Sunshine Gold Limited
Annual Report 2016

Plain-text annual report

PELICAN RESOURCES LIMITED A.B.N. 12 063 388 821 ANNUAL FINANCIAL REPORT 30 JUNE 2016 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES CORPORATE DIRECTORY BOARD OF DIRECTORS Antonio Torresan (Executive Director) Colin Chenu (Non-Executive Director) Alec Pismiris (Non-Executive Director) COMPANY SECRETARY Alec Pismiris CONTENTS Directors’ Report PAGE 1 Statement of Profit or Loss and Other Comprehensive Income 17 Statement of Financial Position 18 Statement of Changes in Equity 19 20 21 55 56 58 59 62 REGISTERED OFFICE AND PRINCIPAL BUSINESS OFFICE Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Auditor’s Independence Declaration ASX Additional Information Corporate Governance Statement Level 9 190 St Georges Terrace Perth, Western Australia, 6000 Postal Address: P.O. Box Z5108, St Georges Terrace Perth, Western Australia, 6831 Telephone: (+61 8) 6141 6304 (+61 8) 9226 1370 Facsimile: SHARE REGISTRY Automic Registry Services Level 1 7 Ventnor Avenue West Perth, Western Australia, 6005 Investor Enquiries: (+61 8) 9324 2099 AUDITOR Stantons International Level 2 1 Walker Avenue West Perth, Western Australia, 6005 Telephone: (+61 8) 9481 3188 (+61 8) 9321 1204 Facsimile: STOCK EXCHANGE LISTING ASX Limited (Australian Securities Exchange) ASX Codes: PEL, PELOA 0 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT The directors present their report together with the financial statements of the Consolidated Entity consisting of Pelican Resources Limited (“Pelican” or “the Company”) and its controlled entities for the financial year ended 30 June 2016 (“Balance Date”) and the auditor’s report thereon. DIRECTORS The names and details of the Company’s directors in office during the financial year and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated. Colin Chenu Antonio Torresan Alec Pismiris PARTICULARS OF DIRECTORS Colin Edward Chenu, B. Juris, LLB Non-Executive Director Appointed 29 June 2015 Mr Chenu is a graduate of the University of Western Australia, with a Bachelor of Laws, and is admitted to practice in the Supreme Court of Western Australia and the High Court of Australia. He has practiced law in Western Australia for 29 years, as both a barrister and solicitor, in a wide range of commercial, litigious and non litigious work. Mr Chenu has gained extensive experience in the law of corporations, trade practices, contracts, equity and trusts and tort. He is a director and principal at Bennett + Co. Other current directorships: None Former directorships (last 3 years): Mount Magnet South Limited Antonio Alessio Torresan Executive Director Appointed 24 March 2015 Mr Torresan is a businessman with significant experience in capital markets. Mr Torresan has been actively involved in arranging capital raisings for ASX listed companies as well as unlisted public companies, providing investor relation services and assisting boards with development of strategic plans. Mr Torresan has held numerous executive positions where his responsibilities have included strategy, operational management and business development. Other current directorships: None Former directorships (last 3 years): None 1 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) PARTICULARS OF DIRECTORS (CONTINUED) Alec Pismiris, B.Comm, MAICD, IGIA Non-Executive Director Appointed 24 March 2015 Mr Pismiris is currently a Director – Corporate Finance with Somers and Partners Pty Ltd, a company which provides corporate finance services. Since 1990, Mr Pismiris has served as a director and company secretary for various ASX listed companies as well as a number of unlisted public and private companies. Mr Pismiris completed a Bachelor of Commerce degree at the University of Western Australia, is a member of the Australian Institute of Company Directors and an associate of The Governance Institute of Australia. Mr Pismiris has over 30 years’ experience in the securities, finance and mining industries and has participated numerous times in the processes by which boards have assessed the acquisition and financing of a diverse range of assets and has participated in and become familiar with the range of evaluation criteria used and the due diligence processes commonly adopted in the commercial assessment of corporate opportunities. Other current directorships: Agrimin Limited, Aguia Resources Limited, HotCopper Holdings Limited and Mount Magnet South Limited Former directorships (last 3 years): Cardinal Resources Limited and Papillon Resources Limited COMPANY SECRETARY Alec Pismiris, B.Comm, MAICD, IGIA Appointed 29 June 2015 Mr Pismiris has over 30 years’ experience in the securities, finance and mining industries and has held a number of company secretary positions secretary for various ASX listed companies as well as a number of unlisted public and private companies over the years. 2 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) DIRECTORS’ MEETINGS The following table sets out the number of meetings of the Company’s directors, including directors’ resolutions, held during the year ended 30 June 2016 by each director: Antonio Torresan Colin Chenu Alec Pismiris PRINCIPAL ACTIVITIES Number Eligible to Attend 3 3 3 Number Attended 3 3 3 The principal activities of the Consolidated Entity during the course of the financial year were the evaluation of its existing exploration projects and the continued search for new opportunities in the resources sector which could demonstrate capacity to add long term shareholder value. OPERATING AND FINANCIAL REVIEW The Company made a loss after tax of $430,562 for the year ended 30 June 2016 (2015: $1,431,510). REPUBLIC OF THE PHILIPPINES SALE OF SIBUYAN NICKEL PROPERTIES DEVELOPMENT CORPORATION On 25 June 2015, the Company announced that it had concluded negotiations for the sale of Sibuyan Nickel Properties Development Corporation (“SNPDC”), the beneficial owner of the Romblon Project located on Sibuyan Island in the Romblon Province in the Philippines and entered into a Memorandum of Understanding (“MOU”) with Dynamo Atlantic Limited, a BVI registered company (“Dynamo”). Under the terms of the MOU, Dynamo agreed to purchase SNPDC for a purchase price of $A4.70 million (“Consideration”) payable in cash as follows: - an initial payment of $A470,000 as a non-refundable deposit which was received by the Company on signing of the MOU; a second payment of $A940,000 was received by the Company on Dynamo completing technical, legal and financial due diligence investigations; and on completion of sale and transfer of 100% ownership of SNPDC, a final payment of $A3,290,000. - - Dynamo further agreed to grant a 2.5% royalty on net income generated by SNPDC from any operations undertaken on Sibuyan Island. The Company required the support of its venture partner, Acacia Resources Inc. (“AAR”) for sale of SNPDC. During the period Pelican made a number of proposals in an attempt to secure AAR’s support for sale of SNPDC, which were largely unsuccessful. Subsequent to year end, Pelican announced that it had secured AAR’s support for the sale which allowed the parties to proceed towards completion. The sale of Pelican’s interest in SNPDC constitutes a disposal of main undertaking pursuant to the Listing Rule 11.2, therefore the Company will seek shareholder approval for the disposal at the Company’s Annual General Meeting to be held in November 2016. Shareholder approval for the sale of Pelican’s interest in SNPDC will satisfy the final condition under the MOU. 3 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) OPERATING AND FINANCIAL REVIEW (CONTINUED) Dynamo subsequently responded indicating that it did not wish to proceed with the purchase of SNPDC, and requested a full refund the purchase price paid to date under the MOU. The Company has advised Dynamo that is considers that the Agreement remains on foot and requires Dynamo to complete the Agreement by payment of the balance of the purchase price at settlement of the sale. The sale of Pelican’s interest in SNPDC constitutes a disposal of main undertaking pursuant to the Listing Rule 11.2, therefore the Company will be required to seek shareholder approval for the disposal. On execution of a formal sale agreement for the transfer Pelican’s interest in SNPDC, Pelican will commence preparing notice of meeting materials seeking shareholder approval for the disposal. ROMBLON PROJECT, SIBUYAN ISLAND, ROMBLON PROVINCE (MPSA No. 3042009-IVB) Interest: MPSA 3042009-IVB The Romblon Project, on Sibuyan Island in the Romblon Province in the Philippines, is being evaluated as a source of direct shipping lateritic nickel ore (DSO). The nickel resource explored by two Japanese nickel companies in 1972 is covered by a Mineral Production Sharing Agreement (MPSA). The project is still in the process of being evaluated and also transferred from Altai Resources Philippines Inc. (Altai), the original applicant of the MPSA, to SNPDC. Further exploration is required to fully evaluate the laterite nickel resource but the project is currently on care and maintenance due to a Cease and Desist Order (CDO) issued in September 2011 by the Mines and Geosciences Bureau (MGB) of the Department of Environment and Natural Resources (DENR). Counsel for SNPDC is pursuing all legal avenues with respect to the appeal to the MGB and DENR to lift the CDO. 4 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) OPERATING AND FINANCIAL REVIEW (CONTINUED) The MGB and DENR are currently focused on reviewing a map issued during the June quarter by the Mineral Industry Coordinating Council (MICC) that specifies Go and No-Go Zones for mining throughout the Philippines. The map is a draft proposal that does not take into consideration approved Exploration Permits, MPSA’s and existing mining operations. Approvals for new mining projects are expected to be deferred until the Go and No-Go Zones are finalised along with implementation rules and regulations. Counsel for SNPDC has advised that approved MPSA’s should be included in Go Zones. Additional issues such as revised mining tax regulations, Minahang Bayan Zones (Small Scale Mining) and domestic processing of DSO are currently being reviewed by various Government departments. New mining exploration projects are expected to be delayed until all issues are resolved by the current Administration. Projects with an approved MPSA or Foreign Technical Assistance Agreement (FTAA) can proceed with approvals to develop mining and plant operations. A new laterite nickel project in the Province of Agusan del Norte was commissioned in 2014 and existing mining operations have been allowed to apply for expansions of their MPSA’s and Environmental Compliance Certificates (ECC’s). The Company held discussions with several local companies currently involved in nickel laterite mining in an effort to identify a potential joint venture partner for the Romblon Project,. The Company believed that involvement of an active local mining company in the project could potentially assist in the permitting process and Local Government Unit (LGU) support for the project. An interested party which had previously conducted a site visit to the Romblon Project, submitted a revised draft joint venture term sheet during the quarter. Another party which had previously submitted a draft proposal for a 90-day due diligence period with exclusive rights to negotiate an agreement, also submitted a revised draft proposal during the quarter. These proposals were reviewed and compared to the Dynamo proposal to acquire SNPDC, and the directors concluded the Dynamo proposal was superior. Interest in laterite nickel resources in the Philippines has increased since Indonesia banned the export of DSO on 12 January 2014. The FOB price of laterite nickel DSO rose to a 6 year high during the first half of 2014. Prices declined during the June quarter as demand for nickel products in China decreased and some DSO is being replaced by other nickel products such as FeNi, nickel concentrates and nickel metal. It is expected that DSO prices will decrease or be relatively flat in the next two quarters as exports from the Philippines will increase due to improved weather and sea conditions in the mining areas of Mindanao and Dinagat Islands. An internal study into nickel laterite processing through the use of direct reduction technology is ongoing along with discussions with local companies with processing experience. A new bill has been submitted to the Senate that proposes a ban on DSO similar to the Indonesian legislation. It is expected that there will be an implementation period of about 5 years if the bill is approved. During 2014, the MICC approved a Minahang Bayan Zone in Eastern Leyte and Samar for Black (Iron) Sand Mining but the product must be processed domestically. It is anticipated that all new Minahang Bayan Zones will be subject to the same regulations. The MGB and DENR are preparing implementation rules and regulations for Minahang Bayan. Currently on gold, silver and chromite are allowed to be mined in Minahang Bayan Zones but the Government intends to include iron sand in the revised regulations. As previously reported all project development field work continued on hold to minimise expenses in the Philippines. 5 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) OPERATING AND FINANCIAL REVIEW (CONTINUED) MABUHAY PROJECT, SURIGAO DEL NORTE PROVINCE, MINDANAO ISLAND (MPSA APPLICATION No. 000029-X) Operator: Wallaby Corporation a subsidiary of Rugby Mining Limited The old Mabuhay gold mine, on Surigao del Norte Province, Mindanao Island, Philippines, has the potential to host an underlying copper-gold porphyry system. In 2011, the Company’s Philippine associate, Sunpacific Resources Inc. (Sunpacific), entered into an agreement with Rugby Mining Limited (Rugby) a Canadian-listed company, to assign all its rights, title and interest under the Memorandum of Agreement (MOA) between All-Acacia Resources Inc. and Sunpacific. The assignment grants to Rugby the right to enter into an option to explore the project area at Mabuhay over a period of seven years. In consideration for the assignment, Rugby will pay to the Company $500,000 over a period of four years as Rugby progresses through the exploration phase. The first payment is due 12 months from the end of the Due Diligence period provided the MPSA is granted. In addition, Rugby will pay to the Company $5 million on commencement of commercial production. Commercial production is defined as being 45 days after mineral products have been shipped from the property. The Company is monitoring progress on the exploration of the project area and particularly on the granting of permits. During the period under review, Pelican reached agreement for the sale of its’ interest in the Mabuhay Project to Rugby. UNITED STATES OF AMERICA SAN MARCOS GOLD PROJECT, ARIZONA USA During the reporting period and in accordance with the terms of the farm-in and joint venture agreement (“JV Agreement”) on the San Marcos Gold Project, Pelican on behalf of its wholly owned subsidiary Dore 5 Resources confirmed its withdrawal from the JV Agreement with AusROC Metals Limited. Pelican as a consequence of its withdrawal from the JV Agreement, relinquished all rights in connection with the San Marcos Gold Project. During the reporting period Pelican dissolved Dore 5 Resources Inc. WESTERN AUSTRALIA KIMBERLEYS COCKATOO ISLAND PROJECT (M04/235) Interest: Operator: 100% Pluton Resources Limited 6 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) OPERATING AND FINANCIAL REVIEW (CONTINUED) The Company announced to the market in September 2012, that it had entered into an agreement with Cliffs Asia Pacific Iron Ore Pty Ltd (Cliffs) and Pluton Resources Limited (Receivers and Managers appointed) (Pluton) on the rights on Cockatoo Island. Cockatoo Island project was purchased from Cliffs Asia Pacific Iron Ore Pty Ltd by Pluton Resources Limited and its unincorporated joint venture partner Wise Energy during September with the asset handover date effective on 1 October 2012. Pluton Resources will be the operator and maintain management control. Their initial open-cut mine plan forecast monthly shipments commenced November 2012. Pelican renegotiated royalty arrangements for direct shipping iron ore derived from open cut mining on the Island are based on $1 per tonne or 1% – 1.5% of the FOB sales price of ore shipped (depending on the prevailing FOB sales price) whichever is the greater. Pluton will only be relieved of its obligation to pay the minimum royalty if mining operations on Cockatoo Island permanently cease following complete exploitation of the ore resources on the island. Payment of the royalty may also be deferred in the event if mining operations on Cockatoo Island are suspended due to force majeure events. On 5 October 2015 Sam Marsden and Derrick Vickers of PricewaterhouseCoopers (“PWC”) were appointed as Voluntary Administrators of Pluton Resources Limited (“Pluton”) following the resignation of Vincent Smith and Samuel Freeman of EY. Bryan Hughes and Daniel Bredenkamp of Pitcher Partners continued to act as Receivers and Managers of Pluton. Throughout the quarter the assets and undertakings of Pluton remained subject to the Receivers’ appointment and all operations of Pluton were under the control of the Receivers. A second meeting of creditors of Pluton was held on 9 December 2015 at which creditors voted in favour of the proposal for the Deed of Company Arrangement (DOCA) proposal from World System Capital Investment Limited (BVI) (“WSCI”), a related entity of General Nice Recursos Comercial Offshore De Macau Limitada. On 6 January 2016 PWC announced that Pluton and WSCI executed the DOCA on 4 January 2016. On execution of the DOCA, Sam Marsden and Derrick Vickers retired as Joint and Several Voluntary Administrators of Pluton and were appointed Joint and Several Deed Administrators. WSCI notified the Deed Administrators that it was unable to comply with the terms of the DOCA by 31 March 2016 (the original end date specified in the DOCA) and requested a meeting of creditors be convened on 8 April 2016 to consider a variation to the terms of the DOCA. The meeting of creditors was further postponed to 9 May 2016 to allow WSCI sufficient time to confirm funding arrangements to meet its obligations under the DOCA. At the meeting of creditors, the Deed Administrators confirmed that $3.5 million had been received from WSCI which was subsequently applied to priority creditors and to the KordaMentha receivership creditors. The Company received $252,994 representing full settlement of outstanding royalty payments incurred during the period that KordaMentha was acting as Receiver and Manager of Pluton. On receipt of the payment from KordaMentha, Pelican withdrew the Writ of Summons with Endorsement of Claim that was lodged with the Supreme Court of Western Australia. The total of all outstanding royalty payments is $910,153. 7 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) OPERATING AND FINANCIAL REVIEW (CONTINUED) RELINQUISHMENTS The Company withdrew from the farm-in and joint venture agreement on the San Marcos Gold Project and the Mabuhay Project. Competent Person’s Statement The information in this Report that relates to Mineral Resources is based on, and accurately reflects, the information compiled by Dr John Hills a consultant to Pelican Resources Limited. Dr Hills is a member of the Australasian Institute of Mining and Metallurgy, respectively. Dr Hills has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activities which they are undertaking to qualify as a Competent Person as defined in the 2004 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Hills consents to the inclusion in this report of the matters based on the information in the form and context in which it appears. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS During the year, the Company undertook the following capital transactions: - On 12 August 2015 the Company issued 50,000,000 unlisted options exercisable at $0.01 expiring 30 June 2019 under the terms of an underwriting agreement entered into and disclosed in the prior financial year. - On 16 September 2015 the Company announced a share sale facility for holders of less than a marketable parcel of the Company’s shares. A Less Than Marketable Parcel of Pelican shares will be any registered shareholding of 62,500 shares or less on 16 September 2015. The Facility closed on 28 October 2015 with a total of 7,883,233 shares purchased for a consideration of $63,065.68. Shareholders that did not elect to retain their shares were paid their sale proceeds by direct credit or cheque. - At a general meeting held on 12 November 2015 approval was obtained for the issue of 20,000,000 options exercisable at $0.02 expiring 31 December 2019 to directors and 14,500,000 options exercisable at $0.02 expiring 31 December 2019 to advisors vesting on the successful completion of a transaction. During the reporting period, the Company continued a review of its existing projects with an objective of rationalising those projects located in offshore jurisdictions. The Company achieved its goal of rationalising existing projects as follows: - The relinquishment and withdrawal from the Company’s interest in the San Marcos Gold Project. - The dissolution of Dore 5 Resources Inc. - The sale of the Company’s interest in the Mabuhay Project to Rugby Mining Limited. - Continued efforts to complete the conditions precedent in the Memorandum of Understanding for the sale of 100% ownership of Sibuyan Nickel Properties Development Corporation (“SNPDC”), the beneficial owner of the Romblon Project located on Sibuyan Island in the Romblon Province in the Philippines for a price of $A4.70 million. Pelican continued to search for new opportunities in the resources sector which could demonstrate capacity to add long term shareholder value. The directors believe that existing cash reserves combined with funds received from the sale of its interest in Sibuyan Nickel Properties Development Corporation leave the Company well positioned to fund new opportunities in the resources sector. 8 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) DIVIDENDS No dividends were paid or recommended for the year ended 30 June 2016. EVENTS SUBSEQUENT TO REPORTING DATE On 20 July 2016 an application to terminate or set aside the Pluton DOCA proposal from WSCI filed by Ziziphus Pty Ltd and Celtic Capital Pty Ltd was heard in the Supreme Court of Western Australia. The following day and pursuant to an Order of the Supreme Court of Western Australia on 21 July 2016 the DOCA was terminated. At a subsequent hearing on 3 August 2016 Sam Marsden and Derrick Vickers of PWC were appointed by the Court as Joint and Several Official Liquidators of the Company. In September 2016, the receivers, Pitcher Partners, put Pluton’s share of the Cockatoo Island project up for sale. On 17 August 2016, the Company announced that it has received notification from All Acacia Resources Inc (“AARI”) that it is prepared to support the sale of SNPDC. Dynamo had previously completed due diligence enquiries and advanced payments totaling $A1.41 million in accordance with the terms of the MOU. On securing AARI’s support for the sale of SNPDC, the Company considers that the MOU is unconditional and the parties can proceed towards completion. On 7 September 2016 the Company announced that Dynamo had indicated that it did not wish to proceed with the purchase of SNPDC, and requested a full refund the purchase price paid to date under the MOU. The Company has advised Dynamo that it considers the Agreement, and the parties’ respective obligations under it, remain on foot, and that it requires Dynamo to complete the Agreement by payment of the balance of the purchase price at settlement of the sale. SHARE OPTIONS The Company has the following securities on issue as at the date of the Directors’ Report. Security Description Fully paid shares Options exercisable at $0.02 expiring 30 June 2017 Options exercisable at $0.01 expiring 30 June 2019 Options exercisable at $0.02 expiring 31 December 2019 Number of Securities 361,923,540 59,725,571 50,000,000 35,000,000 Unissued shares As at the date of this report, there were 144,725,571 unissued ordinary shares under options (30 June 2015: 109,725,571). Option holders do not have any right, by virtue of the options, to participate in any share issue of the Company or any related body corporate. Shares issued as a result of the exercise of options During the financial year there were no ordinary shares issued as a result of the exercise of options (2015: 8,040). 9 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) As at the date of this report there has been no ordinary shares issued since the Balance Date on the exercise of options. LIKELY DEVELOPMENTS AND EXPECTED RESULTS The Group will continue to focus on maximising value from the current portfolio of mining projects and will continue its search for further opportunities. Given that the nature of the Group’s activities is exploration focused, no further information can be provided as to likely developments as such developments will depend on exploration success at the Group’s various project interests, and the nature of any new acquisitions going forward. 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. DIRECTORS’ INTERESTS IN SHARES AND OPTIONS OF THE COMPANY At the date of this report, the directors’ interests in shares and options of Pelican Resources Limited were: Number of Ordinary Number of Options Shares over Ordinary Shares Antonio Torresan Colin Chenu Alec Pismiris 59,193,981 Nil 12,000,000 38,143,563 2,000,000 13,500,000 CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behavior and accountability, the directors of Pelican Resources Limited support and have substantially adhered to the best practice recommendations set by the ASX Corporate Governance Council. The Company’s corporate governance statement is contained in the annual report. INDEMNIFICATION AND INSURANCE OF DIRECTORS The Company has, during or since the financial year, in respect of any person who is or has been an officer of the Company or a related body corporate: - - indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal proceedings; or paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as an officer for the costs or expenses to defend legal proceedings. 10 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) Insurance of Officers Since the end of the previous financial year, the Company has paid insurance premiums in respect of directors and officers liability and corporate reimbursement, for directors and officers of the Company. The insurance premiums relate to: - - any loss for which the directors and officers may not be legally indemnified by the Company arising out of any claim, by reason of any wrongful act committed by them in their capacity as a director or officer, first made against them jointly or severally during the period of insurance; and indemnifying the Company against any payment which it has made and was legally permitted to make arising out of any claim, by reason of any wrongful act, committed by any director or officer in their capacity as a director or officer, first made against the director or officer during the period of insurance. The insurance policy outlined above does not allocate the premium paid to each individual officer of the Company and does not allow disclosure of the premium. AUDITOR’S INDEPENDENCE DECLARATION A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act 2001 is set out on page 58. NON-AUDIT SERVICES Stantons International has not provided any non-audit services to the entity as shown at Note 17. 11 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) This report outlines the remuneration arrangements in place for directors and executives of the Company. Remuneration policy The remuneration policy of Pelican Resources Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the Consolidated Entity’s ability to attract and retain the best executives and directors to run and manage the Consolidated Entity. The Board’s policy for determining the nature and amount of remuneration for board members and senior executives of the Consolidated Entity is as follows: The remuneration policy setting out the terms and conditions for the executive directors and other senior executives was developed by the Board. Executive remuneration and other terms of employment are reviewed annually by the Board having regard to performance against goals set at the start of the year, relevant comparative information and independent expert advice. As well as a base salary, remuneration packages include superannuation, retirement and termination entitlements, performance-related bonuses and fringe benefits. Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the Company’s diverse operations. Remuneration and other terms of employment for the executive director and certain other senior executives have been formalised in service agreements as follows: The Company has entered into an executive service agreement with executive director, Mr Antonio Torresan. The terms of the service agreement are set out as follows: - Commencement date: 24 March 2015 - Term: one year with a one year extension at the sole discretion of the Board - Fixed remuneration: $120,000 per annum - Termination for cause: no notice period - Termination without cause: three month notice period The Company has entered into an agreement with non-executive director, Mr Alec Pismiris. The terms of the agreement are set out as follows: - Commencement date: 24 March 2015 - Term: no fixed - Fixed remuneration: $36,000 per annum - Termination for cause: no notice period - Termination without cause: no notice period 12 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) Remuneration policy (continued) The Company has entered into an agreement with non-executive director, Mr Colin Chenu. The terms of the agreement are set out as follows: - Commencement date: 29 June 2015 - Term: no fixed - Fixed remuneration: $36,000 per annum - Termination for cause: no notice period - Termination without cause: no notice period Remuneration of non-executive directors is determined by the Board within the maximum amount approved by the shareholders from time to time and which currently stands at $250,000 per annum. The Board undertakes an annual review of its performance against goals set at the start of the year. The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth. All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Performance-based remuneration The Company currently has no performance-based remuneration component built into director and executive remuneration packages. 13 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) Key management personnel compensation Details of the nature and amount of emolument paid for each director and executive of Pelican Resources Limited are set out below: Primary Benefits Cash Bonus Monetary Non- Salary & Fees Post Employment Super- annuation Retirement Benefits Share Based Payments Shares/Options Other Benefits TOTAL $ Directors A Torresan - Executive Director 1 2016 2015 120,000 32,500 - - C Chenu - Non-Executive Director 2 2016 2015 36,000 - - - A Pismiris - Non-Executive Director 1 72,0007 9,750 2016 2015 - - M Bue - Executive Director 3 2015 150,000 J Palermo - Non-Executive Director 4 98,750 2015 - - J Hills - Non-Executive Director 5 2015 25,000 Total Remuneration: 228,000 316,000 2016 2015 - - - - - - - - - - - - - - - - - - - - 14,250 1,781 2,375 - 18,406 - - - - - - - - - - - Notes: (1) Appointed 24 March 2015 (2) Appointed 29 June 2015 (3) Resigned 25 March 2015 (4) Deceased 15 March 2015 85,531 - 16,292 - 61,093 - - - - - - - - - - - 205,531 32,500 52,292 - 133,093 9,750 164,250 37,500(6) 138,031 - 27,375 162,916 - - 37,500 390,916 371,906 (5) Resigned 29 June 2015 (6) Termination benefit (7) Includes $36,000 paid as fees for company secretarial services Other related party transactions of key management personnel are disclosed in Note 16. Remuneration Options During the year ended 30 June 2016, 20,000,000 options were issued as part of director remuneration (30 June 2015: Nil). Details relating to remuneration options are as follows: Fair value at measurement date (cents) Dividend yield (%) Expected volatility (%) Risk free rate (%) Expected life of option Share price (cents) Exercise price (cents) Model used 0.8 Nil 100 2.25 4 1.3 2 Black-scholes During the year ended 30 June 2016, no remuneration options were forfeited, expired or exercised by the directors. 14 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) REMUNERATION REPORT (AUDITED) (CONTINUED) Shareholdings by Directors 2016 Balance 01/07/15 (No. of Shares) Received Remuneration (No. of Shares) No. of Options Exercised Net Other Change (No. of Shares) Balance 30/06/16 (No. of Shares) A Torresan C Chenu A Pismiris Total 2015 A Torresan 1 C Chenu 2 A Pismiris 1 M Bue 3 J Palermo 4 J Hills 5 Total 59,193,981 - 12,000,000 71,193,981 - - - - - - - - - - - - 59,193,981 - 12,000,000 71,193,981 Balance 01/07/14 (No. of Shares) Received Remuneration (No. of Shares) No. of Options Exercised Net Other Change (No. of Shares) Balance 30/06/15 (No. of Shares) - - - - 20,822,928 11,811,292 32,634,220 - - - - - - - - - - - - - - 59,193,981 - 12,000,000 - (20,822,928) (11,811,292) 38,559,761 59,193,981 - 12,000,000 - - - 71,193,981 Notes: (1) Appointed 24 March 2015 (2) Appointed 29 June 2015 Options Holdings by Directors (3) Resigned 25 March 2015 (4) Deceased 15 March 2015 (5) Resigned 29 June 2015 2016 A Torresan C Chenu A Pismiris Total 2015 A Torresan 1 C Chenu 2 A Pismiris 1 M Bue 3 J Palermo 4 J Hills 5 Total Balance 01/07/15 (No. Options) Granted as Remuneration (No. Options) No. of Options Acquired No. of Options Exercised Net Change Other (No. Options) Balance 30/06/16 (No. Options) 9,407,667 - - 9,407,667 10,500,000 2,000,000 7,500,000 20,000,000 18,235,896 - 6,000,000 24,235,896 - - - - - - - - 38,143,563 2,000,000 13,500,000 53,643,563 Balance 01/07/14 (No. Options) Granted as Remuneration (No. Options) No. of Options Acquired No. of Options Exercised Net Change Other (No. Options) Balance 30/06/15 (No. Options) - - - - 21,754,400 - 21,754,400 - - - - - - - - - - - 21,754,400 - 21,754,400 - - - - - - - 9,407,667 - - - (43,508,800) 6 - (34,101,133) 9,407,667 - - - - - 9,407,667 Notes: (1) Appointed 24 March 2015 (2) Appointed 29 June 2015 End of remuneration report (audited). (3) Resigned 25 March 2015 (4) Deceased 15 March 2015 (5) Resigned 29 June 2015 15 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ REPORT (CONTINUED) Signed in accordance with a resolution of the board of directors. Dated at Perth this 27th day of September, 2016 Alec Pismiris Director 16 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2016 Revenue Other income Corporate Salaries and wages Exploration expenditure written-off Diminution in value of investments Doubtful debts provision movement (net) Share-based payments Other expenses Loss before income tax Income tax Loss for the year Other comprehensive income/(loss) Item that may be classified to profit or loss: Currency translation differences Other comprehensive income/(loss) for the year Total comprehensive loss for the year Loss attributable to: Members of the parent entity Non-controlling interest Total comprehensive loss attributable to: Members of the parent entity Non-controlling interest Note 2(a) 2(b) 3(c) 3(b) 25 Consolidated 2016 $ 2015 $ 112,636 22,929 970,115 17,934 (475,470) (41,297) (2,352) - 177,079 (190,675) (33,412) (613,067) (301,138) (200,591) (327,715) (945,493) - (31,555) (430,562) (1,431,510) 4 - - (430,562) (1,431,510) (50,638) 115,907 (50,638) 115,907 (481,200) (1,315,603) (424,158) (6,404) (430,562) (1,424,841) (6,669) (1,431,510) (472,181) (9,019) (481,200) (1,323,277) 7,674 (1,315,603) Basic and diluted loss per share (cents per share) 19 (0.12) (0.58) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. 17 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016 Current Assets Cash and cash equivalents Restricted cash Security deposits Trade and other receivables Other current assets Assets held for sale Total Current Assets Non Current Assets Other financial assets Plant and equipment Mineral exploration and evaluation expenditure Total Non Current Assets Total Assets Current Liabilities Trade and other payables Deferred revenue Liabilities associated with assets held for sale Total Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total parent entity interest Non-controlling interest Total Equity Consolidated Note 2016 $ 2015 $ 5 27 6 7 27 8 9 10 11 12 27 910,584 940,000 131,000 20,717 - 2,351,024 1,107,805 - 131,000 41,005 9,267 2,371,772 4,353,325 3,660,849 - - - - - 28,600 - 28,600 4,353,325 3,689,449 228,995 1,410,000 1,236,253 192,029 470,000 1,255,335 2,875,248 1,917,364 2,875,248 1,917,364 1,478,077 1,772,085 13 14 13,630,120 2,021,580 13,634,103 1,878,428 (13,357,078) (12,932,920) 2,294,622 (816,545) 2,579,611 (807,526) 1,478,077 1,772,085 The above statement of financial position should be read in conjunction with the accompanying notes. 18 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2016 Issued Capital Options Reserve Consolidated $ $ Foreign Currency Translation Reserve $ Accumulated Losses Non- Controlling Interest Total Equity $ $ $ Balance at 01/07/2014 Total comprehensive income for the year Loss for the year Other comprehensive income Foreign currency translation differences Total comprehensive income / (loss) for the year Transactions with owners recorded directly into equity Share-based payments Shares issued during the year Options issued during the year Transaction costs 13,286,471 1,528,725 68,891 (11,508,079) (815,200) 2,560,808 - - - - - - - (1,424,841) (6,669) (1,431,510) 101,564 - 14,343 115,907 101,564 (1,424,841) 7,674 (1,315,603) - 603,528 - (255,896) 195,700 - 5,973 (22,425) - - - - - - - - - - - - 195,700 603,528 5,973 (278,321) Balance at 30/06/2015 13,634,103 1,707,973 170,455 (12,932,920) (807,526) 1,772,085 Balance at 01/07/2015 Total comprehensive income for the year Loss for the year Other comprehensive income Foreign currency translation differences Total comprehensive income / (loss) for the year Transactions with owners recorded directly into equity Share-based payments Shares issued during the year Options issued during the year Transaction costs 13,634,103 1,707,973 170,455 (12,932,920) (807,526) 1,772,085 - - - - - - - (424,158) (6,404) (430,562) (48,023) - (2,615) (50,638) (48,023) (424,158) (9,019) (481,200) - - - (3,983) 190,675 - 500 - - - - - - - - - - - - - 190,675 - 500 (3,983) Balance at 30/06/2016 13,630,120 1,899,148 122,432 (13,357,078) (816,545) 1,478,077 The above statement of changes in equity should be read in conjunction with the accompanying notes. 19 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2016 Cash Flows from Operating Activities Payments to suppliers and employees Interest received Royalties received Consolidated Note 2016 $ 2015 $ (510,242) 12,929 289,716 (896,465) 44,106 358,978 Net Cash Used in Operating Activities 15(b) (207,597) (493,381) Cash Flows from Investing Activities Payments for exploration expenditure Payments for plant and equipment Proceeds from sale of plant and equipment Proceeds from sale of project Proceeds from deposit for sale of project Reclassification of deposit for sale of project to restricted cash Net Cash Provided by Investing Activities Cash Flows from Financing Activities Proceeds from issue of shares and options Payments for capital raising costs Net Cash Provided by / (Used in) Financing Activities (2,352) - 6,711 10,000 940,000 (940,000) (156,039) (1,886) - - 470,000 - 14,359 312,075 - (3,983) 609,501 (82,621) (3,983) 526,880 Net increase / (decrease) in cash and cash equivalents held (197,221) 345,574 Cash and cash equivalents at the beginning of the financial year 1,107,805 762,231 Cash and cash equivalents at the end of the financial year 15(a) 910,584 1,107,805 The above statement of cash flows should be read in conjunction with the accompanying notes 20 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Pelican Resources Limited is a company domiciled in Australia. The consolidated financial statements of the Company as at and for the year ended 30 June 2016 comprise the Company and its subsidiaries (referred to as the Group or Consolidated Entity). The significant policies, which have been adopted in the preparation of this financial report, are: (a) Basis of Preparation The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. The financial report was authorised for issue by the Board on 27 September 2016. The financial report has been prepared on an accruals basis and is based on historical costs except for certain assets which are carried at fair value. Cost is based on the fair values of the consideration given in exchange for assets. Going Concern The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The directors confirm that there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable and is a going concern because of the following factors: • The ability to issue additional shares under the Corporations Act 2001; • The ability to sell a project; and/or • The Consolidated Entity receives royalties of $1.00 per metric tonnes of ore shipped. Payment of the royalty may be deferred if mining operations on Cockatoo Island are suspended due to force majeure events. The operator of Cockatoo Island is currently under the control of administrators who have been remitting royalty payments as shipments occur. If the Consolidated Entity is unable to continue as a going concern then it may be required to realise its assets and extinguish its liabilities, other than in the normal course of business and at amounts different from those stated in the financial statements. (b) Statement of Compliance The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial statements and notes comply with International Financial Reporting Standards (IFRS). 21 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (c) New and Revised Accounting Standards and Interpretations adopted by the Group The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current year. The adoption of all the new and revised Standards and Interpretations has not resulted in any material changes to the Group’s accounting policies in order to comply with these amendments. The changes in accounting policies have no effect on the amounts reported for the current or prior years. (d) Principles of Consolidation The consolidated financial statements incorporate all of the assets, liabilities and results of the parent Pelican Resources 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 19. 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 profit or loss and other comprehensive income. Business Combinations Business combinations occur where an acquirer obtains control over one or more businesses and results in the consolidation of its assets and liabilities. A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The acquisition method requires that for each business combination one of the combining entities must be identified as the acquirer (ie. parent entity). The business combination will be accounted for as at the acquisition date, which is the date that control over the acquiree is obtained by the parent entity. At this date, the parent entity shall recognise, in the consolidated accounts, and subject to certain limited exceptions, the fair value of the identifiable assets acquired and liabilities assumed, in addition, contingent liabilities of the acquiree will be recognised where a present obligation has been incurred and its fair value can be reliably measured. 22 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (d) Principles of Consolidation (continued) Business Combinations (continued) All transaction costs incurred in relation to the business combination are expensed to the statement of profit or loss and other comprehensive income. (e) Income Tax The charge for current income tax is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using the rates that have been enacted or are substantively enacted by the statement of financial position date. Deferred tax is accounted for using the statement of financial position liability method in respect of temporary differences arising between the tax base 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 a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of profit or loss and other comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future profit 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 taxation legislation and the anticipation that the Consolidated Entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. (f) Plant and Equipment Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses. 23 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (f) Plant and Equipment (continued) Plant and equipment Plant and equipment is 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 fixed assets is depreciated on either a diminishing value method or prime cost method commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Plant and equipment 2.5 – 100% The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each statement of financial position date and where adjusted, shall be accounted for as a change in accounting estimate. Where depreciation rates or method are changed, the net written down value of the asset is depreciated from the date of the change in accordance with the new depreciation rate or method. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of profit or loss and other comprehensive income. (g) Exploration and Development 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 area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. 24 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (g) Exploration and Development 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. Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. (h) Leases Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, that are transferred to entities in the Consolidated Entity are classified as finance leases. All other leases are classified as operating leases. Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property of the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period. Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. 25 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (i) Share Based Payments The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and risk free interest rate for the term of the option. The fair value of the options granted excluded the impact of any non-market vesting condition (for example, profitability and sale growth targets). Non-market vesting conditions are included in assumption about the number of options that are expected to become exercisable. The employee benefit expense recognised each period takes into account the most recent estimate. Upon the exercise of options, the balance of the share-based payments reserve relating to these options is transferred to share capital. The market value of shares issued to employees for no cash consideration under the employee share scheme is recognised as an employee benefits expense with a corresponding increase in equity when the employees become entitled to the shares. (j) 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. Controlled Entities Investments in controlled entities are carried at cost less, where applicable, any impairment losses. 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. 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. 26 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (j) Financial Instruments (continued) Interests in Joint Arrangements (continued) 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. Impairment At each reporting date, the directors assess whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the statement of profit or loss and other comprehensive income. (k) Impairment of Assets At each reporting date, the directors review the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the 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 profit or loss and other comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the directors estimate the recoverable amount of the cash-generating unit to which the asset belongs. (l) Fair Value of Assets and Liabilities The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable Accounting Standard. Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie unforced) transaction between independent, knowledgeable and willing market participants at the measurement date. As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. 27 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Fair Value of Assets and Liabilities (continued) To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs). For non-financial assets, the fair value measurement also takes into account a market participant's ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use. The fair value of liabilities and the entity's own equity instruments (excluding those related to share-based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and, where significant, are detailed in the respective note to the financial statements. Valuation Techniques In the absence of an active market for an identical asset or liability, the Group selects and uses one or more valuation techniques to measure the fair value of the asset or liability. The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured. The valuation techniques selected by the Group are consistent with one or more of the following valuation approaches: - - - Market approach: valuation techniques that use prices and other relevant information generated by market transactions for identical or similar assets or liabilities; Income approach: valuation techniques that convert estimated future cash flows or income and expenses into a single discounted present value; and Cost approach: valuation techniques that reflect the current replacement cost of an asset at its current service capacity. Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability, including assumptions about risks. When selecting a valuation technique, the Group gives priority to those techniques that maximise the use of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information available about such assumptions are considered unobservable. 28 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Fair Value of Assets and Liabilities (continued) Fair Value Hierarchy AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement can be categorised into as follows: Level 1 Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly Level 3 Measurements based on unobservable inputs for the asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs are not based on observable market data, the asset or liability is included in Level 3. The Group would change the categorisation within the fair value hierarchy only in the following circumstances: (i) (ii) if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or if significant inputs that were previously unobservable (Level 3) became observable (Level 2) or vice versa. When a change in the categorisation occurs, the Group recognises transfers between levels of the fair value hierarchy (i.e. transfers into and out of each level of the fair value hierarchy) on the date the event or change in circumstances occurred. 29 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (m) Investments in Associates Investments in associate companies are recognised in the financial statements by applying the equity method of accounting where significant influence is exercised over an investee. Significant influence exists where the investor has the power to participate in the financial and operating policy decisions of the investees but does not have control or joint control over those policies. The equity method of accounting recognises the Consolidated Entity’s share of post-acquisition reserves of its associates. (n) Foreign Currency Transactions and Balances Functional and presentation currency The functional currency of each of the Consolidated Entity’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. Transaction and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non- monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in the statement of profit or loss and other comprehensive income, except where deferred in equity as a qualifying cash flow 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 profit or loss and other comprehensive income. Controlled entities The financial results and position of foreign operations whose functional currency is different from the Consolidated Entity’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. Retained earnings are translated at the exchange rates prevailing at the date of the transaction. 30 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (n) Foreign Currency Transactions and Balances (continued) Exchange differences arising on translation of foreign operations are transferred directly to the Consolidated Entity’s foreign currency translation reserve in the statement of financial position. These differences are recognised in the statement of profit or loss and other comprehensive income in the period in which the operation is disposed. The functional currency of the subsidiaries incorporated in the Philippines (refer Note 19) is the Philippine PESO. (o) 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, net of outstanding bank overdrafts. (p) Revenue Revenue from the sale of goods is recognised upon the delivery of goods to customers. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. Royalty revenue is recognised on an accruals basis based on tonnages shipped. All revenue is stated net of the amount of goods and service tax (GST). (q) Borrowing Costs Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in income in the period in which they are incurred. (r) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax 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. 31 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (s) (Loss)/Earnings per share (i) Basic (Loss)/Earnings per share Basic (loss)/earnings per share is determined by dividing the operating (loss)/profit after income tax attributable to members of Pelican Resources Limited by the weighted average number of ordinary shares outstanding during the financial year. (ii) Diluted (Loss)/Earnings per Share Diluted (loss)/earnings per share adjusts the amounts used in the determination of basic (loss)/earnings per share by taking into account unpaid amounts on ordinary shares and any reduction in earnings per share that will probably arise from the exercise of options outstanding during the financial year. (t) Issued Capital Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (u) New Accounting Standards and Interpretations for Application in Future Periods A number of new standards, amendments to standards and interpretations issued by the AASB which are not yet mandatorily applicable to the Consolidated Entity have not been applied in preparing these consolidated financial statements. Those which may be relevant to the Consolidated Entity are set out below. The Consolidated Entity does not plan to adopt these standards early. (cid:1) 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. 32 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (u) New Accounting Standards and Interpretations for Application in Future Periods (continued) (cid:1) 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. Although the directors anticipate that the adoption of AASB 15 may have an impact on the Group's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact. (cid:1) AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January 2019). AASB 16 removes the classification of leases as either operating leases or finance leases for the lessee effectively treating all leases as finance leases. Short term leases (less than 12 months) and leases of a low value are exempt from the lease accounting requirements. Lessor accounting remains similar to current practice. Although the directors anticipate that the adoption of AASB 16 may have an impact on the Group's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact. (cid:1) AASB 2014-3: Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations [AASB 1 & AASB 11] AASB 2014-3 amends AASB 11 Joint Arrangements to provide guidance on the accounting for acquisitions of interests in joint operations in which the activity constitutes a business. The amendments require: (a) the acquirer of an interest in a joint operation in which the activity constitutes a business, as defined in AASB 3 Business Combinations, to apply all of the principles on business combinations accounting in AASB 3 and other Australian Accounting Standards except for those principles that conflict with the guidance in AASB 11 (b) the acquirer to disclose the information required by AASB 3 and other Australian Accounting Standards for business combinations This Standard also makes an editorial correction to AASB 11. 33 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (cid:1) AASB 2014-9: Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements (AASB 2014-9 applies to annual reporting periods beginning on or after 1 January 2016. Early adoption permitted). AASB 2014-9 amends AASB 127 Separate Financial Statements, and consequentially amends AASB 1 First-time Adoption of Australian Accounting Standards and AASB 128 Investments in Associates and Joint Ventures, to allow entities to use the equity method of accounting for investments in subsidiaries, joint ventures and associates in their separate financial statements. AASB 2014-9 also makes editorial corrections to AASB 127. (cid:1) 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. (v) Critical Accounting Estimates and Judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The directors evaluate estimates and judgments incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Consolidated Entity. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes: Note 4 – Income Tax Note 6 – Trade and Other Receivables Note 10 – Mineral Exploration and Evaluation Expenditure Note 23 – Risk Management Objectives and Policies Note 26 – Share Based Payments 34 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 2: REVENUE (a) Revenue Royalties (b) Other income Interest earned Profit on sale of exploration project Total NOTE 3: EXPENSES AND GAINS/(LOSSES) (a) Expenses Depreciation Impairment of plant and equipment (b) Doubtful debt provision movement Provision for doubtful debt Reversal of provision for doubtful debt (c) Significant Items Loss before income tax includes the following expenses whose disclosure is relevant in explaining the financial performance of the consolidated entity: Included in corporate expenses Accounting and administration fees Consulting Consolidated 2016 $ 2015 $ 112,636 970,115 12,929 10,000 22,929 17,934 - 17,934 3,909 8,635 12,544 14,139 - 14,139 (75,915) 252,994 (945,493) - 177,079 (945,493) 127,253 189,400 171,640 194,750 35 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 4: INCOME TAX The prima facie tax on loss before income tax is reconciled to the income tax as follows: Loss before income tax Income tax calculated at 30% Add back: (Income accrued)/doubtful debt expense Non deductible expenses Unrealised foreign exchange (gains) Provisions Capitalised exploration written off Capital raising costs Share based payment Foreign losses movement Future income tax (charge)/benefits not brought to account Income tax expense Deferred tax assets: Capital raising costs Provisions Carried forward tax losses (including foreign tax losses) Deferred tax liabilities: Capitalised exploration costs Accrued income NOTE 5: CASH AND CASH EQUIVALENTS Cash at bank 36 Consolidated 2016 $ 2015 $ (430,562) (1,431,510) (129,169) (429,453) 29 - - - 706 (17,321) (57,203) 485,190 198,158 15 (1,909) 97,715 60,178 (37,375) - (29,897) (282,232) 142,568 - - 15,828 314,100 2,285,426 24,632 314,100 2,565,067 2,615,354 2,903,799 (616,633) - (616,633) (616,633) (29) (616,662) 910,584 1,107,805 910,584 1,107,805 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 6: TRADE AND OTHER RECEIVABLES Current Accrued royalties Doubtful debt provision (i) Goods and services tax Advances/loans – other parties Consolidated 2016 $ 2015 $ 923,838 (923,838) 20,717 - 1,103,147 (1,103,147) 25,260 15,745 20,717 41,005 (i) On 8 September 2015, Pluton announced that it has appointed voluntary administrators and receivers and managers in order to execute a recapitalization and restructure proposal. As a result, the Company has raised a provision for doubtful debts against the full amount owing by Pluton which is past the due date. NOTE 7: OTHER CURRENT ASSETS Accrued revenue Prepayments NOTE 8: OTHER FINANCIAL ASSETS Non Current Listed investments at fair value: Shares in other entities(i) - - - - 98 9,169 9,267 - (i) As at 30 June 2016, the Company held 32,725,000 shares and 2,084,167 options exercisable at $0.055 on or before 31 March 2017 in Pluton Resources Limited. At the date of signing this report, the value of those securities held has been provided for in full as the shares in Pluton Resources Limited were in suspension on the Australian Securities Exchange. 37 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 9: PLANT AND EQUIPMENT Plant and equipment at cost Less: accumulated depreciation Total plant and equipment Reconciliation of the carrying amount for plant and equipment is set out below: Plant and equipment Carrying amount at beginning of year Additions Net book value of plant and equipment disposed Depreciation expense Impairment expense Foreign exchange impact Carrying amount at end of year Consolidated 2016 $ 2015 $ - - - 124,340 (95,740) 28,600 28,600 - (9,154) (3,909) (8,635) (6,902) 51,418 1,886 - (14,139) - (10,565) - 28,600 38 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 10: MINERAL EXPLORATION AND EVALUATION EXPENDITURE Balance at beginning of year Exploration and mining expenditure incurred during the year Foreign exchange movement Expenditure written off Transfer to assets held for sale (note 27) Balance at end of year Exploration expenditure carried forward in respect of areas of interest in the exploration and evaluation phase Consolidated 2016 $ 2015 $ - - - - - - - 2,100,000 156,039 312,272 (200,591) (2,367,720) - - The value of the exploration tenements carried forward is dependent upon: (a) (b) (c) The continuance of the Consolidated Entity’s rights to tenure of the area of interest; The results of future exploration; and The recoupment of costs through successful development and exploitation of the areas of interest or alternatively by their sale. The carrying value of the exploration expenditure as at 30 June 2016 is disclosed at note 27 and relates to the Romblon Project which is subject to a cease and desist order. The Company has entered into a Memorandum of Understanding for the sale of the Romblon project for $4.7 million which exceeds the carrying value at 30 June 2016. (refer to the Directors’ Report - Review of Operations for further details). NOTE 11: TRADE AND OTHER PAYABLES Trade payables and accrued expenses Goods and services tax Withholding tax Advances/loans – other parties NOTE 12: DEFERRED REVENUE Deposit on sale of subsidiary Consolidated 2016 $ 73,196 154,520 - 1,279 2015 $ 44,223 145,862 665 1,279 228,995 192,029 Consolidated 2016 $ 2015 $ 1,410,000 470,000 On 25 June 2015, the Company entered into a Memorandum of Understanding with Dynamo Atlantic Limited, a BVI registered company to sell 100% ownership of Sibuyan Nickel Properties Development Corporation and received an initial payment of $470,000 and a subsequent payment of $940,000 on completion of due diligence representing 30% of the purchase price agreed of $4.70 million. A portion of the purchase price is owed to the Company’s joint venture partner All- Acacia Resources Limited. As the sale has not completed, the Company has deferred this revenue and will recognize the full proceeds upon completion of the sale. 39 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 13: ISSUED CAPITAL (a) Issued Capital 361,923,540 Ordinary shares fully paid (2015: 361,923,540) 13,630,120 13,634,103 (b) Movements in ordinary share capital of the Company: Consolidated 2016 $ 2015 $ Date Details No. of Shares Issue Price $ 01/07/2014 02/07/2014 15/06/2015 22/06/2015 Opening balance Conversion of listed options Entitlements offer allotment Entitlements offer allotment 241,274,320 8,040 57,314,330 63,326,850 - $0.04 $0.005 $0.005 Less: transaction costs arising on share issues 30/06/2015 Closing balance 361,923,540 13,286,471 322 286,572 316,634 (255,896) 13,634,103 Date Details No. of Shares Issue Price $ 01/07/2015 Opening balance 361,923,540 Less: transaction costs arising on share issues 30/06/2016 Closing balance 361,923,540 13,634,103 (3,983) 13,630,120 (c) Capital Risk Management When managing capital, management’s objective is to ensure the Company continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the Company. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, enter into joint ventures or sell assets. The Company does not have a defined share buy-back plan. No dividends were paid in 2015 and no dividends will be paid in 2016. There is no current intention to incur further debt funding on behalf of the Company as on-going expenditure will be funded via cash reserves or equity. The Company is not subject to any externally imposed capital requirements. 40 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 14: RESERVES (a) Composition Share based payments reserve Foreign currency translation reserve Consolidated 2016 $ 2015 $ 1,899,148 122,432 1,707,973 170,455 2,021,580 1,878,428 (b) Movements in options and performance rights on issue during the last two years were as follows: Date Details Performance Rights No. of Listed Options No. of Unlisted Options Fair Value of Options and Performance Rights Issued Exercise Price Expiry Date 01/07/2014 Opening balance 02/07/2014 Conversion of listed options 03/07/2014 Listed options expired 19/09/2014 Pursuant to prospectus dated 26 August 2014 25/09/2014 Private placement to investors 25/03/2015 Lapse of performance rights 12/05/2015 Underwriter options (to be issued)(ii) 500,000(i) - - - - (500,000) - 88,104,515 (8,040) (88,096,475) 59,475,571 250,000 - - 50,000,000 Less: transaction costs arising on issues $1,528,725 - - $5,948 $25 - $195,700 ($22,425) 30/06/2015 Closing balance - 59,725,571 50,000,000 $1,707,973 $0.04 30/06/2014 $0.04 30/06/2014 $0.02 30/06/2017 $0.02 30/06/2017 $0.01 30/06/2019 (i) (ii) Performance Rights will convert to shares upon completion of the first shipment of ore from Sibuyan Island under the Company’s Romblon Nickel Project. Underwriter options relating to the Entitlements Offer undertaken in June 2015 were issued on 12 August 2015 following shareholder approval. As services were rendered prior to 30 June 2015, the value of the services have been recognized in the year ended 30 June 2015. Date Details No. of Listed Options No. of Unlisted Options Fair Value of Options and Performance Rights Issued Exercise Price Expiry Date 01/07/2015 Opening balance 12/08/2015 Underwriter options (prior year)(i) 59,725,571 - 50,000,000 $1,707,973 $500 18/11/2015 Director and consultant options 18/11/2015 Advisor options(ii) - - 20,500,000 14,500,000 $165,821 $24,854 Refer above Refer above $0.02 31/12/2019 $0.02 31/12/2019 30/06/2016 Closing balance 59,725,571 85,000,000 $1,899,148 (i) (ii) Underwriter options were accounted for in the prior year. The amount of $500 recognised relates to the subscription price for the issue of the options. The fair value of the advisor options is $62,790 however the value recognised in reserves is lower due to the impact of vesting conditions. 41 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 15: NOTES TO THE STATEMENT OF CASH FLOWS a) Cash and cash equivalents at the end of the financial year as shown in the Statement of Cash Flows is reconciled to items in the Statement of Financial Position as follows: Consolidated 2016 $ 2015 $ Cash and cash equivalents (Note 5) 910,584 1,107,805 b) Reconciliation of net cash and cash equivalents used in operating activities to loss for the year: Loss for the year Exploration and evaluation expenditure written off / impaired Depreciation Diminution in value of investments Impairment of plant and equipment Share based payment expense Doubtful debt provision Movements in assets and liabilities: (Increase)/Decrease in trade and other receivables (Increase)/Decrease in other assets Increase/(Decrease) in trade and other payables Net cash used in operating activities (430,562) (1,431,510) 2,352 3,909 - 8,635 190,675 (177,079) 200,591 14,139 327,715 - - 945,493 202,780 9,267 (17,574) (541,580) 26,152 (34,382) (207,597) (493,381) c) Non-cash investing and financing activities 2016 Other than share-based payment transactions disclosed in note 25, there were no non-cash investing and financing activities during the year ended 30 June 2016. 2015 During the year, the Company received 30,000,000 shares in Pluton Resources Limited in consideration for royalties owed to the value of $300,000. 42 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 16: KEY MANAGEMENT PERSONNEL This note is to be read in conjunction with the Remuneration Report which is included in the Directors’ Report. (a) Compensation of Key Management Personnel Consolidated Compensation by category: Short-term Post employment Termination benefit Share based payment 2016 $ 228,000 - - 162,916 2015 $ 316,000 18,406 37,500 - 390,916 371,906 (b) Transactions with Key Management Personnel Either individually or through companies under their control, or through companies under the control of a director related entity, John Hills, Alec Pismiris, Antonio Torresan, Mike Bue and John Palermo received and/or accrued payment for the provision of geological consulting and general consultancy, management services, underwriting services and disbursements under normal commercial terms and conditions during this financial year. Aggregate amount of each type of transaction with directors and their director related entities were as follows: Sub-underwriting fee (Mainview Holdings Pty Ltd – A Torresan) Sub-underwriting fee (ACP Investments Pty Ltd – A Pismiris) Consulting fee (Capital Investment Partners) (i) Consolidated 2016 $ 71,375 23,484 258,490 2015 $ - - 36,795 (i) On 12 August 2015, 25,547,324 options were issued to Capital Investment Partners as part of the underwriting fee for a total value of $195,700. The fair value of these options were booked as an expense in 2015 as it related to services provided in that year. On 18 November 2015, 14,500,000 options were issued to Capital Investment Partners vesting upon the completion of a corporate transaction for a total value of $62,790. Amounts payable or receivable to directors and their director related party entities at balance date arising from these transactions was $nil (2015: $nil). NOTE 17: REMUNERATION OF AUDITORS Audit services – Stantons International – Overseas auditors 43 Consolidated 2016 $ 29,076 3,815 32,891 2015 $ 30,538 7,077 37,615 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 18: INTEREST IN SUBSIDIARIES (a) Information about Principal Subsidiaries The consolidated financial statements include the financial statements of Pelican Resources Limited and the subsidiaries listed in the following table: Country of Incorporation Equity Interest 2016 % 2015 % Sunrise Exploration Pty Ltd Sunshine Gold Pty Ltd Pelican Pacific Pty Ltd Sunpacific Resources Philippines, Inc. Sunrom Philippines Holdings Corp’n. Sibuyan Nickel Properties Dev. Corp’n. Bato Mining Resources, Inc.* Dore 5 Resources Inc.* AUS AUS AUS PHP PHP PHP PHP USA *Entity was dissolved during the financial year. 100 100 100 100 100 75 - - 100 100 100 100 100 75 100 100 44 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 18: INTEREST IN SUBSIDIARIES (continued) (b) Summarised Financial Information of Subsidiaries with Material Non-Controlling Interests Set out below is the summarised financial information for each subsidiary that has non-controlling interests that are material to the Group. Summarised Financial Position Current Assets Non Current Assets Current Liabilities Non Current Liabilities Net Assets Carrying amount of non-controlling interest Summarised Financial Performance Revenue Loss before income tax Income tax Post-tax loss Other Comprehensive Income Total Comprehensive Loss The information above is the amount before intercompany eliminations. Loss attributable to non-controlling interests Distributions paid to non-controlling interest Summarised Cash Flow Information Net cash flows (used in) operating activities Net cash flows from financing activities 45 Sibuyan Nickel Properties Development Corporation As at 30 June 2016 $ As at 30 June 2015 $ 7,513 1,567,079 (706) (4,776,481) 4,052 1,591,287 (702) (4,761,155) (3,202,595) (3,166,518) (816,545) (807,526) Sibuyan Nickel Properties Development Corporation Year Ended 30 June 2016 $ Year Ended 30 June 2015 $ 13 (25,617) - (25,617) - (25,617) 3 (26,677) - (26,677) - (26,677) (6,404) - (6,669) - Sibuyan Nickel Properties Development Corporation Year Ended 30 June 2016 $ Year Ended 30 June 2015 $ (23,400) - (25,885) - PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 19: LOSS PER SHARE The following reflects the income and data used in the calculations of basic and diluted (loss)/profit per share: Loss before income tax – Group Adjustments: Loss attributable to non-controlling interest Consolidated 2016 $ 2015 $ (430,562) (1,431,510) 6,404 6,669 Loss used in calculating basic and diluted loss per share (424,158) (1,424,841) 2016 Number of Shares 2015 Number of Shares Weighted average number of ordinary shares used in calculating: Basic and diluted loss per share 361,923,540 245,356,231 NOTE 20: COMMITMENTS FOR EXPENDITURE In order to maintain current rights of tenure to mining tenements, the Consolidated Entity will be required to outlay in 2016/17 amounts noted below in respect of minimum tenement expenditure requirements and lease rentals. The obligations are not provided for in the accounts and are payable as follows: Not later than one year Later than one year but not later than 2 years Later than 2 years but not later than 5 years Consolidated 2016 $ - - - - 2015 $ 3,000 - - 3,000 Minimum tenement expenditure and lease rentals relating to the Cockatoo Island project remain the responsibility of Pluton Resources Limited. 46 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 21: SEGMENT INFORMATION Business Segments The directors have considered the requirements of AASB 8 – Operating Segments and the internal reports that are reviewed by the chief operating decision maker (the Board) in allocating resources and have concluded that at this time there are no separate identifiable business segments. The operations and assets of Pelican Resources Limited and its controlled entities are employed in exploration activities relating to minerals in Australia, Philippines and the USA. Australia Philippines USA Eliminations Consolidated 2016 $ 2015 $ 2016 $ 2015 $ 2016 $ 2015 $ 2016 $ 2015 $ 2016 $ 2015 $ Geographical Segments Revenue Sales to customers outside the Consolidated Entity Other revenues from customers outside the Consolidated Entity Total segment revenue 125,552 988,020 10,013 112,636 970,115 - 12,916 17,905 10,013 - 29 29 - - - - - - - - - - - - 112,636 970,115 22,929 17,934 135,565 988,049 Results Segment result Assets Segment assets Liabilities Segment liabilities (443,807) (888,500) (107,844) (340,948) - (124,510) 121,089 (77,552) (430,562) (1,431,510) 2,935,106 2,201,962 2,369,220 2,510,539 - 937 (951,001) (1,023,989) 4,353,325 3,689,449 3,087,507 2,097,747 8,549,065 8,525,497 - 212,408 (8,761,324) (8,918,288) 2,875,248 1,917,364 47 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 22: RISK MANAGEMENT OBJECTIVES AND POLICIES The Consolidated Entity’s principal financial instruments comprise cash and short-term deposits, short-term loans and investments in listed entities. The main purpose of these financial instruments is to finance the Consolidated Entity’s operations. The Consolidated Entity has various other financial assets and liabilities such as other receivables and trade payables, which arise directly from its operations. It is, and has been throughout the entire period under review, the Consolidated Entity’s policy that trading in financial instruments may be undertaken. The main risks arising from the Consolidated Entity’s financial instruments is cash flow interest rate risk, credit risk, foreign exchange risk and market price risk. Other minor risks are either summarised below or disclosed at Note 13 in the case of capital risk management. The Board reviews and agrees policies for managing each of these risks. Cash Flow Interest Rate Risk The Consolidated Entity’s exposure to the risks of changes in market interest rates relates primarily to the Consolidated Entity’s short-term deposits with a floating interest rate. These financial assets with variable rates expose the Consolidated Entity to cash flow interest rate risk. All other financial assets and liabilities in the form of receivables and payables are non-interest bearing. The Consolidated Entity does not engage in any hedging or derivative transactions to manage interest rate risk. The Consolidated Entity has not entered into any hedging activities to cover interest rate risk. In regard to its interest rate risk, the Consolidated Entity does not have a formal policy in place to mitigate such risks. The following tables set out the carrying amount by maturity of the Consolidated Entity’s exposure to interest rate risk and the effective weighted average interest rate for each class of these financial instruments. There were no fixed interest rate financial assets or liabilities held by the Consolidated Entity (2015: nil). Non Interest Bearing $ Weighted Average Effective Interest Rate % Floating Interest Rate $ Total $ 2016 2015 2016 2015 2016 2015 2016 2015 910,584 - - - - - 20,717 931,301 73,902 154,520 1,235,547 - 1,463,969 1,107,805 - 15,745 - 98 - 25,260 1,148,908 44,223 145,862 1,255,912 665 1,446,662 2.10 - - - - - - - - - - 3.30 - - - - - - - - - - - 1,071,000 - - - - - 1,071,000 - - - - - - 131,000 - - - - - 131,000 910,584 1,071,000 - - - - 20,717 2,002,301 1,107,805 131,000 15,745 - 98 - 25,260 1,279,908 - - - - - 73,902 154,520 1,235,547 - 1,463,969 44,223 145,862 1,255,912 665 1,446,662 Financial Assets - Cash and cash equivalents - Deposits held - Receivable other parties - Accrued royalties (net) - Accrued revenue - Investments at fair value - GST receivable Total Financial Assets Financial Liabilities - Trade creditors - GST payable - Loan – other parties - Withholding tax payable Total Financial Liabilities Net Financial Assets / (Liabilities) (532,668) (297,754) 1,071,000 131,000 538,332 (166,754) 48 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 22: RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) Interest Rate Sensitivity At 30 June 2016, if interest rates had changed by 10% during the entire year with all other variables held constant, profit/(loss) for the year and equity would have been $2,142 lower/higher, mainly as a result of lower/higher interest income from cash and cash equivalents. A sensitivity of 10% has been selected as this is considered reasonable given the current level of both short term and long term Australian dollar interest rates. A 10% increase sensitivity would move short term interest rates at 30 June 2016 from around 2.1% to 2.3% (10% decrease: 1.9%) representing a 30 basis points shift. This would represent one increase which is reasonably possible in the current environment with the bias coming from the Reserve Bank of Australia and confirmed by market expectations that interest rates in Australia are more likely to move up than down in the coming period. Based on the sensitivity analysis, only interest revenue from variable rate deposits and cash balances are impacted resulting in a decrease or increase in overall income. Credit Risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date, to recognised financial assets is the carrying amount net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. As at 30 June 2016, the Consolidated Entity had a balance of $923,838 (2015: $1,103,147) owing from Pluton Resources Limited. A provision for doubtful debts has been raised for the full amount (2015: $1,103,147). Liquidity Risk The Company manages liquidity risk by maintaining sufficient cash reserves and marketable securities and through the continuous monitoring of budgeted and actual cash flows. Contracted maturities of liabilities at 30 June Payables - less than 30 days - less than 12 months Loans other parties - less than 12 months - greater than 12 months Consolidated 2016 $ 2015 $ 73,902 154,520 44,223 145,862 8,069 1,228,757 1,465,248 8,174 1,247,738 1,445,997 The amount of $1,228,757 are liabilities associated with assets held for sale which have been disclosed under current liabilities as the disposal of Sibuyan Nickel Properties Development Corporation is expected within 12 months (note 27). 49 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 22: RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) Foreign Exchange Risk The Consolidated Entity is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the PESO and USD. No sensitivity analysis has been completed as the directors believe any impact would be immaterial. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the Company’s and subsidiaries’ functional currencies. The risk is measured using sensitivity analysis. Market Price Risk The Group is exposed to equity price risk which arises from available-for-sale-equity securities. The Consolidated Entity is exposed to market price risk arising from investments in other companies carried at fair value. No sensitivity analysis has been completed as the directors believe any impact would be immaterial. The Company has provided in full for the investment in Pluton Resources Limited. Net Fair Values For assets and other liabilities the net fair value approximates their carrying value. The Consolidated Entity has no financial liabilities but does have financial assets that are readily traded on organised markets at balance date and has no financial assets where the carrying amount exceeds net fair values at balance date. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement of financial position and in the notes to and forming part of the financial statements. Fair Value Hierarchy The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows: • Level 1: quoted prices in active markets for identical assets or liabilities. • Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly as prices or indirectly (ie. derived from prices). • Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). Available for sale financial assets - Level 1(i) Available for sale financial assets - Level 2 Available for sale financial assets - Level 3 (i) Refer Note 8(i). 2016 $ 2015 $ - - - - - - - - 50 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 23: EVENTS SUBSEQUENT TO REPORTING PERIOD Subsequent to the end of the financial year ended 30 June 2016, the following events had occurred: On 20 July 2016 an application to terminate or set aside the Pluton DOCA proposal from WSCI was filed by Ziziphus Pty Ltd and Celtic Capital Pty Ltd was heard in the Supreme Court of Western. The following day and pursuant to an Order of the Supreme Court of Western Australia on 21 July 2016 the DOCA was terminated. At a subsequent hearing on 3 August 2016 Sam Marsden and Derrick Vickers of PWC were appointed by the Court as Joint and Several Official Liquidators of the Company. In September 2016, the receivers, Pitcher Partners, put Pluton’s share of the Cockatoo Island project up for sale. On 17 August 2016, the Company announced that it has received notification from All Acacia Resources Inc that it is prepared to support the sale of SNPDC. Dynamo had previously completed due diligence enquiries and advanced payments totaling $A1.41 million in accordance with the terms of the MOU. On securing AARI’s support for the sale of SNPDC, the Company considers that the MOU is unconditional and the parties can proceed towards completion. On 7 September 2016, the Company announced that Dynamo had indicated that it did not wish to proceed with the purchase of SNPDC, and requested a full refund of the purchase price paid to date under the MOU. The Company has advised Dynamo that it considers the Agreement, and the parties’ respective obligations under it, remain on foot, and that it requires Dynamo to complete the Agreement by payment of the balance of the purchase price at settlement of the sale. NOTE 24: CONTINGENT LIABILITIES On 7 September 2016, the Company announced that Dynamo had indicated that it did not wish to proceed with the purchase of SNPDC, and requested a full refund of the purchase price paid to date under the MOU. The Company has advised Dynamo that it considers the Agreement, and the parties’ respective obligations under it, remain on foot, and that it requires Dynamo to complete the Agreement by payment of the balance of the purchase price at settlement of the sale. Other than as disclosed above, Pelican Resources Limited has no known material contingent liabilities at the end of the financial year. 51 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 25: SHARE BASED PAYMENTS The number and weighted average exercise prices of share options are as follows: Outstanding at 1 July Forfeited during the year Exercised during the year Expired during the year Granted during the year Issued during the year Outstanding at 30 June Exercisable at 30 June Weighted average exercise price 2016 $0.02 - - - - $0.01 $0.02 $0.02 Number of Options 2016 59,725,571 - - - - 85,000,000 144,725,571 130,225,571 Weighted average exercise price 2015 $0.04 - $0.04 $0.04 - $0.02 $0.02 $0.02 Number of Options 2015 88,104,515 - (8,040) (88,096,475) - 59,725,571 59,725,571 59,725,571 The options outstanding at 30 June 2016 have an exercise price of $0.02 and a weighted average remaining contractual life of 2.5 years (2015: 2 years). The following table lists the inputs to the models used for the valuation of the options issued during the year: Director options Consultant options Advisor options Number of options Fair value at measurement date (cents) Dividend yield (%) Expected volatility (%) Risk free rate (%) Expected life of option Share price (cents) Exercise price (cents) Model used 20,000,000 0.8 Nil 100 2.25 4 1.3 2 500,000 0.6 Nil 100 2.25 4 1.0 2 Black-scholes Black-scholes Black-scholes 14,500,000 0.4 Nil 100 2.25 4 0.8 2 52 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 26: PARENT ENTITY DISCLOSURES (a) Financial Position Current Assets Total Assets Current Liabilities Total Liabilities Equity Issued capital Reserves Accumulated losses Total Equity (b) Financial Performance Loss for the year Other comprehensive income Total Comprehensive Loss (c) Guarantees 2016 $ 1,966,352 2,917,353 1,167,716 1,167,716 2015 $ 1,213,372 2,184,011 178,202 178,202 13,630,120 1,899,148 (13,779,630) 13,634,103 1,707,973 (13,336,267) 1,749,638 2,005,809 2016 $ 2015 $ (443,363) - (883,647) - (443,363) (883,647) The parent entity has not entered into any guarantees, in relation to the debts of subsidiaries. (d) Contingent liabilities Other than disclosed in note 24, the parent entity has no known material contingent liabilities at the end of the financial year. (e) Commitments for expenditure The parent entity has not entered into any commitments for expenditure as at the end of the financial year. 53 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016 NOTE 27: ASSETS AND LIABILITIES HELD FOR SALE In June 2015, the Company entered into a Memorandum of Understanding (“MOU”) with Dynamo Atlantic Limited to sell 100% ownership of Sibuyan Nickel Properties Development Corporation (“SNPDC”) for a purchase price of $4.7 million (refer Directors’ Report for further detail). Assets and liabilities held for sale The major classes of assets and liabilities comprising the operations classified as held for sale at balance date are as follows: Cash Trade and other receivables Mineral exploration and evaluation expenditure (note 10) Assets held for sale Trade payables Other payables Liabilities associated with assets held for sale 2016 $ 3,243 4,270 2,343,511 2,351,024 706 1,235,547 1,236,253 2015 $ 870 3,182 2,367,720 2,371,772 702 1,254,633 1,255,335 The Company has received $1.41 million as deposits for the sale of SNPDC and $0.94 million has been classified as restricted cash as the formal sale agreement has not yet been executed. 54 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES DIRECTORS’ DECLARATION 1. In the opinion of the Directors: a. the accompanying financial statements, notes and additional disclosures are 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 2016 and of its performance for the year then ended; and ii. complying with Accounting Standards and Corporations Regulations 2001; and b. c. subject to the matters set out in note 1 “Going Concern”, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. 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 2016. This declaration is signed in accordance with a resolution of the Board of Directors. Alec Pismiris Director Dated this 27th day of September, 2016 55 -56- -57- PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES ASX ADDITIONAL INFORMATION QUOTED SECURITIES (a) ORDINARY FULLY PAID SHARES (i) DISTRIBUTION OF SHAREHOLDERS AS AT 26 SEPTEMBER 2016: SPREAD OF HOLDINGS NO. OF HOLDERS 1 – 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001+ 28 34 23 92 176 353 NO. OF SHARES 9,956 82,341 162,633 4,647,049 357,021,561 361,923,540 PERCENTAGE OF ISSUED CAPITAL % 0.00 0.02 0.04 1.28 98.65 100.00 The number of shareholdings held in less than marketable parcels is 1370. (ii) TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES: The names of the twenty largest shareholders of ordinary fully paid shares are listed below: NAME NO. OF ORDINARY SHARES HELD PERCENTAGE OF ISSUED SHARES % Mainview Holdings Pty Ltd 1. Mr Kenneth Gatchalian 2. Mr Joe Leuzzi & Mrs Sally Leuzzi 3. DF Lynton-Brown Pty Ltd 4. Monslit Pty Ltd 5. Gallant (WA) Pty Ltd 6. Finebase Holdings Pty Ltd 7. Alitime Nominees Pty Ltd 8. Veltox Pty Ltd 9. 10. Topaze Enterprises Pty Ltd 11. GAB Superannuation Fund Pty Ltd 12. Mr Jose Mari Moraza & Mr Antonio Moraza Topaze Enterprises Pty Ltd 13. 14. Finebase Holdings Pty Ltd 15. ACP Investments Pty Ltd 16. ACP Investments Pty Ltd 17. Darlot Investments Pty Ltd 18. 19. 20. Mr Paul Gabriel Sharbanee Citicorp Nominees Pty Ltd Cityscan Pty Ltd 42,843,981 25,699,591 16,350,000 13,932,885 13,350,000 12,094,137 11,990,000 10,930,205 10,593,650 9,484,049 7,873,785 7,272,445 6,229,134 6,019,666 6,000,000 6,000,000 5,849,676 5,282,634 5,177,757 5,007,434 227,981,029 11.84 7.10 4.52 3.85 3.69 3.34 3.31 3.02 2.93 2.62 2.18 2.01 1.72 1.66 1.66 1.66 1.62 1.46 1.43 1.38 62.99 59 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES ASX ADDITIONAL INFORMATION (continued) QUOTED SECURITIES (continued) (a) ORDINARY FULLY PAID SHARES (continued) (iii) VOTING RIGHTS Article 15 of the Constitution specify that on a show of hands every member present in person, by attorney or by proxy shall have: (a) (b) for every fully paid share held by him one vote for every share which is not fully paid a fraction of the vote equal to the amount paid up on the share over the nominal value of the shares. (iv) SUBSTANTIAL SHAREHOLDERS Name Mainview Holdings Pty Ltd Mr Kenneth Gatchalian Ordinary Shares No. 42,843,981 25,699,591 68,513,572 % 11.84 7.10 18.94 (b) OPTIONS As at 26 September 2016, there existed the following quoted options: 59,725,571 OPTIONS EXERCISABLE AT $0.02 EACH ON OR BEFORE 30 JUNE 2017 (i) DISTRIBUTION OF OPTIONHOLDERS: SPREAD OF HOLDINGS NO. OF HOLDERS NO. OF OPTIONS PERCENTAGE OF QUOTED OPTIONS % 534 19,848 28,184 884,064 58,792,941 59,725,571 0.00 0.03 0.05 1.48 98.44 100.00 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001+ 2 6 4 26 32 70 60 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES ASX ADDITIONAL INFORMATION (continued) QUOTED SECURITIES (continued) (b) OPTIONS (continued) (ii) TOP 20 HOLDERS OF QUOTED OPTIONS:- The names of the twenty largest optionholders are listed below: NAME NO. OF OPTIONS HELD PERCENTAGE OF QUOTED OPTIONS % Finebase Holdings Pty Ltd 1. 2. Mainview Holdings Pty Ltd 3. Mr Martin Music 4. Mulloway Pty Ltd Darlot Investments Pty Ltd 5. Topaze Enterprises Pty Ltd 6. Goffacan Pty Ltd 7. First Investment Partners Pty Ltd 8. Stonehurst (WA) Pty Ltd 9. 10. Citicorp Nominees Pty Ltd 11. Monslit Pty Ltd 12. Mr Chad Jonathon Jones 13. Mr Brett David Jones 14. Mr Ryan Bennett 15. Virtus Capital Pty Ltd 16. Mulloway Pty Ltd 17. Mr Daniel James Pietzner 18. Monslit Pty Ltd 19. Jetblack Nominees Pty Ltd Finebase Holdings Pty Ltd 20. 21,754,400 8,357,666 6,500,000 4,000,000 3,000,000 2,257,584 1,837,415 1,500,000 1,425,000 1,166,666 683,334 516,667 500,000 500,000 445,000 405,668 390,274 366,667 350,000 333,839 56,290,180 36.42 13.99 10.88 6.70 5.02 3.78 3.08 2.51 2.39 1.95 1.14 0.87 0.84 0.84 0.75 0.68 0.65 0.61 0.59 0.56 94.25 (iii) VOTING RIGHTS Holders of options are not entitled to vote at a General Meeting of Members in person, by proxy or upon a poll, in respect of their option shareholding. UNQUOTED SECURITIES (a) UNLISTED OPTIONS ON ISSUE - 50,000,000 unlisted options exercisable at $0.01 each on or before 30 June 2019. - 35,000,000 unlisted options exercisable at $0.02 each on or before 31 December 2019. (b) PERFORMANCE RIGHTS The Company has no performance rights on issue. 61 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT This statement outlines the main corporate governance practices adopted by the Board of Pelican Resources Limited (“Pelican” or the “Company”), which comply with the ASX Corporate Governance Council recommendations unless otherwise stated. The Board and management of Pelican recognise their duties and obligations to shareholders and other stakeholders to implement and maintain a proper system of corporate governance. The Company believes that good corporate governance adds value to stakeholders and enhances investor confidence. The ASX Listing Rules require listed companies to prepare a statement disclosing the extent to which they have complied with the recommendations of the ASX Corporate Governance Council (“Recommendations”) in the reporting period. The Recommendations are guidelines designed to improve the efficiency, quality and integrity of the Company. They are not prescriptive, sit that if a company considers a recommendation to be inappropriate having regard to its own circumstances, it has the flexibility not to follow it. Where a company has not followed all the Recommendations, it must identify which Recommendations have not been followed and give reasons for not following them. This Corporate Governance Statement (“Statement”) sets out a description of the Company’s main corporate practices and provides details of the Company’s compliance with the Recommendations, or where appropriate, indicates a departure from the Recommendations with an explanation. This Statement is current as at 25 September 2015 and has been approved by the Board of Directors of Pelican. Principle 1 – Lay solid foundations for management and oversight Recommendation 1.1 A listed entity should disclose: Requirement Comply Yes/No (a) The respective roles and responsibilities of its board and management: and (b) Those matters expressly reserved to the board and those delegated to Yes management. 1.2 A listed entity should: (a) Undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director: and (b) Provide security holders with all material information in its possession relevant to a decision on where or not to elect or re-elect a director. 1.3 1.4 A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment. The company secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board. Yes Yes Yes 62 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT (CONTINUED) Recommendation 1.5 A listed entity should: Requirement (a) Have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them: (b) Disclose the policy or a summary of it: and (c) Disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them and either: 1) The respective proportions of men and women on the board, in senior executive positions and across the whole organisation (including how the entity has defined “senior executive” for these purposes): or If the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most recent “Gender Equality Indicators”, as defined in and published under the Act. 2) Comply Yes/No Yes 1.6 A listed entity should: (a) Have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors: and (b) Disclose, in relation to each reporting period, whether a performance Yes evaluation was undertaken in the reporting period in accordance with that process. 1.7 A listed entity should: (a) Have and disclose a process for periodically evaluating the performance of its senior executives; and (b) Disclose, in relation to each reporting period, whether a performance Yes evaluation was undertaken in the reporting period in accordance with that process. Commentary The Corporate Governance Policies set out the functions and responsibilities of the Board of Pelican, and are available on the Pelican website. The Company seeks to have a board comprising directors with an appropriate variety of skill, experience and expertise who are competent in dealing with current and emerging issues of the business and who can effectively review and challenge the performance of management and exercise independent judgement. The Board has procedures for the selection and appointment of new directors and the re-election of incumbent directors, which are set out in the Corporate Governance Policies which are available on the Pelican website. Non-executive directors have written agreement with the Company setting out the terms of their appointment as directors, the two executive directors have employment contracts. The Board meets on a regular basis. The agenda for these meetings is prepared by the Company Secretary who is also the Managing Director, in conjunction with the Chairman. Relevant information is circulated to directors in advance of the Board meetings. The Company Secretary is accountable directly to the Board on matters to do with the proper functioning of the Board. The Board has adopted a policy on achieving gender, age and ethnic diversity in the Company’s board and employees. 63 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT (CONTINUED) The respective proportions of men and women on the Board, in senior executive positions and across the whole organisation is as follows: Gender Total Female Male %Female Senior Management - 1 - 0 4 0 Board - 3 - The evaluation of the performance of the Board and individual directors is undertaken annually and in accordance with the terms of their employment contract. Performance reviews were undertaken in the reporting period. Principle 2 – Structure the Board to add value Recommendation 2.1 The board of a listed entity should: (a) Have a nomination committee which: Requirement 1) Has at least three members, a majority of whom are independent directors; and Is chaired by an independent director, 2) and disclose 3) The charter of the committee: 4) The members of the committee; and 5) As at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; OR (b) If it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. A listed entity should have and disclose a board skills matric setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership. A listed entity should disclose: (a) The names of the directors considered by the board to be independent directors; (b) If a director has an interest, position, association or relationship of the type describe in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and (c) The length of service of each director. A majority of the board of a listed entity should be independent directors. The Chair of the board of a listed entity should be independent director and, in particular, should not be the same person as the CEO/Managing Director of the entity. A listed entity should have a program for inducting new directors and provide appropriate professional development opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively. 64 2.2 2.3 2.4 2.5 2.6 Comply Yes/No Yes Yes Yes No Yes Yes PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT (CONTINUED) Commentary The Board believes the Company is not of sufficient size to justify having a Nomination Committee. If any vacancies arise on the Board, the Board and all directors are involved in the search and recruitment of a replacement. The Board strives to ensure that it is comprised of directors with a blend of skills, experience and attributes appropriate to the Company and its business. The principal criterion for the appointment of new directors is their ability to add value to the Company and its business. In light of this, it has not been deemed necessary to create a formal document setting out the mix of skills and diversity that the Board currently has or is looking to achieve in its membership. The Board consists of Executive Director Mr Antonio Torresan (appointed 24 March 2015), Independent non- executive director Mr Colin Chenu (appointed 29 June 2015), Non-executive director Mr Alec Pismiris (appointed 24 March 2015), Executive Director Mr Mike Bue (resigned on 25 March 2015), Non-executive chairman Mr John Palermo (deceased 15 March 2015) and Independent non-executive director Mr John Hills (resigned 29 June 2015). The details of their skills, experience and expertise have been included in the 2015 Directors Report. The number of Board meetings and attendance of the directors are set out in the 2015 Directors Report. Although the majority of the Board is not independent, the directors considers the current Board composition to be suitable in the present circumstances, with an appropriate range of qualifications and expertise, and directors who can understand and competently deal with current and emerging business issues as well as effectively review and challenge the performance of management. Furthermore, each individual member of the Board is satisfied that all directors bring an independent judgement to bear on board decisions. New directors are provided with copies of all relevant documents and policies governing the Company’s business, operations and management at the time of joining the Board. The Company is able to provide appropriate professional development opportunities for directors to assist in their roles. Directors are also encouraged to personally undertake appropriate training and refresher courses conducted by the Australian Institute of Company Directors. Principle 3 – Act ethically and responsibly Recommendation 3.1 A listed entity should: Requirement (a) Have a code of conduct for its directors, senior executives and employees; and (b) Disclose that code or a summary of it. Comply Yes/No Yes Commentary As part of the Board’s commitment to maintaining a proper system of corporate governance, the Company has adopted a Code of Conduct to guide directors and officers in carrying out their duties and responsibilities. The Code embraces the values of honesty, integrity, enterprise, excellence, accountability, justice, independence and equality of stakeholder opportunity. The Code of Conduct is available on the Pelican website. 65 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT (CONTINUED) Principle 4 – Safeguard integrity in corporate reporting Recommendation 4.1 The board of a listed entity should: (a) Have an audit committee which: Requirement Comply Yes/No 1) Has at least three members, all of whom are non-executive 2) directors and a majority of whom are independent directors; and Is chaired by an independent director, who is not the chair of the board, and disclose; 3) The charter of the committee; 4) The relevant qualifications and experience of the members of the 5) committee; and In relation to each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) If it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. The board of a listed entity should, before it approves the entity’s financial statements for a financial period, receive form its CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true an fair view of the financial position and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. A listed entity should that has an AGM should ensure that its external auditor attends its AGM and is available to answer questions from security holders relevant to the audit. Yes Yes Yes 4.2 4.3 Commentary The board believes that due to the size and composition of the board and the size of the Company it is not appropriate to have an Audit Committee. The Board as a whole is responsible for the integrity of the Company’s financial reporting, reviews and oversees the planning process for external audits, the conduct of the external audit process and the independence of all parties to the process as well as reviewing the performance of external auditors, the processes for the appointment and removal of the external auditor and the rotation of the audit engagement partner. Prior to the approval of the Company’s annual financial statements, the board obtains a declaration from its Company Secretary and CFO that , in their opinion, the financial records of the Company have been properly maintained and that the financial statements comply with appropriate accounting standards and give a true and fair view of the financial position and performance of the Company, and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. The Company’s external auditor attends every Annual General Meeting as required by the Corporations Act, and member are allowed a reasonable opportunity at the meeting to ask the auditor questions relevant to the audit, their report and independence, and the accounting policies adopted by the company. 66 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT (CONTINUED) Principle 5 – Make timely and balanced disclosure Recommendation 5.1 A listed entity should: Requirement (a) Have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and (b) Disclose that code or a summary of it. Comply Yes/No Yes Commentary The Company’s Disclosure Policy is available on the Pelican website. The Disclosure Policy sets out the key obligations of directors and employees in relation to continuous disclosure as well as the Company’s obligation under the ASX Listing Rules and the Corporations Act. The Policy also provides procedures for internal notification and external disclosure, as well as procedures for promoting understanding of compliance with disclosure requirements. Principle 6 – Respect the rights of security holders Recommendation 6.1 A listed entity should provide information about itself and its governance to investors via a website. Requirement A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors. A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meeting so security holders. A listed entity should give security holders to option to receive communicating from and send communications to, the entity and its security registry electronically. 6.2 6.3 6.3 Commentary Comply Yes/No Yes Yes Yes Yes The Board is committed to open and accessible communications with holders of the Company’s shares. In accordance with continuous disclosure obligations under the ASX Listing Rules, all disclosure are made in a time manner and posted on the Company’s website. Shareholders are forwarded the Company’s Annual Report, if requested and documents relating to each General Meeting, being the Notice of Meeting, any Explanatory Memorandum and a Proxy Form, and shareholders are invited to attend these meetings. Shareholders may elect to receive communications electronically. The Company’s external auditors are also required to be present at annual shareholder meetings to answer any queries shareholders may have with regard to the audit and preparation and content of the Audit Report. 67 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT (CONTINUED) Principle 7 – Recognise and manage risk Recommendation 7.1 The board of a listed entity should: (a) Have a committee or committees to oversee risk, each of which; Requirement Comply Yes/No 1) Has at least three members, a majority of whom are independent directors; and Is chaired by and independent director and disclose; 2) 3) The charter of the committee 4) The ;members of the committee; and 5) As at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or If it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. The board or a committee of the board should; (a) Review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound; and (b) Disclose, in relation to each reporting period, whether such review has taken place. 7.2 7.3 A listed entity should disclose: (a) If it has an internal audit function, how the function is structured and what role it performs; or (b) If it does not have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its risk management and internal control processes. A listed entity should disclose whether it has any material exposure to economic, environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks. 7.4 Commentary Yes Yes Yes Yes The board as a whole is ultimately responsible for establishing and reviewing the Company’s policies on risk profile, oversight and management and satisfying itself that management has developed and implemented a sound system of risk management and internal control in accordance with the Company’s Corporate Governance Policies. The board believes that due to the size and composition of the board, and the size of the Company it is not appropriate to have a Risk Committee. The Company’s risk management program is implemented under the direction of the Chief Executive Officer to ensure matters affecting goals, objectives and performance of the Company and the safety of its stakeholders are identified and assessed by an operational risk management framework in accordance with industry accepted standards. The Company’s risk management framework is reviewed annually. A review was undertaken in the reporting period. The board believes that the Company is not of a size to justify having an internal audit function for efficiency purposes. The Company evaluates its risk management and internal control processes in consultation with its external auditor with a view to continually improving its effectiveness. 68 PELICAN RESOURCES LIMITED AND CONTROLLED ENTITIES CORPORATE GOVERNANCE STATEMENT (CONTINUED) The board does not believe the Company has any material exposure to economic, environmental and social sustainability risks at the present time. Principle 8 – Remunerate fairly and responsibly Recommendation 8.1 The board of a listed entity should: (a) Have a remuneration committee which’ Requirement 1) Has at least three members, a majority of whom are independent directors; and Is chaired by an independent director, and disclose 2) 3) The charter of the committee; 4) The members of the committee; and 5) As at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the members at those meetings; or (b) If it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level and composition of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive. Comply Yes/No Yes 8.2 A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the remuneration of executive directors and other senior executives. Yes Commentary The Board believes it is not of a size to justify having a Remuneration Committee. The Company’s remuneration policy is structured for the purpose of motivating executive directors and senior management to pursue the long- term growth and success of the Company. The Board sets the level and structure of remuneration to executive directors and senior executives for the purpose of balancing the Company’s competing interest of attracting and retaining executive directors and senior management and not paying excessive remuneration. 69