gold market, particularly in
GB Pound terms post the UK’s Brexit decision. The price has ranged between £1059/z and £904/oz since that decision
and the assumed gold price in the Updated BFS of $1150/oz and exchange rate of $1.25/£ (which implies UK gold
price of £920/oz) is still considered reasonable. Notwithstanding the improved gold price and reduced capital
requirement, the financing of projects in the sector remains challenging. The Company is therefore exploring various
funding avenues, focusing on those appropriate for Cononish’s unusually small size, although it is recognized that any
funding plan is likely to be conditional upon a positive determination of the planning application. In this connection, the
revised financial metrics included within the Updated Bankable Feasibility Study have been well received by the
Scotgold Resources Limited
Page 14
OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Company’s recently appointed investment bank, Invenio Corporate Finance. Invenio have been engaged to explore
the debt and private equity markets in search for project development funding.
The work completed on advancing our future pipeline of projects has been modest due to the need to focus cash and
management resources on the advancement of Cononish. Work has generally focused on analyzing the existing data
and determining priorities, such that cost effective exploration programs can be rapidly implemented once constraints
are relaxed.
From cost savings and strategic developments, to review of project development opportunities, the Company is looking
forward to an exciting year ahead.
Scotgold Resources Limited
Page 15
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Your Directors submit their report on the consolidated entity consisting of Scotgold Resources Limited and its
controlled entities (“Scotgold”) for the financial year ended 30 June 2017. All amounts are presented in Australian
Dollars, unless otherwise stated.
DIRECTORS
The following persons were Directors of Scotgold Resources Limited during the whole of the financial year and up to
the date of this report unless otherwise stated:
Nathanial le Roux
Richard Gray
Chris Sangster
Phillip Jackson
Gabriel Chiappini
Non Executive Chairman
Managing Director
Non Executive Director
Non Executive Director
Non Executive Director
In office from
18/03/2015
10/10/2014
10/10/2014
14/08/2007
27/05/2016
In office to
present
present
present
present
16/05/2017
PARTICULARS OF CURRENT DIRECTORS AND COMPANY SECRETARY
Nathaniel le Roux
Non-Executive Chairman
MSc (Hons)
Qualifications and experience
Mr Nathaniel “Nat” le Roux has spent most of his career in financial markets and was Chief Executive of IG Group
plc between 2002 and 2006. He served as an independent director of the London Metal Exchange from 2008-2016
and is a trustee of various charities. Nat was born in Scotland and was educated in Edinburgh. He holds an MA in
Law from Cambridge University and an MSc in Anthropology from University College London.
Interest in Shares and Options at 30 June 2017
Fully Paid Shares
Options
Special Responsibilities
Overall strategic guidance and UK Capital markets.
632,220,806
45,656,433
Mr le Roux has advanced funds of £1.0 million to the Company for working capital purposes. The loan is secured
over the business undertakings of the Company and earns interest at the rate of 10% per annum.
Richard Gray
Managing Director
BSc (Hons)
Qualifications and experience
Mr Richard Gray most recently served as Head of Mining & Expansion at Avocet Mining PLC. He has extensive
international experience, in both underground and open pit mine operations, and brings considerable operational
knowledge and management experience and skills to the Company, particularly in the development and
implementation of gold mining projects. He has previously held various roles at both majors and juniors within the
gold mining sector and his successful career has included 15 years working in South Africa for Gencor Ltd and 10
years in West Africa for Golden Star Resources Ltd. Whilst at Golden Star he served as General Manager of Bogoso
Gold Limited, General Manager of Golden Star Wassa Limited and Senior Vice President Operations of Golden Star
Resources Ltd. He holds a BSc (Hons) Mining Engineering from the Royal School of Mines, Imperial College and
an MBA from the Graduate School of Business, Cape Town University.
Scotgold Resources Limited
Page 16
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Interest in Shares and Options
Fully Paid Shares
Options
Special Responsibilities
AND CONTROLLED ENTITIES
5,204,240
291,294
Mr Gray is the CEO / Managing Director and is responsible for the day to day running of the company.
Christopher Sangster
Non-executive Director
BSc (Hons), ARSM, GDE
Qualifications and experience
Mr Sangster is a mining engineer with over 30 years experience in the mining industry. He has a Bachelor of Science
(Honours) Degree in Mining Engineering from the Royal School of Mines, Imperial College in London and a GDE in
Mineral Economics from the University of Witwatersrand. He currently lives close to the Company’s exploration
licences at Comrie in Scotland.
Mr Sangster’s career covers extensive production and technical experience at senior levels in both junior and multi-
national companies in gold, diamonds and base metals in Africa, UK and Canada and covers a wide range of mining
applications.
Between 1996 and 1999 Mr Sangster was General Manager for Caledonia Mining Corporation for the Cononish Gold
Project and a Director of Fynegold Exploration, where he was responsible for all aspects of the project including
feasibility study preparation, project due diligence, finance negotiations, exploration initiatives and planning
permission applications.
After 1999, Mr Sangster moved to the Zambian Copperbelt with Anglo American Plc / KCM Plc where he attained
the position of Vice President of Mining Services and in 2005 joined Australian Mining Consultants as a Principal
Mining Engineer. More recently, Mr Sangster was employed as General Manager for an AIM – listed company
European Diamonds Plc.
Interest in Shares and Options
Fully Paid Shares
Options
Special Responsibilities
18,204,484
493,333
Advice on technical and planning matters. Mr Sangster provides consulting services at commercial rates to the
Company under a management agreement with the Company.
Phillip Jackson
Non-executive Director
BJuris LLB MBA FAICD
Qualifications and experience
Mr Jackson is a barrister and solicitor with over 25 years legal and international corporate experience, especially in
the areas of commercial and contract law, mining law and corporate structuring. He has worked extensively in the
Scotgold Resources Limited
Page 17
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Middle East, Asia and the United States of America. In Australia, he was formerly managing legal counsel for a major
international mining company, and in private practice specialised in small to medium resource companies.
Mr Jackson was managing region legal counsel Asia-Pacific for a leading oil services company for 13 years. He is
now General Counsel for a major international oil and gas company. He has been a Director of a number of Australian
public companies, particularly mining companies. He has been Chairman of Aurora Minerals Limited since it listed
in 2004 and Peninsula Mines Limited, since it listed in August 2007.
His experience includes management, finance, accounting and human resources. He is a director of ASX listed
companies Aurora Miinerals Limited, Peninsula Mines Limited, and Predictive Discovery Limited
Interest in Shares and Options
Fully Paid Shares
Special Responsibilities
4,331,250
Mr Jackson is Chairman of the Audit Committee and is responsible for legal matters.
Richard Barker
Company Secretary
BJuris LLB
Mr Barker is an Australian lawyer with 15 years’ experience working with top Australian Law firms in NSW and
WA. For the past 6 years Mr Barker has provided corporate compliance and company secretarial services for both
listed (ASX and AIM) and unlisted private companies. Mr Barker has extensive experience providing advice and
services on equity raisings and corporate governance matters.
SHARES UNDER OPTION
At the date of this report unissued shares of the Company under option are:
Number of shares under option
Exercise price
Expiry date
3,000,000
30,000,000
123,457,334
$0.0800
$0.0069
£0.0100
31 March 2022
22 September 2017
30 September 2017
OPERATING AND FINANCIAL REVIEW
A review of the operations of the consolidated entity during the financial year is contained in the Operations and
Strategic Review section of this Financial Report. The Company’s strategy in Scotland continues to focus on
advancing the 100% owned Cononish Gold and Silver Project to production whilst continuing to explore its large,
highly prospective land position around Cononish and elsewhere in Scotland which extends to some 4,300km2.
The consolidated entity also holds exploration interests in France and Portugal.
Scotgold Resources Limited
Page 18
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
PRINCIPAL ACTIVITIES
The principal activities of the consolidated entity during the year was mineral exploration, including the operation of
the Bulk Processing Trial, and pursuing revised project planning permission and funding opportunities for the
advancement of its Cononish gold and silver project in Scotland.
Operating Results
The consolidated loss after income tax for the financial year was $1,348,167 (2016: $1,505,592).
Financial Position
At 30 June 2017 the Company had cash reserves of $572,332 (2016: $738,866).
Dividends
No dividends were paid during the year and no recommendation is made as to dividends.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
In the opinion of the Directors, there were no significant changes in the state of affairs of the consolidated entity that
occurred during the financial year under review not otherwise disclosed in this report or in the consolidated financial
statements.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Company intends to continue its exploration activities with a view to the commencement of mining operations as
soon as possible.
Further information on likely developments in the operations of the consolidated entity and the expected results of
operations have not been included in this report because the Directors believe it would be likely to result in
unreasonable prejudice to the Company.
MEETINGS OF DIRECTORS
The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June
2017, and the number of meetings attended by each Director. These meetings included matters relating to the
Remuneration and Nomination Committees of the Company.
Nathaniel le Roux
Richard Gray
Chris Sangster
Phillip Jackson
Gabriel Chiappini
Number eligible
to attend
Number
attended
6
6
6
6
5
5
6
6
6
4
Scotgold Resources Limited
Page 19
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
AUDIT COMMITTEE
The Audit Committee is comprised of Mr Jackson who chaired one meeting of the audit committee during the year
ended 30 June 2017.
REMUNERATION REPORT (audited)
This report details the nature and amount of remuneration for each director and executive of Scotgold Resources
Limited.
Remuneration policy
The board policy is to remunerate Directors at market rates for time, commitment and responsibilities. The Board
determines payments to the Directors and reviews their remuneration annually, based on market practice, duties and
accountability. Independent external advice is sought when required. The maximum aggregate amount of Directors’
fees that can be paid is subject to approval by shareholders in general meeting, from time to time. Fees for Non-
Executive Directors are not linked to the performance of the consolidated entity. However, to align Directors’ interests
with shareholders’ interests, the Directors are encouraged to hold securities in the Company.
The Company’s aim is to remunerate at a level that will attract and retain high-calibre Directors and employees.
Company officers and Directors are remunerated to a level consistent with size of the Company.
All remuneration paid to key management personnel is valued at the cost to the company and expensed.
Performance-based remuneration
The company does not pay any performance-based component of salaries.
Details of remuneration for year ended 30 June 2017
Directors’ Remuneration
No salaries, commissions, bonuses or superannuation were paid or payable to Directors during the year.
Remuneration was by way of fees paid monthly in respect of invoices issued to the Company by the Directors or
companies associated with the Directors in accordance with agreements between the Company and those entities.
Details of the agreements are set out below.
Agreements in respect of remuneration of Directors:
Executive Directors
Richard Gray (Managing Director) is on a contract dated 22 September 2017 which provides for a fixed salary and
benefits, with a termination period of three months. The remuneration is reviewed annually. At the date of this report
the annual remuneration for Richard Gray is £100,000 ($162,000) plus pension contribution. In the event of a
termination of contract giving less notice than provided for in this contract, the remaining notice period will be paid in
full.
Chris Sangster earns fees from the Company as a consultant on technical issues. In addition to his director’s fees,
Mr Sangster earned fees of $115,079.
Scotgold Resources Limited
Page 20
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Non-Executive Directors
The Company’s constitution provides that the Non-Executive Directors may collectively be paid as remuneration for
their services a fixed sum not exceeding the aggregate sum determined by a general meeting. The aggregate
remuneration has been set at an amount of $300,000 per annum. A Director may be paid fees or other amounts as
the Directors determine where a Director performs special duties or otherwise performs services outside the scope
of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred as a
result of their directorship or any special duties. Executive Directors may be paid on commercial terms as the
Directors see fit.
The total remuneration paid to key management personnel is summarised below:
Director/Executive Associated Company
Year ended 30 June 2016
Nat le Roux
Richard Gray
Richard Harris
Chris Sangster
Phillip Jackson
Gabriel Chiappini
Peter Newcomb
Golden Matrix Holdings Pty
Ltd
Holihox Pty Ltd
Laurus Corporate Services
Pty Ltd
Symbios Pty Ltd
Year ended 30 June 2017
Nat le Roux *
Richard Gray
Chris Sangster
Phillip Jackson
Gabriel Chiappini
Peter Newcomb
Holihox Pty Ltd
Laurus Corporate Services
Pty Ltd
Symbios Pty Ltd
Short-term benefits
Fees
$
$
Post
$
Performance
Total
$
based
%
Consulting Employment
32,308
-
17,100
18,843
22,187
1,616
-
92,054
-
-
17,186
17,887
14,145
-
49,218
-
203,666
43,250
159,800
-
21,948
104,137
532,801
-
168,180
115,079
-
39,655
20,000
342,914
-
2,037
-
-
-
-
32,308
205,703
60,350
178,643
22,187
23,564
-
2,037
104,137
626,892
-
3,364
-
-
-
-
3,364
-
171,544
132,265
17,887
53,800
20,000
395,496
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Mr le Roux has waived his director fees for the time being
Scotgold Resources Limited
Page 21
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
Key management personnel share holdings
AND CONTROLLED ENTITIES
Balance 30
June 2015
Purchase and
Conversion of
Sales
Note
At date of
resignation
Balance 30
June 2016
Year ended 30 June 2016
Nat le Roux
Richard Gray
Richard Harris
Chris Sangster
Phillip Jackson
Peter Newcomb
456,564,373
2,912,946
42,999,999
17,150,213
4,331,250
11,921,179
535,879,960
45,656,433
1,291,294
-
1,054,271
-
774
48,002,772
73,900,000
-
-
-
-
-
73,900,000
-
-
(42,999,999)
-
-
(11,921,953)
(54,921,952)
576,120,806
4,204,240
-
18,204,484
4,331,250
-
602,860,780
Balance 30
June 2016
Purchase and
Conversion of
Sales
Note
At date of
resignation
Balance 30
June 2017
Year ended 30 June 2017
Nat le Roux
Richard Gray
Chris Sangster
Phillip Jackson
576,120,806
4,204,240
18,204,484
4,331,250
602,860,780
-
1,000,000
-
-
1,000,000
56,100,000
-
-
-
56,100,000
-
-
-
-
-
632,220,806
5,204,240
18,204,484
4,331,250
659,960,780
Key management personnel option holdings
Year ended 30 June 2016
Free
attaching
options
Purchase and
Sales
Expiry or
exercise
of options
At date of
resignation
Balance 30
June 2016
Nat le Roux
Richard Gray
Chris Sangster
102,502,587
291,294
493,333
103,287,214
(20,593,750)
1,000,000
-
(19,593,750)
(36,252,404)
(1,000,000)
-
(37,252,404)
-
-
-
-
45,656,433
291,294
493,333
46,441,060
Year ended 30 June 2017
Nat le Roux
Richard Gray
Chris Sangster
Free
attaching
options
45,656,433
291,294
493,333
46,441,060
Purchase and
Sales
Expiry or
exercise
of options
Date of
resignation
Balance 30
June 2017
-
-
-
-
-
-
-
-
-
-
-
-
45,656,433
291,294
493,333
46,441,060
Scotgold Resources Limited
Page 22
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
The consolidated entity does not have any full time Executive officers, other than the Managing Director as detailed
above.
Aggregate amounts payable to Directors and their related entities.
Consolidated
Entity
2017
$
Consolidated
Entity
2016
$
Accounts payable
14,248
86,707
There were no performance related payments made during the year.
End of remuneration report.
ENVIRONMENTAL ISSUES
The consolidated entity has conducted exploration activities on mineral tenements. The right to conduct these
activities is granted subject to environmental conditions and requirements. The consolidated entity aims to ensure a
high standard of environmental care is achieved and, as a minimum, to comply with relevant environmental
regulations. There have been no known breaches of any of the environmental conditions.
SUBSEQUENT EVENTS
On 4 July 2017 the Company announced that 50,000 fully paid ordinary shares had been issued on conversion of
options exercisable at £0.01.
On 18 August 2017 the Company announced that it had received confirmation from the Loch Lomond and Trossachs
National Park Planning Authority that its application for a revision of the currently permitted operation had been
received and validated. The revisions from the permitted operation are firstly to redesign the Tailings Storage Facility
using a “dry stack” system and secondly, to alter the phasing of the project, allowing for a lower capital first production
phase followed by a subsequent expansion to the currently permitted production levels. A decision on the revision
is expected by 31 December 2017.
On 25 August 2017, after approval by shareholders at General Meeting, the Company announced that it had
completed its 1 for 100 share consolidation. Options in issue will also be consolidated on a 1 for 100 basis and the
exercise price adjusted accordingly. The reason for the consolidation is to reduce the number of shares in issue to a
level that is more in line with other comparable AIM-traded companies and to create a higher share price per share
that will improve investor perception of the Company.
INDEMNIFICATION OF DIRECTORS
During the financial year, the Company has not given an indemnity or entered into an agreement to indemnify any of
the Directors.
AUDITOR
HLB Mann Judd continues in office in accordance with section 327 of the Corporations Act 2001.
Scotgold Resources Limited
Page 23
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
NON-AUDIT SERVICES
There were no non-audit services provided during the current year by our auditors, HLB Mann Judd.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration has been received for the year ended 30 June 2017 and forms part of the
Directors’ report.
PROCEEDINGS ON BEHALF OF 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.
Signed in accordance with a resolution of the Directors.
..............................................................
RICHARD GRAY – Managing Director
Dated at London, England, this 28th day of September 2017
Scotgold Resources Limited
Page 24
AUDITOR’S INDEPENDENCE DECLARATION
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Scotgold Resources Limited
Page 25
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Notes
CONSOLIDATED
Revenue – interest received
Other income
Administration costs
Interest expense
Unwinding of convertible note discount
Depreciation and gain on disposal of property, plant and equipment
Exploration expensed as incurred
Employee and consultant costs
Listing and share registry costs
Legal fees
Office and communication costs
Other expenses
2
2
12
3
2017
$
211
41,417
(389,511)
(64,966)
(55,974)
(103,132)
(111,579)
(211,191)
(260,438)
(60,622)
(91,117)
(41,265)
2016
$
1,459
-
(438,021)
(983)
(215,526)
(15,376)
(131,303)
(278,702)
(229,571)
(84,417)
(71,549)
(41,603)
LOSS BEFORE INCOME TAX BENEFIT
(1,348,167)
(1,505,592)
Income tax benefit
LOSS FOR THE YEAR
Other Comprehensive Income
4
-
-
(1,348,167)
(1,505,592)
Items that may be reclassified to Profit or Loss
Exchange difference on translation of foreign subsidiaries
Total comprehensive result for the year
(41,477)
(94,490)
(1,389,644)
(1,600,082)
Basic (loss) per share (cents per share)
24
(0.09)
(0.13)
These financial statements should be read in conjunction with the accompanying notes.
Scotgold Resources Limited
Page 26
STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
AND CONTROLLED ENTITIES
Notes
CONSOLIDATED
2017
$
572,332
42,110
222,248
16,269
2016
$
738,866
63,004
26,993
21,109
852,959
849,972
92,923
289,840
16,346,365
89,977
348,626
15,730,586
16,729,128
16,169,189
17,582,087
17,019,161
180,522
45,895
1,742,964
157,835
121,439
1,124,409
1,969,381
1,403,683
15,612,706
15,615,478
27,216,549
54,283
(11,658,126)
25,829,677
344,515
(10,558,714)
15,612,706
15,615,478
5
6
7
8
6
9
10
11
11
12
13
14
14
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventory
Other current assets
Total Current Assets
NON-CURRENT ASSETS
Trade and other receivables
Plant and equipment
Mineral exploration and evaluation
Total Non Current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Other current liabilities
Interest bearing liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
These financial statements should be read in conjunction with the accompanying notes.
Scotgold Resources Limited
Page 27
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
CONSOLIDATED
Issued
Capital
Accumulated
Losses
Options
Reserve
Convertible
Note
Reserve
Foreign
Currency
Translation
Reserve
Total Equity
Year Ended 30 June 2016
$
$
$
$
$
Balance 1 July 2015
Placements (Note 13)
Entitlements Issue (Note 13)
Options exercised
Share issue expenses
Equity portion of notes issued
Options expiry
Total comprehensive result for the year
As at 30 June 2016
22,711,529
1,053,904
1,476,010
254,388
(109,554)
443,400
-
-
25,829,677
(10,077,922)
-
-
-
-
107,800
917,000
(1,505,592)
(10,558,714)
1,141,769
-
-
-
-
-
(917,000)
-
224,769
356,555
-
-
-
-
(107,800)
-
-
248,755
(34,519)
-
-
-
-
-
(94,490)
(129,009)
14,097,412
1,053,904
1,476,010
254,388
(109,554)
443,400
-
(1,600,082)
15,615,478
Year Ended 30 June 2017
$
$
$
$
$
Balance 1 July 2016
Placements (Note 13)
Options exercised
Share issue expenses
Equity portion of notes converted
Total comprehensive result for the year
25,829,677
880,000
4,133
(53,861)
556,600
-
27,216,549
(10,558,714)
-
-
-
248,755
(1,348,167)
(11,658,126)
224,769
-
-
-
-
-
224,769
248,755
-
-
-
(248,755)
-
-
(129,009)
-
-
-
-
(41,477)
(170,486)
15,615,478
880,000
4,133
(53,861)
556,600
(1,389,644)
15,612,706
These financial statements should be read in conjunction with the accompanying notes.
Scotgold Resources Limited
Page 28
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
AND CONTROLLED ENTITIES
Notes
CONSOLIDATED
2017
$
2016
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payment to suppliers
Interest income received
(1,328,402)
-
(1,343,403)
326
Net Cash Outflow From Operating Activities
20
(1,328,402)
(1,343,077)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration expenditure
Purchase of property, plant and equipment
Net Cash Outflow From Investing Activities
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares and options
Share and option issue transaction costs
Borrowings costs and interest
Proceeds from borrowings
Net Cash Inflow From Financing Activities
Net increase/(decrease) in cash held
(717,927)
(45,216)
(1,050,176)
(259,398)
(763,143)
(1,309,574)
884,133
(53,861)
(38,658)
1,166,667
2,784,301
(109,553)
-
-
1,958,281
2,674,748
(133,264)
22,097
Effect of exchange rate fluctuations on cash and cash equivalents
(33,270)
(85,880)
Cash and cash equivalents at the beginning of this financial year
738,866
802,649
Cash and cash equivalents at the end of this financial year
5
572,332
738,866
These financial statements should be read in conjunction with the accompanying notes.
Scotgold Resources Limited
Page 29
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
These financial statements are general purpose financial statements, which have been prepared in accordance with
the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and comply with other
requirements of the law. Cost is based on the fair value of the consideration given in exchange for assets.
The financial statements have also been prepared on a historical cost basis. The financial statements are presented
in Australian dollars.
The company is a listed public company, incorporated in Australia and operating in Australia, Scotland, France and
Portugal. The entity’s principal activity is mineral exploration.
The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise
stated. The financial statements are for the consolidated entity consisting of Scotgold Resources Limited and its
subsidiaries.
Reporting Basis and Conventions
The financial statements have been prepared on the basis of accounting principles applicable to a going concern,
which assumes the commercial realisation of the future potential of the consolidated entity’s assets and the discharge
of their liabilities in the normal course of business. At balance date, the Group had current assets of $852,959 and
current liabilities of $1,969,381. In addition, the Group had a net cash outflow from operating activities of $1,328,402
and investing activities of $763,143 and available cash and cash equivalents of $572,332.
The consolidated entity is also anticipating revenues over the ensuing twelve month period from gold sales derived
from its Bulk Processing Trial.
The Company has received a letter of financial comfort from its major shareholder that amounts owing to him, but
not due for payment until 31 March 2018 of $1,742,964, will not be called for repayment until such time as the
Company is in a financial position to do so.
While the Board considers that the consolidated entity is a going concern it is also recognised that additional funding
may be required to ensure that the consolidated entity can continue to fund its operations and further its mineral
exploration and evaluation activities during the twelve-month period from the date of this financial report. Such
additional funding, can potentially be derived from either one or a combination of the following:
• Loan funds
• The placement of securities of up to $2.0m, as an excluded offer pursuant to the Corporations Act 2001; or
• The sale of assets.
Accordingly, the Directors believe the consolidated entity will obtain sufficient funding to enable it and the
consolidated entity to continue as going concerns and that it is appropriate to adopt that basis of accounting in the
preparation of the financial report.
However, the existence of the above conditions constitutes a material uncertainty that may cast significant doubt in
relation to the consolidated entity’s ability to continue as a going concern and whether it will therefore realise its
assets and extinguish its liabilities in the normal course of business.
Scotgold Resources Limited
Page 30
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Statement of Compliance
The financial report was authorised for issue on 27 September 2016.
The financial report complies with Australian Accounting Standards, which include Australian equivalents to
International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report,
comprising the financial statements and notes thereto, complies with International Financial Reporting Standards
(IFRS).
Adoption of new and revised standards
Changes in accounting policies on initial application of Accounting Standards
In the year ended 30 June 2017, the Directors have reviewed all of the new and revised Standards and Interpretations
issued by the AASB that are relevant to the consolidated entity’s operations and effective for the current annual
reporting period.
It has been determined by the Directors that there is no impact, material or otherwise, of the new and revised
Standards and Interpretations on its business and, therefore, no change is necessary to consolidated entity
accounting policies.
The Directors have also reviewed all new Standards and Interpretations that have been issued but are not yet
effective for the year ended 30 June 2017. As a result of this review the Directors have determined that there is no
impact, material or otherwise, of the new and revised Standards and Interpretations on the consolidated entity’s
business and, therefore, no change necessary to the consolidated entity’s accounting policies.
Accounting Policies
(a) Basis of Consolidation
A controlled entity is any entity controlled by Scotgold Resources Limited. Control exists where Scotgold Resources
Limited has the capacity to dominate the decision-making in relation to the financial and operating policies of another
entity so that the other entity operates with Scotgold Resources Limited to achieve the objectives of Scotgold
Resources Limited. All controlled entities have a 30 June financial year-end.
All intercompany balances and transactions between entities in the consolidated entity, including any unrealised profit
or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where
necessary to ensure consistencies with those policies applied by the parent entity.
Where controlled entities have entered or left the consolidated entity during the year, their operating results have
been included from the date control was obtained or until the date control ceased.
(b)
Income Tax
The charge for current income tax expenses is based on the profit for the year adjusted for any non-assessable or
disallowable items. It is calculated using tax rates that have been enacted or are substantively enacted by the
balance date.
Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax
bases of assets and liabilities and their carrying amount in the financial statements. No deferred income tax will be
recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no
effect on accounting or taxable profit or loss.
Scotgold Resources Limited
Page 31
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability
is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that
may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available
against which deductible temporary difference can be utilised.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no
adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will derive
sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility
imposed by the law.
(c) Plant and Equipment
Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation.
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
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 which will be received from the assets 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 benefits associated with the item will flow to the consolidated entity and the cost
of the item can be measured reliably. All other repairs and maintenance are charged to the statement of
comprehensive income during the financial period in which they are incurred.
(d) Depreciation
The depreciable amount of all fixed assets including capitalised lease assets, but excluding computers, is depreciated
on a reducing balance commencing from the time the asset is held ready for use. Computers are depreciated on a
straight line basis over their useful lives to the consolidated entity commencing from the time the asset is held ready
for use.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset:
Plant and Equipment
Depreciation Rate:
15 – 50%
The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and
losses are included in the statement of comprehensive income. When revalued assets are sold, amounts included
in the revaluation reserve relating to that asset are transferred to retained earnings / accumulated losses.
(e) Exploration and Evaluation Expenditure
Exploration and evaluation expenditure incurred is either written off as incurred or accumulated in respect of each
identifiable area of interest. Tenement acquisition costs are initially capitalised. Costs are only carried forward to
the extent that they are expected to be recouped through the successful development of the areas, sale of the
respective areas of interest or where activities in the area have not yet reached a stage which permits reasonable
Scotgold Resources Limited
Page 32
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
assessment of the existence of economically recoverable reserves. Revenues earned from the sale of materials
produced in connection with exploration activities are applied against the accumulated deferred expenditure with the
result of reducing those expenditures.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the
decision to abandon the areas is made.
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.
Exploration and evaluation expenditure, of which the Bulk Processing Trial is an integral part, is reclassified to
development expenditure once the technical feasibility and commercial viability of extracting the related mineral
reserve is demonstrable.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are
expensed as incurred and treated as exploration and evaluation expenditure. Likewise, fixed asset depreciation is
charged directly to profit and loss in the period in which it is charged.
(f)
Impairment of Assets
At each reporting date, the Directors review the carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable
amount of the assets, being the higher of the asset’s fair value less costs to sell and value-in-use, is compared to the
asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the
statement of comprehensive income.
Where it is not possible to estimate the recoverable amount of an individual asset, the consolidated entity estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
(g) Provisions
Provisions are recognised where there is 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.
(h) Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid
investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
change in value.
(i)
Inventory
Inventory which includes contained gold in pyrite and galena concentrates is valued at the lower of cost and net
realiseable value
(j)
Revenue
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial
assets.
Scotgold Resources Limited
Page 33
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
(k) Goods and Services Tax (GST) and Value Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of GST or VAT, except where the amount of GST
or VAT incurred is not recoverable from the relevant authority. In these circumstances the GST or VAT is recognised
as part of the cost of acquisition of the asset or as part of an item in expenses. Receivables and payables in the
statement of financial position are shown inclusive of GST or VAT.
(l)
Issued Capital
Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any
transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share
proceeds received.
(m) Comparative Figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial year.
(n) Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments has been identified as the Board of Directors of Scotgold Resources Limited.
(o) Share based payments – shares and options
The fair value of shares and share options granted is recognised as an expense with a corresponding increase in
equity. Fair value is measured at grant date and recognised over the period during which the grantees become
unconditionally entitled to the shares or share options.
The fair value of share grants at grant date is determined by reference to the share price at that time.
The fair value of share options at grant date is determined using a Black-Scholes option pricing model that takes into
account the exercise price, the term of the option, any vesting and performance criteria, the share price at grant date,
the expected price volatility of the underlying share, the expected dividend yield and the risk free rate for the term of
the option.
Upon the exercise of the option, the balance of the share-based payments reserve relating to the option is transferred
to share capital.
(p) Foreign currency translation
The presentation currency of the consolidated financial statements is Australian dollars. In addition, functional
currency is determined for each entity in the Group and items included in the financial statements of each entity are
measured using that functional currency.
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated
at the rate of exchange ruling at the balance date.
All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences
on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken
directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss.
Scotgold Resources Limited
Page 34
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported
as part of the fair value gain or loss.
The functional currency of the foreign operation, Scotgold Resources is Pounds Sterling (£). The functional currency
of SGZ France SAS and Scotgold Resources Portugal is the Euro (€).
As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of
the consolidated financial statements at the rate of exchange ruling at the balance date and income and expense
items are translated at the average exchange rate for the period, unless exchange rates fluctuated significantly during
that period, in which case the exchange rates at the dates of the transactions are used.
The exchange differences arising on the translation are taken directly to a separate component of equity, being
recognised in the foreign currency translation reserve.
On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign
operation is recognised in profit or loss.
In addition, in relation to the partial disposal of a subsidiary that does not result in the Group losing control over the
subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-controlling interests
and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or jointly
controlled entities that do not result in the Group losing significant influence or joint control), the proportionate share
of the accumulated exchange differences is reclassified to profit or loss.
(q) Critical accounting estimates and judgements
The application of accounting policies requires the use of judgements, estimates and assumptions about carrying
values of assets and liabilities that are not readily apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.
Key Estimates – Impairment
The Directors assess impairment at each reporting date by evaluating conditions specific to the consolidated entity
that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is
determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key
estimates.
Impairment of mineral exploration and evaluation
AASB 6 Exploration for and Evaluation of Mineral Resources requires an assessment of recoverable amount to be
completed whenever facts and circumstance suggest that the carrying amount of an exploration asset may exceed
its recoverable amount. Recoverable amount is defined within AASB 136 Impairment of Assets as the higher of fair
value less costs to sell and value-in-use. Value-in-use is determined on a pre-tax basis and is the present value of
the future cash flows expected to be derived from the asset or cash-generating unit.
At 30 June 2017, the Group had capitalised mineral exploration and evaluation expenditure of $16,346,365 (2016:
$15,730,586). The Directors do not believe any indications of impairment are present. The Company announced
Scotgold Resources Limited
Page 35
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
on 16 March 2017, an updated Bankable Feasibility Study on the Cononish Gold and Silver Project showing a
reported a base case (US$1,150 per ounce) net present value (10% WACC) of the project of £43 million.
Classification of exploration and evaluation
The Bulk Processing Trial is designed to demonstrate technical feasibility and commercial viability. Accordingly, the
criteria to reclassify any exploration and evaluation expenditure to development have not yet been met.
NOTE 2 – REVENUE
Revenue
Interest received
Other income (currency variance)
Total revenue
NOTE 3 - LOSS FROM ORDINARY ACTIVITIES BEFORE TAX EXPENSES
Expenses
Interest expensed
Total borrowing cost expensed
Depreciation of non-current assets
Plant and Equipment
Motor vehicles
Office furniture and equipment
Total depreciation of non-current assets
NOTE 4 - INCOME TAX
2017
$
2016
$
211
41,417
41,628
1,459
-
1,459
64,966
64,966
983
983
100,892
2,220
20
103,132
11,749
3,598
29
15,376
The prima facie tax benefit at 27.5% (2016: 28.5%) on loss from ordinary activities is reconciled to the income tax
benefit in the financial statements as follows:
Loss from ordinary activities
(1,348,167)
(1,505,592)
Prima facie income tax benefit at 27.5% (2016 28.5%)
370,746
429,094
Tax effect of permanent differences
Option based payments
Share issue costs amortised
Other non-deductible expenses
-
25,407
-
-
26,000
(634)
Income tax benefit adjusted for permanent differences
396,153
454,460
Deferred tax asset not brought to account
Income tax benefit
(396,153)
-
(454,460)
-
Scotgold Resources Limited
Page 36
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
2017
$
2016
$
INCOME TAX BENEFIT
The directors estimate the cumulative unrecognised deferred tax asset attributable to the company and its controlled
entity at 27.5% is as follows:
UNRECOGNISED DEFERRED TAX ASSETS
Revenue losses after permanent differences
Capital raising costs yet to be claimed
2,747,235
55,083
2,802,318
2,351,082
61,822
2,412,904
The potential deferred tax asset has not been brought to account in the financial report at 30 June 2017 as the
Directors do not believe it is appropriate to regard the realisation of the asset as probable. This asset will only be
obtained if:
(a)
(b)
(c)
The company and its controlled entity derive future assessable income of an amount and type sufficient
to enable the benefit from the deductions for the tax losses and the un-recouped exploration expenditure
to be realised;
The company and its controlled entity continue to comply with the conditions for deductibility imposed by
tax legislation; and
No changes in tax legislation adversely affect the company and its controlled entity in realising the benefit
from the deductions for the tax losses and un-recouped exploration expenditure.
Franking Credits
No franking credits are available at balance date for the subsequent financial year.
NOTE 5 – CASH AND CASH EQUIVALENTS
Cash at bank and on hand
572,332
738,866
NOTE 6 – TRADE AND OTHER RECEIVABLES
Current
GST / VAT receivable
Other receivables
Non-current
Bond on Tenement
NOTE 7 – INVENTORY
Inventory of gold concentrates
38,900
3,210
42,110
61,825
1,179
63,004
92,923
89,997
222,248
26,993
Scotgold Resources Limited
Page 37
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
NOTE 8 – OTHER CURRENT ASSETS
Prepayments
NOTE 9 – PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated Depreciation
Movement for the year
Opening balance
Additions
Depreciation expensed
Closing balance
NOTE 10 – MINERAL EXPLORATION AND EVALUATION
Opening balance
Net (gain)/loss from the BPT
Additional expenditure deferred during the year
Expenditure as incurred
Closing balance
2017
$
16,269
2016
$
21,109
655,293
(365,453)
289,840
610,947
(262,321)
348,626
348,626
44,346
(103,132)
289,840
104,605
259,397
(15,376)
348,626
15,730,586
(32,357)
759,715
(111,579)
16,346,365
14,794,913
90,801
976,175
(131,303)
15,730,586
The ultimate recoupment of exploration expenditure carried forward is dependent upon successful development and
commercial exploitation, or sale of the respective areas.
The net gain (2016 – loss) from the BPT is an integral part of the Company’s Mineral Exploration and Evaluation,
and includes $78,841 of revenue from Dore sales (2016: $nil) , $308,015 of revenue from Concentrate sales (2016:
$nil) and $354,499 of production costs (2016: $90,801). The criteria to reclassify Mineral Exploration and Evaluation
expenditure to Development have not yet been met and continue to be accumulated.
NOTE 11 – TRADE AND OTHER PAYABLES
Trade creditors
Other accruals
Trade creditors and accruals relating to exploration expenditure
Trade creditors and accruals relating to administration
180,522
45,895
226,417
96,822
129,595
226,417
157,835
121,439
279,274
115,142
164,132
279,274
Trade creditors are non-interest bearing and are normally settled on 30 day terms (2016: 30 days).
Scotgold Resources Limited
Page 38
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 12 – INTEREST BEARING LIABILITIES
Convertible Notes
AND CONTROLLED ENTITIES
The Company entered into Convertible Note Agreements (Convertible Notes) on the terms and conditions set out in
the Company’s Notice of Meeting dated 23 June 2014 (and approved by Shareholders at the General Meeting on 30
July 2014). The Convertible Notes were fully settled in the year ended to 30 June 2017.
Last financial year, on 22 March 2016, $443,400 Convertible Notes were converted into 73,900,000 ordinary shares
of the Company at the conversion price of $0.006 per share. This partial conversion reduced the principal amount
due under the Convertible Notes by the same amount.
During the year on 2 September 2016, $220,000 Convertible Notes were converted into 36,666,667 ordinary shares
of the Company at the conversion price of $0.006 per share.
On 23rd September 2016 a further $336,600 Convertible Notes were converted into 56,100,000 ordinary shares of
the Company at the conversion price of $0.006 per share.
The remaining Convertible Note of £300,000 ($600,000) was repaid on the repayment date of 30 September 2016
by a loan from a shareholder of £300,000 ($508,200), refer below.
The balance outstanding at 30 June 2017 is made up as follows:
Balance at 30 June 2016
Unwinding of discount
Conversion to shares
Foreign exchange
Conversion to loan (£300,000)
Balance at 30 June 2017
Shareholder loans
First draw
23 September, 2014
$
Second draw
30 March, 2015
$
537,764
17,336
(556,600)
1,500
-
-
586,645
13,355
-
(91,800)
(508,200)
-
Total
$
1,124,409
30,691
(556,600)
(90,300)
(508,200)
-
On 30 September 2016 The Company entered into an interest bearing loan agreement with Nat le Roux, the
Company’s non executive Chairman and major shareholder, for an amount of £300,000 ($508,200), The funds
were used to repay the Convertible Note of £300,000 ($508,200) which expired on 30 September 2016.
The loan was unsecured, interest was charged at 6% per annum and the loan could not be called before 30
September 2018. The loan could be repaid with accrued interest at any time at the election of the Company. The
loan and interest were fully repaid on 14 March 2017.
On 14 March 2017 the Company entered into a second short term loan agreement for £1,000,000 with Nat le Roux.
The term of the loan is one year ending on 14 March 2018 with an interest rate of 10% per annum. The principal is
repayable at the expiry of the term with interest. The loan is secured by a charge over all the Company’s assets.
The £1,000,000 funds have been used to fully repay the existing £300,000 loan facility plus accrued interest (6%
pa) provided by Nat Le Roux.
Scotgold Resources Limited
Page 39
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
The loan balance outstanding at 30 June 2017 is made up as follows:
First loan
30 September 2016
$
Second loan
14 March 2017
$
508,216
-
14,875
(523,091)
-
-
-
1,666,667
50,091
-
26,206
1,742,964
2017
$
2016
$
Principal sum drawn (£300,000)
Principal sum drawn (£1,000,000)
Interest accrued
Repayment
Foreign exchange
NOTE 13 – ISSUED CAPITAL
(a)
Issued capital
1,593,220,665 ordinary shares fully paid (2016: 1,437,697,714)
27,216,549
25,829,678
(b)
Movements in ordinary share capital of the Company were as follows:
Date
Details
Shares
Value
(cents)
$
Balance at 30 June 2015
1,135,392,472
07/10/2015
28/10/2015
24/10/2015
20/01/2016
22/03/2016
29/03/2016
14/04/2016
15/06/2016
Entitlements Issue
Entitlements Issue Shortfall
Placement
Options conversion
Loan conversion
Placement
Options conversion
Options conversion
Transaction costs arising on share issues
Balance at 30 June 2016
05/07/2016
04/08/2016
02/09/2016
23/09/2016
12/05/2017
Options conversion
Placement
Conversion of convertible note
Conversion of convertible note
Options conversion
Transaction costs arising on share issues
1.3000
1.3000
1.3000
1.9000
0.6000
1.1000
1.2000
1.9000
1.8300
1.4080
0.6000
0.6000
1.5200
95,295,889
18,243,341
10,556,659
12,000
73,900,000
83,333,333
20,593,750
370,271
1,437,697,715
76,500
62,500,000
36,666,667
56,100,000
179,784
1,593,220,666
22,711,529
1,238,847
237,163
137,237
228
443,400
916,667
247,125
7,035
(109,554)
25,829,677
1,400
880,000
220,000
336,600
2,733
(53,861)
27,216,549
Shares issued for non-cash consideration amounted to Nil during the year (2016: $Nil).
Scotgold Resources Limited
Page 40
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
(c)
Movements in options were as follows:
Number
$
Balance at 30 June 2015
66,486,494
1,141,769
Options expired during the year 24 July 2015
Options expired during the year 7 December 2015
Options expired during the year 28 March 2016
Options issued expiring 30 September 2017
Options exercised
Options issued on part conversion of note
Note options exercised 31 March 2016
Note options expired 31 March 2016
Balance at 30 June 2016
Options exercised
Options exercised
Balance at 30 June 2017
Option exercise dates and prices
Number
Exercise Price
Expiry Date
3,000,000
30,000,000
123,457,334
$0.0800
£0.0069
£0.0100
31 March 2022
22 September 2017
30 September 2017
(d)
Voting and dividend rights
(26,222,222)
(153,161)
(7,111,111)
124,095,889
(382,271)
56,846,154
(20,593,750)
(36,252,404)
156,713,618
(76,500)
(179,784)
156,457,334
(785,000)
(7,000)
(125,000)
-
-
-
-
-
224,769
-
-
224,769
Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the
number of shares held.
At shareholder’s 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.
NOTE 14 – RESERVES AND ACCUMULATED LOSSES
Accumulated Losses
Balance at beginning of the year
Net loss from ordinary activities
Movement on Convertible Note Reserve
Options expiry
Balance at end of the year
2017
$
2016
$
(10,558,714)
(1,348,167)
248,755
-
(11,658,126)
(10,077,922)
(1,505,592)
107,800
917,000
(10,558,714)
Scotgold Resources Limited
Page 41
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
Foreign Currency Translation Reserve
Balance at beginning of the year
Reserve arising on translation of foreign currency subsidiary
Balance at end of the year
Share Option Reserve
Balance at beginning of the year
Options expiry
Balance at end of the year
Convertible Note Reserve
Balance at beginning of the year
Partial conversion of convertible note
Balance at end of the year
Nature and purpose of reserves
Foreign currency translation reserve
2017
$
2016
$
(129,009)
(41,477)
(170,486)
(34,519)
(94,490)
(129,009)
224,769
-
224,769
1,141,769
(917,000)
224,769
248,755
(248,755)
-
356,555
(107,800)
248,755
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign subsidiaries.
Share Option Reserve
The share option reserve is used to record the assessed value of options issued.
Convertible Note Reserve
The convertible note reserve is used to account for the equity component of the convertible notes.
NOTE 15 – SHARE BASED PAYMENTS
During the current and prior year no share based payments in the form of shares and options were made.
On 6 July 2015 an Incentive Option Agreement was announced by the Company, whereby 38 million (380,000 post
consolidation of shares) options to acquire shares were agreed to be granted to Mr Richard Gray upon the
achievement of certain performance criteria, including project funding and gold production. The options will be
exerciseable at £0.006 (£0.60 post consolidation of shares). The options will lapse on 30 June 2025.
Scotgold Resources Limited
Page 42
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
NOTE 16 - COMMITMENTS FOR EXPENDITURE
Mineral Tenement Leases
In order to maintain current rights of tenure to exploration and mining tenements, the consolidated entity will be
required to outlay in the year ending 30 June 2018 amounts of up to $500,000 in respect of tenement expenditure
commitments and lease rentals. The commitments are dependent on exploration success and in the case of many
European held tenements are subject to negotiation. Certain of the commitments are also subject to new contracts.
The commitments shown below are therefore somewhat subjective and are not provided for, in the financial
accounts.
Not later than one year
Later than 1 year but not later than 2 years
Later than 2 years but not later than 5 years
NOTE 17 - CONTINGENT LIABILITIES
Minimum
expenditure
$
450,000
700,000
1,800,000
2,950,000
Licence
Fee
$
50,000
50,000
150,000
250,000
Total
$
500,000
750,000
1,950,000
3,200,000
a) The Company has entered into a donations agreement with the Strathfillan Community Development Trust
(”SCDT”) pursuant to which the Company will work with SCDT to provide additional facilities and opportunities for
the community served by SCDT and provide funding in respect of the same of up to £350,000. This liability is
contingent upon starting the development as defined under the Planning conditions and Decision letter.
b) Upon the granting of the Vendrennes licence in France, as announced on 11 May 2017, a Net Smelter Return
(NSR) agreement was activated whereby the economic entity became liable to pay 0.75% of gross proceeds
generated from the production of minerals to Golden Matrix Holdings Ltd, a company related to a former director of
the parent entity. The payment of any NSR is contingent upon the production of minerals from the Vendrennes
licence.
Scotgold Resources Limited and its controlled entities have no other known material contingent liabilities as at 30
June 2017.
NOTE 18 - INVESTMENT IN CONTROLLED ENTITIES
Parent
Registered
Number
Country of
Incorporation
Interest Held
Value of
investment
$
Scotgold Resources Limited
42 127 042 773
Australia
100%
N/A
Subsidiary
Scotgold Resources Limited
SGZ France SAS
Scotgold Resources Portugal Ltda
SC 309525
804 686 582
513 303 057
Scotland
France
Portugal
100%
100%
100%
5,491,881
288,434
1,490
Fynegold Exploration Limited
SC 084497
Scotland
100%
-
Scotgold Resources Limited
Page 43
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
NOTE 19 - SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors of Scotgold Resources Limited.
Year ended 2016
Segment revenues
Segment loss
Scotland
$
1,133
492,999
Segment assets
Segment non-current assets
Segment liabilities
16,869,064
16,121,603
141,274
Included in segment result:
Interest expense
Depreciation
Capitalised exploration
Acquisition of fixed assets
Year ended 2017
Segment revenues
Segment loss
983
14,734
895,454
259,397
Scotland
$
210
687,564
Segment assets
Segment non-current assets
Segment liabilities
17,475,162
16,666,771
204,822
Included in segment result:
Interest expense
Depreciation
Capitalised exploration
Acquisition of fixed assets
-
102,634
671,869
44,346
Australia
$
326
810,756
72,550
7,366
1,231,156
-
642
-
-
Australia
$
1
477,831
32,325
6,867
1,764,559
64,966
498
-
-
Other
$
-
201,387
77,547
40,220
31,253
-
-
40,219
-
Other
$
-
182,772
74,600
55,490
-
-
-
55,489
-
Total
$
1,459
1,505,592
17,019,161
16,169,189
1,403,683
983
15,376
935,673
259,397
Total
$
211
1,348,167
17,582,087
16,729,128
1,969,381
64,966
103,132
727,358
44,346
Scotgold Resources Limited
Page 44
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 20 - NOTES TO THE STATEMENT OF CASH FLOWS
Reconciliation of loss after income tax to net operating cash flows
Loss from ordinary activities
Depreciation
Exploration expenditure expensed
Unwinding of convertible note discount
Movement in assets and liabilities
Receivables
Inventory
Other current assets
Payables
Revaluation effect of foreign currency working capital
Net cash used in operating activities
NOTE 21 - KEY MANAGEMENT PERSONNEL
(a) Directors
AND CONTROLLED ENTITIES
2017
$
2016
$
(1,348,167)
(1,505,592)
103,132
111,579
55,974
(1,077,482)
15,376
131,303
215,526
(1,143,387)
22,925
(195,255)
(2,032)
(38,537)
(38,021)
(1,328,402)
(11,892)
(26,993)
2,603
(110,714)
(52,694)
(1,343,077)
The names and positions of Directors in office at any time during the financial year are:
Nathanial le Roux
Richard Gray
Chris Sangster
Phillip Jackson
Gabriel Chiappini
Non Executive Chairman
Managing Director
Non Executive Director
Non Executive Director
Non Executive Director
(b) Remuneration Polices
In office from
18/03/2015
10/10/2014
10/10/2014
14/08/2007
27/05/2016
In office to
present
present
present
present
16/05/2017
Remuneration policies are disclosed in the Remuneration Report which is contained in the Directors’ Report.
(c) Key management personnel remuneration
Remuneration was by way of fees paid monthly in respect of invoices issued to the Company by the Directors or
Companies associated with the Directors in accordance with agreements between the Company and those entities.
The Directors are entitled to reimbursement of out-of-pocket expenses incurred whilst on company business.
The aggregate compensation made to key management personnel of the group is set out below.
Scotgold Resources Limited
Page 45
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Short-term employee benefits
Post-employment benefits
Share-based payments
AND CONTROLLED ENTITIES
Consolidated
2017
$
392,132
3,364
-
395,496
2016
$
624,855
2,037
-
626,892
(d) Aggregate amounts payable to Directors and their personally related entities for remuneration.
Consolidated Entity
2017
$
2016
$
Accounts payable
14,248
86,707
NOTE 22 - RELATED PARTY INFORMATION
Transactions within the Consolidated Entity
Aggregate amount receivable within the consolidated entities
at balance date
Parent Entity
2017
$
2016
$
Total non-current receivables
Write down of loans attributable to losses of subsidiaries
Non-current receivables in parent entity
20,293,978
(8,730,842)
11,563,136
18,811,307
(7,819,028)
10,992,279
NOTE 23 - REMUNERATION OF AUDITORS
Auditing and reviewing of the financial statements of Scotgold
Resources Limited and of its controlled entities.
Consolidated
2017
$
38,000
38,000
2016
$
36,750
36,750
Scotgold Resources Limited
Page 46
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 24 - LOSS PER SHARE
AND CONTROLLED ENTITIES
Consolidated
2017
$
2016
$
Earnings used in calculation of earnings per share
(1,348,167)
(1,505,592)
Weighted average number of ordinary shares outstanding
during the year used in the calculation of basic loss per share
1,567,677,877
1,273,583,261
Number
Number
There are no potential ordinary shares on issue at the date of this report.
NOTE 25 - FINANCIAL INSTRUMENTS
(a) Financial Risk Management Policies
The consolidated entity’s financial instruments consist mainly of deposits with banks, accounts receivable, accounts
payable and hire purchase liabilities.
The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst
maintaining potential adverse effects on financial performance. The Group has developed a framework for a risk
management policy and internal compliance and control systems that covers the organisational, financial and
operational aspects of the group’s affairs. The Chairman is responsible for ensuring the maintenance of, and
compliance with, appropriate systems.
(b) Financial Risk Exposures and Management
The main risks the group is exposed to through its financial instruments are interest rate risk, foreign currency risk
and liquidity risk.
Interest Rate Risk
The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will
fluctuate as a result of change in the market, interest rate and the effective weighted average interest rate on these
financial assets, is as follows:
Financial Assets
Cash at Bank
Trade and other receivables
Total Financial Assets
Financial Liabilities
Trade and other payables
Interest bearing liabilities
Total Financial Liabilities
Scotgold Resources Limited
Weighted Average
Effective Interest Rate
2017
2016
0.03%
-
0.05%
-
-
9.5%
-
1.0%
Floating Interest Rate
2017
$
572,332
151,302
723,634
180,522
1,742,964
1,923,486
2016
$
738,866
174,090
912,956
157,835
1,124,409
1,282,244
Page 47
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
AND CONTROLLED ENTITIES
The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the
statement of financial position and in the notes to and forming part of the financial statements.
Interest Rate Sensitivity Analysis
The Group has performed a sensitivity analysis relating to its exposure to interest rate risk. This sensitivity analysis
demonstrates the effect on the current year results and equity which could result in a change in these risks.
At 30 June 2017 the effect on the loss and equity as a result of a change in the interest rate of 1% with all other
variables remaining constant is not material.
Foreign Currency Risk
The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate
fluctuations arise.
The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the
reporting date is as follows:
Currency
Liabilities
Assets
Liabilities
Assets
2017
$
178,927
-
178,927
2017
$
679,065
19,111
698,176
2016
$
141,276
31,253
172,529
2016
$
747,462
37,327
784,789
£ Sterling
€ Euro
Foreign currency
Other than translational risk the Group has no significant exposure to foreign currency risk at the balance date.
Liquidity Risk
The group manages liquidity risk by monitoring forecast cash flows.
Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date, is the
carrying amount net of any provisions for doubtful debts, as disclosed in the statement of financial position and notes
to the financial statement.
In the case of cash deposited, credit risk is minimised by depositing with recognised financial intermediaries such as
banks, subject to Australian Prudential Regulation Authority supervision.
The consolidated entity does not have any material risk exposure to any single debtor or group of debtors under
financial instruments entered into by it.
Scotgold Resources Limited
Page 48
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
Capital Management Risk
AND CONTROLLED ENTITIES
Management controls the capital of the Group in order to maximise the return to shareholders and ensure that the
group can fund its operations and continue as a going concern.
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. These responses include the management of
expenditure and debt levels and share and option issues.
There have been no changes in the strategy adopted by management to control capital of the Group since the prior
year.
Net Fair Values
For financial assets and liabilities, the net fair value approximates their carrying value. The consolidated entity has
no financial assets or liabilities that are readily traded on organised markets at balance date and has no financial
assets where the carrying amount exceeds net fair values at balance date.
NOTE 26 - MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR
Other than as set out below there are no other matters or circumstances that have arisen after the balance date that
have significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those
operations, or the state of affairs of the consolidated entity in future periods.
On 4 July 2017 the Company announced that 50,000 fully paid ordinary shares had been issued on conversion of
options exercisable at £0.01.
On 18 August 2017 the Company announced that it had received confirmation from the Loch Lomond and Trossachs
National Park Planning Authority that its application for a revision of the currently permitted operation had been
received and validated. The revisions from the permitted operation are firstly to redesign the Tailings Storage Facility
using a “dry stack” system and secondly, to alter the phasing of the project, allowing for a lower capital first production
phase followed by a subsequent expansion to the currently permitted production levels. A decision on the revision
is expected by 31 December 2017. This event did not affect the state of affairs of the consolidated entity.
On 25 August 2017, after approval by shareholders at General Meeting, the Company announced that it had
completed its 1 for 100 share consolidation. Options in issue will also be consolidated on a 1 for 100 basis and the
exercise price adjusted accordingly. The reason for the consolidation is to reduce the number of shares in issue to a
level that is more in line with other comparable AIM-traded companies and to create a higher share price per share
that will improve investor perception of the Company. This event did not affect the state of affairs of the consolidated
entity.
Scotgold Resources Limited
Page 49
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2017
NOTE 27 - PARENT ENTITY DISCLOSURES
Financial Position
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Total Current Assets
NON CURRENT ASSETS
Plant and equipment
Investment in subsidiary
Loan to subsidiaries
Total Non-Current assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Interest bearing loan
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Financial Performance
AND CONTROLLED ENTITIES
2017
$
2016
$
17,163
8,294
61,661
3,523
25,457
65,184
6,867
5,781,805
11,563,136
7,366
5,781,805
10,992,279
17,351,808
16,781,450
17,377,265
16,846,634
21,595
1,742,964
106,747
1,124,409
1,764,559
1,231,156
1,764,559
1,231,156
15,612,706
15,615,478
31,294,040
224,769
(15,906,103)
29,907,169
581,324
(14,873,015)
15,612,706
15,615,478
Loss for the year attributable to the parent
Total comprehensive loss
1,033,088
1,033,088
1,600,082
1,600,082
The loss attributable to the parent entity includes write down of loans to subsidiaries caused by subsidiary losses of
$911,812 (2016: $789,326). The parent entity has not entered into any guarantees in relation to debts of its
subsidiaries, has no contingent liabilities, and has no commitments for acquisition of property, plant and equipment.
Scotgold Resources Limited
Page 50
DIRECTORS’ DECLARATION
AND CONTROLLED ENTITIES
1.
In the opinion of the Directors of Scotgold Resources Limited (the ‘Company’):
a.
the accompanying financial statements and notes are in accordance with the Corporations Act 2001
including:
i. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017
and of its performance for the year then ended; and
ii. complying with Australian Accounting Standards, the Corporations Regulations 2001,
professional reporting requirements and other mandatory requirements.
b.
c.
there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
the financial statements and notes thereto are in accordance with International Financial Reporting
Standards issued by the International Accounting Standards Board.
This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2016.
This declaration is made in accordance with a resolution of the Board of Directors.
..............................................................
RICHARD GRAY – Managing Director
Dated at London, England, this 28th day of September, 2017.
Scotgold Resources Limited
Page 51
INDEPENDENT AUDITOR’S REPORT
AND CONTROLLED ENTITIES
Scotgold Resources Limited
Page 52
INDEPENDENT AUDITOR’S REPORT
AND CONTROLLED ENTITIES
Scotgold Resources Limited
Page 53
INDEPENDENT AUDITOR’S REPORT
AND CONTROLLED ENTITIES
Scotgold Resources Limited
Page 54
INDEPENDENT AUDITOR’S REPORT
AND CONTROLLED ENTITIES
Scotgold Resources Limited
Page 55
SHAREHOLDER DETAILS
ANALYSIS OF SHAREHOLDING
Shareholding
1
1,001
5,001
10,001
100,001
1,000
-
5,000
-
-
10,000
- 100,000
- or more
Shareholding
1
1,001
5,001
10,001
100,001
Total on Issue
Voting Rights
1,000
-
5,000
-
-
10,000
- 100,000
- or more
AND CONTROLLED ENTITIES
Number of Shareholders
Aust
(Certificated)
AIM
Total
669
144
16
19
8
856
14
17
6
15
16
68
683
161
22
34
24
924
Number of Shares
184,936
311,079
122,183
523,405
1,505,168
2,646,771
3,317
38,021
44,539
626,273
12,574,011
13,286,161
188,253
349,100
166,722
1,149,678
14,079,179
15,932,932
Article 16 of the Constitution specifies that on a show of hands every member present in person, by attorney or by
proxy shall have :
a)
b)
for every fully paid share held by him one vote
for every share which is not fully paid a fraction of the vote equal to the amount paid up on the share over
the nominal value of the shares
Substantial Shareholders
The following substantial shareholders have notified the Company in accordance with Corporations Act 2001.
Mr Nat le Roux
Mr Richard Milne Harris
Mr Graham Donaldson & Mrs Christine Donaldson
6,322,209
680,000
508,143
39.68%
4.27%
3.19%
Directors’ Shareholding
The interest of each director in the share capital of the Company is detailed in the Directors’ Report.
Scotgold Resources Limited
Page 56
SHAREHOLDER DETAILS
TOP TWENTY SHAREHOLDERS
AND CONTROLLED ENTITIES
%
Name
HARGREAVE HALE NOMINEES LIMITED
HSDL NOMINEES LIMITED
HARGREAVES LANSDOWN (NOMINEES) LIMITED
TD DIRECT INVESTING NOMINEES (EUROPE) LIMITED
JIM NOMINEES LIMITED
BARCLAYS DIRECT INVESTING NOMINEES LIMITED
INVESTOR NOMINEES LIMITED
BEAUFORT NOMINEES LIMITED
MR GRAHAM DONALDSON & MRS CHRISTINE DONALDSON
ALLIANCE TRUST SAVINGS NOMINEES LTD
SVS (NOMINEES) LIMITED
GOLDEN MATRIX HOLDINGS PTY LTD
SHARE NOMINEES LTD
HSBC CUSTODY NOMINEES
HSBC CLIENT HOLDINGS NOMINEE (UK) LIMITED
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16 WEALTH NOMINEES LIMITED
17 MR ALEXANDER LITTLEJOHN
18
19
20 MR RICHARD MILNE HARRIS
PERSHING INTERNATIONAL NOMINEES LIMITED
VIDACOS NOMINEES LIMITED
Shares
6,325,616 39.70%
1,043,751 6.55%
936,450
5.88%
754,052
4.73%
611,237
3.84%
460,539
2.89%
457,976
2.87%
353,079
2.22%
347,368
2.18%
294,497
1.85%
257,566
1.62%
255,000
1.60%
226,771
1.42%
210,555
1.32%
200,884
1.26%
184,873
1.16%
170,001
1.07%
160,386
1.01%
160,196
1.01%
150,000
0.94%
TOTAL 13,560,797 85.12%
Scotgold Resources Limited
Page 57
SHAREHOLDER DETAILS
TOP TWENTY OPTIONHOLDERS
Name
1 MR NAT LE ROUX
2 MR ALAN STANLEY STARKEY
3 MR KARL ALAN STARKEY
4 MR WILLIAM STYSLINGER
5 BARCLAYSHARE NOMINEES LIMITED
6 MR ADAM JAMES STARKEY
JIM NOMINEES LIMITED
7
8 HSDL NOMINEES LIMITED
9
INVESTOR NOMINEES LIMITED
INVESTOR NOMINEES LIMITED
10 MR GRAHAM DONALDSON & MRS CHRISTINE DONALDSON
11
12 MR KARL ALAN STARKEY
13 NR ADAM JAMES STARKEY
14 HSDL NOMINEES LIMITED
15 TD DIRECT INVESTING NOMINEES (EUROPE) LIMITED
16 ALLIANCE TRUST SAVINGS NOMINEES LIMITED
17 HARGREAVES LANSDOWN (NOMINEES) LIMITED
18 HARGREAVES LANSDOWN (NOMINEES) LIMITED
19 TD DIRECT INVESTING NOMINEES (EUROPE) LIMITED
20 HARGREAVES LANSDOWN (NOMINEES) LIMITED
TOTAL
AND CONTROLLED ENTITIES
Options
456,565
200,000
130,000
100,000
91,702
70,000
45,814
37,029
34,391
27,761
25,270
25,000
25,000
21,468
16,557
15,019
13,537
11,365
10,868
9,510
1,366,856
%
29.76%
13.04%
8.47%
6.52%
5.98%
4.56%
2.99%
2.41%
2.24%
1.81%
1.65%
1.63%
1.63%
1.40%
1.08%
0.98%
0.88%
0.74%
0.71%
0.62%
89.10%
Scotgold Resources Limited
Page 58
INTEREST IN EXPLORATION LEASES
AND CONTROLLED ENTITIES
Scotland
Location
Agreement
Grant Date
Cononish Glen Orchy
Cononish Glen Orchy
Cononish Glen Orchy
Glen Lyon
Inverliever
Knapdale
Ochils
Landholder Lease
Crown Lease
Option Agreement
Option Agreement
Option Agreement
Option Agreement
Option Agreement
23 July 2009
31 May 2012
5 November 2015
5 November 2015
5 November 2015
5 November 2015
5 November 2015
Area
20 sq km
975 sq km
1,369 sq km
660 sq km
676 sq km
426 sq km
Portugal
Location
Agreement
Grant Date
Area
Pomar MN/PP/001/16
Exploration Contract
21 April 2016
264 sq km
France
Location
Agreement
Grant Date
Area
Vendrennes
Exploration Contract
10 May 2017
303 sq km
Mining Leases in Scotland – general information
The mineral rights to gold and silver in most of Britain, including Scotland, are generally held by the Crown, In order
to explore for gold and silver, an option agreement is required to be concluded with the Crown which entitles the
holder to explore for gold and silver (subject to access agreements with the landowner (see below)) and on the grant
of planning permission (and other conditions), to take out a lease for exploitation of these metals.
Surface rights (and other minerals rights) are generally held by the landowner with whom access and lease
agreements must separately be obtained.
Mineral developments in Scotland are governed by the Town and Country Planning (Scotland) Act, with responsibility
for planning control exercised by the local Authority. Statutory designations inform as to the appropriate levels of
environmental assessment to be carried out.
Scotgold Resources Limited
Page 59
CORPORATE GOVERNANCE STATEMENT
AND CONTROLLED ENTITIES
The Board of Directors of Scotgold Resources Limited is responsible for the corporate governance of the Company.
The Board guides and monitors the business and affairs of Scotgold Resources Limited on behalf of the shareholders
by whom they are elected and to whom they are accountable. The statement reports on Scotgold Resources
Limited’s key governance principles and practices.
Details of the Corporate Governance Statement can be found on the Scotgold Resources Limited’s website at
http://www.scotgoldresources.com.au/corporate/corporate-governance/
Scotgold Resources Limited
Page 60
COMPANY INFORMATION - SCOTLAND
AND CONTROLLED ENTITIES
Exploration Office
Upper Tyndrum Station
Tyndrum, Stirlingshire
Scotland
FK20 8RY
Phone +44(0) 183 840 0306
Nominated Adviser (NOMAD)
Stockdale Securities Limited
Beaufort House
15 St. Botolph Street
London
EC3A 7BB
Phone +44(0) 207 601 6114
Share Registry
Computershare Investor Services PLC
Auditor
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ
Phone +44(0) 870 703 6300
Scott-Moncrieff
Exchange Place 3
Semple Street
Edinburgh
EH3 8BL
Phone +44(0) 131 473 3500
Solicitors
Harper McLeod LLP
Bankers
Media
The Ca’d’oro
Glasgow
G1 3PE
Phone +44(0) 141 221 8888
Bank of Scotland
Shandwick Place
Edinburgh
EH11 1YH
Phone +44(0) 870 850 1671
Capital M Consultants
1 Royal Exchange Avenue
London
EC3V 3LT
Phone +44(0) 7703 167065
Scotgold Resources Limited
Page 61