ABN : 42 127 042 773
ANNUAL REPORT
2018
CONTENTS
AND CONTROLLED ENTITIES
Company Information
Operations and Strategic Review
Directors’ Report (including Remuneration Report – audited)
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
Corporate Governance Statement
3
5
15
26
27
28
29
30
31
54
55
59
60
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
Richard Barker
Peter Hetherington
William (Bill) Styslinger
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Company Secretary and Non-Executive Director
(appointed 9 October 2017)
Non-executive Director (appointed 18 June 2018)
Non-executive Director (appointed 18 June 2018)
Company Secretary
Richard Barker
Registered Office
Suite 4, 189 Stirling Highway,
Nedlands,
Western Australia, 6009
Telephone:
+61 8 9463 3260
Email: sgz@scotgoldresources.com
Share Registry
Auditor
Bankers
Securities Exchange
Listing
Nominated Adviser
and Joint Broker
Computershare Investor Services Pty Ltd
Level 11
172 St Georges Terrace
Perth, WA 6000
Telephone:
+61 8 9323 2000
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco, WA 6008
Telephone:
+61 8 6382 4600
Westpac Banking Corporation
1257 Hay Street
West Perth
WA 6005
AIM board of the London Stock Exchange.
AIM Code:
“SGZ”
SP Angel Corporate Finance Llp
Prince Frederick House,
35-39 Maddox Street,
London, W1S 2PP
Bank of Scotland
The Mound,
Edinburgh
Scotland EH1 1YZ
Scotgold Resources Limited
Page 3
COMPANY INFORMATION
AND CONTROLLED ENTITIES
Joint Broker
Lawyers
Smaller Company Capital Ltd
4 Lombard Street,
London, EC3V 9HD
Australian Law -
Steinepreis Paganin
Level 4, The Read Buildings,
16 Milligan Street,
Perth WA 6000
Website
www.scotgoldresources.com
English Law -
Fox Williams LLP
10 Finsbury Square
London
EC2A 1AF
Scotgold Resources Limited
Page 4
OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2018
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 National Parks (“NPA”) 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, scalability 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
Update to the Bankable Feasibility Study, announced in March 2017. 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 submitted a revised application for planning permission to incorporate the new tailings
disposal methodology. The application was unanimously approved in February 2018 by the National Parks Authority
(“NPA”) Board and a decision notice is expected in late 2018.
Grampian Gold Project –
The Grampian Gold Project comprises Crown Option agreements covering approximately 4100 km2 in the south west
Grampians of Scotland and covers some of the most prospective areas of the Dalradian Series in the UK. This is a
sequence of highly folded and metamorphosed sedimentary and volcanic rocks of late Precambrian to Early Cambrian
age, which extends into regions that were contiguous at the time of its formation. This includes the western extension
to the eastern seaboard of Canada and the Appalachian belt in the US, and the eastern extension into Norway and
Sweden and Norway. The British Geological Survey has identified the Dalradian sequence as 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 has historically undertaken regional stream sediment sampling programs over the wider Grampian
gold project area and identified a number of high grade outcrops in the vicinity of the Cononish project. In the current
Scotgold Resources Limited
Page 5
OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
reporting period work has focused on orientation surveys over the known Cononish deposit in order to better
understand the significance of these anomalies and improve our exploration methodology going forward.
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. In March 2018 the
Company announced the conditional sale of Vendrennes and separately the entering of an “earn in” agreement for
Pomar.
Corporate Activities-
In July 2017 the Company announced the completion of a 1 for 100 share consolidation.
In December 2017 a rights issue, followed by a placement on the same terms as the rights issue in January 2018,
raised £2.66m (before expenses) and £0.45m respectively. This was the first tranche of funding for the development
of the Cononish Project. In May 2018 the Company completed the final tranche of approximately £9.0m, consisting
of £4.0m through the placement of shares and £5.0m as a debt facility.
The Company also strengthened its Board during the year with the appointment of Richard Barker, Peter
Hetherington and William Styslinger.
CONONISH GOLD AND SILVER PROJECT
In December 2017 the Company concluded the Bulk Processing Trial, which had informed the Updated BFS
(announced in March 2017) and provided a supply of “Scottish Gold”. Work on site has since focussed on
preparations for the phased development of the Cononish project, in readiness for the completion of funding and
issue of Planning consent Decision Notice.
The Bankable Feasibility Study (BFS) for “The Cononish Gold and Silver Project” was conducted by Bara Consulting
Ltd and published in August 2015. An update was published in March 2017.
The report highlighted that the Phased Project approach improved economic returns and reduced the development
peak funding requirements to £7.4m¹
Project Development
The Project development is intended to take place in two stages to strengthen the mine’s production ability whilst
minimising technical risks. Assuming November 2018 commencement:
→ Phase One (December 2019 - February 2022): After a 4 month ramp up and commissioning period, the mine is
intended to operate at a production level of 3,000 tonnes per month (36,000 tonnes per annum).
→ Phase Two (March 2022 - End of Life of Mine): The mining is intended to reach a steady state level of production
at 6,000 tonnes per month (72,000 tonnes of ore per annum).
Phase Two is intended to be organically funded by Phase One. Within 2.5 years Scotgold aim to be in a position
where profits generated by Phase One can be invested into the development requirements of Phase Two.
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
Tailings Storage Facility (TSF)
The TSF is designed as a “Dry Stack” tailings system, where tailings (waste) are stored on the surface in the form of
piles (dry stacks).
The stacks - 10 in total - will be built during the Life of Mine (LOM) from mining waste, eliminating a previously
required impoundment dam.
The lower upfront capex requirement enhances Project’s operational flexibility and significantly lowers the capital
costs.
Due to the avoidance of a reservoir facility, progressive rehabilitation and naturalistic final landform, the new design
has significant environmental advantages.
2
Project Lifetime
EBITDA
Pre Tax Cash Flow
Net Cashflow
IRR pre-Tax @ 10%
Operating Margin
Cost Dynamics
2
Capital Cost
Operating Cost
Average Operating Cost/oz Eq Au.
Average Capital Cost/oz Eq Au.
Total Average Cost/oz Eq Au.
¹Provided by Bara Consulting BFS and Scotgold management
£ 101,114,660
£ 81,017,398
£ 68,256,497
80%
59%
£ 20,097,262
£ 69,066,131
£ 373.09
£ 108.56
£ 481.65
2
As prepared by Bara Consulting on behalf of Management assuming a development of the mine funded through equity only. The information was drawn from
the Update to the Cononish Bankable Feasibility Study (BFS) and Short Term Funding Plan referred to in the company press release of March 17
2017.
th
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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 30/06/2018
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 6.5kt from the Indicated Resources – Mined Stockpile
Note: Mineral Resources presented above include Ore Reserves stated below.
There has been no change in the Mineral Resources reported as at 30/06/2017 other than the depletion of the mined
stockpile, the resource will be adjusted for this depletion of the stockpile. Approximately 6.5kt had been depleted to
the end of June 2018.
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 trenches, 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. At this stage, such indications are highly conceptual and there is no guarantee that further exploration will
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 2018
AND CONTROLLED ENTITIES
define additional Mineral Resources.
Cononish Ore Reserves
As part of initial work towards developing the 2015 BFS, Bara Consulting Ltd (“Bara Consulting”) 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 30/06/2017.
An internal review of the Ore Reserve Statement concluded that the modifying factors used in determining the Ore
Reserve remained appropriate.
Table: Annual Ore Reserve Statement as at 30/06/2018
As at 25 May 2015 (JORC 2012 Code)
Classification
Tonnes (‘000)
Au Grade (g/t)
Au Metal (k oz)
Ag Grade (g/t)
Ag Metal (k oz)
Proven Probable Total
555
490
11.1
11.1
198
174
47.7
47.2
851
743
65
11.5
24
51.5
108
(Bara Consulting Limited Ore Reserve Statement dated May 2015)
For greater detail on the parameters derived from this work and used for the Ore Reserve estimation process, please
refer to the Company’s announcement on 26/05/2015 – Cononish Gold Project Study Update and Reserve Estimate;
and to the subsequent announcement on 16/03/2017 - Update to Cononish Bankable feasibility study on the
Company’s website.
The Ore Reserve statement above does not take account of the depletion of the surface stockpile through the BPT.
At 30 June 2018, approximately 6’5kt 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.
GRAMPIAN GOLD PROJECT
The Company continues to actively pursue exploration activities on its substantial land position in the Dalradian Belt
of the south west Grampians, a terrain highly prospective for both gold and 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.
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
The Grampian Gold project encompasses a large area (~4100 km2) of the highly prospective Dalradian sequence.
Basic exploration data, including gravity and airborne magnetics, are available from government surveys but are 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 recent years an initial wide spaced regional scale stream sediment sampling program was undertaken and followed
up by a more detailed infill sampling program in the anomalous result areas. In parallel previously identified high
grade outcrop samples close to the Cononish project were resampled 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.
Scotgold Resources Ltd also conducted a structural study and initial analysis of Scotgold’s extensive Geographic
Information System (GIS) database covering the Grampian Gold project (“The GIS Study”).
Through 3 Dimensional (3D) geological and GIS modelling, a preliminary prospectivity map was developed for the
GIS study area to identify areas of high priority and potential. Based on this map, the GIS 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.
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 structural 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 in the current reporting period work has focused on orientation surveys using these techniques over the
known Cononish deposit. Once evaluation of these surveys is complete, it is intended the most promising will be
applied to the high priority targets identified by the prospectivity map in order to inform future drill programs.
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) Arsenic (“As”) / (Gold) (“Au”) 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.
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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. A 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.
In March 2018, the Company announced an “earn in” agreement with PanEx Resources Limited over the Pomar
Project.
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.
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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
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 and 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.
Scotgold Resources Limited
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OPERATIONS and STRATEGIC REVIEW
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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 2018
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 25 August 2017 the Company concluded its 1 for 100 consolidation of its shares. Together with the sale of small
shareholdings, the consolidation of shares has resulted in a more attractive and less cumbersome share structure.
ii) 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..
iii) The Company appointed BDO as Auditors in June 2018.
iv) The Company will adopt the QCA code of corporate governance which will supercede the currently adopted ASX
code of Corporate Governance.
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 fundamental technical work completed on Cononish in 2015, with the revised Mineral Resource Estimate and
Ore Reserve Estimate, underpinned the Updated Bankable Feasibility Study (BFS) completed in March 2017. This
study amply demonstrated the project’s technical and financial viability, but funding the new reduced capital remained
a challenge. This challenge was met this year with the raising of two traches of funding, through a combination of
Rights Issue, share placement and debt, totalling approximately £12m. The key remaining impediment to
commencement of development is now the issue of the Decision Notice by the NPA relating to the planning
application (approved by the NPA Board in February 2018). While the legal process which will enable the issue of
the Decision Notice in on going, the Company has been actively progressing the anticipated technical submissions
required by the Planning Permit conditions. Once these submissions are approved the Company will be in a position
to commence development activities on site.
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 £1029/z and £929/oz over this
reporting period 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. With full project funding in place, the Company
expects project returns in line with the Updated BFS estimates.
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. With sufficient funding in place for the development,
the Company has also begun investing in further exploration on the Grampian Project. These sums remain relatively
modest and will focus on the design of cost effective future programs, utilising the Company’s extensive data set to
best advantage. We will continue to minimise our expenditure on our Portuguese asset through the earn in
agreement and continue to work towards the conclusion of the sale of the French asset.
The coming period will be dominated by the Cononish development activities and we look forward to reporting
progress on these once the NPA Decision Notice is issued and works can commence.
Scotgold Resources Limited
Page 14
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2018
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 2018. 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
Richard Barker
Peter Heatherington
William Styslinger
Non Executive Chairman
Managing Director
Non Executive Director
Non Executive Director
Company Secretary/ Non Exec Director
Non Executive Director
Non Executive Director
18/03/2015
10/10/2014
10/10/2014
14/08/2007
09/10/2017
18/06/2018
18/06/2018
present
present
present
present
present
present
present
In office from
In office to
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.
Other Directorships in past three years: None
Interest in Shares and Options at 30 June 2018
Fully Paid Shares
Options
Special Responsibilities
Overall strategic guidance and UK Capital markets.
22,318,222
1,744,657
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 all interest has been waived.
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
Scotgold Resources Limited
Page 15
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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.
Other Directorships in past three years: None
Interest in Shares and Options
Fully Paid Shares
Options
Special Responsibilities
96,738
1,008,939
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
Chris has a BSc Hons in Mining Engineering from the Royal School of Mines, Imperial College in London and a GDE
in Mineral Economics from the University of Witwatersrand. Chris has extensive experience worldwide in gold,
diamond and base metal production environments. Since 1999, he has held positions of Vice President Mining
Services at KCM PLC and Principal Mining Engineer for Australian Mining Consultants. In 2007, Chris co-founded
Scotgold Resources and was its CEO / Managing Director until October 2014. He is a Non-executive Director of
Ariana Resources and also an Associate Consultant for Bara Consulting Limited.
Other Directorships in past three years: None
Interest in Shares and Options
Fully Paid Shares
Options
Special Responsibilities
202,045
4,000
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
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.
Scotgold Resources Limited
Page 16
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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 Minerals Limited, Peninsula Mines Limited, and Predictive Discovery Limited.
Other Directorships in past three years: None
Interest in Shares and Options
Fully Paid Shares
Special Responsibilities
43,313
Mr Jackson is Chairman of the Audit Committee and is responsible for legal matters.
Richard Barker
Company Secretary
BJuris LLB
Qualifications and experience
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.
Other Directorships in past three years: None
Peter Hetherington
Non Executive Director
B. Econ., Mstrs (Fin)
Qualifications and experience
Mr Hetherington is the Chief Executive Officer of IG Group Holidings Plc (“IG”), having joined IG as a graduate trainee
in 1994. He graduated from Nottingham University with a degree in Economics, and from the London Business
School with a masters in Finance. Mr Hetherington also served as an officer in the Royal Navy prior to joining IG.
Other Directorships in past three years:
Deal City Limited
Dot Trading Registry Limited
DotBroker Registry Limited
DotCFD Registry Limited
DotForex Registry Limited
DotMarkets Registry Limited
DotSpreadbetting Registry Limited
Extrabet Financial Limited
Extrabet Limited
Scotgold Resources Limited
Page 17
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
(Services)
Registrar
Registry
Domaigns
Domaigns
Financial Domaigns
Limited
Financial Domaigns Limited
Financial
Limited
Financial
Holdings Limited
Fox Japan Holdings
Fox Sub 2 Limited
Fox Sub Limited
IG Asia Pte Limited
IG Bank S.A
IG Finance
IG Finance Two
IG Finance 5 Limited
IG Finance 8 Limited
IG Finance 9 Limited
IG Finance Four
IG Finance Three
IG Forex Limited
IG Group Holdings Plc
IG Group Limited
IG Index Limited
IG Infotech (India) Private Limited
IG Limited
IG Markets Limited
IG Markets South Africa Limited
IG Services Limited
IG Spread Betting Limited
ITS Market Solutions Limited
LLC IG Dev
Market Data Limited
Nadex Clearing, LLC
Nadex Domains Inc
North
American
Exchange Inc
Extrabet Financial Limited
ITS Market Solutions Limited
Derivatives
Interest in Shares and Options
Fully Paid Shares
3,231,818
Scotgold Resources Limited
Page 18
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
William Styslinger
Non Executive Director
BSc Engineering
Qualifications and experience
Mr Styslinger is a director of Nasdaq listed Casa Systems Inc, and served as Chairman, President and Chief
Executive Officer of SeaChange International Inc, a Nasdaq listed provider of multiscreen video software and
services, from its inception in July 1993 until his retirement in November 2011.
Other Directorships in past three years: None
Interest in Shares and Options
Fully Paid Shares
Options
SHARES UNDER OPTION
1,990,555
320,000
At the date of this report unissued shares of the Company under option are:
Number of shares under option
Exercise price Expiry date
30,000
2,124,699
$8.00
£0.40
31 March 2022
31 December 2019
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.
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 $1,899,667 (2017: $1,348,167).
Financial Position
At 30 June 2018 the Company had cash reserves of $11,207,036 (2017: $572,332).
Dividends
Scotgold Resources Limited
Page 19
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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 and to further its objective of development of the Cononish
silver and gold project with a view to the commencement of mining operations as soon as possible.
MEETINGS OF DIRECTORS
The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June
2018, 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
Richard Barker
Peter Hetherington
William Styslinger
AUDIT COMMITTEE
Number eligible
to attend
Number
attended
6
6
6
6
6
1
1
6
6
6
6
6
1
1
The Audit Committee is comprised of Mr Jackson (Chairman) and Mr Barker. One meeting of the audit committee
was held during the year ended 30 June 2018.
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. No advice has been sought in the current year.
The maximum aggregate amount of Directors’ fees that can be paid is set at $300,000 and may be increased from
time to time, subject to approval by shareholders in general meeting. Fees for Non-Executive Directors are not linked
Scotgold Resources Limited
Page 20
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
to the performance of the consolidated entity. The Annual Report, containing this Remuneration Report is presented
and considered at at the Annual General Meeting, however, no shareholder approval is required.
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 cost to the company and expensed, unless it has
been incurred in connection with activities which are capitalised as deferred exploration.
The group does not operate an Employee Share Scheme and there are no deferred shares.
Performance-based remuneration
The company does not pay any performance-based component of salaries.
Details of remuneration for year ended 30 June 2018
Directors’ Remuneration
No salaries, commissions, bonuses or superannuation were paid or payable to Directors during the year except for
Richard Gray who was salaried. 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 Director
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 £135,000 ($241,000) 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.
In the year ended 30 June 2018, Mr Gray was granted 1,000,000 options to acquire shares in the company at an
exercise price of 30p per share. The options vest on the later of one year from date of grant or the commencement
of gold production from the Cononish mine. The options will expire 10 years after the date of grant, being 1 May
2028. The grant of the options is subject to shareholder approval which, at the date of this report is outstanding.
Accordingly, no amount has been recorded in the Financial Statements. However, for the purpose of this Report, a
value of $52,870 (2017 - $Nil) has been ascribed to Mr Gray’s remuneration.
Non-Executive Directors
i) 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 $115,614 in the year ended 30 June 2018 (2017 - $115,079).
ii) Through his service company, Barston Corporation Pty Ltd, Richard Barker also acts as Company Secretary. In
addition to his director’s fees, Mr Barker earned fees related to Company Secretary services of $39,996 in the year
ended 30 June 2018 (2017 - $Nil).
Scotgold Resources Limited
Page 21
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
iii) The Chairman and major shareholder, Nat le Roux, has advanced funds to the Company in accordance with the
terms of a loan agreement, as amended. Up to March 2018, interest was charged at 10%, however, at that date the
terms of the loan were re-negotiated to be interest free and the repayment date extended. Further details of the loan
are shown in Note 11 to the Financial Statements.
\
Loans to Directors
There are no loans due from Company Directors.
Shareholder approval of Directors’ remuneration
The Company’s constitution provides that the 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. The Directors may approve a Managing Director whose fee or salary
is agreed by the Directors within such aggregate sum. 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:
Short-term benefits
Fees
Consulting /
Salary
$
Director/Executive Associated Company
Year ended 30 June 2017
Nat le Roux *
Richard Gray
Chris Sangster
Phillip Jackson
Gabriel Chiappini
Peter Newcomb
Holihox Pty Ltd
Laurus
Services Pty Ltd
Symbios Pty Ltd
Corporate
Year ended 30 June 2018
Nat le Roux *
Richard Gray
Chris Sangster
Phillip Jackson
Richard Barker
Peter Heatherington
William Styslinger
Holihox Pty Ltd
Barston Corp. Pty Ltd
$
-
-
17,186
17,887
14,145
-
49,218
-
-
17,420
18,192
12,554
-
-
48,166
Retirement
Benefits
Share
based
$
-
3,364
-
-
-
-
3,364
-
3,471
-
-
-
-
-
3,471
52,870
52,870
Total
$
-
171,544
132,265
17,887
53,800
20,000
395,496
-
229,892
133,034
18,192
52,550
-
-
433,668
-
168,180
115,079
-
39,655
20,000
342,914
-
173,551
115,614
-
39,996
-
-
329,161
* Mr le Roux has waived his director fees for the time being
Scotgold Resources Limited
Page 22
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
Key management personnel share holdings
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
Balance 30
June 2017
Share
Consolidation
Right issue/
Placing
At date of
resignation/
appointment
Balance 30
June 2018
Year ended 30 June 2018
Nat le Roux
Richard Gray
Chris Sangster
Phillip Jackson
Richard Barker
Peter Hetherington
William Styslinger
632,220,806
5,204,240
18,204,484
4,331,250
-
-
-
659,960,780
(625,898,598)
(5,152,197)
(18,022,439)
(4,287,937)
-
-
-
(653,361,171)
15,996,014
44,695
20,000
-
-
-
-
16,060,709
-
-
-
-
-
3,231,818
1,990,555
5,222,373
22,318,222
96,738
202,045
43,313
-
3,231,818
1,990,555
27,882,691
Key management personnel option holdings
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
Expiry or
exercise
of options
Date of
resignation
Balance 30
June 2017
-
-
-
-
-
-
-
-
45,656,433
291,294
493,333
46,441,060
Year ended 30 June 2018
Nat le Roux
Richard Gray
Chris Sangster
William Styslinger
Free
attaching
options
45,656,433
291,294
493,333
Expiry or
exercise
of options1
(45,656,433)
(291,294)
(493,333)
46,441,060
(46,441,060)
Rights
Issue2
Balance 30
June 2018
1,744,657
8,939
4.000
320,000
2,077,596
1,744,657
8,939
4,000
320,000
2,077,596
1 includes those options cancelled due to the share consolidation
2 The Rights Issue options are exercisable at 40p and expire 31 December 2019
Scotgold Resources Limited
Page 23
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
Aggregate amounts payable to Directors and their related entities.
Consolidated Entity
2018
$
Consolidated Entity
2017
$
Accounts payable
29,477
14,248
There were no performance related payments made during the year. The grant of 1,000,000 share options to Mr
Gray, the Managing Director, is subject to shareholder approval which, at the date of this report is outstanding.
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
There have been no events or transactions, subsequent to balance date, to be disclosed as Subsequent Events.
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
The Perth based affiliate of BDO International, BDO Audit (WA) Pty Ltd, was appointed as auditors in June 2018.
The former auditor, Mann Judd HLB resigned as auditor on 18 June 2018.
NON-AUDIT SERVICES
The Directors have considered the position and are satisfied that the provision of the non-audit services is compatible
with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are
satisfied that the provision of non-audit services by BDO Corporate Tax (WA) Pty Ltd, set out below, did not
compromise the auditor independence requirements of the Corporations Act 2001, for the following reasons:
All non-audit services have been reviewed by the audit committee to ensure they do not impact the
impartiality and objectivity of the auditor; and
None of the services undermine the general principles relating to auditor independence as set out in APES
110 Code of Ethics for Professional Accountants
BDO Corporate Tax (WA) Pty Ltd provides income tax services to the Company – 2018: $3,519 (2017: $3,060).
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration has been received for the year ended 30 June 2018 and forms part of the
Directors’ report.
Scotgold Resources Limited
Page 24
Scotgold Resources Limited
Page 25
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY MATTHEW CUTT TO THE DIRECTORS OF SCOTGOLD RESOURCES
LIMITED
As lead auditor of Scotgold Resources Limited for the year ended 30 June 2018, I declare that, to the
best of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Scotgold Resources Limited and the entities it controlled during the
period.
Matthew Cutt
Director
BDO Audit (WA) Pty Ltd
Perth, 27 September 2018
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
Scotgold Resources Limited
Page 26
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
Notes
CONSOLIDATED
Interest income
Other income
Gain on loan renegotiation
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
11
3
2018
$
969
1,666
263,707
(514,758)
(172,144)
-
(69,907)
(68,009)
(438,955)
(313,221)
(226,734)
(112,727)
(249,554)
2017
$
211
41,417
-
(389,511)
(64,966)
(55,974)
(103,132)
(111,579)
(211,191)
(260,438)
(60,622)
(91,117)
(41,265)
LOSS BEFORE INCOME TAX
(1,899,667)
(1,348,167)
Income tax benefit
LOSS FOR THE YEAR
Other Comprehensive Income
4
-
-
(1,899,667)
(1,348,167)
Items that may be reclassified to Profit or Loss
Exchange difference on translation of foreign subsidiaries
Total comprehensive result for the year
109,191
(41,477)
(1,790,476)
(1,389,644)
Basic (loss) per share (cents per share)
24
(7.92)
(8.60)
These financial statements should be read in conjunction with the accompanying notes.
Scotgold Resources Limited
Page 27
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2018
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
Loans payable
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
AND CONTROLLED ENTITIES
Notes
CONSOLIDATED
2018
$
2017
$
5
6
7
5
8
9
10
10
11
12
13
13
11,207,036
59,267
62,850
53,082
572,332
42,110
222,248
16,269
11,382,235
852,959
97,894
226,042
16,685,135
92,923
289,840
16,346,365
17,009,071
16,729,128
28,391,306
17,582,087
294,262
43,529
1,740,867
180,522
45,895
1,742,964
2,078,658
1,969,381
26,312,648
15,612,706
39,706,967
73,474
(13,467,793)
27,216,549
54,283
(11,658,126)
26,312,648
15,612,706
These financial statements should be read in conjunction with the accompanying notes.
Scotgold Resources Limited
Page 28
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
CONSOLIDATED
Issued
Capital
Accumulated
Losses
Options
Reserve
Convertible
Note
Reserve
Foreign
Currency
Translation
Reserve
Total Equity
Year Ended 30 June 2017
$
$
$
$
$
Balance 1 July 2016
Total comprehensive result for the year
25,829,677
-
(10,558,714)
(1,348,167)
224,769
-
248,755
-
(129,009)
(41,477)
15,615,478
(1,389,644)
Transactions with owners in their capacity as owners:
Placements (Note 12)
Options exercised
Share issue expenses
Equity portion of notes converted
880,000
4,133
(53,861)
556,600
-
-
-
248,755
-
-
-
-
-
-
-
(248,755)
-
-
-
-
880,000
4,133
(53,861)
556,600
27,216,549
(11,658,126)
224,769
-
(170,486)
15,612,706
Year Ended 30 June 2018
$
$
$
$
$
Balance 1 July 2017
Total comprehensive result for the year
27,216,549
-
(11,658,126)
(1,899,667)
224,769
-
Transactions with owners in their capacity as owners:
Issue of shares
Placements (Note 12)
Options exercised
Options expired
Share issue expenses
4,612,375
7,971,620
12,187
-
(105,764)
39,706,967
-
-
90,000
-
(13,467,793)
-
-
(90,000)
-
134,769
-
-
-
-
-
-
-
(170,486)
109,191
15,612,706
(1,790,476)
-
-
-
-
(61,295)
4,612,375
7,971,620
12,187
-
(105,764)
26,312,648
These financial statements should be read in conjunction with the accompanying notes.
Scotgold Resources Limited
Page 29
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
Notes
CONSOLIDATED
2018
$
2017
$
CASH FLOWS FROM OPERATING ACTIVITIES
Payment to suppliers
Interest income received
(1,744,357)
969
(1,328,402)
-
Net Cash Outflow From Operating Activities
19
(1,743,388)
(1,328,402)
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
(247,268)
(6,172)
(717,927)
(45,216)
(253,440)
(763,143)
12,596,182
(105,764)
-
-
884,133
(53,861)
(38,658)
1,166,667
12,490,418
1,958,281
10,493,590
(133,264)
Effect of exchange rate fluctuations on cash and cash equivalents
141,114
(33,270)
Cash and cash equivalents at the beginning of this financial year
572,332
738,866
Cash and cash equivalents at the end of this financial year
11,207,036
572,332
These financial statements should be read in conjunction with the accompanying notes.
Scotgold Resources Limited
Page 30
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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 $11,382,235,
including available cash and cash equivalents of $11,207,036, and current liabilities of $2,078,658.
The board reviews 12 to 18 month cash flows and while the Board considers that the consolidated entity is a going
concern it also recognises that significant funds will be required in the development of the Cononish mine, regional
exploration activities and general working capital. In addition to existing cash reserves the Group has further available
funds by way of a secured £5.0m ($8.75m) loan facility not yet drawn down.
Scotgold Resources Limited
Page 31
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
Statement of Compliance
The financial report was authorised for issue on 27 September 2018.
The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards
Board and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board.
Adoption of new and revised standards
Changes in accounting policies on initial application of Accounting Standards
In the year ended 30 June 2018, the Directors have reviewed all of the new and revised Accounting 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.
New Accounting Standards and Interpretations
The Directors are also reviewing all new Accounting Standards and Interpretations that have been issued but are not
yet effective for the year ended 30 June 2018.
AASB 9 Financial Instruments (Application date: Financial years commencing after 1 January 2018)
AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement. Except for certain trade
receivables, an entity initially measures a financial asset at its fair value plus, in the case of a financial asset not at
fair value through profit or loss, transaction costs. Debt instruments are subsequently measured at fair value through
profit or loss (FVTPL), amortised cost, or fair value through other comprehensive income (FVOCI), on the basis of
their contractual cash flows and the business model under which the debt instruments are held. There is a fair value
option (FVO) that allows financial assets on initial recognition to be designated as FVTPL if that eliminates or
significantly reduces an accounting mismatch. Equity instruments are generally measured at FVTPL. However,
entities have an irrevocable option on an instrument-by-instrument basis to present changes in the fair value of non
trading instruments in other comprehensive income (OCI) without subsequent reclassification to profit or loss. For
financial liabilities designated as FVTPL using the FVO, the amount of change in the fair value of such financial
liabilities that is attributable to changes in credit risk must be presented in OCI. The remainder of the change in fair
value is presented in profit or loss, unless presentation in OCI of the fair value change in respect of the liability’s
credit risk would create or enlarge an accounting mismatch in profit or loss. All other AASB 139 classification and
measurement requirements for financial liabilities have been carried forward into AASB 9, including the embedded
derivative separation rules and the criteria for using the FVO. The incurred credit loss model in AASB 139 has been
replaced with an expected credit loss model in AASB 9. The requirements for hedge accounting have been amended
to more closely align hedge accounting with risk management, establish a more principle-based approach to hedge
accounting and address inconsistencies in the hedge accounting model in AASB 139.
The Group is currently evaluating the impact of the new standard.
AASB 15 Revenue from Contracts with Customers (Application date: Financial years commencing after 1 January
2018)
Scotgold Resources Limited
Page 32
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
AASB 15 replaces all existing revenue requirements in Australian Accounting Standards (AASB 111 Construction
Contracts, AASB 118 Revenue, AASB Interpretation 13 Customer Loyalty Programmes, AASB Interpretation 15
Agreements for the Construction of Real Estate, AASB Interpretation 18 Transfers of Assets from Customers and
AASB Interpretation 131 Revenue – Barter Transactions Involving Advertising Services) and applies to all revenue
arising from contracts with customers, unless the contracts are in the scope of other standards, such as AASB 117
(or AASB 16 Leases, once applied). The core principle of AASB 15 is that an entity recognises revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which an entity
expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with the
core principle by applying the following steps:
► Step 1: Identify the contract(s) with a customer
► Step 2: Identify the performance obligations in the contract
► Step 3: Determine the transaction price
► Step 4: Allocate the transaction price to the performance obligations in the contract
► Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation.
The Group is not expecting this new standard to have a significant impact.
AASB 16 Leases (Application date: Financial years commencing after 1 January 2019)
AASB 16 requires lessees to account for all leases under a single on-balance sheet model in a similar way to finances
leases under AASB 117 Leases. The Standard includes two recognition exemptions for lessees – leases of ‘low-
value’ assets (eg, personal computers) and short-term leases (eg, leases with a lease term of 12 months or less). At
the commencement date of a lease, a lessee will recognise a liability to make lease payments (eg, the lease liability)
and an asset representing the right to use the underlying asset during the lease term (eg, the right-of-use asset).
Lessees will be required to separately recognise the interest expense on the lease liability and the depreciation
expense on the right-of-use asset. Lessees will be required to remeasure the lease liability upon the occurrence of
certain events (eg, a change in the lease term, a change in future lease payments resulting from a change in an
index or rate used to determine those payments). The lessee will generally recognise the amount of the
remeasurement of the lease liability as an adjustment to the right-of-use asset. Lessor accounting is substantially
unchanged from today’s accounting under AASB 117. Lessors will continue to classify all leases using the same
classification principle as in AASB 117 and distinguish between two types of leases: operating and finance leases.
The Group is currently evaluating the impact of the new standard.
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.
Scotgold Resources Limited
Page 33
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
(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.
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.
Scotgold Resources Limited
Page 34
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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
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.
Mineral exploration and evaluation expenditure, of which the Bulk Processing Trial is an integral part, is reclassified
to Mine 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.
Scotgold Resources Limited
Page 35
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
(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.
(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)
Loans payable
Scotgold Resources Limited
Page 36
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
All loans and borrowings are initially recognised at cost, being fair value of the consideration received net of
transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any
transaction costs, and any discount or premium on settlement. Gains and losses are recognised in the income
statement when the liabilities are derecognised, and likewise through the amortisation process. Loans and
borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after balance date.
(q) 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.
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.
(r) Critical accounting estimates and judgements
Scotgold Resources Limited
Page 37
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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 2018, the Group had capitalised mineral exploration and evaluation expenditure of $16,685,135 (2017:
$16,346,365). The Directors do not believe any indications of impairment are present.
NOTE 2 – REVENUE
Revenue
Interest received
Other income
Gain on loan renegotiation
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
2018
$
2017
$
969
1,666
263,707
266,342
211
41,417
-
41,628
172,144
172,144
64,966
64,966
68,171
1,718
18
69,907
100,892
2,220
20
103,132
Scotgold Resources Limited
Page 38
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
The prima facie tax benefit at 27.5% (2017: 27.5%) on loss from ordinary activities is reconciled to the income tax
benefit in the financial statements as follows:
Loss from ordinary activities
(1,899,667)
(1,348,167)
Prima facie income tax benefit at 30.0% (2017 27.5%)
522,408
370,746
Tax effect of permanent differences
Share issue costs amortised
Other non-deductible expenses
29,018
-
25,407
-
Income tax benefit adjusted for permanent differences
551,426
396,153
Deferred tax asset not brought to account
Income tax benefit
(551,426)
-
(396,153)
-
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:
2018
$
2017
$
UNRECOGNISED DEFERRED TAX ASSETS
Revenue losses after permanent differences
Capital raising costs yet to be claimed
2,637,395
55,150
2,692,545
2,747,235
55,083
2,802,318
The potential deferred tax asset has not been brought to account in the financial report at 30 June 2018 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 – TRADE AND OTHER RECEIVABLES
Scotgold Resources Limited
Page 39
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
Current
GST / VAT receivable
Other receivables
Non-current
Bond on Tenement
NOTE 6 – INVENTORY
Inventory of gold concentrates
NOTE 7 – OTHER CURRENT ASSETS
Prepayments
NOTE 8 – PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated Depreciation
Movement for the year
Opening balance
Additions
Depreciation expensed
Closing balance
NOTE 9 – MINERAL EXPLORATION AND EVALUATION
Opening balance
Net (gain)/loss from the BPT
Additional expenditure deferred during the year
Closing balance
56,424
2,842
59,266
38,900
3,210
42,110
97,894
92,923
62,850
222,248
2018
$
53,082
2017
$
16,269
661,402
(435,360)
226,042
655,293
(365,453)
289,840
289.840
6,109
(69,907)
226,042
348,626
44,346
(103,132)
289,840
16,346,365
(280,331)
619,101
16,685,135
15,730,586
(32,357)
648,136
16,346,365
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 of $280,331 (2017 $32,357) from the BPT is an integral part of the Company’s Mineral Exploration and
Evaluation, and includes $203,177 of revenue from Dore sales (2017: $78,841), $634,631 of revenue from
Concentrate sales (2017: $308,015) and $557,477 of production costs (2017: $354,499). The criteria to reclassify
Scotgold Resources Limited
Page 40
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
Mineral Exploration and Evaluation expenditure to Development have not yet been met and continue to be
accumulated.
During the year, minor preliminary works were commenced on the development of the Cononish Mine. Certain of
these costs have been capitalised and included in deferred expenditure and total $130,635 (2017: $Nil). The
appropriate amount of deferred Mineral Exploration and Evaluation expenditure related to the Cononish Mine will be
transferred to Mine Development at the appropriate time (refer Note 1 (e)).
NOTE 10 – TRADE AND OTHER PAYABLES
Trade creditors
Other accruals
Trade creditors and accruals relating to exploration expenditure
Trade creditors and accruals relating to administration
294,262
43,529
337,791
42,814
294,977
337,791
180,522
45,895
226,417
96,822
129,595
226,417
Trade creditors are non-interest bearing and are normally settled on 30 day terms (2017: 30 days).
NOTE 11 – LOANS PAYABLE
Shareholder loans
a) On 14 March 2017 the Company entered into a short term loan agreement for £1,000,000 with Nat le Roux, the
Company’s non-executive Chairman and major shareholder. The original term of the loan was one year ending on
14 March 2018 with an interest rate of 10% per annum. On 20 March 2018 it was announced that the loan
agreement had been amended and the repayment date was extended to 30 September 2018 and all interest
previously accrued was waived and the loan became interest free. The principal is repayable at the expiry of the
term and the loan is secured by a charge over all the Company’s assets.
The loan balance outstanding at 30 June 2018 is made up as follows:
Principal sum drawn (£1,000,000) on 14 March 2017
Interest accrued to 30 June 2017
Foreign exchange
Loan brought forward at 30 June 2017
Interest accrued to 14 March 2018
Gain on loan renegotiation
Unwinding of discount to 30 June 2018
Foreign exchange
Loan balance at 30 June 2018
Shareholder loan
$
1,666,667
50,091
26,206
1,742,964
122,199
(263,707)
48,684
90,727
1,740,867
b) On 18 May 2018, SGZ Cononish Limited a subsidiary of the Company entered into a secured loan facility of
£5,000,000 with Bridge Barn Limited a wholly owned and controlled company of Nat le Roux, the Company's Non-
Executive Chairman and major shareholder. The terms of the secured loan are as follows:
Scotgold Resources Limited
Page 41
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
i)
ii)
iii)
iv)
Drawdown of up to £3,000,000 within 30 days of 1 September 2018 and the balance of £2,000,000 to
be drawn down within 30 days after 1 October 2018;
Term of loan is 30 months from earliest date of draw-down, being 1 September 2018, with early
repayment at option of the Borrower for no penalty;
Interest rate is 9.0% calculated and payable annually for the first 24 months from the earliest draw-
down date on the outstanding principal and then for the six month stub period to repayment date. If the
Secured Loan is repaid early, interest will be calculated up to date of repayment; and
Security by way of Debenture over all of the assets and undertakings of the Company's 100% owned
subsidiaries, Scotgold Resources Ltd (SC309525) and SGZ Cononish Ltd (SC569264), including the
transfer of security of the issued capital of each of the subsidiaries.
NOTE 12 – ISSUED CAPITAL
(a)
Movements in ordinary share capital of the Company were as follows:
Date
Details
Shares
Value
(cents)
$
2018
$
2017
$
Balance at 30 June 2016
1,437,697,715
05/07/2016
04/08/2016
02/09/2016
23/09/2016
12/05/2017
04/07/2017
25/08/2017
02/10/2017
08/11/2017
28/11/2017
21/12/2017
21/12/2017
04/01/2018
23/03/2018
17/05/2018
17/05/2018
Options conversion
Placement
Conversion of convertible note
Conversion of convertible note
Options conversion
Transaction costs arising on share issues
Balance at 30 June 2017
Options conversion
Total before consolidation
1 for 100 share consolidation
Total after share consolidation
Options conversion
Options conversion
Options conversion
Rights issue
Rights issue costs
Placing
Options conversion
Placing
Placing costs
76,500
62,500,000
36,666,667
56,100,000
179,784
1,593,220,666
50,000
1,593,270,666
(1,577,337,734)
15,932,932
4,402
1,575
500
10,625,940
1,800,000
450
14,545,455
1.8300
1.4080
0.6000
0.6000
1.5200
1.6695
1.6955
1.7074
1.7374
1.7363
1.7236
1.8333
1.7990
25,829,677
1,400
880,000
220,000
336,600
2,733
(53,861)
27,216,549
837
27,217,386
27,217,386
27,217,386
7,464
2,689
867
4,612,375
(83,343)
775,620
330
7,196,000
(22,421)
42,911,254
39,706,967
Shares issued for non-cash consideration amounted to Nil during the year (2017: $Nil).
Scotgold Resources Limited
Page 42
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
(b)
Movements in options were as follows:
Balance at 30 June 2016
Options exercised
Options exercised
Balance at 30 June 2017
Options exercised
Options expired 22 September 2017
Options expired 30 September 2017
Options before share consolidation
1 for 100 share consolidation
Total after share consolidation
Options issued with Rights issue
Conversion of options
Balance at 30 June 2018
AND CONTROLLED ENTITIES
Number
$
156,713,618
(76,500)
(179,784)
156,457,334
(56,477)
(30,000,000)
(123,400,857)
3,000,000
(2,970,000)
30,000
2,125,149
(450)
2,154,699
224,769
-
-
224,769
-
(90,000)
-
134,769
-
134,769
-
-
134,769
Option exercise dates and prices
Number
Exercise Price
Expiry Date
Reserve $
30,000
2,124,699
2,154,699
$8.00
£0.40
31 March 2022
31 December 2019
134,769
-
134,769
In the year ended 30 June 2018, 1,240,000 options to acquire shares in the company at an exercise price of 30p per
share were granted to executive management, subject to shareholder approval. The options vest on the later of one
year from date of grant or the commencement of gold production from the Cononish mine. The options will expire 10
years after the date of grant, being 1 May 2028. Upon approval, these options will be brought to account and valued
accordingly.
(d)
Voting and dividend rights
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 13 – 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
2018
$
2017
$
(11,658,126)
(1,899,667)
-
90,000
(13,467,793)
(10,558,714)
(1,348,167)
248,755
-
(11,658,126)
Scotgold Resources Limited
Page 43
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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
2018
$
2017
$
(170,486)
109,191
(61,295)
(129,009)
(41,477)
(170,486)
224,769
(90,000)
134,769
224,769
-
224,769
-
-
-
248,755
(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 14 – SHARE BASED PAYMENTS
During the current and prior year no share based payments in the form of shares or options were made.
On 3 May 2018 an Incentive Option Agreement was announced by the Company, whereby 1,240,000 options to
acquire shares were agreed to be granted to executive management upon the commencement of gold production.
The options will be exercisable at £0.30. The options are subject to shareholder approval and will expire on 1 May
2028.
Scotgold Resources Limited
Page 44
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 15 - COMMITMENTS FOR EXPENDITURE
Mineral Tenement Leases
AND CONTROLLED ENTITIES
In order to maintain current rights of tenure to exploration and mining tenements (refer Note 18), the consolidated
entity will be required to outlay in the year ending 30 June 2019 amounts of up to $525,000 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 statements.
The consolidated entity currently holds 5 licences in Scotland. It is likely under changes to maximum land holding
areas that this number of licences will increase in the next 12 months, but total land holding will decrease
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
Minimum expenditure
(est.)
$
Licence Fee
(est.)
$
130,000
190,000
120,000
440,000
400,000
400,000
700,000
1,500,00
Total
(est.)
$
530,000
590,000
820,000
1,940,000
NOTE 16 - CONTINGENT LIABILITIES
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 2018.
Scotgold Resources Limited
Page 45
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
NOTE 17 - INVESTMENT IN CONTROLLED ENTITIES
Parent
Scotgold Resources Limited
42 127 042 773
Australia
100%
Registered
Number
Country of
Incorporation
Interest Held
Subsidiary
Scotgold Resources Limited
SGZ France SAS
Scotgold Resources Portugal Ltda
SGZ Cononish Limited
Fynegold Exploration Limited
NOTE 18 - SEGMENT INFORMATION
SC 309525
804 686 582
513 303 057
SC 569264
SC 084497
Scotland
France
Portugal
Scotland
Scotland
100%
100%
100%
100%
100%
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 2017
Segment revenues
Segment loss
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
Year ended 2018
Segment revenues
Segment loss
-
102,634
671,869
44,346
Scotland
$
968
1,255,926
Segment assets
Segment non-current assets
Segment liabilities
28,192,629
16,884,195
301,901
Included in segment result:
Australia
$
1
477,831
32,325
6,867
1,764,559
64,966
498
-
-
Australia
$
1
586,139
58,892
6,474
1,759,067
Other
$
-
182,772
74,600
55,490
-
-
-
55,489
-
Other
$
-
57,602
139,785
118,402
17,690
Total
$
211
1,348,167
17,582,087
16,729,128
1,969,381
64,966
103,132
727,358
44,346
Total
$
969
1,899,667
28,391,306
17,009,071
2,078,658
Scotgold Resources Limited
Page 46
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
Interest expense
Depreciation
Capitalised exploration
Acquisition of fixed assets
-
69,424
275,857
6,074
172,144
483
-
-
-
-
62,913
-
172,144
69,907
338,770
6,074
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 and on the grant of planning permission (and other conditions), to take out a
lease for exploitation of these metals.
Additionally, surface rights (and other minerals rights) are generally held by the landowner with whom access and
lease agreements must separately be obtained. The Company holds a 21 year lease, dated 2009 with the Cononish
landowner. At the option of the Company, the lease may be extended for a further 21 years.
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 47
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 19 - 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
Gain on loan renegotiation
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 20 - KEY MANAGEMENT PERSONNEL
(a) Directors
AND CONTROLLED ENTITIES
2018
$
2017
$
(1,899,667)
(1,348,167)
69,907
68,009
(263,707)
-
(2,025,458)
103,132
111,579
55,974
(1,077,482)
(17,157)
159,398
(36,813)
282,257
(105,615)
(1,743,388)
22,925
(195,255)
(2,032)
(38,537)
(38,021)
(1,328,402)
The names and positions of Directors in office at any time during the financial year are:
In office from
In office to
Nathanial le Roux
Richard Gray
Chris Sangster
Phillip Jackson
Richard Barker
Peter Hetherington
William Styslinger
Non Executive Chairman
Managing Director
Non Executive Director
Non Executive Director
Company Secretary and
Non Executive Director
Non Executive Director
Non Executive Director
18/03/2015
10/10/2014
10/10/2014
14/08/2007
09/10/2017
18/06/2018
18/06/2018
(b) Remuneration Polices
present
present
present
present
present
present
present
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.
Scotgold Resources Limited
Page 48
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
The aggregate compensation made to key management personnel of the group is set out below.
Short-term employee benefits
Post-employment benefits
Share-based payments
Consolidated
2018
$
377,327
3,471
-
380,798
2017
$
392,132
3,364
-
395,496
(d) Aggregate amounts payable to Directors and their personally related entities for remuneration.
Accounts payable
29,477
14,248
Consolidated Entity
2018
$
2017
$
NOTE 22 - RELATED PARTY INFORMATION
a) Transactions within the Consolidated Entity
Aggregate amount receivable within the consolidated entities
at balance date
Parent Entity
2018
$
2017
$
Total non-current receivables
Write down of loans attributable to losses of subsidiaries
Non-current receivables in parent entity
32,166,970
(9,936,324)
22,230,646
20,293,978
(8,730,842)
11,563,136
b) Transactions with Directors
Each of the Directors is a related party. The following directors have entered into transactions with group companies.
i)
ii)
iii)
Chris Sangster provides technical consulting services to the Company. Fees are charged at
commercial, arm’s length rates in accordance with time incurred. Details of fees earned are provided in
the Remuneration Report. Refer also the Remuneration Report.
Richard Barker provides services of Company Secretary through his service company Barston
Corporation Pty Ltd. Services are charged at commercial, arm’s length rates. Details of fees earned
are provided in the Remuneration Report. Refer also the Remuneration Report.
Nat le Roux has provided loan funds to the Company on commercial terms. The details of the loan are
shown in Note 11. Refer also the Remuneration Report.
Scotgold Resources Limited
Page 49
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
NOTE 23 - REMUNERATION OF AUDITORS
Auditing and reviewing of the financial statements of Scotgold
Resources Limited and of its controlled entities.
Due to BDO Audit (WA) Pty Ltd
Due to HLB Mann Judd
Other services (tax)
NOTE 24 - LOSS PER SHARE
AND CONTROLLED ENTITIES
Consolidated
2018
$
2017
$
19,605
0
3,519
23,124
0
38,000
3,060
41,060
Consolidated
2018
$
2017
$
Earnings used in calculation of earnings per share
(1,899,667)
(1,348,167)
Weighted average number of ordinary shares outstanding
during the year used in the calculation of basic loss per share
Number
Number
23,978,240
15,676,7791
There are no potential ordinary shares on issue at the date of this report.
1 Number of shares has been adjusted for 100 : 1 share consolidation.
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.
Scotgold Resources Limited
Page 50
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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
Loans payable
Total Financial Liabilities
Weighted Average
Effective Interest Rate
2018
2017
0.03%
-
0.03%
-
-
0%
-
9.5%
Floating Interest Rate
2018
$
11,207,036
59,267
11,266,303
294,262
-
294,262
2017
$
572,332
151,302
723,634
180,522
1,742,964
1,923,486
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 2018 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
£ Sterling
€ Euro
2018
$
2018
$
276,572
17,690
294,262
11,318,329
21,383
11,339,712
2017
$
178,927
-
178,927
2017
$
679,065
19,111
698,176
Scotgold Resources Limited
Page 51
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
AND CONTROLLED ENTITIES
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.
Capital Management Risk
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
There are no 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.
Scotgold Resources Limited
Page 52
NOTES TO AND FORMING PART OF
THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2018
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
2018
$
2017
$
21,367
31,051
17,163
8,294
52,418
25,457
6,474
5,781,978
22,230,646
6,867
5,781,805
11,563,136
28,019,098
17,351,808
28,071,516
17,377,265
18,000
1,740,867
21,595
1,742,964
1,758,867
1,764,559
1,758,867
1,764,559
26,312,649
15,612,706
43,784,458
134,769
(17,606,578)
31,294,040
224,769
(15,906,103)
26,312,649
15,612,706
Loss for the year attributable to the parent
Total comprehensive loss
1,700,475
1,700,475
1,033,088
1,033,088
The loss attributable to the parent entity includes write down of loans to subsidiaries caused by subsidiary losses of
$1,205,482 (2017: $911,812). 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 53
Scotgold Resources Limited
Page 54
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Scotgold Resources Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Scotgold Resources Limited (the Company) and its subsidiaries
(the Group), which comprises the consolidated statement of financial position as at 30 June 2018, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 30 June 2018 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
Scotgold Resources Limited
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Carrying Amount of Exploration and Evaluation Asset
Key audit matter
How the matter was addressed in our audit
As disclosed in Note 9 the carrying value of the
Our procedures included, but were not limited to:
Exploration and Evaluation Asset represents a significant
asset of the Group.
(cid:127)
Obtaining a schedule of the areas of
interest held by the Group and assessing
In accordance with AASB 6 Exploration for and Evaluation
whether the rights to tenure of those areas
of Mineral Resources (AASB 6), the recoverability of
of interest remained Current at balance
exploration and evaluation expenditure required
date;
significant judgement by management in determining
whether there are any facts or circumstances that exist
to suggest the carrying amount of this asset may exceed
its recoverable amount. As a result, this is considered a
key audit matter.
(cid:127)
Holding discussions with management as to
the status of ongoing exploration
programmes in the respective areas of
interest;
(cid:127)
Considering whether any such areas of
interest had reached a stage where a
reasonable assessment of economically
recoverable reserves existed; and
(cid:127)
Considering whether any facts or
circumstances existed to suggest
impairment testing was required.
We also assessed the adequacy of the related
disclosures in Accounting policies note (r) and Note 9
of the financial statements.
Scotgold Resources Limited
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Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 30 June 2018, but does not include the
financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon. In connection with our audit of the financial report, our
responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise
appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
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Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included on pages 20 to 24 of the annual report for the year
ended 30 June 2018.
In our opinion, the Remuneration Report of Scotgold Resources Limited, for the year ended 30 June
2018, complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO Audit (WA) Pty Ltd
Matthew Cutt
Director
Perth, 27 September 2018
Scotgold Resources Limited
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SHAREHOLDER DETAILS
ANALYSIS OF SHAREHOLDING
Voting Rights
AND CONTROLLED ENTITIES
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 Peter Hetherington
Mr William Styslinger
Mr Charles Outhwaite
Directors’ Shareholding
22,318,222
3,231,818
1,990,555
1,454,545
52.01%
7.53%
4.64%
3.39%
The interest of each director in the share capital of the Company is detailed in the Directors’ Report.
Scotgold Resources Limited
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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. This 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
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