ACN 153 868 789 ANNUAL REPORT 2017 CONTENTS Company Information Review of Operations Directors’ Report Corporate Governance Statement Auditor’s Independence Declaration Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to Financial Statements Directors’ Declaration Independent Auditor’s Report Shareholder Details Interest in Exploration Leases AND CONTROLLED ENTITIES 3 4 10 19 20 21 22 23 24 25 43 44 48 50 Taruga Gold Limited Page 2 COMPANY INFORMATION AND CONTROLLED ENTITIES Non-Executive Director Non-Executive Director (appointed 15 July 2016) Non-Executive Director (appointed 6 September 2017) Non-Executive Director (resigned 6 September 2017) ACN Directors 153 868 789 Bernard Aylward Gary Steinepreis Sheena Eckhof Daniel Smith Joint Company Secretaries Daniel Smith Sylvia Foong Registered Office Unit 5, Ground Floor 1 Centro Avenue Subiaco WA 6008 Telephone: Facsimile: +61 8 9486 4036 +61 8 9486 4799 Share Registry Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153 Auditor Bankers Telephone: Facsimile: 1300 992 916 +61 8 9315 2233 HLB Mann Judd Level 4, 130 Stirling Street Perth, WA 6000 Telephone: Facsimile: +61 8 9227 7500 +61 8 9227 7533 Westpac Banking Corporation 116 James Street Northbridge Perth, WA 6000 Securities Exchange Listing Taruga Gold Limited Shares are listed on the Australian Securities Exchange. The home exchange is Perth, Western Australia. ASX Code: TAR Website www.tarugagold.com.au Taruga Gold Limited Page 3 REVIEW OF OPERATIONS AND CONTROLLED ENTITIES REVIEW OF OPERATIONS Company Overview Taruga Gold Limited (“Taruga” or “the Company”) is an exploration company that listed on the Australian Securities Exchange (ASX) on 7 February 2012. Taruga initially focussed on West African projects, with the lead project the advanced Kossa Project in Niger which is located approximately 15km from the 5moz Essakane goldmine. Taruga continues to target the Birimian geology of West Africa, however the Company is actively seeking new projects and is reviewing projects in Australia, Africa and other regions of interest. As part of Taruga’s strategy to identify attractive project acquisitions within Africa and Australia, the Company announced on 24 May 2017 that it had entered into a potential acquisition of PEPM4019 in the Kolwezi Mining District in the south-east of the Democratic Republic of Congo (Project). PEPM4019 (Permis d' Exploitation de Petite Mine) covers 7.5 square kilometres within the prolific Central African Copperbelt, a 700km long x 400km wide arcuate fold belt which hosts a large number of sediment hosted, world-class copper-cobalt deposits both in Katanga, south-eastern DRC and Zambia. Following the due diligence period, where the Company undertook a geochemical sampling program designed to verify the initial coincident Copper/Cobalt anomaly, the Company elected not to proceed with the acquisition of the Project. Taruga is continuing to review and evaluate other opportunities prospective for copper, cobalt and lithium within the DRC in conjunction with its DRC consultants. In addition to the African projects, Taruga has also pursued new opportunities in Australia and during the year announced the application of two licences regarded as prospective for Cobalt in the mid-west region of Western Australia. The Company intends to explore these licences when they are granted. The Company successfully concluded two capital raisings during the period, with funds raised through existing shareholders and new investors, together totalling approximately $1.15m. Taruga Gold Limited Page 4 REVIEW OF OPERATIONS AND CONTROLLED ENTITIES TARUGA IN NIGER Kossa Project, Niger Borobon Prospect The Borobon prospect is located at the south end of the Kossa–Borobon trend, a 10km strike length of gold mineralisation defined by drilling, anomalous geochemistry and artisanal workings. Extensive gold mineralisation has been defined at the Borobon prospect with drilling completed by Taruga and previous explorers. At the Borobon prospect gold mineralisation is hosted in parallel shear zones in a folded sedimentary sequence (refer Figure 1). Interpretation of the drilling results indicates a series of plunging shoots that require additional drilling to target strike and depth extension. The gold mineralised shoots are interpreted to result from the intersection of shear structures highlighted on the detailed aeromagnetic survey. Figure 1 – Taruga Gold Limited – Borobon Prospect drill hole location and significant results Page 5 Taruga Gold Limited REVIEW OF OPERATIONS AND CONTROLLED ENTITIES An Inferred Mineral Resource estimate of 2.7Mt @ 1.3g/t gold for 112,000ozs gold (top cut 20g/t gold and lower cut-off of 0.5g/t gold applied) at the Borobon was announced for the prospect on 15 March 2016. During the reporting period, exploration activity consisted of field visits by Taruga staff to undertake geological review of the Kossa-Borobon trend, review artisanal mining activities to evaluate geological control on mineralisation and to review targets for additional drilling. The Company continued communication with the Government regarding the licences and proposed work programme and is reviewing the potential for further exploration in the new field season. TARUGA IN COTE D’IVOIRE The Mankono concession is located in central Cote d’Ivoire and was granted to Taruga in 2013. The Company has continued to follow the renewal application for the Mankono concession, however at this stage there is no advancement to report. COBALT EXPLORATION, AUSTRALIA During the year, the Company applied for two new prospect areas with the potential for Cobalt mineralisation in the mid-west area of Western Australia. The applications are in an early stage and all compliance requirements have been fulfilled to ensure grant of the licences in the future. Taruga has currently applied for two licences, with targeting based on geological mapping, geochemical sampling completed by the Geological Survey of Western Australia (“GSWA”) and initial field inspection completed by the Company. The licence applications are shown below, with the mapped geology of the “Yaghong North” project shown in Figure 3. Taruga Gold Limited Page 6 REVIEW OF OPERATIONS AND CONTROLLED ENTITIES Figure 2: Location of Taruga Tenement Applications, Western Australia. Following grant of tenements, Taruga is proposing an exploration program of surface mapping and geochemical sampling. Initial field reconnaissance completed indicates that the concessions are amenable to surface geochemistry, with areas of outcropping geology and areas of transported surficial cover related to sheetwash drainage. No significant exploration for Cobalt has been completed and the wide spaced geochemical sampling completed by the GSWA provides early indications of potential, however a coherent exploration program is required to assess the area. Taruga Gold Limited Page 7 REVIEW OF OPERATIONS AND CONTROLLED ENTITIES Figure 3: Yaghong North – Surface geology and target trends for Cobalt exploration PROJECT EVALUATION ACTIVITIES Cobalt Exploration, Democratic Republic of Congo PEPM 4019 Technical Summary PEPM4019 (Permis d' Exploitation de Petite Mine) covers 7.5 square kilometres within the prolific Central African Copperbelt, a 700km long x 400km wide arcuate fold belt which hosts a large number of sediment hosted, world-class copper-cobalt deposits both in Katanga, south-eastern DRC and Zambia. Copper- cobalt mineralization was initially thought to be constrained to the lower sedimentary sequences within the Lower Roan sub-group of rocks known as the Mines Group (R- 2). Recent exploration, however, has led to the discovery of several deposits in the overlying Mwashya (R-4) and Nguba Groups with the most significant being Ivanhoe’s Kamoa deposits hosted in the “Grand Conglomerate Formation” at the base of the Nguba Group (also referred to as the Lower Kundulungu) which highlights the potential for new copper- cobalt discoveries. Locally, the project consists predominantly of carbonaceous shales and siltstones from the Kundulungu Group which have been transgressed by west-east trending Roan breccias. The project is divided by a north-west trending river system which potentially follows an underlying fault zone. Historical work had been limited to systematic soil sampling on a 50m x 50m grid by the current licence holder, La Société Geoscience Congo Services (GCS) where a number of highly significant copper (up to 4,970ppm Cu) and cobalt (up to 1,985ppm Co) anomalies were defined as shown in Figures 2 and 3. A total of 2,319 samples were collected in 1m deep pits and screened through a -80 mesh sieve. Samples were then analysed using a Niton XRF analyser. QAQC was limited to repeat and blank samples. No certified reference materials (CRM’s) were analysed. Taruga Gold Limited Page 8 REVIEW OF OPERATIONS AND CONTROLLED ENTITIES During the June quarter, the Company continued Due Diligence investigation of a potential acquisition of the Copper/Cobalt PEPM4019 project in the Democratic Republic of Congo (“DRC”). Taruga completed a geochemical sampling program designed to verify the initial coincident Copper/Cobalt anomaly defined by the Vendor group sampling. While the completed geochemical sampling indicated anomalous results, the work did not significantly enhance the anomaly and the relationship between the Cobalt and Copper anomalism is less defined. Taruga announced the withdrawal from the potential acquisition in July 2017. Taruga is continuing to review and evaluate other opportunities prospective for copper, cobalt and lithium within the DRC in conjunction with its DRC consultants. CORPORATE Capital Raisings On 8 July 2016, the Company announced the allotment of 8,885,885 new fully paid shares under the Shortfall Placement of $0.03 per new share, following the Company’s two (2) for three (3) non-renounceable rights issue announced to the market on 7 June 2016. Total applications for 8,885,885 New Shares raising gross proceeds of $266,577 before fees was received. In December 2016, the Company advised that 2,090,001 unlisted options exercisable at $0.50 on or before 1 December 2016 had lapsed unexercised. On 15 February 2017, the Company announced a capital raising via a two tranche placement to raise up to $899,500 before costs. The placement of 25,700,000 ordinary shares to new and existing shareholders at an issue price of $0.035 per share was undertaken for project evaluation and general working capital purposes. On 24 February 2017, the Company issued 19,500,000 fully paid ordinary shares (Tranche 1), raising $682,500. Tranche 2, consisting of an additional 6,200,000 fully paid ordinary shares, was approved by shareholders at a general meeting on 7 April 2017. On 31 May 2017, 9,608,898 unlisted options exercisable at $0.15 on or before 31 May 2017 lapsed unexercised. Board Appointments On 15 July 2016, the Company announced the appointment of non-executive director Mr Gary Steinepreis to the board. Additionally, Mr Frank Terranova and Mr Myles Campion resigned from the board on the same day. Following the end of the reporting period, the Company announced changes to the board with the resignation of Mr Daniel Smith, and the appointment of Miss Sheena Eckhof as Non-executive Director of the Company. Miss Eckhof holds a Bachelor of Commerce degree, majoring in Corporate and Investment Finance, from the University of Western Australia and has previously worked with two globally renowned Investment Banks, with a specific focus on the resources sector. Miss Eckhof currently works within a Business Development and Investor Relations role with a West Australian mid-cap resources company. Competent person’s statement The information in this report that relates to geological information and exploration results is based on information compiled by Mr Bernard Aylward. Mr Aylward is a Non-executive Director of Taruga Gold Limited and is also the CEO of Kodal Minerals Plc. Mr Aylward is a member of The Australasian Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking t o qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Aylward consents to the inclusion in the report of the matters based on information in the form and context in which it appears. Taruga Gold Limited Page 9 DIRECTOR’S REPORT AND CONTROLLED ENTITIES DIRECTORS’ REPORT Your Directors submit their report on the consolidated entity consisting of Taruga Gold Limited and its controlled entities (“Taruga”) for the period ended 30 June 2017. DIRECTORS The following persons were Directors of Taruga Gold Limited during the period and up to the date of this report unless otherwise stated: Frank Terranova Myles Campion Bernard Aylward Daniel Smith Gary Steinepreis Sheena Eckhof Non-executive Chairman Non-executive Director Non-executive Director Non-executive Director & Company Secretary Non-executive Director Non-executive Director In office from In office to 3 September 2013 27 August 2014 21 October 2011 27 August 2014 15 July 2016 6 September 2017 15 July 2016 15 July 2016 present 6 September 2017 present present PARTICULARS OF DIRECTORS Bernard Aylward Non-Executive Director BSc (Hons.), MAusIMM Qualifications and experience Mr Aylward is a geologist with over 20 years’ experience as a manager and exploration geologist in the mining and exploration industry in a variety of commodities. Mr Aylward’s experience includes serving as the Chief Operating Officer of International Goldfields Ltd, General Manager of Azumah Resources Ltd (Ghana), and Exploration Manager for Croesus Mining NL. Mr Aylward has been involved in the discoveries and management of the Bepkong, Julie, Collette and Kunche deposits in Ghana, as well as the Deep South gold deposit, Gladstone North deposit, St Patrick’s, Norseman Reef, and the Safari Bore gold deposit. Mr Aylward brings considerable relevant skills and experience to the Board. He is a member of the Australasian Institute of Mining and Metallurgy. Interest in Shares and Options Fully Paid Shares – 5,324,386 Options – Nil Special Responsibilities None. Directorships held in listed entities Company Name Kodal Minerals Plc. Appointed 20 May 2016 Resigned - Taruga Gold Limited Page 10 DIRECTOR’S REPORT AND CONTROLLED ENTITIES Gary Steinepreis Non-Executive Director B.Com, CA Qualifications and experience Mr Steinepreis has in excess of 20 years’ experience with ASX-listing rules, corporate governance and equity capital raisings. Mr Steinepreis is a Chartered Accountant and holds a Bachelor of Commerce from UWA. Mr Steinepreis is currently a Non-Executive Director of Helios Energy Ltd and CFOAM Limited. Interest in Shares and Options Fully Paid Shares – 4,152,502 Options – Nil Special Responsibilities None. Directorships held in listed entities Company Name Helios Energy Ltd CFOAM Limited AVZ Minerals Ltd Monto Minerals Ltd Norseman Gold Plc Intercept Minerals Ltd Appointed 4 June 2010 30 March 2016 30 November 2012 16 June 2009 3 December 2007 8 April 2014 Resigned - - 21 August 2017 12 January 2016 9 March 2016 2 February 2015 Sheena Eckhof Non-Executive Director B.Com Qualifications and experience Miss Eckhof holds a Bachelor of Commerce degree, majoring in Corporate and Investment Finance, from the University of Western Australia and has previously worked with two globally renowned Investment Banks, with a specific focus on the resources sector. Miss Eckhof currently works within a Business Development and Investor Relations role with a West Australian mid-cap resources company. Interest in Shares and Options Fully Paid Shares – Nil Options – Nil Special Responsibilities None. Directorships held in listed entities None. Taruga Gold Limited Page 11 DIRECTOR’S REPORT AND CONTROLLED ENTITIES Information on Former Directors Myles Campion Mr Campion is a geologist with a BSc.(Hons.) from University of Wales College Cardiff and a MSc.(MinEx) from the Royal School of Mines in London and is an Associate of the Royal School of Mines. Mr Campion has over 25 years' experience in the natural resources sector, including Resource Analyst, Fund Manager, equities research and project and debt financing. Frank Terranova Mr Terranova is a senior executive with extensive experience in corporate finance and executive management in mining and agricultural sectors. He is a Fellow of the Institute of Chartered Accountants and has held a number of executive roles in ASX listed companies including Managing Director of Allied Gold Mining PLC which was acquired by St Barbara Limited in 2012 for A$560M. He subsequently became Managing Director of Polymetals Mining Limited overseeing its merger with Southern Cross Goldfields Limited and led the organisational transformation and a re-capitalisation program of that Group. Daniel Smith Mr Smith is a member of the Australian Institute of Company Directors and the Governance Institute of Australia, with a background in finance. He has primary and secondary capital markets expertise, having been involved in a number of IPOs and capital raisings. He is also a director of Minerva Corporate, a private corporate consulting firm. OPERATING AND FINANCIAL REVIEW A review of the operations of the consolidated entity during the financial year is contained in the Review of Operations section of this Annual Report. The Company’s strategy in West Africa is to continue with the targeted exploration programs. The Company will also continue to review opportunities as they arise with a focus on advanced gold projects located within West Africa, as well as gold and other metals within Central Africa and Western Australia PRINCIPAL ACTIVITIES The principal activity of the consolidated entity during the year was mineral exploration in West Africa and Australia. Operating Results Consolidated comprehensive loss after income tax for the financial period is $381,328 (2016: $1,429,955). Financial Position At 30 June 2017 the Company had cash reserves of $1,740,836 (2016: $848,735). Dividends No dividends were paid during the year and no recommendation is made as to dividends. Taruga Gold Limited Page 12 DIRECTOR’S REPORT AND CONTROLLED ENTITIES SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS In the opinion of the Directors, there were no significant changes in the state of affairs of the consolidated entity that occurred during the financial year under review not otherwise disclosed in this report or in the consolidated accounts. MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR On 6 September 2017 the Company announced the appointment of non-executive director Miss Sheena Eckhof to the board. Additionally, Mr Daniel Smith resigned from the board on the same day, but will remain as Company Secretary to the Company. LIKELY DEVELOPMENTS AND EXPECTED RESULTS The Company intends to continue its exploration activities in Niger and Cote d’Ivoire and investigate the acquisition of new mineral projects. Taruga has also applied for two new prospect areas with the potential for Cobalt mineralisation in the mid- west area of Western Australia. The applications are in an early stage and the Company is proposing an exploration program of surface mapping and geochemical sampling. The Company is also continuing to review and evaluate other opportunities prospective for copper, cobalt and lithium within the DRC in conjunction with its DRC consultants. Further information on likely developments in the operations of the consolidated entity and the expected results of operations have not been included in this report because the Directors believe it would be likely to result in unreasonable prejudice to the Company. MEETINGS OF DIRECTORS The following table sets out the number of meetings of the Company’s Directors held during the year ended 30 June 2017, and the number of meetings attended by each Director. Gary Steinepreis 4 Bernard Aylward Sheena Eckhof1 Daniel Smith2 Frank Terranova3 Myles Campion3 Number eligible to attend Number attended 2 2 - 2 - - 2 2 - 2 - - 1 Miss Eckhof was appointed 6 September 2017 2 Mr Smith resigned 6 September 2017 3 Mr Terranova and Mr Campion resigned on 15 July 2016 4 Mr Steinepreis was appointed 15 July 2016 Taruga Gold Limited Page 13 DIRECTOR’S REPORT AND CONTROLLED ENTITIES REMUNERATION REPORT This report details the nature and amount of remuneration for each director and “Key Management Personnel” of Taruga Gold Limited. The information provided in the remuneration report includes remuneration disclosures that are required under Accounting Standards AASB 124 “Related Party Disclosures”. These disclosures have been subject to audit. Key Management Personnel are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, including any director. Remunerations policy The board policy is to remunerate Directors at market rates for time, commitment and responsibilities. The Board determines payment to the Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of Directors’ fees that can be paid is subject to approval by shareholders in general meeting, from time to time. Fees for Non-Executive Directors are not linked to the performance of the consolidated entity. However, to align Directors’ interests with shareholders’ interests, the Directors are encouraged to hold securities in the Company. The Company’s aim is to remunerate at a level that will attract and retain high-calibre Directors and employees. Company officers and Directors are remunerated to a level consistent with the size of the Company. Performance-based remuneration The Company does not pay any performance-based component of salaries. Details of remuneration for year ended 30 June 2017 Directors’ Remuneration No salaries, commissions, bonuses or superannuation were paid or payable to Directors during the year. Remuneration was by way of fees paid monthly in respect of invoices issued to the Company by the Directors or companies associated with the Directors in accordance with agreements between the Company and those entities. Details of the agreements are set out below. Agreements in respect of cash remuneration of Directors: Executive Directors None Non-executive Directors The Company’s constitution provides that the Non-executive Directors may collectively be paid as remuneration for their services a fixed sum not exceeding the aggregate sum determined by a general meeting. The aggregate remuneration has been set at an amount of $300,000 per annum. Taruga Gold Limited Page 14 DIRECTOR’S REPORT AND CONTROLLED ENTITIES Mr Daniel Smith (through Minerva Corporate Pty Ltd) was on a contract dated 26 August 2016 which provided for a fixed fee of $2,000 per month. Mr Gary Steinepreis is on a contract dated 15 July 2016, which provides for a fixed fee of $2,000 per month. Mr Bernard Aylward is on a contract dated 15 July 2016, which provides for a fixed fee of $2,000 per month. Miss Sheena Eckhof is on a contract dated 6 September 2017, which provides for a fixed fee of $2,000 per month. A Director may be paid fees or other amounts as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties. Executive Directors may be paid on commercial terms as the Directors see fit. The total remuneration paid to Key Management Personnel is summarised below: Year ended 30 June 2017 Director Associated Company Short-term Benefits Gary Steinepreis Bernard Aylward Daniel Smith Minerva Corporate Pty Leisurewest Consulting Pty Ltd Matlock Services Pty Ltd Geological Ltd Myles Campion Frank Terranova Year ended 30 June 2016 Director Associated Company Matlock Geological Services Pty Ltd Minerva Corporate Pty Ltd Bernard Aylward Daniel Smith Myles Campion Frank Terranova Fees Consultancy Options $ $ $ Total Performance related % $ 23,000 - - 24,000 24,500 - - 47,500 - - - 24,000 - - - - - - 23,000 24,000 24,500 - - 71,500 - - - - - Short-term Benefits Fees Consultancy Options $ $ $ Total Performance related % $ - 88,972 30,000 30,000 48,000 108,000 - - - 88,972 - - - 88,972 30,000 30,000 - 48,000 - 196,972 - - - - The consolidated entity does not have any full time Executive officers. There were no performance related payments made during the year. Taruga Gold Limited Page 15 DIRECTOR’S REPORT AND CONTROLLED ENTITIES Shareholdings of Key Management Personnel: Balance 30 June 2016 Balance on Appointment Additions Balance on Resignation Balance 30 June 2017 Bernard Aylward Daniel Smith1 Myles Campion2 Frank Terranova3 Gary Steinepreis4 Sheena Eckhof5 5,324,386 764,444 588,889 1,095,289 - - - - - - - 314,285 - - 5,324,386 1,078,729 - - 588,889 1,095,289 - - 3,210,002 942,500 - - - - 4,152,502 - 7,773,008 3,210,002 1,256,785 1,684,178 10,555,617 1Mr Smith resigned on 6 September 2017 with a shareholding balance of 1,078,729 shares 2Mr Campion resigned on 15 July 2016 with a shareholding balance of 588,889 shares. 3Mr Terranova resigned on 15 July 2016 with a shareholding balance of 1,095,289 shares. 4Mr Steinepreis was appointed on 15 July 2016 with a shareholding balance of 3,210,002 shares. 5Miss Eckhof was appointed on 6 September with a shareholding balance of NIL. Balance 30 June 2015 Additions Consolidation Balance on Appointment Additions Balance on Resignation Balance 30 June 2016 Bernard Aylward Daniel Smith1 Myles Campion2 Frank Terranova3 Gary Steinepreis4 43,665,188 14,444,444 (55,785,246) - - 2,444,444 (2,346,666) 2,222,222 (2,133,333) 7,160,000 3,555,555 (10,286,932) - - - 50,825,188 22,666,665 (70,552,177) - - - - - - 3,000,000 666,666 500,000 666,666 - 4,833,332 - - - - - - 5,324,386 764,444 588,889 1,095,289 - 7,773,008 1Mr Smith resigned on 6 September 2017 with a shareholding balance of 1,078,729 shares 2Mr Campion resigned on 15 July 2016 with a shareholding balance of 588,889 shares. 3Mr Terranova resigned on 15 July 2016 with a shareholding balance of 1,095,289 shares. 4Mr Steinepreis was appointed on 15 July 2016 with a shareholding balance of 3,210,002 shares. Accounts payable Taruga Gold Limited Consolidated Entity 2017 $ Consolidated Entity 2016 $ 26,120 40,111 Page 16 DIRECTOR’S REPORT AND CONTROLLED ENTITIES Taruga Gold Ltd Director Mr Daniel Smith is a current director of Minerva Corporate Pty Ltd. Minerva Corporate Pty Ltd provided corporate consultancy services to Taruga Gold Ltd during the period that Mr Daniel Smith was a director. Payments to Minerva Corporate Pty Ltd during the period total $81,168 (2016: $105,000). Option holdings of Key Management Personnel: Balance 30 June 2016 Balance on Appointment Additions Balance on Resignation Issues/ (Expiry) Balance 30 June 2017 Bernard Aylward Daniel Smith Myles Campion Frank Terranova Gary Steinepreis1 Sheena Eckhof2 303,333 60,000 60,000 121,600 - - 544,933 - - - - - - - - - - - - - - - - (303,333) (60,000) (60,000) (121,600) - - - - - - (181,600) (363,333) - - - - - - - 1Mr Steinepreis was appointed on 15 July 2016 with an option holding balance of NIL. 2Miss Eckhof was appointed on 6 September 2017 with an option holding balance of NIL. Balance 30 June 2015 Additions Consolidation Balance on Appointment Issues/ (Expiry) Balance on Resignation Balance 30 June 2016 Bernard Aylward Daniel Smith Myles Campion Frank Terranova Gary Steinepreis1 9,250,000 3,333,333 (12,080,000) 1,500,000 1,500,000 3,040,000 - - - - - (1,440,000) (1,440,000) (2,918,400) - 15,290,000 3,333,333 (17,878,400) - - - - - - (200,000) - - - - (200,000) - - - - - - 303,333 60,000 60,000 121,600 - 544,933 End of remuneration report ENVIRONMENTAL ISSUES The consolidated entity has conducted exploration activities on mineral tenements. The right to conduct these activities is granted subject to environmental conditions and requirements. The consolidated entity aims to ensure a high standard of environmental care is achieved and, as a minimum, to comply with relevant environmental regulations. There have been no known breaches of any of the environmental conditions. Taruga Gold Limited Page 17 DIRECTOR’S REPORT AND CONTROLLED ENTITIES OPTIONS At the date of this report, there were no share options on issue. The names of persons who currently hold options are entered in a register pursuant to Section 170 of the Corporations Act 2001. No person entitled to exercise any option has or had, by virtue of the option, a right to participate in any share issue of the Company or any other corporation. Subsequent to year end no options have been issued or exercised. INDEMNIFICATION OF DIRECTORS During the financial year, the Company has not given an indemnity or entered into an agreement to indemnify any of the Directors. AUDITOR HLB Mann Judd continues in office in accordance with section 327 of the Corporations Act 2001. NON-AUDIT SERVICES There were no non-audit services provided during the current year by our auditors, HLB Mann Judd. PROCEEDINGS ON BEHALF OF COMPANY No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. AUDITORS’ INDEPENDENCE DECLARATION Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the directors of the company with an Independence Declaration in relation to the review of the interim financial report. This Independence Declaration is set out on page 20 and forms part of this directors’ report for the year ended 30 June 2017. This report is signed in accordance with a resolution of the Board of Directors made pursuant to section 306(3) of the Corporations Act 2001. Gary Steinepreis Non-Executive Director Dated Perth 29 September 2017 Taruga Gold Limited Page 18 CORPORATE GOVERNANCE STATEMENT AND CONTROLLED ENTITIES The Company has adopted systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company's needs. To the extent they are applicable, the Company has adopted the Corporate Governance Principles and Recommendations (3rd Edition) as published by ASX Corporate Governance Council. The following corporate governance charters, codes and policies have been implemented and are available on the Company’s website at www.tarugagold.com.au: • • • • • • • Board Charter Corporate Code of Conduct Diversity, Nomination and Remuneration Committee Charter Audit and Risk Committee Charter Shareholder Communication Guidelines and Policy Disclosure Policy Securities Trading Policy Taruga Gold Limited Page 19 AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of Taruga Gold Limited for the year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no contraventions of: a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) any applicable code of professional conduct in relation to the audit. Perth, Western Australia 29 September 2017 M R Ohm Partner HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533 Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES Note CONSOLIDATED Year to 30 June 2017 $ Year to 30 June 2016 $ Revenue Other income Depreciation Consultants Impairment expense Professional fees Travel and accommodation Office and communication costs Exchange loss Other expenses Loss from continuing operations before income tax Income tax expense 2 3 4 Net loss for the period from continuing operations Loss from discontinued operations net of tax 23 Other comprehensive income Items that may be reclassified to profit or loss Exchange loss on translation of foreign subsidiaries Transfer of exchange gain on sale of subsidiaries (4,666) - 12,254 130,353 10,127 73,107 2,784 45,057 75 68,746 (1,698) (154,661) 17,194 241,427 (4,599) 132,101 36,461 44,358 17,412 66,419 337,837 394,414 - 337,837 - 337,837 43,491 - - 394,414 1,020,642 1,415,056 (1,182) 16,081 Total comprehensive loss for the period 381,328 1,429,955 Basic and diluted loss per share (cents per share) Basic and diluted loss per share from continuing operations (cents per share) 19 19 0.39 0.39 2.18 0.61 The accompanying notes form part of these financial statements. Taruga Gold Limited Page 21 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 AND CONTROLLED ENTITIES Note 5 6 7 8 CONSOLIDATED 30 June 2017 $ 30 June 2016 $ 1,740,836 13,696 848,735 18,513 1,754,532 867,248 37,916 6,995,457 50,242 7,029,813 7,033,373 7,080,055 8,787,905 7,947,303 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Total Current Assets NON CURRENT ASSETS Plant and equipment Mineral exploration and evaluation Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 9 43,620 135,129 Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY 43,620 135,129 43,620 135,129 8,744,285 7,812,174 11 12 12 13,821,735 (111,896) (4,965,554) 12,508,296 (33,365) (4,662,757) 8,744,285 7,812,174 The accompanying notes form part of these financial statements. Taruga Gold Limited Page 22 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES Consolidated Issued Capital Options Reserve Accumulated Losses Total Equity Foreign Currency Translation Reserve $ $ $ $ $ 11,767,286 1,991,641 (1,037,213) - 681,344 - - 2,640 (648,944) (3,896,645) - - - 648,944 (83,304) - - - - 8,468,681 1,991,641 (1,037,213) 2,640 - (213,418) - - - - - - - - (1,415,056) - - - (1,182) (213,418) (1,415,056) (1,182) - 16,081 16,081 12,508,296 35,040 (4,662,757) (68,405) 7,812,174 12,508,296 1,400,907 35,040 - (4,662,757) - (68,405) - 7,812,174 1,400,907 - (87,468) - (35,040) - - 35,040 - (337,837) - (87,468) (337,837) - - - 13,821,735 - - - (4,965,554) (43,491) (111,896) (43,491) 8,744,285 Year to 30 June 2016 As at 1 July 2015 Issue of shares In specie distribution Issue of options Transfer of reserve to accumulated losses on expiry of options Share issue expenses Loss for the period Exchange loss on translation of foreign subsidiaries Transfer of exchange gain on sale of subsidiaries As at 30 June 2016 Year to 30 June 2017 As at 1 July 2016 Issue of shares Transfer of reserve to accumulated losses on expiry of options Share issue expenses Loss for the period Exchange loss on translation of foreign subsidiaries As at 30 June 2017 The accompanying notes form part of these financial statements. Taruga Gold Limited Page 23 STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES CONSOLIDATED Note Year to 30 June 2017 $ Year to 30 June 2016 $ CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers Interest income received (399,159) 4,666 Net cash used in operating activities 16 (394,493) CASH FLOWS FROM INVESTING ACTIVITIES Payments for exploration expenditure Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Share issue transaction costs Net cash provided by financing activities Net increase in cash held Cash and cash equivalents at the beginning of the period (10,332) (10,332) 1,400,907 (104,397) 1,296,510 891,685 848,735 Effect of exchange rate fluctuations on cash held 416 Cash and cash equivalents at the end of the year 1,740,836 (289,546) 1,698 (287,848) (681,442) (681,442) 1,102,374 (105,751) 996,623 27,333 830,111 (8,709) 848,735 The accompanying notes form part of these financial statements. Taruga Gold Limited Page 24 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 1 – STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and complies with other requirements of the law. Cost is based on the fair values of the consideration given in exchange for assets. The financial report has also been prepared on a historical cost basis. The financial report is presented in Australian dollars. The company is a listed public company, incorporated in Australia and operating in West Africa. The entity’s principal activity is mineral exploration. The accounting policies detailed below have been consistently applied to all of the periods presented unless otherwise stated. The financial statements are for the consolidated entity consisting of Taruga Gold and its subsidiaries. For the purposes of preparing the consolidated financial statements, the Group is a for profit entity. The financial report has also been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, and financial assets and financial liabilities for which the fair value basis of accounting has been applied. Statement of Compliance The financial report was authorised for issue on 29 September 2017. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). Adoption of new and revised standards Changes in accounting policies on initial application of Accounting Standards In the year ended 30 June 2017, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the company’s operations and effective for annual reporting periods beginning on or after 1 July 2016. It has been determined by the Directors that, there is no impact, material or otherwise, of the new and revised standards and interpretations on its business and therefore no change is necessary to Company accounting policies. The Directors have also reviewed all of the new standards and interpretations in issue but not yet effective and determined that, there is no impact, material or otherwise, on the company’s business and therefore no change is necessary to Company accounting policies. No retrospective change in accounting policy or material reclassification has occurred requiring the inclusion of a third Statement of Financial Position as at the beginning of the comparative financial year, as required under AASB 101. Taruga Gold Limited Page 25 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES Accounting Policies (a) Basis of Consolidation A controlled entity is any entity controlled by Taruga Gold Limited. Control exists where Taruga Gold Limited has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with Taruga Gold Limited to achieve the objectives of Taruga Gold Limited. All controlled entities have a 30 June financial year-end. All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profit or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity. Where controlled entities have entered or left the consolidated entity during the year, their operating results have been included from the date control was obtained or until the date control ceased. (b) Income Tax The charge for current income tax expenses is based on the result for the year adjusted for any non- assessable or disallowable items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance date. Deferred tax is accounted for using the liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amount in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity. Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary difference can be utilised. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the consolidated entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. (c) Plant and Equipment Each class of plant and equipment is carried at cost less, where applicable, any accumulated depreciation. Plant and equipment are measured on the cost basis less depreciation and impairment losses. The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future consolidated benefits associated with the item will flow to the consolidated entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during the financial period in which they are incurred. Taruga Gold Limited Page 26 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES Depreciation The depreciable amount of all fixed assets including capitalised lease assets, but excluding computers, is depreciated on a reducing balance commencing from the time the asset is held ready for use. Computers are depreciated on a straight line basis over their useful lives to the consolidated entity commencing from the time the asset is held ready for use. The depreciation rates used for each class of depreciable assets are: Class of Fixed Asset: Plant and Equipment Depreciation Rate: 15 – 50% The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the statement of comprehensive income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings. (d) Exploration and Evaluation Expenditure Exploration and evaluation expenditure incurred is either written off as incurred or accumulated in respect of each identifiable area of interest. Tenement acquisition costs are initially capitalised. Costs are only carried forward to the extent that they are expected to be recouped through the successful development of the areas, sale of the respective areas of interest or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the areas is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are expensed as incurred and treated as exploration and evaluation expenditure. (e) Impairment of Assets At each reporting date, the Directors review the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the assets, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income. Where it is not possible to estimate the recoverable amount of an individual asset, the consolidated entity estimates the recoverable amount of the cash-generating unit to which the asset belongs. (f) Provisions Provisions are recognised where there is a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured. Taruga Gold Limited Page 27 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES (g) Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. (h) Revenue Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. (i) 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 expenses. Receivables and payables in the statement of financial position are shown inclusive of GST. (j) Contributed Equity 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. (k) Segment Reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of Taruga Gold Limited. (l) Critical accounting estimates and judgements The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Key Estimates – Impairment The Directors assess impairment at each reporting date by evaluating conditions specific to the consolidated entity that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates. An impairment was recognised in the prior year in respect of costs carried forward as exploration assets in Note 8. The ultimate recoupment of value is dependent on the successful development and commercial exploitation or sale of the respective areas. The Directors have considered the potential existence of indicators of impairment at 30 June 2017 in relation to the Group’s exploration portfolio and determined that none exist. Taruga Gold Limited Page 28 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES (m) Share based payments – shares and options The fair value of shares and share options granted is recognised as an expense with a corresponding increase in equity. Fair value is measured at grant date and recognised over the period during which the grantees become unconditionally entitled to the shares or share options. The fair value of share grants at grant date is determined by the share price at that time. The fair value of share options at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, any vesting and performance criteria, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk free rate for the term of the option. Upon the exercise of the option, the balance of the share-based payments reserve relating to the option is transferred to share capital. (n) Foreign currency translation Both the functional and presentation currency of Taruga Gold Limited is Australian dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance date. All exchange differences in the consolidated financial report are taken to profit or loss with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in profit or loss. Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. The functional currency of the foreign operations during the period and up to the disposal of some of the subsidiaries being the entities - Gecko Gold Niger, Gecko Gold CI and MGS Ghana is CFA Francs. As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of Taruga Gold Limited at the rate of exchange ruling at the balance date and income and expense items are translated at the average exchange rate for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used. The exchange differences arising on the translation are taken directly to a separate component of equity, being recognised in the foreign currency translation reserve. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss. Taruga Gold Limited Page 29 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES In addition, in relation to the partial disposal of a subsidiary that does not result in the Group losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non- controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates or jointly controlled entities that do not result in the Group losing significant influence or joint control), the proportionate share of the accumulated exchange differences is reclassified to profit or loss. (o) Parent entity financial information The financial information for the parent entity, Taruga Gold Limited, disclosed in Note 22 has been prepared on the same basis as the consolidated financial statements, except for Investments in subsidiaries which are accounted for at cost in the parent entity’s financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments. Trade and other payables (p) These amounts represent liabilities for goods and services provided to the company prior to the end of financial year which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. NOTE 2 – REVENUE Revenue Interest received Total Revenue NOTE 3 – LOSS FROM CONTINUING ACTIVITIES BEFORE INCOME TAX Expenses Depreciation of non-current assets Plant and Equipment Office furniture and equipment Motor vehicles Total depreciation of non-current assets NOTE 4 – INCOME TAX Consolidated 2017 $ 4,666 4,666 2017 $ 1,607 1,883 8,764 12,254 2016 $ 1,698 1,698 2016 $ 1,008 2,876 13,310 17,194 The prima facie tax expense at 30% on loss from continuing activities is reconciled to the income tax expense in the financial statements as follows: Loss from continuing activities 2017 $ 2016 $ 337,837 1,415,056 Prima facie income tax expense at 30% 101,351 424,517 Taruga Gold Limited Page 30 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 4 – INCOME TAX (CONTINUED) Tax effect of permanent differences Share issue costs amortised Other non-deductible expenses 40,894 3,038 69,530 - Income tax expense adjusted for permanent differences 145,283 494,047 Deferred tax asset not brought to account Income tax expense Income tax benefit (145,283) - (494,047) - The directors estimate the cumulative unrecognised deferred tax asset attributable to the company and its controlled entity at 30% is as follows: DEFERRED TAX ASSETS Revenue Losses after permanent differences Capital Raising Costs yet to be claimed Consolidated 2017 $ 2016 $ 2,011,936 163,579 2,175,515 1,910,585 - 1,910,585 The potential deferred tax asset has not been brought to account in the financial report at 30 June 2017 as the Directors do not believe it is appropriate to regard the realisation of the asset as probable. This asset will only be obtained if: (a) (b) (c) The company and its controlled entity derive future assessable income of an amount and type sufficient to enable the benefit from the deductions for the tax losses and the unrecouped exploration expenditure to be realised; The company and its controlled entity continue to comply with the conditions for deductibility imposed by tax legislation; and No changes in tax legislation adversely affect the company and its controlled entity in realising the benefit from the deductions for the tax losses and unrecouped exploration expenditure. Franking Credits No franking credits are available at balance date for the subsequent financial year. NOTE 5 – CASH AND CASH EQUIVALENTS Cash at bank and on hand 1,740,836 848,735 Cash at bank earns interest at floating rates based on daily deposit rates. Taruga Gold Limited Page 31 2017 $ 2016 $ NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 6 – TRADE AND OTHER RECEIVABLES Current GST receivable Other receivables 2,013 11,683 13,696 5,447 13,066 18,513 NOTE 7 – PLANT AND EQUIPMENT 2016 Consolidated Cost Balance Brought Forward Acquisitions Disposals Foreign exchange movement Balance Carried Forward Accumulated Depreciation Balance Brought Forward Disposals Charge Foreign exchange movement Balance Carried Forward Motor Vehicles $ 159,720 - (42,240) 2,723 120,203 Plant & Equipment $ 52,175 - (30,285) 508 22,398 Fixtures & Fittings $ 25,337 - - 588 25,925 Total $ 237,232 - (72,525) 3,819 168,526 112,896 (42,240) 13,310 305 84,271 40,557 (30,285) 1,008 4,528 15,808 15,279 - 2,876 50 18,205 168,732 (72,525) 17,194 4,883 118,284 Net Book Value 30 June 2016 35,932 6,590 7,720 50,242 2017 Balance Brought Forward Foreign exchange movement Balance Carried Forward Accumulated Depreciation Balance Brought Forward Charge Foreign exchange movement Balance Carried Forward 120,203 748 120,951 22,398 139 22,537 25,925 161 26,086 168,526 1,048 169,574 84,271 8,764 799 93,834 15,808 1,608 146 17,562 18,205 1,882 175 20,262 118,284 12,254 1,120 131,658 Net Book Value 30 June 2017 27,117 4,975 5,824 37,916 Taruga Gold Limited Page 32 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 8 – MINERAL EXPLORATION AND EVALUATION Opening balance Expenditure during the year Disposal of subsidiaries Foreign exchange movement Closing balance Consolidated 2017 $ 7,029,813 10,804 - (45,160) 6,995,457 2016 $ 8,508,993 534,242 (2,022,553) 9,131 7,029,813 The ultimate recoupment of exploration expenditure carried forward is dependent upon successful development and commercial exploitation, or sale of the respective areas. NOTE 9 – TRADE AND OTHER PAYABLES Trade creditors Other payables 2017 $ 26,120 17,500 43,620 2016 $ 103,636 31,493 135,129 Trade payables are non-interest bearing and are normally settled on 30 day terms. NOTE 10 – INTEREST BEARING LIABILITIES Financing Agreements No overdraft facilities have been formalised at 30 June 2017 (2016: Nil) and neither the company nor its controlled entity have lines of credit at 30 June 2017 (2016: Nil). NOTE 11 – ISSUED CAPITAL (a) Issued capital 103,917,239 shares fully paid 2017 $ 2016 $ 13,821,735 12,508,296 Movements in ordinary share capital of the Company were as follows: Opening balance at 30 June 2015 Share Purchase Plan Placement - Tranche 2 Partial Placement of SPP Shortfall Shares issued in lieu of professional fees Consolidation 1:25 Shares issued to advisor in lieu of cash Issue of shares in lieu of accrued directors' fees and consultant fees In-specie distribution of KOD shares Placement Transaction costs Closing balance at 30 June 2016 Number 447,821,877 15,777,775 139,157,847 2,222,222 19,333,332 (599,340,483) 97,777 $ 11,767,286 71,000 626,210 10,000 87,000 - 8,018 4,833,332 145,000 - 31,599,995 - 61,503,674 (1,037,213) 948,000 (117,005) 12,508,296 Taruga Gold Limited Page 33 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 11 – ISSUED CAPITAL (CONTINUED) Opening balance at 30 June 2016 Allotment of rights issue Shortfall Placement of 6 June 2016 Placement - Tranche 1 Placement - Tranche 2 Transaction costs Closing balance at 30 June 2017 Movements in options were as follows: Opening balance at 30 June 2015 Free attaching options 17 July 2015 Consolidation 1:25 Unlisted options issued 16 October 2015 Lapse of unlisted options Closing balance at 30 June 2016 Opening balance at 30 June 2016 Lapse of $0.50 unlisted options 1/12/2016 Lapse of $0.15 unlisted options 31/05/2017 Closing balance at 30 June 2017 (d) Voting and dividend rights Number 61,503,674 7,827,680 8,885,885 19,500,000 6,200,000 - 103,917,239 $ 12,508,296 234,830 266,577 682,500 217,000 (87,468) 13,821,735 Number $ 67,250,000 240,222,219 (295,173,320) 97,777 (600,000) 11,796,676 11,796,676 (2,090,001) (9,706,675) - 681,344 - - 2,640 (648,944) 35,040 35,040 (32,400) (2,640) - Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. NOTE 12 – RESERVES AND ACCUMULATED LOSSES Options Reserve Foreign Currency Translation Reserve Accumulated Losses Balance at beginning of the year Net loss from ordinary activities Transfer from options reserve on expiry of options Balance at end of the year Taruga Gold Limited Consolidated 2017 $ 2016 $ - (111,896) (111,896) 35,040 (68,405) (33,365) 2017 $ 4,662,757 337,837 (35,040) 4,965,554 2016 $ 3,896,645 1,415,056 (648,944) 4,662,757 Page 34 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 12 – RESERVES AND ACCUMULATED LOSSES (CONTINUED) Options Reserve Balance at beginning of the year Reserve arising on issue of options Transfer to accumulated losses on expiry of options Balance at end of the year Foreign Currency Translation Reserve Balance at beginning of the year Reserve arising on translation of foreign subsidiaries Balance at end of the year Nature and purpose of Reserves Consolidated 2017 $ 2016 $ 35,040 - (35,040) - 681,344 2,640 (648,944) 35,040 2017 $ (68,405) (43,491) (111,896) 2016 $ (83,304) 14,899 (68,405) The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations. The share option reserve contains amounts received on the issue of options over unissued capital of the company. NOTE 13 – COMMITMENTS FOR EXPENDITURE (a) Mineral Tenement Leases In order to maintain current rights of tenure to mining tenements, the consolidated entity will be required to outlay amounts of $550,000 in respect of minimum tenement expenditure requirements and lease rentals (subject to the renewal applications noted on page 6). The obligations are not provided for in the financial report and are payable as follows : Not later than one year Later than 1 year but not later than 2 years Later than 2 years but not later than 5 years 2017 $ 100,000 200,000 250,000 550,000 2016 $ 100,000 200,000 250,000 550,000 Taruga Gold Limited Page 35 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 14 – INVESTMENT IN CONTROLLED ENTITIES Parent Registered Number Country of Incorporation Interest Held Value of investment $ Taruga Gold Limited 153 868 789 Australia Subsidiaries Gecko Gold Niger SARL MGS Ghana Limited Gecko Gold CI SARL RCCM-NI-NIA-2010-B-2625 CA-80, 601 RCCM-CI-ABJ-2010-B-1899 Niger Ghana Cote d’Ivoire 100% 100% 100% 1,316,675 - 1,350,367 NOTE 15 – SEGMENT INFORMATION Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of Taruga Gold Limited. The company operates in one operating segment therefore disclosures are consistent with the financial report. Non-current assets by country Mineral exploration and evaluation Niger Cote D’Ivoire Consolidated 2017 $ 5,637,205 1,358,252 6,995,457 2016 $ 5,659,267 1,370,546 7,029,813 Taruga Gold Limited Page 36 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 16 – NOTES TO THE STATEMENT OF CASH FLOWS Reconciliation of loss after income tax to net operating cash flows Loss from ordinary activities Depreciation Impairment Loss from discontinued operations net of tax Movement in assets and liabilities Receivables Payables Net cash used in operating activities Non cash financing activities Shares issued in lieu of payments Consolidated 2017 $ 2016 $ 337,837 1,415,056 (12,254) (10,127) - 315,457 (17,194) 4,599 (1,020,642) 381,819 4,817 74,219 394,493 36,228 22,818 440,865 - 394,493 (153,017) 287,848 NOTE 17 – RELATED PARTY INFORMATION a) Transaction with Key Management Personnel The transactions with key management personnel have been entered into under terms and conditions no more favourable than those the Company would have adopted if dealing at arm's length. The total remuneration paid to Directors and Executives is summarised below: Former Taruga Gold Ltd Director, Mr Daniel Smith, is a current director of Minerva Corporate Pty Ltd. Minerva Corporate Pty Ltd provided corporate consultancy services to Taruga Gold Ltd during the period that Mr Daniel Smith was a director. Payments to Minerva Corporate Pty Ltd during the period total $81,168 (2016: $105,000). An amount of $7,276 was included in trade payables and other liabilities at 30 June 2017. b) Directors and Executives Disclosures The aggregate compensation made to directors and other key management personnel of the Group is set out below: Short-term employee benefits Post-employment benefits 2017 $ 71,500 - 71,500 2016 $ 196,972 - 196,972 Taruga Gold Limited Page 37 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 18 – REMUNERATION OF AUDITORS Auditing and reviewing of the financial statements of Taruga Gold Limited and of its controlled entities. 2017 $ 25,000 25,000 2016 $ 27,250 27,250 NOTE 19 – LOSS PER SHARE The loss and weighted average number of ordinary shares used in the calculation of basic loss per share is as follows: Loss for the year Loss for the year from continuing operations 2017 $ 337,837 337,837 2016 $ 1,415,056 394,414 Number Number Weighted average number of ordinary shares outstanding during the year used in the calculation of basic loss per share 86,007,316 65,008,402 There are no potential ordinary shares on issue at the date of this report. In accordance with AASB 133, prior year weighted average number of shares has been restated as a result of the consolidation of share capital. NOTE 20 – FINANCIAL INSTRUMENTS Financial Risk Management Policies The consolidated entity’s financial instruments consist mainly of deposits with banks, accounts receivable, accounts payable and hire purchase liabilities. The Board’s overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst maintaining potential adverse effects on financial performance. The Group has developed a framework for a risk management policy and internal compliance and control systems that covers the organisational, financial and operational aspects of the group’s affairs. The Chairman is responsible for ensuring the maintenance of, and compliance with, appropriate systems. Financial Risk Exposures and Management The main risks the group is exposed to through its financial instruments are interest rate risk, foreign currency risk and liquidity risk. Interest Rate Risk The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of change in the market, interest rate and the effective weighted average interest rate on these financial assets, is as follows: Taruga Gold Limited Page 38 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES Financial Assets Cash at Bank Total Financial Assets Weighted Average Effective Floating Interest Rate Interest Rate Consolidated 2017 2016 0.60% 0.60% 2017 $ 1,738,638 1,738,638 2016 $ 844,581 844,581 There are no financial liabilities subject to interest rate fluctuations. The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the statement of financial position and in the notes to and forming part of the financial statements. Interest Rate Sensitivity Analysis The Group has performed a sensitivity analysis relating to its exposure to interest rate risk. This sensitivity analysis demonstrates the effect on the current year results and equity which could result in a change in these risks. At 30 June 2017 the effect on the loss and equity as a result of changes in the interest rate with all other variables remaining constant is as follows: Change in Loss Increase in interest by 2% Decrease in interest by 2% Change in Equity Increase in interest by 2% Decrease in interest by 2% Foreign Currency Risk Consolidated 2017 $ (45,119) 45,119 2016 $ (21,935) 21,935 (45,119) 45,119 (21,935) 21,935 The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. The carrying amount of the Group’s foreign currency denominated monetary assets and monetary liabilities at the reporting date is as follows: Currency West Africa CFA Ghanaian Cedi Liabilities 2017 $ - - Consolidated Assets 2017 $ - - Liabilities 2016 $ - - Assets 2016 $ 164,364 39 Taruga Gold Limited Page 39 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES Foreign currency Other than translational risk the Group has no significant exposure to foreign currency risk at the balance date. Liquidity Risk The group manages liquidity risk by monitoring forecast cash flows. Credit Risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date, is the carrying amount net of any provisions for doubtful debts, as disclosed in the statement of financial position and notes to the financial statement. In the case of cash deposited, credit risk is minimised by depositing with recognised financial intermediaries such as banks, subject to Australian Prudential Regulation Authority Supervision. The consolidated entity does not have any material risk exposure to any single debtor or group of debtors under financial instruments entered into by it. Capital Management Risk Management controls the capital of the Group in order to maximise the return to shareholders and ensure that the group can fund its operations and continue as a going concern. Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of expenditure and debt levels and share and option issues. There have been no changes in the strategy adopted by management to control capital of the Group since the prior year. Net Fair Values For financial assets and liabilities, the net fair value approximates their carrying value. The consolidated entity has no financial assets or liabilities that are readily traded on organised markets at balance date and has no financial assets where the carrying amount exceeds net fair values at balance date. NOTE 21 - MATTERS SUBSEQUENT TO THE END OF FINANCIAL YEAR On 6 September 2017 the Company announced the appointment of non-executive director Miss Sheena Eckhof to the board. Additionally, Mr Daniel Smith resigned from the board on the same day, but will remain as Company Secretary to the Company. Taruga Gold Limited Page 40 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 22 - PARENT ENTITY DISCLOSURES Financial Position CURRENT ASSETS Cash and cash equivalents Trade and other receivables Total Current Assets NON CURRENT ASSETS Total Non Current assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY Financial Performance Consolidated 2017 $ 2016 $ 1,735,712 13,695 843,638 18,512 1,749,407 862,150 7,038,497 7,014,837 8,787,904 7,876,987 43,619 135,129 43,619 135,129 8,744,285 7,741,858 13,821,735 - (5,077,450) 12,508,296 35,040 (4,801,478) 8,744,285 7,741,858 Loss for the year Impairment Transfer of reserves to accumulated losses on expiry of options Total comprehensive loss 311,012 2,336,965 (35,040) 2,612,937 1,470,473 - (648,944) 821,529 The parent entity has not entered into any guarantees in relation to debts of its subsidiaries, has no contingent liabilities, and has no commitments for acquisition of plant and equipment. Taruga Gold Limited Page 41 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES NOTE 23 – DISCONTINUED OPERATIONS On 20 May 2016 the Group disposed of 100% of its interest in International Goldfields (Bermuda) Limited to Kodal Minerals Plc (AIM:KOD). Results of discontinued operations Revenue Cost of sales Expenses Results from operating activities Income tax (expense)/benefit Results from operating activities after tax Loss on sale of subsidiary assets Loss from discontinued operations (i) Loss on sale of subsidiary assets Carrying value of International Goldfields (Bermuda) Limited Exploration Other Sale consideration received Loss on disposal of International Goldfields (Bermuda) Limited (ii) Valuation of sale consideration Kodal Minerals Plc shares received Kodal Minerals Plc share price 20 May 2016 (completion date) Value of Kodal Minerals Plc shares received GBP Value of Kodal Minerals Plc shares received AUD (AUD:GBP2.02383) Cashflows gained from/(used in) discontinued operations Net cash gained from operating activities Net cash flow for the year 2017 $ 2016 $ - - - - - - - - - - (59,435) (59,435) - (59,435) (961,207) (1,020,642) 2017 $ 2016 $ - - - - 2,022,553 (24,133) (1,037,213) 961,207 2017 2016 - 1,025,000,000 - GBP 0.0005 - GBP 512,500 $1,037,213 - 2017 $ - - 2016 $ 13,186 13,186 Taruga Gold Limited Page 42 DIRECTORS’ DECLARATION FOR THE YEAR ENDED 30 JUNE 2017 AND CONTROLLED ENTITIES In the opinion of the directors of Taruga Gold Limited (“the company”): 1) The attached financial statements and notes thereto are in accordance with the Corporations Act 2001 including: (a) (b) complying with Australian Accounting Standards, the Corporations Regulations 2001, professional reporting requirements and other mandatory requirements; and giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its performance for the period then ended; and 2) 3) 4) There are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The financial statements and notes thereto are in accordance with international financial reporting standards issued by the International Accounting Standards Board. This declaration has been made after reviewing the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial period ended 30 June 2017. This declaration is signed in accordance with a resolution of the Board of Directors made pursuant to s.303(5) of the Corporations Act 2001. Gary Steinepreis Non-Executive Director Dated Perth 29 September 2017 Taruga Gold Limited Page 43 INDEPENDENT AUDITOR’S REPORT To the Members of Taruga Gold Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Taruga Gold Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration for the Company and the Group. In our opinion, the accompanying financial report of Taruga Gold Limited is in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial performance for the year then ended; and b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533 Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers Key Audit Matter How our audit addressed the key audit matter Exploration and Evaluation Expenditure (Refer Note 8) In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources, the Group capitalises all exploration and evaluation including acquisition costs and expenditure, subsequently applies the cost model after recognition. Our audit focused on the Group’s assessment of the carrying amount of the capitalised exploration and evaluation asset, as this is one of the most significant assets of the Group. We planned our work to address the audit risk that the capitalised expenditure might no longer meets the recognition criteria of the standard. In addition, we considered it necessary to assess whether facts and circumstances existed to suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. Our procedures included but were not limited to the following: - We obtained an understanding of the key processes associated with management’s review of the carrying values of each area of interest; - We considered the Directors’ assessment of potential indicators of impairment; - We obtained evidence that the Group has current rights to tenure of its areas of interest; - We examined the exploration budget for the 2017/2018 and discussed with management the nature of planned ongoing activities; - We enquired with management, reviewed ASX announcements and reviewed minutes of Directors’ meetings to ensure that the Group had not resolved to discontinue exploration and evaluation at any of its areas of interest; and - We examined the disclosures made in the financial report. Information Other than the Financial Report and Auditor’s Report Thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2017. In our opinion, the Remuneration Report of Taruga Gold Limtied for the year ended 30 June 2017 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. HLB Mann Judd Chartered Accountants Perth, Western Australia 29 September 2017 M R Ohm Partner ASX Additional Information ANALYSIS OF SHAREHOLDING as at 26 September 2017 1 1,001 5,001 10,001 100,001 Total on Issue 1,000 - 5,000 - - 10,000 - 100,000 - or more AND CONTROLLED ENTITIES Shareholders 186 87 38 150 112 573 The number of shareholdings held in less than marketable parcels is 351. Voting Rights Article 16 of the Constitution specifies that on a show of hands every member present in person, by attorney or by proxy shall have: a) b) for every fully paid share held by him one vote for every share which is not fully paid a fraction of the vote equal to the amount paid up on the share over the nominal value of the shares Substantial Shareholders The following substantial shareholders have notified the Company in accordance with Corporations Act 2001. N&J Mitchell Holdings Pty Ltd, Croesus Mining Pty Ltd and Linda Steinepreis Shares 9,665,095 % 9.30 Directors’ Shareholding The interest of each director in the share capital of the Company is detailed in the director’s report. Securities Subject to Escrow Nil. Taruga Gold Limited Page 48 ASX Additional Information AND CONTROLLED ENTITIES TOP TWENTY SHAREHOLDERS Rank Holder Name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 CITICORP NOMINEES PTY LTD J P MORGAN NOMINEES AUSTRALIA MCNEIL NOMINEES PTY LIMITED RANCHLAND HOLDINGS PTY LTD MR BERNARD AYLWARD CROESUS MINING PTY LTD CROESUS MINING PTY LTD SUNSHORE HOLDINGS PTY LTD BNP PARIBAS NOMINEES PTY LTD OAKHURST ENTERPRISES PTY LTD TWO TOPS PTY LTD MR BIN LIU MR DAVID HARPER TIETTO MINERALS PTY LTD TALLTREE HOLDINGS PTY LTD CROESUS MINING PTY LTD MS TIFFANY BEBB VIMINALE PTY LTD ASCENT CAPITAL HOLDINGS PTY LTD SCINTILLA STRATEGIC Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL) Securities 6,839,709 6,722,884 5,232,857 4,761,906 4,671,386 3,406,482 3,262,514 3,060,656 2,718,334 2,609,167 2,444,576 2,400,000 2,080,304 2,000,000 2,000,000 1,944,445 1,666,667 1,666,666 1,543,335 1,500,000 62,531,888 % 6.58% 6.47% 5.04% 4.58% 4.50% 3.28% 3.14% 2.95% 2.62% 2.51% 2.35% 2.31% 2.00% 1.92% 1.92% 1.87% 1.60% 1.60% 1.49% 1.44% 60.17% Total Remaining Holders Balance 41,385,351 39.83% The name of the joint Company Secretaries are Daniel Smith and Sylvia Foong. The address of the registered office is: Unit 5, Ground Floor, 1 Centro Avenue, Subiaco WA 6008. Registers of securities are held Security Transfer Registrars Pty Ltd, 770 Canning Highway, Applecross WA 6153 Quotation has been granted for all the ordinary shares of the Company on the Australian Securities Exchange Ltd. There are nil securities currently subject to escrow. Unquoted Options over Un-issued Shares Nil Taruga Gold Limited Page 49 ASX Additional Information AND CONTROLLED ENTITIES Granted tenements held directly by Taruga Gold or subsidiary company Tenements Held Kossa 1 Kossa 2 Kouriki Ounzerbe Mankono 100% 100% 100% 100% 100% Country Niger Niger Niger Niger Cote d’Ivoire Taruga Gold Limited Page 50