Sihayo Gold Limited
Annual Report 2018

Plain-text annual report

2018 ANNUAL REPORT ABN 77 009 241 374 “BUILDING A SUCCESSFUL INDONESIAN GOLD COMPANY” 1 | P a g e CONTENTS CONTENTS .............................................................................................................................................. 2 CORPORATE DIRECTORY ........................................................................................................................ 3 CHAIRMAN’S REVIEW ............................................................................................................................. 4 REVIEW OF OPERATIONS ........................................................................................................................ 5 DIRECTORS’ REPORT ............................................................................................................................. 11 AUDITOR’S INDEPENDENCE DECLARATION ......................................................................................... 21 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ................ 22 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ....................................................................... 23 CONSOLIDATED STATEMENT OF CASH FLOWS .................................................................................... 24 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ........................................................................25 NOTES TO THE FINANCIAL STATEMENTS ..............................................................................................26 DIRECTORS’ DECLARATION ..................................................................................................................58 INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SIHAYO GOLD LIMITED ............................59 ADDITIONAL SHAREHOLDER INFORMATION .......................................................................................63 SUMMARY OF TENEMENTS HELD BY THE GROUP ................................................................................65 2 | P a g e CORPORATE DIRECTORY Directors Misha A Collins C.F.A (Chairman) Gavin Caudle (Non Executive Director) Stuart Gula (Non Executive Director) Mark Hepburn (Appointed 1 August 2018) (Non Executive Director) Malcolm Paterson (Managing Director) (resigned on 31 August 2018) Daniel Nolan (Executive Director) Chief Executive Officer Malcolm Paterson (resigned 31 August 2018) Timothy Adams (appointed 1 September 2018) Company Secretary Daniel Nolan Registered Office and Business Address C/-McCullough Robertson 11/66 Eagle St, Brisbane QLD 4000 Share Registry Home Exchange Auditors Solicitors Bankers Telephone: Facsimile: E-mail: Web: 0427 401198 (07) 33993172 sihayogold@sihayogold.com www.sihayogold.com Security Transfer Australia 770 Canning Highway Applecross WA 6153 Telephone: Facsimile: (08) 9315 2333 (08) 9315 2233 Australian Securities Exchange Limited Level 40, Central Park 152-158 St George’s Terrace Perth WA 6000 Stantons International Audit and Consulting Pty Ltd Level 2, 1 Walker Avenue West Perth WA 6005 Steinepreis Paganin Level 2, The Read Buildings West Perth WA 6000 ANZ Banking 111 Eagle St, Brisbane, QLD. 4000 Sihayo Gold Limited is a company limited by shares, incorporated and domiciled in Australia. 3 | P a g e CHAIRMAN’S REVIEW Dear Fellow Shareholders, During the past twelve months our Company has completed the refresh of the feasibility study for the development of the Sihayo-Pungkut project located in North Sumatra, Indonesia. The results of this study indeed showed significantly improved economics, even with a lower USD Gold price assumption. We believe some further improvement may yet be possible, however intend to proceed with permitting and other statutory approvals required given the change in project size and other aspects. Preliminary discussions around potential project debt capacity and financing structures have also begun. This process is expected to build momentum once final project approvals are in place and will be an important part of delivering the project development. Our clear goal is to put the Sihayo-Pungkut project into development over the next twelve months. To deliver on this objective will require a lot of work and as a result the coming year should continue to see high levels of activity. I would again like to thank our employees, contractors and my fellow directors for their efforts over the past twelve months. I wish to thank Mr Malcolm Paterson for his efforts in completing the feasibility study update and welcome Mr Timothy Adams as interim CEO. I would also like to thank all our shareholders and particularly our major shareholders for their ongoing support of the company. Yours Sincerely, Misha Anthony Collins 4 | P a g e REVIEW OF OPERATIONS Sihayo Gold Project (75%) The Sihayo Gold Project (“Sihayo”) is held by PT Sorikmas Mining (“Sorikmas”) under a 7th Generation Contract of Work (“COW”) and is located in Mandailing Natal, North Sumatra, Indonesia. The COW describes in detail the rights and obligations of both the Company and the Government during the term of the COW. Our COW is in the first year of construction having completed the three main Indonesian Government Statutory Permits. PT Sorikmas Mining is 75% owned by Sihayo Gold Limited (“Sihayo Gold”) and 25% by PT Aneka Tambang Tbk (“Antam”). Sihayo Gold is responsible for 100% of the exploration and development funding of Sorikmas until the commencement of production. The funding is by way of loans to Sorikmas and under the terms of the Loan Agreement, Antam is required to repay its share of loans to Sihayo Gold or other lenders to Sorikmas, from 80% of its attributable share of available cash flow from production, until its 25% share of the loans are repaid in full. Dairi Sihayo Pungkut 1.6 Moz Au Tembang Martabe Way Pongkor Figure 1: Significant Indonesian mineral deposits including the Sihayo Pungkut Gold Deposit The current Sihayo JORC Code (2012 Edition) Mineral Resource Estimate, which was revised in July 2018, stands at 23.4 Mt at 2.11 g/t for 1.585 Moz. Indicated and Measured Resources at Sihayo only have been converted to JORC Code (2012 Edition) Ore Reserves by Entech Pty Ltd containing 11.39 Mt at 2.1 g/t for 761,000oz. 5 | P a g e REVIEW OF OPERATIONS Sihayo Pungkut – Geology Sihayo is located along the Trans Sumatra Fault Zone ("TSFZ") and associated Neogene Magmatic Arc ("NMA"), which is the result of an oblique collision of two tectonic plates and associated subduction. A complex suite of Permian volcanics and sediments, intruded by Jurassic and Cretaceous intrusive plutons, subsequently juxtaposed or overlain by Tertiary to recent volcanics, intrusives, and sediments comprises the broader COW area. Figure 2 shows the location of the Sihayo Resource and key exploration prospects across the COW that support an opportunity for significant exploration targets for ongoing potential project generation. In addition to the Sihayo Resource there are over twenty (20) identified prospects of carbonate-hosted gold, low to intermediate - sulphidation epithermal-vein gold; gold-copper skarn, copper-gold porphyry, and lead zinc skarn style mineralisation spread across the highly prospective COW area and these prospects will be the subject of future exploration activities. Figure 2: Sihayo Pungkut Gold Project – JORC Resource, key prospects and regional geology 6 | P a g e REVIEW OF OPERATIONS Resource Estimate The Sihayo Mineral Resource Estimate is based upon review and work undertaken by Mr Anthony McDougall, the Company’s chief geologist. The relevant JORC 2012 Table 1 is available on the Company website. Resource Tonnage (Mt) Grade Au (g/t) Contained Gold ounces JORC Classification Au Cut-off grade (g/t) SIHAYO 23.4 2.11 1,585,000 Measured & Indicated & 0.6 Inferred Table 1: JORC Code (2012 Edition) Mineral Resource Estimate revised by as at July 2018 Section 55000E Figure 3: Sihayo-Sambung Resources Location Plan 7 | P a g e REVIEW OF OPERATIONS Resource Estimate (continued) A B Figure Figure 5 Figure 4: Geology Cross Section 55000E of Sihayo Resource looking NW Figure 5: Enlargement of cross section 55000E shows significant gold intercepts. 8 | P a g e REVIEW OF OPERATIONS Feasibility Study The Sihayo "Maiden" Ore Reserve and Feasibility Study completion was announced on January 29, 2014 and was substantially revised in July 2018. Indicated and Measured Resources have been converted to Probable and Proved Ore Reserves by Entech Pty Ltd. The relevant JORC 2012 Table 1 is available on the Company website. Resource Tonnage (Mt) Grade Au (g/t) Contained Gold ounces Resource Category SIHAYO TOTAL 2.09 9.30 11.39 1.8 2.1 2.1 119,000 643,000 Proved Probable 761,000 Proved & Probable “Calculations have been rounded to the nearest 1,000t, 0.1 g/t grade and 1,000oz metal” Table 2: JORC Code (2012 Edition) Sihayo Ore Reserves prepared by Entech Pty Ltd (May 2018) The January 2014 Feasibility Study was based on a gold price of US$1,400/oz, which proved to be optimistic in the ensuing period and reduced the capacity to attract funding to complete the project. The revised Feasibility is based on a gold price of US$1,300 and reflects updated assumptions:  Doubling the production rate to average 91,000 oz per year,  Reducing tailings and waste disposal costs,  Owner operation for mining, drilling and laboratory service,  Simplified plant design to reduce capital,   Including grid power, Inclusion of cyanide recovery and detox technology using the RECYN process to reduce operating costs. Permitting and Approvals The status of the COW is now in the second year of construction and the Company expects to complete construction within the permitted three year period, providing funding of the project is successful. The three key Indonesian Government approvals, Feasibility Study, AMDAL (Environmental) and Forestry are complete, however amendments are being prepared reflecting the proposed changes resulting from the revised Feasibility Study. Corporate Social Responsibility (CSR) Programmes Ahead of the potential project development the Company has continued to engage local Stakeholders associated with Government permitting and approvals. As the project progress into construction and operation, the Company remains committed to the delivery of CSR programs in line with our Strategy. 9 | P a g e REVIEW OF OPERATIONS Other Projects India – Diamond Exploration (9-10%) No progress was made during the year in resolving the legal status of the tenements. Mount Keith Gold Project – Western Australia (2% net smelter royalty) No mining was undertaken on the project during the year. Mulgabbie Gold Project – Western Australia (2% net smelter royalty) No mining was undertaken on the project during the year. Competent Persons Statements All statements in this report, other than statements of historical facts that address future timings, activities, events and developments that the Company expects, are forward looking statements. Although Sihayo Gold Limited, its subsidiaries, officers and consultants believe the expectations expressed in such forward looking statements are based on reasonable expectations, investors are cautioned that such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward looking statements. Factors that could cause actual results to differ materially from forward looking statements include, amongst other things commodity prices, continued availability of capital and financing, timing and receipt of environmental and other regulatory approvals, and general economic, market or business conditions. Sihayo Resource Information that relates to Mineral Resource Estimates at the Sihayo project is based on information compiled by or under the supervision of Mr Tony Mcdougall, who is the Principal Geologist at PT Sorikmas Mining. Mr Mcdougall 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 an Independent Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (CP JORC). Mr Mcdougall is a Member of MAusIMM and a full time employee of PT Sorikmas Mining. Mr Mcdougall consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Sihayo Reserve Information that relates to Ore Reserves at Sihayo is based on information compiled by or under the supervision of Mr Shane McLeay, who is a Principal Mining Engineer at Entech Pty Ltd and provided to PT Sorikmas Mining. Mr McLeay 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 an Independent Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr McLeay is a Fellow of the Australasian Institute of Mining and Metallurgy and a full time employee of Entech Pty Ltd. Mr McLeay consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Note All statements in this report, other than statements of historical facts that address future timings, activities, events and developments that the Company expects, are forward looking statements. Although Sihayo Gold Limited, its subsidiaries, officers and consultants believe the expectations expressed in such forward looking statements are based on reasonable expectations, investors are cautioned that such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward looking statements. Factors that could cause actual results to differ materially from forward looking statements include, amongst other things commodity prices, continued availability of capital and financing, timing and receipt of environmental and other regulatory approvals, and general economic, market or business conditions. 10 | P a g e C D Figure 8 Figure 9 DIRECTORS’ REPORT Your directors present their report on the consolidated entity consisting of Sihayo Gold Limited ("Sihayo Gold", or" the Company") and the entities it controlled at the end of, or during the year ended 30 June 2018 ("the reporting period"). DIRECTORS The following persons were directors of Sihayo Gold during the financial year and up to the date of this report: Misha Collins - Chairman Gavin Caudle - Non Executive Director Stuart Leslie Gula - Non Executive Director Mark Hepburn - Non Executive Director (appointed on 1 August 2018) Daniel Garry Nolan - Executive Director, Chief Financial Officer, Company Secretary Malcolm Paterson - Managing Director& Chief Executive Officer (resigned effective on 31 August 2018) Timothy Adams - Interim Chief Executive Officer (appointed on 1 September 2018) PRINCIPAL ACTIVITIES The principal activities of the consolidated entity during the course of the financial year were the continuing development of the Sihayo Pungkut Gold project. There were no significant changes in the nature of those activities during the financial year. DIVIDENDS No dividends have been paid or declared since the end of the previous financial year and no dividend is recommended in respect of this financial year. REVIEW OF OPERATIONS The review of operations is detailed at pages 5-10. OPERATING RESULTS During the financial year the consolidated entity incurred a consolidated operating loss after income tax of $2,673,862 (2017: $1,315,522). SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There have been no significant changes in the state of affairs of the consolidated entity for the 2018 financial year. EMPLOYEES The consolidated entity employed 22 employees as at 30 June 2018 (2017: 25 employees) CORPORATE STRUCTURE The Company has 1,854,262,526 ordinary shares on issue as at the date of this report. The corporate group consists of the parent entity Sihayo Gold Limited, its 100% owned subsidiaries Inland Goldmines Pty Ltd, Excelsior Resources Pty Ltd, Oropa Technologies Pty Ltd, Oropa Indian Resources Pty Ltd, Oropa Exploration Pty Ltd and Aberfoyle Pungkut Investments Pte Ltd. Aberfoyle Pungkut Investments Pte Ltd holds a 75% interest in PT Sorikmas Mining, with an Indonesian Government mining company PT Aneka Tambang Tbk holding the remaining 25%. 11 | P a g e DIRECTORS’ REPORT LIKELY FUTURE DEVELOPMENTS Details of important developments occurring in this current financial year have been covered in the review of operations. Further information on likely developments in the operations of the consolidated entity and the expected results have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity. FINANCIAL POSITION The net assets of the consolidated entity as at 30 June 2018 are $12,287,475 (2017: $12,313,327 ). ENVIRONMENTAL REGULATION The consolidated entity has assessed whether there are any particular or significant environmental regulations which apply. It has determined that the risk of non-compliance is low, and has not identified any compliance breaches during the year. INFORMATION ON DIRECTORS Details of the directors of the Company in office at the date of this report are: Misha A Collins Chairman Experience and expertise Mr Collins has 20 years of experience in financial markets with particular emphasis on gold and mining business analysis and evaluation. Mr Collins was employed by BT Funds Management for an 11 year period as an equity analyst covering both domestic and international markets together with the formulation of capital market strategies and commodity forecasting. Mr Collins currently operates his own investment and technical consulting business and acts as Adviser to a Malaysian based Gold and Silver investment fund. Mr Collins holds a Bachelor of Engineering in Metallurgy, graduating with First Class Honours from the RMIT University, a Graduate Certificate in Banking and Finance from Monash University and a Graduate Diploma in Applied Finance and Investment from the Financial Services Institute of Australia. He also completed the CFA program with the US based CFA Institute and has been awarded the Chartered Financial Analyst designation (CFA). Directorships of Other ASX Listed Companies None Former ASX Listed Companies Directorships in last 3 years Ask Funding Limited Special responsibilities Audit Committee chairman Interests in shares and options 6,823,547 ordinary shares in Sihayo Gold Limited 12 | P a g e DIRECTORS’ REPORT Gavin Caudle (Non Executive Director) Experience and expertise Mr Caudle has over 25 years experience in the finance and investment sectors in Australia, Singapore and Indonesia. Starting his career at Arthur Andersen Australia, he eventually became a partner based in the Jakarta office. He joined Citigroup in 1998 in Indonesia and held positions as Head of Mergers & Acquisition and Head of Private Equity at Citigroup and Country Head of the Investment Bank at Salomon Smith Barney. Since 2003, together with his partners, Gavin has developed numerous successful businesses including Tower Bersama Group (a listed telecommunications infrastructure business), Merdeka Copper & Gold (an Indonesian listed mining Company and Provident Agro (a listed plantation business) with assets valued at more than $4 billion today. Gavin and his partners bring substantial expertise in dealing with all business aspects in Indonesia, most importantly for Sihayo being:  Track record of raising more than US$3 billion of senior, mezzanine and equity capital over the past 10 years; and  Expertise in dealing with forestry issues through the ownership of a substantial plantation business.  Expertise in dealing with mining related issues through the ownership of substantial shareholdings in Sumatra Copper and Gold Limited, Finders Resources Limited and PT Merdeka Copper Gold Tbk. Directorships of Other ASX Listed Companies Sumatra Copper and Gold Limited Finders Resources Limited Former ASX Listed Companies Directorships in last 3 years No former directorships Special responsibilities Audit Committee member Interests in shares and options 6,613,984 ordinary shares (held directly) 518,665,951 ordinary shares (held indirectly) Stuart Leslie Gula (Non Executive Director) Experience and expertise Mr Gula has over 25 years management experience in the mining sector in Australia, North America, Africa and Asia. Among many other achievements, his experience includes successful construction completion, commissioning and production of two gold projects in China and Africa and has successfully participated in varied levels of management on feasibility studies for many other projects. Prior to joining Sihayo Gold, he held the position of Group General Manager, Mining - North America for Nyrstar. Nyrstar is a European based integrated metals and mining company with a market capital in excess of US$ 1 billion. Mr Gula holds a Bachelors degree in Engineering (mining major) and a Masters of Business Administration (Technology Management). 13 | P a g e DIRECTORS’ REPORT Information on Directors (continued) Directorships of Other ASX Listed Companies None Former ASX Listed Companies Directorships in last 3 years No former directorships Interests in shares and options 1,033,269 ordinary shares (held indirectly) Malcolm Paterson (resigned on 31August 2018) BSc. (Hons) Eng. Met., F. Aus IMM (Chief Executive Officer & Managing Director of Sihayo Gold Limited) Malcolm has over forty-five years post graduate experience in the international minerals industry in project development, operations, engineering and company management. Prior to joining Sihayo he was CEO of PT Kasongan Bumi Kencana (KBK), part of the Pelsart Group. This position involved rebuilding the company organisation structure and management systems to provide the in- house capability to develop and operate mining projects. The Mirah Gold/Silver Project was successfully commissioned in 2012 and further projects are in the development stage, including the remake of the Mt. Muro Project, presently being commissioned. Malcolm was also responsible for the establishment of Green Gold Technology, a company specialising in Resin technology for the recycling of cyanide and detoxification of gold plant tailings. Directorships of Other ASX Listed Companies None Former ASX Listed Companies Directorships in last 3 years No former directorships Interests in shares and options None Daniel Garry Nolan (Executive Director, Chief Financial Officer, Company Secretary) The company secretary is Mr Daniel Garry Nolan. Mr Nolan was appointed to the position of company secretary on 1 July 2011. Mr Nolan has worked in finance and accounting for more than 30 years. He has held senior finance positions in Australia, Cambodia, Vietnam and Indonesia. Immediately before joining Sihayo he held senior management roles in the Saratoga Group in Indonesia. Prior to that, he was a senior finance executive at Telstra for 10 years in Australia, Cambodia and Indonesia. Mr Nolan holds a Bachelor of Business from Monash University and a Certificate in Governance and Risk Management from The Governance Institute of Australia Interests in shares and options 4,350,919 ordinary shares (held indirectly) 14 | P a g e DIRECTORS’ REPORT Information on Directors (continued) MEETINGS OF DIRECTORS The following tables set 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. (Note that meeting attendance may have been completed via telephone conferencing). Directors’ meeting: M Collins Gavin Caudle S Gula D Nolan M Paterson Audit committee meeting: M Collins Gavin Caudle D Nolan Number eligible to attend 4 4 4 4 4 Number eligible to attend 2 2 2 Number Attended 4 4 4 4 4 Number Attended 2 2 2 15 | P a g e DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) The full board of Sihayo Gold act as as the Remuneration Committee at the date of this report. The responsibilities and functions of the Remuneration Committee are as follows: 1) review the competitiveness of the Company’s executive compensation programs to ensure: (a) (b) (c) the attraction and retention of corporate officers; the motivation of corporate officers to achieve the Company’s business objectives; and the alignment of the interests of key leadership with the long-term interests of the Company’s shareholders. 2) review trends in management compensation, oversee the developemnt of new compensation plans and, when necessary, approve the revision of existing plans; 3) review the performance of executive management; 4) review and approve Chairperson and Chief Executive Officer goals and objectives, evaluate Chairperson and Chief Executive Officer performance in light of these corporate objectives, and set Chairperson and Chief Executive Officer compensation levels consistent with Company philosophy; 5) approve the salaries, bonus and other compensation for all senior executives, the committee will recommend appropriate salary, bonus and other compensation to the Board for approval; 6) review and approve compensation packages for new corporate officers and termination packages for corporate officers as requested by management; 7) review and approve the awards made under any executive officer bonus plan, and provide an appropriate report to the Board; 8) review and make recommendations concerning long-term incentive compensation plans, including the use of share options and other equity-based plans. Except as otherwise delegated by the Board, the committee will act on behalf of the Board as the “Committee” established to administer equity- based and employee benefit plans, and as such will discharge any responsibilities imposed on the committee under those plans, including making and authorising grants, in accordance with the terms of those plans; and 9) review periodic reports from management on matters relating to the Company’s personnel appointments and practices. Principles used to determine the nature and amount of remuneration  Non-executive directors receive fees in cash. The fees are fixed and approved by shareholders.  Where non-executive directors provide services in their area of expertise they receive payment at normal commercial rates.  There are no executives (other than directors) with authority for strategic decision making and management.  The remuneration of the directors is not linked directly to the performance of the Company. Engagement of remuneration consultants During the financial year, the Company did not engage any remuneration consultants. 16 | P a g e DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued) Details of remuneration Details of the remuneration of key management personnel of Sihayo Gold Limited, including their personally related entities are set out below for the year ended 30 June 2018. There have been no changes to the below named key management personnel since the end of the reporting period unless noted: 2018 Name M Collins G Caudle D Nolan S Gula M Paterson Short-term Post Employment Long Term Cash Salary & Fees 65,000 45,000 62,864 48,750 420,000 Non Monetary Benefits 1,461 1,011 963 1,096 9,438 641,614 13,969 Super- annuation Retirement Benefits Incentive Plans LSL - - - - - - - - - - - - - - - - - - - - - - - - Equity Share based payment - - - - - Total $ 66,461 46,011 63,827 49,846 429,438 - 655,583 Total Remuneration represented by options - - - - - - (a) $65,000 in directors fees was paid to M Collins as at 30 June 2018. (b) $371,250 in directors fees was payable as at 30 June 2018 to G Caudle for fees for the year ended 30 June 2018 and in lieu of previous years directors fees. (c) $62,864 salary was paid to D Nolan for the year ended 30 June 2018. (d) $48,750 salary was paid to Stuart Gula for the year ended 30 June 2018. (e) $420,000 salary was paid to Malcolm Paterson for the year ended 30 June 2018. He resigned on 31 August 2018. (f) $13,969 non monetary benefit is related to Director and Officers Liability Insurance. 2017 Name M Collins G Caudle D Nolan S Gula M Paterson Short-term Post Employment Long Term Cash Salary & Fees 65,000 45,000 36,000 233,753 35,000 Non- Monetary Benefits 2,220 1,537 410 7,984 1,195 414,753 13,346 Super- annuation Retirement Benefits Incentive Plans LSL - - - - - - - - - - - - - - - - - - - - - - - - Equity Share based payment - - - - - Total $ 67,220 46,537 36,410 241,737 36,195 - 428,099 Total Remuneration represented by options - - - - - - (a) $65,000 in directors fees was paid to M Collins as at 30 June 2017. (b) $326,250 in directors fees was payable as at 30 June 2017 to G Caudle for fees for the year ended 30 June 2017 and in lieu of previous years directors fees. (c) $36,000 salary was paid to D Nolan for the year ended 30 June 2017. (d) $233,753 salary was paid to Stuart Gula for the year ended 30 June 2017. (e) $35,000 salary was paid to Malcolm Paterson for the year ended 30 June 2017. He was appointed on 01 June 2017. (f) $13,346 non monetary benefit is related to Director and Officers Liability Insurance. 17 | P a g e DIRECTORS’ REPORT REMUNERATION REPORT (AUDITED) (continued) No options granted as part of remuneration during the years ended 30 June 2018 and 30 June 2017. There were no shares issued on exercise of compensation options (Consolidated) for the years ended 30 June 2018 or 30 June 2017. Option holdings of key management personnel Nil Shareholdings of Key Management Personnel The number of shares held in the Company during the financial year by each key management personnel of Sihayo Gold Limited, including their personally-related entities, are set out below: Balance 1 July 17 Granted as remuneration On exercise of options Net change other Balances as at date of resignation/ termination Balance 30 June 18 Ord Pref Ord Pref Ord Pref Ord Pref Ord Pref Ord 34,691,404 487,972,464 1,033,269 4,350,919 - - - - - - - - - - - - - - - - - - - - - - - - - - - (27,867,857) 37,307,471 - - - - - - - - - - - - - - - - - - 6,823,547 525,279,935 1,033,269 4,350,919 - Balance 1 July 16 Granted as remuneration On exercise of options Net change other Balances as at date of resignation/ termination Balance 30 June 17 Ord Pref Ord Pref Ord Pref Ord Pref Ord Pref Ord 14,529,574 155,435,368 133,269 4,250,919 - - - - - - - - - - - - - - - - - - - - - - - - - - - 20,161,830 332,537,096 900,000 100,000 - - - - - - - - - - - - - - - - 34,691,404 487,972,464 1,033,269 4,350,919 - 30 June 2018 M Collins G Caudle S. Gula D. Nolan M. Paterson 30 June 2017 M Collins G Caudle S. Gula D. Nolan M. Paterson 18 | P a g e DIRECTORS’ REPORT DIRECTORS AGREEMENTS Whilst no formal agreements have been entered into between the Company or previous agreements have expired and each of its Directors, annual Director remuneration, as disclosed below, has been Board approved. Name Remuneration Per Annum ($) plus Allowance Misha Collins Stuart Leslie Gula Daniel Garry Nolan Gavin Caudle Malcolm Paterson 65,000 45,000 80,000 45,000 420,000 END OF REMUNERATION REPORT Directors and Officers Insurance During the year $13,969 was paid for Directors and officeholders insurance, covering all directors and officeholders. The liabilities insured are costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the consolidated entity. SHARES UNDER OPTION There were no options outstanding as at 30 June 2018. WORKING CAPITAL LOAN Total working capital loan from Provident Minerals Ltd was $1,050,000 with 10% interest per annum accrued daily and compunded monthly. Total working capital loan from Asian Metal Mining was $450,000 with 10% interest per annum accrued daily and compunded monthly. PROCEEDINGS ON BEHALF OF COMPANY No person entitled to exercise any of the options has any right, by virtue of the options, to participate in any share issue of any other body corporate. The names of all persons who currently hold options, granted at any time, are entered in the register kept by the Company pursuant to Section 216C of the Corporations Act 2001 and the register may be inspected free of charge. No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of these proceedings. 19 | P a g e DIRECTORS’ REPORT The Company was not party to any such proceedings during the year. CORPORATE GOVERNANCE The Company’s Corporate Governance Statement is located at the Company’s Website: http://www.sihayogold.com/view/about-us/corporate-governance NON-AUDIT SERVICES There were no non-audit services undertaken by Stantons International during the financial year. A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 21. Signed in accordance with a resolution of the Board of Directors. Misha Anthony Collins Chairman 30 September 2018 20 | P a g e PO Box 1908 West Perth WA 6872 Australia Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 84 144 581 519 www.stantons.com.au Stantons International Audit and Consulting Pty Ltd trading as Chartered Accountants and Consultants 30 September 2018 The Directors Sihayo Gold Limited c/- Mccullough Robertson Level 11 66 Eagles Street BRISBANE, QLD 4000 Dear Sirs RE: SIHAYO GOLD LIMITED In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Sihayo Gold Limited. As Audit Director for the audit of the financial statements of Sihayo Gold Limited for the year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (ii) any applicable code of professional conduct in relation to the audit. Yours faithfully, STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company) Samir Tirodkar Director Liability limited by a scheme approved under Professional Standards Legislation CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018 Notes 3 3(a)(i) 3(a)(ii) 5, 3(a)(i) 6(a)(ii) 3(a)(ii) 3(a) 3(b) Other revenue Total revenue Employee benefits expense External consultancy expenses Rates and taxes Rental expense Travel and entertainment expenses Permit and licenses Corporate secretarial expenses Finance costs Depreciation and amortisation Insurance expense Provision for impairment of capitalised exploration and evaluation costs Foreign exchange gain Write back of provision for impairment VAT receivable Gain on derivative liability Other expenses Loss before income tax Income tax expense Net loss Other comprehensive income Items that will never be classified to profit or loss Items that may be classified to profit or loss Movement in foreign currency translation reserve Other comprehensive loss for the year, net of tax Total comprehensive loss for the year Loss after income tax attributable to: Members of Sihayo Gold Limited Non controlling interest Comprehensive loss after income tax attributable to: Members of Sihayo Gold Limited Non controlling interest Basic/diluted loss per share in cents 20 Consolidated 2018 $ 2017 $ 492 492 (1,915,020) (589,445) (250,491) (103,467) (62,136) (55,722) (52,567) (38,284) (15,480) (10,123) (1,865,095) 121,596 2,187,030 - (25,150) (2,673,862) - (2,673,862) 599,427 599,427 528 528 (607,933) (604,998) (107,098) (2,291) (21,779) (149,215) (49,430) (96,935) (57,736) (3,375) - - - 725,554 (340,814) (1,315,522) - (1,315,522) - (453,255) (453,255) (2,074,435) (1,768,777) (2,091,472) (582,390) (2,673,862) (285,471) (1,788,964) (2,074,435) (0.12) (875,503) (440,019) (1,315,522) (567,588) (1,201,189) (1,768,777) (0.06) The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjuction with the accompanying notes. 22 | P a g e CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Other assets Property, plant and equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Borrowings Other liabilities TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS SHAREHOLDERS’ EQUITY Parent entity interest: Contributed equity Reserves Accumulated losses Total parent entity interest Non-controlling interest in controlled entities TOTAL SHAREHOLDERS’ EQUITY Notes 19 4 4 6 5 7 9 8 10 11(a) 11(b) 18(b) 2018 $ Consolidated 2017 $ 116,210 257,696 373,906 2,382,136 13,609,718 102,428 16,094,282 16,468,188 2,106,603 1,500,000 57,271 3,663,874 516,839 516,839 4,180,713 12,287,475 109,269,211 15,183,104 (91,369,369) 33,082,946 (20,795,471) 12,287,475 834,757 203,125 1,037,882 - 12,878,780 83,964 12,962,744 14,000,626 862,800 261,510 57,516 1,181,826 505,473 505,473 1,687,299 12,313,327 107,220,628 13,377,103 (99,144,809) 21,452,922 (9,139,595) 12,313,327 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 23 | P a g e CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018 CASH FLOWS FROM OPERATING ACTIVITIES Payments to creditors and suppliers & employees Interest received NET CASH FLOWS (USED) IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Payments for addition of mining exploration and evaluation expenditure Payments for addition of property, plant & equipment NET CASH (USED) IN INVESTING ACTIVITIES CASH FLOWS RECEIVED FROM FINANCING ACTIVITIES Proceeds from issue of shares Repayment of borrowings Proceeds from borrowings Payment of unmarketable securities Cost of shares issue NET CASH FLOWS RECEIVED FROM FINANCING ACTIVITIES Net (decrease)/increase in cash and cash equivalents held Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year Notes 2018 $ 2017 $ Consolidated (2,111,479) 492 (1,495,623) 528 19(b) (2,110,987) (1,495,095) (1,865,095) (29,294) (1,894,389) 2,163,307 (261,510) 1,500,000 (244) (114,724) - - - 5,976,981 (3,625,538) 233,454 (404) (282,361) 3,286,829 2,302,132 (718,547) 807,037 834,757 27,720 19 116,210 834,757 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 24 | P a g e CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018 $ $ Share capital Options & equity reserve $ Foreign currency translation reserve $ $ $ Accumulated losses Non- controlling interest Total Balance at 1.07.16 101,526,008 2,380,395 10,688,793 (98,269,306) (7,938,406) 8,387,484 Loss for the year Other comprehensive loss: Movement in foreign currency translation reserve Total comprehensive loss for the year Issue of shares (net of transaction costs) - - - 5,694,620 - - - - - (875,503) (440,019) (1,315,522) 307,915 - (761,170) (453,255) 307,915 (875,503) (1,201,189) (1,768,777) - - - 5,694,620 Balance at 30.06.17 107,220,628 2,380,395 10,996,708 (99,144,809) (9,139,595) 12,313,327 Balance at 1.07.17 107,220,628 2,380,395 10,996,708 (99,144,809) (9,139,595) 12,313,327 Transfer of losses from the Group to NCI as a result of write off of exploration and evaluation expenditure and VAT at subisidiary company level Loss for the year Other comprehensive loss: Movement in foreign currency translation reserve Total comprehensive loss for the year Issue of shares (net of transaction costs) - - - - 2,048,583 - - - - - - - 9,866,912 (9,866,912) - (2,091,472) (582,390) (2,673,862) 1,806,001 - (1,206,574) 599,427 1,806,001 (2,091,472) (1,788,964) (2,074,435) - - - 2,048,583 Balance at 30.06.18 109,269,211 2,380,395 12,802,709 (91,369,369) (20,795,471) 12,287,475 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes 25 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements are general purpose financial statements that have been prepared in accordance with Accounting Standards of the Australian Accounting Standards Board and the Corporations Act 2001. The financial statements cover Sihayo Gold Limited and its controlled entities, and has authorised for issue in accordance with a resolution of the Directors on 30 September 2018. Sihayo Gold Limited is a listed public company, incorporated and domiciled in Australia. The following is a summary of the material accounting policies adopted by the group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. Basis of preparation Statement of compliance The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) and the Corporations Act 2001. The consolidated financial report of the Group also complies with International Financial Reporting Standards and interpretations adopted by the International Accounting Standards Board. New standards and interpretations not yet adopted A number of new standards, amendments to standards and interpretations issued by the AASB which are not yet mandatorily applicable to Sihayo Group have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Group are set out below. Sihayo Group does not plan to adopt these standards early. Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2018 reporting year. The group’s assessment of the impact of these new standards and interpretations is set out below:  AASB 9 Financial Instruments and associated Amending Standards (applicable for annual reporting period commencing 1 January 2018) The Standard will be applicable retrospectively (subject to the comment on hedge accounting below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments and simplified requirements for hedge accounting. Key changes made to this standard that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. The directors anticipate that the adoption of AASB 9 will not have a material impact on the Group’s financial instruments). 26 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)  AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods commencing on or after 1 January 2018) When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers. The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process: - identify the contract(s) with a customer; - identify the performance obligations in the contract(s); - determine the transaction price; - allocate the transaction price to the performance obligations in the contract(s); and - recognise revenue when (or as) the performance obligations are satisfied. This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue. The directors anticipate that the adoption of AASB 15 will not have a material impact on the Group's financial statements.  AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January 2019). When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as either operating leases or finance leases. Lessor accounting remains similar to current practice. 27 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) The main changes introduced by the new Standard are as follows: - recognition of the right-to-use asset and liability for all leases (excluding short term leases with less than 12 months of tenure and leases relating to low value assets); - depreciating the right-to-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components; inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability using the index or rate at the commencement date; application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead account for all components as a lease; and additional disclosure requirements. - - - The transitional provisions of AASB 16 allow a lease to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity at the date of initial application. The directors anticipate that the adoption of AASB 16 will not have a material impact on the Group’s recognition of leases and disclosures.  AASB 2014-10: Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (applicable to annual reporting periods commencing on or after 1 January 2018). This Standard amends AASB 10: Consolidated Financial Statements with regards to a parent losing control over a subsidiary that is not a “business” as defined in AASB 3: Business Combinations to an associate or joint venture and requires that: - a gain or loss (including any amounts in other comprehensive income (OCI)) be recognised only to the extent of the unrelated investor’s interest in that associate or joint venture; the remaining gain or loss be eliminated against the carrying amount of the investment in that associate or joint venture; and any gain or loss from remeasuring the remaining investment in the former subsidiary at fair value also be recognised only to the extent of the unrelated investor’s interest in the associate or joint venture. The remaining gain or loss should be eliminated against the carrying amount of the remaining investment. - - The directors anticipate that the adoption of AASB 2014-10 will not have a material impact on the Group's financial statements. 28 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)  Other standards not yet applicable There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions New and amended standards adopted by the Group The Group has considered the implications of new and amended Accounting Standards applicable for annual reporting periods beginning after 1 January 2017 but determined that their application to the financial statements is either not relevant or not material. a) Going concern The financial statements have been prepared on a going concern basis which the directors believe to be appropriate. The directors are confident that the Group will be able to maintain sufficient levels of working capital to continue as a going concern and continue to pay its debts as and when they fall due. For the year ended 30 June 2018, the Group incurred a loss before tax of $2,673,862 (2017: loss of $1,315,522) and has a working capital deficit of $3,289,968 (2017: $143,944). The Group has cash and cash equivalents of $116,210 (2017: $834,757) and current liabilities of $3,663,874 (2017: $1,181,826) which includes borrowings of $1,500,000. The financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and realisation of assets and settlement of liabilities in the ordinary course of business. The Group’s ability to continue as a going concern is dependent upon it maintaining sufficient funds for its operations and commitments. The directors continue to be focused on meeting the Group’s business objectives and is mindful of the funding requirements to meet these objectives. The Directors consider the basis of going concern to be appropriate for the following reasons: • • • The current cash of the Group relative to its fixed and discretionary commitments; The contingent nature of certain of the Group’s project expenditure commitments; The ability of the Group to terminate certain agreements without any further on-going obligation beyond what has accrued up to the date of termination; The underlying prospects for the Group to raise funds from the capital markets; and The fact that future exploration and evaluation expenditure are generally discretionary in nature (ie. at the discretion of the Directors having regard to an assessment of the progress of works undertaken to date and the prospects for the same). Subject to meeting certain expenditure commitments, further exploration activities may be slowed or suspended as part of the management of the Group’s working capital. • • 29 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) a) Going concern (continued) The Directors are confident that the Group can continue as a going concern and as such are of the opinion that the financial report has been appropriately prepared on a going concern basis. Should the Group be unable to undertake the initiatives disclosed above, there is uncertainty which may cast doubt as to whether or not the Group will be able to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. b) Principles of consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Sihayo Gold Limited and all of the subsidiaries. Subsidiaries are entities the parent controls. The parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 18. The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group. Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non controlling interests". The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary's net assets on liquidation at either fair value or at the non-controlling interests' proportionate share of the subsidiary's net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income. c) Business combinations The purchase method of accounting is used to account for business combinations regardless of whether equity instruments or other assets are acquired. The cost of a business combination is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred. 30 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) c) Business combinations (continued) Where equity instruments are issued in a business combination, the fair value of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and valuation methods provide a more reliable measure of fair value. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of the business combination over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets acquired, the difference is recognised directly in the Statement of Comprehensive Income, but only after a reassessment of the identification and measurement of the net assets acquired. If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured at fair value as at the acquisition date through profit or loss. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. d) Income tax The charge for current income tax expenses is based on the profit for the year adjusted for any non- assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding business combination, where there is no effect on accounting or taxable profit or loss. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences 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 tax legislation and the anticipation that the economic 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. 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. 31 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) e) Property, plant & equipment Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. Plant and equipment Property, 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 that 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 Depreciation The depreciable amount of all Property, Plant and Equipment (other than Leasehold Improvements and certain plant and equipment which are based on the prime cost method) is based on the diminishing value method over their useful lives to the Company commencing from the time the assets are held ready for use. The depreciation rates used for plant and equipment vary between 2.5% and 40%. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying value is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. f) Acquistion of assets The purchase method of accounting is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs incidental to the acquisition. Where shares are issued in an acquisition, the value of the shares is determined having reference to the fair value of the assets or net assets acquired, including goodwill or discount on acquisition where applicable. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of the acquisition. The discount rate used is the rate at which a similar borrowing could be obtained under comparable terms and conditions. g) Exploration and evaluation expenditure Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the areas have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. 32 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) g) Exploration and evaluation expenditure (continued) 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. 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. h) Financial instruments Recognition Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method. Financial liabilities Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in the statement of comprehensive income. i) Impairment of assets At each reporting date, the group reviews 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 asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income. j) Interests in joint arrangements Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous decisions about relevant activities are required. 33 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) j) Interests in joint arrangements (continued) Separate joint venture entities providing joint venturers with an interest to net assets are classified as a "joint venture" and accounted for using the equity method. Joint venture operations represent arrangements whereby joint operators maintain direct interests in each asset and exposure to each liability of the arrangement. The Group's interests in the assets, liabilities, revenue and expenses of joint operations are included in the respective line items of the consolidated financial statements. Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties' interests. When the Group makes purchases from a joint operation, it does not recognise its share of the gains and losses from the joint arrangement until it resells those goods/assets to a third party. k) Functional and presentation currency The functional currency of each of the group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. l) Foreign currency transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year end exchange rate. Non-monetary items measured at historical costs continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the statement of comprehensive income, except where deferred in equity as a qualifying cashflow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the statement of comprehensive income. m) Group companies The financial results and position of foreign operations whose functional currency is different from the group’s presentation currency are translated as follows:  Assets and Liabilities are translated at year-end exchange rates prevailing at that reporting date.  Income and expenses are translated at average exchange rates for the period. Exchange rate differences arising on translation of foreign operations are transferred directly to the group’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of comprehensive income in the period in which the operation is disposed. 34 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) n) Revenue Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from the sale of assets is recognised at the date that the contract is entered into. All revenue is stated net of the amount of goods and services tax (GST). o) Employee benefits Provision is made for the group’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. p) Provisions Provisions are recognised when the group has a legal or constructive obligation, as a result of a past event, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. q) Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short term borrowings in current liabilities on the statement of financial position. r) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. s) Share based payment transactions The group provides benefits to the directors and senior executives in the form of share-based payment transactions, whereby services are rendered in exchange for shares or rights over shares (‘equity settled transactions’). The cost of these equity settled transactions with directors is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an external valuer using the Black- Scholes model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Sihayo Gold Limited. 35 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) s) Share based payment transactions (continued) The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the market conditions are fulfilled. The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that in the opinion of the directors will ultimately vest. The opinion is formed on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon market condition. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share. t) Trade and other receivables CURRENT All trade debtors are recognised at the amounts receivable as they are due for settlement no more than 30 days from the date of recognition. Collectability of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful debts is raised when some doubt as to collection exists and in any event when the debt is more than 60 days overdue. u) Trade and other receivables NON-CURRENT All debtors that are not expected to be received within 12 months of reporting date are included in non- current receivables. Collectability of non-current receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful debts is raised when some doubt as to collection exists. v) Trade and other creditors These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition 36 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) w) Operating leases Operating lease payments are charged to the Statement of comprehensive income in the periods in which they are incurred, as this represents the pattern of benefits derived from the leased assets. x) Significant accounting judgements, estimates and assumptions Significant accounting judgements In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements: Exploration and evaluation assets The Group’s accounting policy for exploration and evaluation expenditure is set out above. The application of this policy necessarily requires management to make certain estimates and assumptions as to future events and circumstances, in particular, the assessment of whether economic quantities of reserves are found. Any such estimates and assumptions may change as new information becomes available. Significant accounting estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are: Recovery of deferred assets Deferred tax assets are recognised for deductible temporary differences when management considers that it is probable that future taxable profits will be available to utilise those temporary differences. Share-based payment transactions The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The Group measures the cost of cash-settled share-based payments at fair value at the grant date using the Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. y) Segment reporting The Group determines and presents operating segments based on the information that internally is provided to the Managing Director, who is the Group’s chief operating decision maker. An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating results are regularly reviewed by the Managing Director to make decisions about resources to be allocated to the segment and assess its performance. Unless stated otherwise, all amounts reported to the Board of Directors as the chief decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group. 37 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) y) Segment reporting (continued) Intersegment loans payable and receivable are initially recognised at the consideration received net of transaction costs. If intersegment loans receivable and payable are not on commercial terms, these are not adjusted to fair value on market interest rates. 2. RISK MANAGEMENT (a) Interest rate risk The Consolidated Entity and the Company’s exposure to interest rate risk, is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rate on classes of financial assets and liabilities. The Consolidated Entity and the Company do not have a major exposure in this area as the interest rate earned on deposited funds does not vary greatly from month to month. Consolidated Entity 2018 Financial assets Cash and cash equivalents Trade and other receivables Deposits Total financial assets Financial liabilities Trade and other payables Borrowings Other liabilities Total financial liabilities Fixed interest rate maturing in Floating Interest Rate 1 year or less 1 to 5 years More than 5 years Non - interest bearing $ $ $ $ $ Total carrying amount at balance sheet $ Applicable interest rate on 30 June 2018 % 116,210 - - 116,210 - - - - - - - - 1,500,000 - - 1,500,000 - - 163 163 - - - - - - - - 116,210 2,416,940 - 2,416,940 163 - - - - 2,416,940 2,533,313 - - - 2,106,603 - 57,271 2,106,603 1,500,000 57,271 - 10% - - 2,163,874 3,663,874 38 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 2. RISK MANAGEMENT (continued) Consolidated Entity 2017 Fixed interest rate maturing in Floating Interest Rate 1 year or less 1 to 5 years More than 5 years Non- interest bearing $ $ $ $ $ Total carrying amount at balance sheet $ Applicable interest rate on 30 June % 834,757 - - 834,757 - - - - - - 6,602 6,602 - - - - 261,510 - - 261,510 - - - - - - - - - - - - - 834,757 0.0% 127,733 - 127,733 6,602 - 4% 127,733 969,092 862,800 - 57,516 862,800 261,510 57,516 - 10% - 920,316 1,181,826 Financial assets Cash and cash equivalents Trade and other receivables Deposits Total financial assets Financial liabilities Trade and other payables Borrowings Other liabilities Total financial liabilities (b) Credit risk exposures The consolidated entity and the Company has no significant concentrations of credit risk. The maximum exposure to credit risk at balance date is the carrying amount (net of provision of doubtful debts) of those assets as disclosed in the consolidsted statement of financial position and note 21. As the consolidated entity and Company does not presently have any debtors arising from sales, lending, significant stock levels or any other credit risk, a formal credit risk management policy is not maintained. (c) Foreign currency risk management The Consolidated Entity and the Company is exposed to fluctuations in foreign currencies arising from costs incurred at overseas mineral exploration tenements. To mitigate this risk the Company holds cash in the currency in which it forecasts the costs will be incurred. 39 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 2. RISK MANAGEMENT (continued) (d) Liquidity risk Liquidity risk is the risk that the Consolidated Entity and the Company will not be able to meet its financial obligations as they fall due. Financial obligations of the Consolidated Entity and the Company consist of trade creditors and other payables. The Company has not conducted a sensitivity analysis on credit or interest rate risk as the amounts are not considered significant. 3. REVENUE Revenue from the operating activities Interest 3(a) LOSS BEFORE INCOME TAX Net expenses The loss before income tax includes the following expenses: (i) Expenses: Depreciation Rental expenses (ii) Finance costs and movements in derivative liability Finance costs Gain on derivative liability Consolidated 2018 $ 2017 $ 492 492 528 528 Consolidated 2018 $ 15,480 103,467 118,947 38,284 - 38,284 2017 $ 57,736 2,291 60,027 96,935 (725,554) (628,619) 40 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 3(b) INCOME TAX EXPENSE Loss from ordinary activities before income tax expense (2,673,862) (1,315,522) Consolidated 2018 $ 2017 $ (i) Prima facie tax benefit on loss from ordinary activities @27.5% Tax effects of amounts which are not deductible (taxable) In calculating taxable income: Provisions Non assessable (income)/expenses Provision for impairment of mining exploration and evaluation expenditure Provision for impairment of VAT receivable Movement in unrecognised temporary difference Tax effect of current year tax losses for which no deferred tax asset has been recognised Income tax expense (ii) Unrecognised temporary differences Deferred Tax Assets at 27.5% Carried forward revenue tax losses Carried forward capital tax losses Black hole expenditure (735,313) (361,769) 6,875 - 512,901 (601,433) (816,970) (64,223) 881,193 - 12,972 (199,527) - - (548,324) (68,896) 617,220 - 8,774,025 958,469 100,428 9,832,922 8,326,240 958,469 177,154 9,461,863 This benefit for tax losses will only be obtained if: (i) the consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised, or the losses are transferred to an eligible entity in the consolidated entity, and the consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation; and no changes in tax legislation adversely affect the consolidated entity in realising the benefit from the deductions for the losses. the movement in unrecognised DTA on tax losses does not agree to Note 3(b)(i) due to foreign exchange differences. (ii) (iii) (iv) (v) 41 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 4. TRADE AND OTHER RECEIVABLES CURRENT Prepayments Other debtors NON CURRENT VAT receivable Provision for impairment Consolidated 2018 $ 2017 $ 222,892 34,804 257,696 2,382,136 - 2,382,136 75,392 127,733 203,125 2,166,660 (2,166,660) - VAT receivables will be recoverable from the Indonesian Goverment once production commences. As the reporting date, none of the other debtors were past due or impaired. Other debtors These amounts generally arise from transactions outside the usual operating activities of the consolidated entity and are non-interest bearing. The other debtors do not contain any impaired receivables. 5. PROPERTY, PLANT AND EQUIPMENT NON CURRENT Land at Cost Plant and equipment, at cost Less: accumulated depreciation Motor vehicles, at cost Less: accumulated depreciation Office equipment, at cost Less: accumulated depreciation Total property, plant and equipment Consolidated 2018 $ 2017 $ 71,639 69,186 352,531 (351,801) 351,658 (350,984) 730 674 117,555 (117,555) 117,663 (112,077) - 5,586 747,575 (717,516) 716,849 (708,331) 30,059 102,428 8,518 83,964 42 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 5. PROPERTY, PLANT AND EQUIPMENT (continued) Reconciliations Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the current financial year are set out below: 2018 Consolidated Carrying amount at 1 July 2017 Effect of foreign currency translation Additions Disposal Depreciation expense Carrying amount at 30 June 2018 2017 Consolidated Carrying amount at 1 July 2016 Effect of foreign currency translation Additions Disposal Depreciation expense Carrying amount at 30 June 2017 Land at cost $ Plant & equipment $ Motor vehicles $ Office equipment $ Total $ 69,186 674 5,586 8,518 83,964 2,453 - - - 71,639 873 - - (817) 730 (108) - - (5,478) 1,432 29,294 - (9,185) 4,650 29,294 - (15,480) - 30,059 102,428 Land at cost $ Plant & equipment $ Motor vehicles $ Office equipment $ Total $ 71,292 12,277 16,266 45,502 145,337 (2,106) - - - 69,186 (108) - - (11,495) (391) - - (10,289) (1,032) - - (35,952) (3,637) - - (57,736) 674 5,586 8,518 83,964 6. OTHER ASSETS NON CURRENT Deposits Capitalised mineral exploration costs Consolidated 2018 $ 163 13,609,555 13,609,718 2017 $ 6,602 12,872,178 12,878,780 6.a.(i) Deposits Deposits of $163 represent security deposit for office administration (2017: $6,602). 43 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 6. OTHER ASSETS (continued) 6.a.(ii) Mining exploration and evaluation expenditure Opening balance Additions during the year Change arising from foreign currency movement Provision for impairment Write off Consolidated 2018 $ 12,872,178 1,865,095 737,377 (1,865,095) - 2017 $ 13,254,246 - (382,068) - - Closing balance 13,609,555 12,872,178 Management believes that the carrying amount of the Group’s capitalised expenditure and evaluation costs is adequate to recoverable. The estimated impairment will be reviewed and revised in future periods in alignment with movements in the gold price and any changes in the projected cost profile of the Sihayo Pungkut project. 7. TRADE AND OTHER PAYABLES CURRENT Trade payables and accruals Consolidated 2018 $ 2017 $ 2,106,603 862,800 There are no trade payables past due. The normal credit from suppliers is 30-60 days 8. PROVISIONS NON CURRENT Employee Entitlements and Other Provisions Consolidated 2018 $ 2017 $ 516,839 505,473 Employee numbers Average number of employees during the financial year 22 25 44 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 9. BORROWINGS Working capital loan: Provident Minerals Pte Ltd. Asian Metal Mining Developments Limited Provident Minerals Pte Ltd. Consolidated 2018 $ 2017 $ 1,050,000 450,000 261,510 - 1,500,000 261,510 Sihayo Gold has signed a loan agreement with Provident Minerals Pte Ltd dated 28 March 2018. The total loan facility amounting to $1,400,000 with interest rate of 10% per annum and classified as unsecured loan. Final maturity date is 31 December 2018 or any other date mutually agreed between the parties. Provident Minerals is not entitled to demand repayment of outstanding loan in any circumtances before the final maturity date, except there is event of defaults occurred. Sihayo Gold has fully repaid the funds which are borrowed from Provident Minerals with final maturity date 30 June 2017. Gavin Caudle is a director of Sihayo Gold and Provident Minerals. Provident Minerals also one of Sihayo Gold’s shareholder. Therefore, this loan is classified as related party transaction. Asian Metal Mining Developments Limited Sihayo Gold has signed a loan agreement with Asian Metal Mining Developments Limited dated 27 March 2018. The total loan facility amounting to $600,000 with interest rate of 10% per annum and classified as unsecured loan. Final maturity date is 31 December 2018 or any other date mutually agreed between the parties. Asian Metal is not entitled to demand repayment of outstanding loan in any circumtances before the final maturity date, except there is event of defaults occurred. Asian Metal is one of Sihayo Gold’s shareholder. Therefore, this loan is classified as related party transaction. 10. CONTRIBUTED EQUITY Issued capital Fully paid – ordinary shares 1,854,262,526 (2017: 1,699,740,648) Consolidated 2018 $ 2017 $ 109,269,211 107,220,628 109,269,211 107,220,628 45 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 10. CONTRIBUTED EQUITY (continued) Movements in ordinary share capital of the Company during the past 2 years were as follows: Number of Shares $ 01/07/2016 06/07/2016 08/09/2016 07/03/2017 26/05/2017 30/06/2017 13/10/2017 05/12/2017 10/01/2018 30/06/2018 Opening balance Shares issued Shares issued Shares issued Shares issued Shares issue costs Balance at 30 June 2017 Shares issued Shares issued Shares issued Shares issue costs Balance at 30 June 2018 1,136,037,339 88,832,675 361,554,591 30,483,509 82,832,534 - 1,699,740,648 20,927,822 21,428,571 112,165,485 - 1,854,262,526 101,526,008 888,327 3,615,546 396,286 1,076,823 (282,362) 107,220,628 292,990 300,000 1,570,317 (114,724) 109,269,211 Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. Options over ordinary shares There is no option as at 30 June 2018 (2017: nil). 11. RESERVES AND ACCUMULATED LOSSES Consolidated Note 2018 $ 2017 $ (a) Reserves Share based payment reserve (i) Foreign currency translation reserve (ii) (i) Option premium reserve Balance at the beginning of the financial year Options issued during the year Balance at the end of the financial year 2,380,395 12,802,709 15,183,104 2,380,395 10,996,708 13,377,103 2,380,395 - 2,380,395 2,380,395 - 2,380,395 46 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 11. RESERVES AND ACCUMULATED LOSSES (continued) Options There is no outstanding balance of options as at 30 June 2018. (ii) Foreign Currency Reserve Balance at the beginning of the financial year Movement for the year Balance at the end of the financial year (b) Accumulated Losses Balance at the beginning of the financial year Net losses attributable to members of Sihayo Gold Limited Transfer of losses from the Group to NCI as a result of write off of exploration and evaluation expenditure and VAT at subisidiary company level Consolidated 2018 $ 2017 $ 10,996,708 1,806,001 12,802,709 10,688,793 307,915 10,996,708 (99,144,809) (98,269,306) (2,091,472) (875,503) 9,866,912 - Balance at the end of the financial year (91,369,369) (99,144,809) 12. PARENT ENTITY DISCLOSURE NOTE FINANCIAL POSITION Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets deficiency Equity Issued capital Accumulated losses Reserves Option reserve Total equity Parent 2018 $ 2017 $ 75,816 125,012 200,828 1,994,520 - 1,994,520 (1,793,692) 610,580 122,814 733,394 804,212 - 804,212 (70,818) 109,269,211 (113,539,998) 107,220,630 (109,768,543) 2,477,095 2,477,095 (1,793,692) (70,818) 47 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 12. PARENT ENTITY DISCLOSURE NOTE (continued) FINANCIAL PERFORMANCE Loss for the year Other comprehensive income Total comprehensive Loss Parent 2018 $ 2017 $ (3,771,455) - (1,268,893) - (3,711,455) (1,268,893) The parent entity did not enter into any guarantees in relation to the debts of its subsidiaries for 2017 or 2018. The parent entity did not have any contingent liabilities for 2017 or 2018. 13. KEY MANAGEMENT PERSONNEL DISCLOSURE Names and positions held of parent entity key management personnel in office at any time during the financial year are: Key Management Personnel Misha Collins Gavin Caudle Stuart Gula Malcolm Paterson Daniel Nolan Chairman Non Executive Director Non Executive Director Managing Director & CEO Company Secretary, Chief Financial Officer & Executive Director There are no executives (other than those listed above) with authority for strategic decision and management. Compensation for Key Management Personnel Short-term employee benefits Non monetary benefit Post employment benefits Share based payments Consolidated 2018 $ 641,614 13,969 - - 2017 $ 414,753 13,346 - - 655,583 428,099 48 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 14. REMUNERATION OF AUDITORS Remuneration for audit or review of the financial reports of the parent entity or any entity in the consolidated entity Stantons International Subsidiary Auditor 15. CONTINGENT ASSETS AND LIABILITIES Consolidated 2018 $ 2017 $ 45,500 21,735 67,235 40,062 34,927 74,989 The Group’s Indonesian subsidiary, PT Sorikmas Mining has received an assessment from Indonesian Tax Authorities in July 2018 claiming an underpayment of taxes of approximately $551,523 (Indonesian Rupiah 5.8 billion) for 2013 tax year. PT Sorikmas Mining intends to submit objection and appeal against this assessment. No liability is acknowledged or accounted for in this financial report. There are no contingent assets as at 30 June 2018. 16. RELATED PARTIES Directors and directors-related entities Disclosures relating to directors and specified executives are set out in the director’s report and as detailed in Note 13. PT Green Gold Engineering, an entity associated with Mr Malcolm Paterson, as PT Sorikmas Mining’s consultant feasibility study. The transaction balances as of 30 June 2018 amounting to $1,606,893. Wholly-owned Group The wholly-owned group consists of Sihayo Gold Limited and its wholly-owned subsidiaries Inland Goldmines Pty Limited, Excelsior Resources Pty Limited, Oropa Technologies Pty Limited, Oropa Indian Resources Pty Limited and Oropa Exploration Pty Limited. Sihayo Gold Limited owns 100% of the shares in Aberfoyle Pungkut Investments Pte Ltd (“API”). API holds a 75% interest in PT Sorikmas Mining, with the Indonesian Government mining company, PT Aneka Tambang Tbk. holding the remaining 25%. Transactions between Sihayo Gold Limited and related parties in the wholly-owned group during the year ended 30 June 2018 consisted of loans on an interest free basis with no fixed term and no specific repayment arrangements. Sihayo Gold Limited reversed provision for doubtful debts of $6,854,629 due to the movement in loan balance in its accounts for the year ended 30 June 2018 (2017: $680,169) in relation to the loans made to its subsidiaries. No other amounts were included in the determination of operating loss before tax of the parent entity that resulted from transactions with related parties in the group. 49 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 16. RELATED PARTIES (continued) Other related parties Aggregate amounts receivable from related parties in the wholly owned group at balance date were as follows: Non-current receivables Provision for doubtful debts 17. EXPENDITURE COMMITMENTS Parent Entity 2018 $ 100,054,897 (100,054,897) - 2017 $ 93,200,268 (93,200,268) - Exploration commitments In order to maintain current rights of tenure to exploration tenements, the Company and consolidated entity were previously required to outlay lease rentals and to meet the minimum expenditure requirements of the Mines Departments. PT Sorikmas Mining commitments Under the Contract of Work (COW), the Company was required to spend certain minimum expenditures in respect of the contract area for the General Survey Period and Exploration Period as follows: General survey period Exploration period US$ / km2 100 1,100 As at 30 June 2018, PT Sorikmas Mining had fulfilled its expenditure commitments in respect of the General Survey Period and Exploration Period. Operating leases – rent The company currently has no operating leases as at 30 June 2018. Other commitments The Company currently has no other commitments as at 30 June 2018. Capital commitments There were no outstanding capital commitments not provided for in the financial statements of the Company as at 30 June 2018 or 30 June 2017. 50 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 17. EXPENDITURE COMMITMENTS (continued) Other commitments Parent Entity Sihayo Gold Limited Project Mt Keith Controlled Entities: Excelsior Resources Pty Limited Project Mulgabbie 18. INVESTMENTS IN CONTROLLED ENTITIES Class of shares Ordinary Ordinary Ordinary Ordinary Ordinary Ordinary Controlled entities: Inland Goldmines Pty Limited (incorporated in Australia) Excelsior Resources Pty Limited (incorporated in Australia) Oropa Technologies Pty Ltd (incorporated in Australia) Oropa Indian Resources Pty Limited (incorporated in Australia) Oropa Exploration Pty Limited (incorporated in Australia) Aberfoyle Pungkut Investments Pte Ltd(a) (incorporated in Singapore) PT Sorikmas Mining (b) (incorporated in Indonesia) Principal activities Interest 2018 Interest 2017 Mineral 2% Royalty 2% Royalty exploration Principal activities Interest 2018 Interest 2017 Mineral 2% Royalty 2% Royalty exploration Cost of Parent Entity’s investment 2018 $ 2017 $ Equity holding 2018 % 2017 % 583,942 583,942 1,062,900 1,062,900 1 1 1 1 1 1 697,537 697,537 - - 2,344,382 2,344,382 100 100 100 100 100 100 75 100 100 100 100 100 100 75 51 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 18. INVESTMENTS IN CONTROLLED ENTITIES (continued) (a) When Sihayo Gold Limited issued 9,259,259 shares as consideration for exercising the option to acquire 100% of the shares in Aberfoyle Pungkut Indonesia Pte Ltd, it was assigned the vendors receivables from Aberfoyle Pungkut Investments Pte Ltd and PT Sorikmas Mining. This reduced the cost of the investment in Aberfoyle Pungkut Investments Pte Ltd. (b) Aberfoyle Pungkut Investments Pte Ltd holds a 75% interest in PT Sorikmas Mining, with an Indonesian Government mining company PT Aneka Tambang Tbk. holding the remaining 25%. The non-controlling interest in PT Sorikmas Mining equates to 25% of the nets liabilities of PT Sorikmas Mining of US$61,109,665 being $20,795,471 as at 30 June 2018 (2017: $9,139,595). The movement during the year represents the transfer of losses from the Group to non-controlling interest as a result of write off of exploration and evaluation expenditure at subsidiary company level. 19. NOTES TO THE STATEMENT OF CASH FLOWS Consolidated 2018 $ 2017 $ Cash and cash equivalents 116,210 834,757 (a) Reconciliation of cash and cash equivalents For the purposes of the Statement of Cash Flows cash includes cash and cash equivalents on hand and at call deposits with banks, and investments in money market instruments net of outstanding bank overdrafts. It includes $26,390 held in trust. (b) Reconciliation of operating loss after income tax to net cash flow from operating activities Consolidated 2018 $ 2017 $ Operating loss after income tax (2,673,862) (1,315,522) Non-cash items Depreciation Provision for impairment of capitalised exploration and evaluation expenditure Provision for impairment VAT receivable Loss on derivative valuation Convertible note finance charge Change in operating assets and liabilities: (Increase) / decrease in trade and other receivables Increase in payables Increase / (decrease) in provisions Increase in inventory 15,480 57,736 1,865,095 (2,187,030) - - (243,417) 1,101,381 11,366 - - - (725,554) 96,935 121,385 216,902 53,023 - Net cash outflow from operating activities (2,110,987) (1,495,095) 52 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 20. EARNINGS PER SHARE (a) Basic and diluted loss per share (in cents) (b) Weighted average number of shares outstanding during the year used in the calculation of basic earnings per share Consolidated Entity 2018 2017 (0.12) (0.06) 1,777,349,540 1,533,172,344 As the Group made a loss for the year, diluted earnings per share is the same as basic earnings per share. 21. FINANCIAL INSTRUMENTS Net fair value of financial assets and liabilities The net fair value of financial assets and financial liabilities of the Group approximates their carrying value. The Group holds the following financial instruments: Financial assets Cash and cash equivalents Trade, other receivables and deposits Total financial assets Financial liabilities Trade and other payables Borrowings Other liabilities Total financial liabilities Consolidated 2018 $ 2017 $ 116,210 2,417,103 2,533,313 834,757 134,335 969,092 Consolidated 2018 $ 2017 $ 2,106,603 1,500,000 57,271 862,800 261,510 57,516 3,663,874 1,181,826 53 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 21. FINANCIAL INSTRUMENTS (continued) Credit risk The Company’s maximum exposure to credit risk at the reporting date was as detailed below: Financial assets Cash and cash equivalents Trade, other receivables and deposits Total financial assets Impairment losses Consolidated 2018 $ 2017 $ 116,210 2,417,103 2,533,313 834,757 134,335 969,092 At 30 June 2018 and 2017, no additional impairment was made in relation to VAT receivables, however there was a reversal of prior impairment provision. The Company does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered by the economic entity. Foreign currency risk management The consolidated entity and company undertake certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. Sihayo Gold Limited has opened a US Dollar Bank Account to manage exchange rate fluctuations. The carrying amount of the consolidated entity’s foreign currency denominated assets and liabilities at the reporting date in Australian Dollars is as follows: Australian Dollars Liabilities 2018 $ 1,472,675 2017 $ 351,941 Assets 2018 $ 2017 $ 2,448,100 902,551 54 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 21. FINANCIAL INSTRUMENTS (continued) The table below details financial assets and liabilities of the consolidated entity exposed to foreign currency risk. Cash and cash equivalents SGD USD IDR Trade, other receivables and deposits USD IDR Trade and other payables SGD USD IDR Consolidated 2018 $ 2017 $ 6 3,922 315,973,210 6 509,253 1,003,109,563 - 25,533,048,944 15,038 1,085,525,138 5,000 - 15,531,069,788 5,000 24,168 3,168,070,659 Sensitivity analysis The table below summarises the impact of a 10 percent weakening/strengthening of the Australian Dollar against the US Dollar, the Singaporean Dollar and Rupiah in the movement of the financial assets and liabilities listed in the previous table. Impact on post-tax profit and accumulated losses USD/AUD USD/AUD SGD/AUD SGD/AUD IDR/AUD IDR/AUD Impact on equity reserve only USD USD SGD SGD IDR IDR AUD +10% -10% +10% -10% +10% -10% AUD +10% -10% +10% -10% +10% -10% Consolidated 2018 $ 2017 $ 534 (534) (497) 497 97,506 (97, 506) 66,272 (66,272) (472) 472 (10,739) 10,739 Consolidated 2018 2017 534 (534) (497) 497 97,506 (97, 506) 66,272 (66,272) (472) 472 (10,739) 10,739 55 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 22. EVENTS OCCURRING AFTER REPORTING DATE In July and September 2018, the Company has made additional of drawdown from the existing loan facilities (Note 9). The drawdown is amounting to $650,000 from Provident Minerals and $150,000 from Asian Metal. The Company has announced the following changes of Board Directors composition: - Mr Malcolm Paterson has resigned on 31 August 2018 as Managing Director and Chief Executive Officer. - Mr Timothy Adams has appointed on 1 September 2018 as Interim Chief Executive Officer. - Mr Mark Hepburn has appointed on 1 August 2018 as Non-Executive Director. 23. SEGMENT INFORMATION Primary reporting – geographical segments The geographical segments of the consolidated entity are as follows: Revenue by geographical region Revenue attributable to the Group disclosed below, based on where the revenue is generated from: Australia Africa South East Asia India Other foreign countries Total revenue Segment result by geographical region Australia Africa South East Asia India Total expenses Segment result 2018 $ 2017 $ 492 - - - - 492 528 - - - - 528 2018 $ (353,632) (156) (2,319,989) (577) (2,674,354) 2017 $ 271,076 (717) (1,586,084) (325) (1,316,050) (2,673,862) (1,315,522) 56 | P a g e NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2018 23. SEGMENT INFORMATION (continued) Assets by geographical region Liabilities by geographical region The location of segment liabilities by geographical location of the assets is disclosed below: Australia Africa South East Asia India Total liabilities 2018 $ (1,995,842) - (2,184,871) - (4,180,713) 2017 $ (804,211) - (883,088) - (1,687,299) 57 | P a g e DIRECTORS’ DECLARATION DIRECTORS’ DECLARATION In accordance with a resolution of the directors of Sihayo Gold Limited, I state that: 1. In the opinion of the directors: (a) The financial statements, notes and the additional disclosures included in the directors’ report designated as audited, of the Company and of the consolidated entity are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2018 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards and Corporations Regulations 2001; and (b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. (c) The financial report also complies with International Financial Reporting Standards as disclosed in Note 1. 2. This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2018. On behalf of the Board Misha Anthony Collins Chairman 30 September 2018 58 | P a g e Stantons International Audit and Consulting Pty Ltd trading as Chartered Accountants and Consultants PO Box 1908 West Perth WA 6872 Australia Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 84 144 581 519 www.stantons.com.au INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SIHAYO GOLD LIMITED Report on the Audit of the Financial Report Qualified Opinion We have audited the financial report of Sihayo Gold 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 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 statements, including a summary of significant accounting policies, and the directors' declaration. In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section of our report, 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 then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Qualified Opinion As disclosed in note 15, Group’s Indonesian subsidiary, PT Sorikmas Mining has received an assessment from the Indonesian tax authorities in July 2018 claiming underpayment of taxes of approximately $551,523 (Indonesian Rupiah 5.8 billion) for 2013 tax year. PT Sorikmas Mining intends to submit objection and appeal against this assessment. No liability is acknowledged or accounted for in this financial report. The Group has not accrued any liability on the basis that PT Sorikmas Mining will lodge an appeal against this assessment. We were unable to obtain sufficient appropriate audit evidence about the tax assessment to enable us to form an opinion as to the completeness and accuracy of the assessment and the probability of PT Sorikmas Mining being successful in their appeal. Consequently, we were unable to determine whether any Liability should have been accrued at the reporting date and the adequacy of the disclosure as contingent liability made in the Consolidated Financial Report. 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 auditor independence requirements of 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Emphasis of Matter - Material Uncertainty Relating to Going Concern Attention is drawn to the following matter. As referred to in Note 1(a) to the financial statements, the consolidated financial statements have been prepared on the going concern basis. At 30 June 2018, the Group had cash and cash equivalents of $116,210, net working capital deficiency of $3,289,968 and incurred a loss after income tax of $2,673,862. The ability of the Group to continue as a going concern and meet its planned exploration, administration and other commitments is dependent upon the Group raising further working capital and/or successfully exploiting its mineral assets. In the event that the Group is not successful in raising further equity or successfully Liability limited by a scheme approved under Professional Standards Legislation exploiting its mineral assets, the Group may not be able to meet its liabilities as and when they fall due and the realisable value of the Group’s current and non-current assets may be significantly less than book values. Key Audit Matters In addition to the matter described in the material uncertainty related to going concern, we have determined the matter described below to be a key audit matter to be communicated in the report. 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. Key Audit Matters How the matter was addressed in the audit Carrying Value of Mineral Exploration and Evaluation Expenditure As at 30 June 2018, Mineral Exploration and Evaluation Expenditure totals $13,609,555 (refer to Note 6 of the financial report). The carrying value of Mineral Exploration and Evaluation Expenditure is a key audit matter due to:    The significance of the total balance (83% of total assets); to assess management’s The necessity the requirements of the application of accounting standard Exploration for and Evaluation of Mineral Resources (“AASB 6”), in light of any indicators of impairment that may be present; and The assessment of significant judgements made by management in relation to the capitalised evaluation expenditure. exploration and Inter alia, our audit procedures following: included the i. Assessing the Group’s right to tenure over exploration assets by corroborating the ownership of the relevant licences for mineral resources registries and relevant third-party documentation; to government ii. Reviewing the directors’ assessment of the carrying value of the exploration and evaluation costs, ensuring the data the veracity of that management have presented and considered the effect of potential impairment indicators, commodity prices and the stage of the Group’s projects against AASB 6; iii. Evaluation of Group documents for consistency with the intentions for continuing exploration and evaluation activities particularly in relation to the Pungkut Project and corroborated with interviews with management. The documents we evaluated included:  Minutes of the board and management;  Announcements made by the Group to the Australian Securities Exchange; and  Net Present Value (NPV) Model for the Pungkut Project iv. We reviewed the NPV Model and conducted a sensitivity analysis to analyse the effects of changes in key variables on the projects viability and carrying value. v. Consideration of of the accounting standard AASB 6 and reviewed the financial statements to ensure appropriate disclosures are made. requirements Other Information The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2018, but does not include the financial report and our auditor's report thereon. Our opinion on the financial report does not cover the other information and accordingly 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. As part of an audit in accordance with Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. We evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in Internal control that we identify during our audit. The Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements. We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the consolidated financial report of the current period and are therefore key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 16 to 19 of the directors’ report for the year ended 30 June 2018. In our opinion, the Remuneration Report of Sihayo Gold 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. STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International) (An Authorised Audit Company) Samir Tirodkar Director West Perth, Western Australia 30 September 2018 ADDITIONAL SHAREHOLDER INFORMATION The following additional information dated 31 August 2018 is provided in compliance with the requirements of the Australian Securities Exchange Limited. 1. (a) (b) (c) 2. DISTRIBUTION OF LISTED ORDINARY SHARES AND OPTIONS Analysis of numbers of shareholders by size of holding. Distribution 1-1000 1,001-5,000 5,001-10,000 10,001-100,000 100,001 and above Total No. of shareholders Units % off issued Capital 117 74 42 232 233 698 29,122 187,449 325,747 11,122,163 1,842,598,045 1,854,262,526 0.00% 0.01% 0.02% 0.60% 99.37% 100.00% There were 189 shareholders holding less than a marketable parcel. The percentage of the total of the twenty largest holders of ordinary shares was 88.61%. TWENTY LARGEST SHAREHOLDERS AND OPTION HOLDERS Names No. of shares % PROVIDENT MINERALS PTE LTD HSBC CUSTODY NOM AUST LTD PT SARATOGA INVESTAMA GOLDSTAR MINING ASIA LION SELECTION GRP LTD ASIAN METALS MINING DVLMT CITICORP NOM PL GOLDSTAR ASIA MINING NATIONAL NOM LTD DBS VICKERS SEC SINGAPORE FATS PL YAW CHEE SIEW PT SARATOGA INVESTAMA JP MORGAN NOM AUST LTD LEONG CAROLINE BUTLER DAVID ROBERT PETTERSSON BRADLEY JOHN PT TEKNOLOGI RISET GLOBAL BJARNASON JON N + RE DEVINE LUKE DAVID Total 518,665,951 320,105,036 218,722,017 117,991,074 76,738,654 41,428,571 41,304,594 41,030,239 38,954,792 33,310,161 31,712,787 31,515,151 28,420,378 19,783,649 18,000,000 15,642,150 15,425,000 14,545,455 12,000,000 8,023,907 1,643,319,566 27.97% 17.26% 11.80% 6.36% 4.14% 2.23% 2.23% 2.21% 2.10% 1.80% 1.71% 1.70% 1.53% 1.07% 0.97% 0.84% 0.83% 0.78% 0.65% 0.43% 88.61% 63 | P a g e ADDITIONAL SHAREHOLDER INFORMATION 3. SUBSTANTIAL SHAREHOLDERS An extract from the Company’s register of substantial shareholders is set out below: Ordinary Shares Held Name PROVIDENT MINERALS PTE LTD HSBC CUSTODY NOM AUST LTD PT SARATOGA INVESTAMA GOLDSTAR MINING ASIA 4. VOTING RIGHTS Number Percentage 518,665,951 320,105,036 218,722,017 117,991,074 27.97% 17.26% 11.80% 6.36% The Company's share capital is of one class with the following voting rights: (a) Ordinary Shares On a show of hands every shareholder present in person or by proxy shall have one vote and upon a poll each share shall have one vote. (b) Options The Company's options have no voting rights. 5. RESTRICTED SECURITIES There are no ordinary shares on issue that have been classified by the Australian Securities Exchange Limited, Perth as restricted securities. 6. SECURITIES EXCHANGE LISTING Sihayo Gold Limited shares are listed on the Australian Securities Exchange Limited. The home exchange is the Australian Securities Exchange (Perth) Limited. 64 | P a g e SUMMARY OF TENEMENTS HELD BY THE GROUP FOR THE YEAR ENDED 30 JUNE 2018 Project Name Tenement Date Approval Date Expiry Area Equity % OROPA INDIAN RESOURCES INDIA Block D-7 PT SORIKMAS MINING INDONESIA Pungkut 96PK0042 SIHAYO GOLD LIMITED WESTERN AUSTRALIA Mt. Keith M53/490 M53/491 22.01.00 N/A 4,600km2 31.05.96 N/A 66,200ha 11.06.04 11.06.04 10.06.25 10.06.25 582ha 621ha EXCELSIOR RESOURCES PTY LTD Mulgabbie PL28/1078 PL28/1079 PL28/1080 PL28/1081 PL28/1082 ML28/364 22.09.08 22.09.08 22.09.08 22.09.08 22.09.08 25.03.09 21.09.12 21.09.12 21.09.12 21.09.12 21.09.12 Gullewa M59/394 NOTES (1) (2) Option to increase interest to 18% 2% net smelter royalty 24.03.30 54.3ha 98.0ha 143.7ha 140.7ha 191.4ha 120.0ha 200.0 9(1) 75 0(2) 0(2) 0(2) 0(2) 0(2) 0(2) 0(2) 0(2) 0 (3) 65 | P a g e 

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