TLG Immobilien
Annual Report 2015

Plain-text annual report

TALGA RESOURCES LTD AND CONTROLLED ENTITIES ABN 32 138 405 419 ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2015 TALGA RESOURCES LTD CONTENTS PAGE FOR THE YEAR ENDED 30 June 2015 Corporate Directory Chairman’s Report Directors' Report Auditor's Independence Declaration Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Directors' Declaration Independent Auditor's Report to the Members of Talga Resources Ltd Shareholder Information Corporate Governance Statement Schedule of Mineral Tenements Page 2 3 4 25 26 27 28 29 30 58 59 61 64 71 Page 1 TALGA RESOURCES LTD CORPORATE DIRECTORY FOR THE YEAR ENDED 30 June 2015 DIRECTORS Keith Coughlan (Chairman) Mark Thompson (Managing Director) Grant Mooney (Non-Executive Director) COMPANY SECRETARY Dean Scarparolo REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS Suite 3, First Floor 2 Richardson Street WEST PERTH WA 6005 Phone: +618 9481 6667 Facsimile: +618 9322 1935 EMAIL & WEBSITE Email: Website: www.talgaresources.com admin@talgaresources.com ABN 32 138 405 419 SECURITIES EXCHANGE LISTING The Company is listed on Australian Securities Exchange Limited Home Exchange: Perth ASX Codes: TLG (Shares) TLGO (Options) SHARE REGISTRY Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153 Telephone: (08) 9315 2333 Facsimile: (08) 9315 2233 AUDITORS Stantons International Level 2 1 Walker Avenue WEST PERTH WA 6005 Page 2 TALGA RESOURCES LTD CHAIRMAN’S REPORT FOR THE YEAR ENDED 30 June 2015 Dear Shareholders It is with pleasure that I introduce the 2015 Annual Report of Talga Resources Ltd (“Talga” or “the Company”). Talga has made considerable progress throughout the 2015 Financial Year in its goal to become a substantial and profitable producer of graphite and graphene. The company has become a successful early mover in the rapidly growing market of ultra thin graphite and graphene. Talga has successfully scaled up its innovative production method from the laboratory beaker to produce larger samples for industry and during the year advanced development of its pilot testwork facility in Germany. This follows active engagement with industry and product developers in the material additive market and listening to their requirements. Industry feedback has guided Talga’s European production hub strategy to choose sites proximal to major end users, world class analytics and the Company’s existing research program partners. The German site also has the full support of the regional authorities. In October 2014 the Company announced the results of a Scoping Study into the Vittangi Graphite Project in Sweden which demonstrated a very robust NPV with low capex and projected operating costs. Importantly the study showed that the project could be financially and technically viable on graphite production alone, with graphene a bonus. Since then there have been further successful drilling programs at Vittangi and Jalkunen which have expanded the Company’s significant inventory of high grade graphite resources. Talga has continued to build strong collaborative relationships with a number of globally recognised research agencies such as CSIRO, the Universities of Dresden and Jena respectively and the Max Planck Institute. We believe that the close association with these esteemed institutions will be of significant benefit to the company by assisting both innovation and collaboration with industry. Operationally, the Company has been greatly encouraged by the granting of the trial mining licence and the subsequent highly successful utilisation of that licence. The trial mining results reinforce the Company’s view that the unique nature of the Vittangi ore body will enable the development of an environmentally benign operation in a world class mining destination. The Company’s aspiration to fill the current bulk graphene supply void has been strengthened by the success of the trial. It has also further confirmed the potential for the project to maintain a cost profile in the lowest quartile whilst creating minimal environmental impact. Similarly to 2014 we were faced with a difficult environment for capital markets however Talga has been able to advance development of both its traditional graphite markets business and the high volume additive materials business. By identifying applications that can be disruptively transformed by the availability of bulk graphene and related ultra-thin graphites, Talga aims to work with specific partners to develop high volume products that meet their needs. This forms a development path where the market will mature to meet Talga’s full scale production in the future. Talga’s high grade natural assets, location and strategy sets it apart from its peers. With the global focus on graphene based products increasing dramatically, Talga is exceptionally well placed to develop a unique and significant advanced materials business. The outlook for the Company remains promising and we expect to build further on the achievements of 2015. These achievements are the culmination of a great deal of hard work and vision from Managing Director Mark Thompson and his team as well as the ongoing support of the company’s shareholders and advisers. Talga looks forward to sharing further successes with its shareholders in the future. Keith Coughlin Chairman Page 3 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 The Directors present their report, together with the financial statementsr of Talga Resources Ltd (“Talga”) and its controlled entities (“Group”), for the financial year ended 30 June 2015. 1. BOARD OF DIRECTORS The following persons were Directors of Talga Resources Ltd during the whole financial year and up to the date of this report, unless otherwise stated: Directors Keith Coughlan Mark Thompson Grant Mooney Position Non-Executive Chairman Managing Director Non-Executive Director Date of Appointment Appointed 27th September 2013 Appointed 21st July 2009 Appointed 20th February 2014 2. INFORMATION ON DIRECTORS The names and details of Directors in office during the financial year and until the date of this report are as follows: Keith Coughlan (Non-Executive Chairman) (Appointed 27th September 2013) Mr Coughlan has over 30 years' experience in stockbroking and funds management where he has been largely involved in the funding and promoting of resource companies listed on the ASX, AIM and TSX. He has advised various companies on the identification and acquisition of resource projects and was previously employed by one of Australia's then largest funds management organisations. Mr Coughlan is a current executive director of ASX listed European Metals Holdings Limited. Mark Thompson Managing Director) (appointed 21st July 2009) Mr Thompson has more than 21 years industry experience in exploration and mining management, working extensively on Australian and international resource projects. He is a Member of the Australian Institute of Geoscientists and the Society of Economic Geologists, and is Guest Professor in Mineral Exploration Technology at both the Chengdu University of Technology and the Southwest University of Science and Technology in China. Mr Thompson founded and served on the Board of ASX listed Catalyst Metals Ltd and is a Non-Executive Director of Phosphate Australia Ltd. Grant Mooney (Non-Executive Director) (appointed 20th February 2014) Mr Mooney has a wealth of experience in resources and technology markets. Mr Mooney serves as Director and Company Secretary to several ASX listed companies including Director of renewable energy developer, Carnegie Wave Energy Ltd and Director of ASX-listed resource companies, Barra Resources Ltd, Phosphate Australia Ltd and Wild Acre Metals Limited. Mr Mooney is a member of the Institute of Chartered Accountants in Australia. 3. INFORMATION ON COMPANY SECRETARY Dean Scarparolo (Appointed 5 February 2015) Mr Scarparolo is a member of CPA Australia, and has a wealth of experience developing and managing the finance departments of ASX listed companies within the resources sector. Mr Scarparolo is also the Financial Controller for the Company. Lisa Wynne (Resigned 5 February 2015) Ms Wynne was appointed on 20 February 2014. Ms Wynne is a Chartered Accountant and Chartered Secretary with significant experience in the administration of ASX and TSX listed companies, corporate governance and financial accounting. Ms Wynne is Company Secretary of a number of public companies and the principal of corporate advisory firm Sila Consulting Pty Ltd, specialising in the provision of corporate services to public companies. Page 4 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 4. CORPORATE STRUCTURE Talga Resources Ltd is a company limited by shares incorporated and domiciled in Australia. Talga Resources Ltd has a 100% interest in both Talga Mining Pty Ltd and a German company, Talga Advanced Materials GmbH. 5. PRINCIPAL ACTIVITIES The principal activities of the Group during the financial year comprised graphite and graphene development, production and exploration. 6. REVIEW OF OPERATIONS The Company’s objective is to become a substantial and profitable producer of graphite and world leading supplier of graphene. During the year these goals were rapidly progressed, from laboratory level processing breakthroughs to advanced stages of commercial development, including the commencement of trial mining and pilot test-work activities. The first half of the year was marked by outstanding results from the Company’s scoping study along with commencement of graphene collaborations in Germany and graphite-to-graphene process milestones in Australia. The second half of the year was dominated by successful permitting and trial mining in Sweden, together with pilot plant progress and process flowsheet optimisation work in Germany. To a lesser extent, non-core gold projects in Western Australia and cobalt-copper-gold and iron ore projects in Sweden were advanced, primarily towards gaining joint venture partners or trade buyers. The year has represented a watershed period with respect to Talga’s strategic transition from a strictly resource development company, to one that is now highly leveraged to the high growth materials sector. This ultimately involves production, marketing and sales of the Company’s graphite and graphene into diverse applications from aerospace composites to battery electrodes. By participating in both large volume additive material markets and traditional graphite markets, the Company’s unique and global competitive advantages may be fully realised to drive higher growth. Figure 1 – Talga graphene produced from the Company’s 100% owned graphite deposits. Page 5 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 PROJECT DEVELOPMENT During the year Talga focused on its unique and cost effective processing pathway for converting raw ore into high quality graphene and graphite. Extensive work to increase the scale of the process and test commerciality of products was initially completed in Australia. The results were used in the Vittangi graphite-graphene project scoping study which incorporated financial modelling undertaken by Snowden Mining Industry Consultants (ASX:TLG 9 October 2014). Study highlights included:  Vittangi targeting dual production of approximately 46,000tpa graphite and 1,000tpa graphene over     circa 20 years from 250,000 tonnes per annum processing mill; Project low risk with Capex approximately AUD$29m and capex payback of 1.4 years including construction; Indicative pre-tax NPV in excess of AUD$490m based only on JORC Indicated portion of resource1; Project viable on graphite production alone – graphene a natural by-product of processing pathway; and Conservative Study numbers - only the indicated portion of resource was used, the graphene price used was severely discounted to current type minimum pricing and low-end first pass metallurgical yields assumed. The positive study results, combined with feedback from industry graphene consumers, provided confidence and a business case to advance the project. The next stages required on the path to future full scale development were to commence trial mining during the period and move to pilot plant design and construction in the latter half of the year. Other key highlights of the year’s project developments included:  World class graphene experts at Friedrich Schiller University, Dresden University of Technology and the Max Planck Institute for Polymer Research agreed to collaborate with Talga on metallurgical and graphene product developments; Pilot plant site secured in central Germany industrial hub; Thuringian State Government confirmed full backing for the project and support to fast-track production of large samples for industry analysis;    Research program by CSIRO confirmed Vittangi graphene and graphite ore characterisation to assist  future exploration and processing considerations; and Trial mining successfully permitted and commenced subsequent to the year-end with first graphite ore blocks delivered to the Company’s pilot plant site in Germany (Figure 2). Figure 2 – Trial mining program underway at Talga’s 100% owned Vittangi graphite project. Page 6 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 COMMERCIAL AND CORPORATE Talga’s technical success during the year necessitated considerable growth in the commercial and corporate operations of the Company. The management and technical team were bolstered with the appointment of a full time Commercial Manager, Financial Controller and Metallurgist (with a Project Chemist being appointed soon after the year end). Capital requirements were supported with a placement of 13.75 million ordinary fully paid shares at $0.40 per share to institutions and targeted sophisticated investors to raise $5.5million. Other commercial and corporate activities during the year included:  Establishment of 100% owned German subsidiary company, Talga Advanced Materials GmbH (“TAM”) to manage all aspects of the pilot test facility and general operations in Germany (Figure 3); First sale of graphene to German Nano-to-3D printing technology company; Creation of intellectual property assets with patent application lodged;    Appointment of New York based EAS Advisors and global financial services firm Canaccord Genuity;  Collaboration agreement with Haydale Graphene Industries PLC post the year end to explore development of graphene composite and ink products; Extensive domestic and international travel to conduct presentations at industry events and conferences, visit potential end-user facilities and engage with customers, shareholders, media, the investment community and other stakeholders; and   Disposal of non-core gold projects commenced with ‘option to purchase’ agreements executed. Figure 3 – Location plan and strategy of Talga’s European operations. EXPLORATION/GEOLOGY Talga wholly owns multiple mineral projects in Australia and Sweden, with core activities focused on its high grade graphite projects located in the Fennoscandian Shield of north Sweden, a major mining province of Europe (Figure 4). Within these, Talga concentrates on deposits where it has the greatest natural advantages in grade, logistics, margins and market scale than standard flake graphite deposits. At two of the Company’s five Swedish graphite projects, Vittangi and Jalkunen, direct graphene from ore processing capability has been demonstrated. These were subject to the majority of exploration activities during the period, with other projects explored as required for tenement maintenance. Key highlights of activities included:  High grade drill intercepts over 6km strike around Nunasvaara deposit at Vittangi support potential for future resource growth; Page 7 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015  New ground secured over graphite-to-graphene unit for total 32km strike at Vittangi and 28km at Jalkunen;  Definition of JORC compliant Exploration Targets# for the combined Vittangi and Jalkunen projects totalling 150-275 million tonnes (“Mt”) at 18-25% graphite (see Note below); Successful drilling program at Jalkunen intercepts large shallow dipping graphite unit and maiden inferred JORC 2012 resource of 31.5Mt @14.9% graphite announced post the end of year; Jalkunen graphite ore demonstrated amenable to Talga’s graphene processing methodology; and Encouraging cobalt, gold and copper drilling results from Kiskama ‘IOCG’ project;    The Company’s flagship Vittangi project contains the highest grade graphite resource in the world* defined under JORC or NI43-101 codes and is favourably located 3km from transport links to major European graphite and graphene markets. The project’s Nunasvaara deposit JORC resource1 estimate totals 7.6 million tonnes at 24.4% graphitic carbon (“Cg”) (ASX:TLG 8 November 2012). Figure 4 – Location of Talga’s Projects in Sweden. During the year Talga drill tested 6 kilometres of strike extensions at Vittangi around the current Nunasvaara resource. All holes intersected wide zones of high grade graphite (ASX:TLG 13 November 2014). Key intercepts included:  NUN14005: from 1m depth 47m @ 30.8% Cg (2km north from Nunasvaara);  NUN14006: from 52m depth 46m @ 31.4% Cg (2km north from Nunasvaara);  NUN14001: from 15m depth 27m @ 25.4% Cg (350m southeast from Nunasvaara); The drill results validate the theory that there is no geological restriction on massive size increases to the resource at Vittangi if required and add to the current 20 year production profile demonstrated in the Company’s scoping study. Figure 5 – Jalkunen graphite exploration targets. The Company’s Jalkunen project is situated 50km southeast from Vittangi and contains multiple graphite deposits and exploration targets of significant scale, based on historic mining, surveying and sampling, primarily by the Geological Survey of Sweden (“SGU”) (Figure 5). Jalkunen contains what is interpreted to be the at Vittangi, metamorphosed to varying grades but retaining the primal flake morphology (shape and distribution). This enables the same simple and cost effective graphene liberation method as used at Vittangi (ASX:TLG 16 September 2014 and 27 August 2015) to work at Jalkunen. graphite geology same as Exploration conducted by Talga during the year included geophysical surveys, rock chip sampling, drilling and preliminary metallurgical tests (ASX:TLG 16 September 2014 and 4 June 2015). The drilling successfully intersected a substantial graphite deposit averaging 50-60 metres true thickness, shallowly dipping at approximately 18° to approximately 600m down dip and open. from surface Page 8 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 The horizontal thickness of this unit exceeds 150m width. Key intercepts included:      JALK02: from 3m depth 30m @ 19.5% Cg (collared in mineralisation) JALK03: from 7m depth 26m @ 16.6% Cg (collared in mineralisation) JALK06: from 76m depth 54m @ 16.6% Cg JALK07: from 115m depth 51m @ 15.0% Cg JALK08: from 9m depth 66m @ 13.4% Cg The drill data enabled a maiden JORC 2012 compliant inferred mineral resource to be published subsequent to the year end, totaling 31.5Mt at 14.9% Cg for 4.7Mt of contained graphite, based on a 10% Cg lower cut-off (ASX:TLG 27 August 2015 and Table 1). Table 1 - Jalkunen Graphite Deposit - JORC (2012) Resource at 10% Cg cut-off Project Jalkunen JORC Classification Inferred Resource Tonnes 31,500,000 Grade Graphite (%Cg) 14.9 Contained Graphite (Tonnes) 4,693,500 The maiden Jalkunen resource tripled the total Indicated and Inferred inventory across Talga’s combined Swedish graphite-graphene projects to more than 43Mt of JORC classified material for approximately 6.9Mt contained graphite (ASX:TLG 27 August 2015 and Mineral Resources and Ore Reserve Statement). Utilising new drill results and other exploration data, Talga defined JORC (2012) compliant exploration targets at the combined Vittangi and Jalkunen graphite projects totaling 150-275Mt at 18-25% Cg (ASX:TLG 26 February 2015 and Table 2) #Note: The Exploration Target is based on a number of assumptions and limitations with the potential grade and quantity being conceptual in nature. There has been insufficient exploration to estimate a Mineral Resource Estimate in accordance with the JORC Code and it is uncertain if future exploration will result in the estimation of a Mineral Resource. Table 2 – Talga graphite Exploration Targets. Project Exploration Target Tonnes (0-100m vertical depth) Vittangi Jalkunen Nunasvaara Kotajärvi Maltosrova Tiankijokki Jalkunen Nybrännan Suinavaara Lautakoski Subtotal Rounded Total Min. 62,400,000 16,640,000 20,800,000 2,600,000 13,000,000 5,200,000 2,600,000 26,000,000 149,240,000 150,000,000 Max. 93,600,000 30,160,000 52,000,000 5,200,000 26,000,000 10,400,000 5,720,000 52,000,000 275,080,000 275,000,000 Graphite (%Cg) Min. Max. 20 20 20 20 15 20 15 15 19 18 30 25 25 25 25 30 25 25 27 25  http://www.techmetalsresearch.com/metrics-indices/tmr-advanced-graphite-projects-index/ Page 9 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 MINERAL RESOURCES AND ORE RESERVE STATEMENT Summary This statement represents the Mineral Resources and Ore Reserves (“MROR”) for Talga Resources Limited as at 30 June 2015. This MROR statement has been compiled and reported in accordance with the guidelines of the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (“2012 JORC Code”). This statement is to be reviewed and updated annually in accordance with Section 15 of the 2012 JORC Code. The nominated annual review date for this MROR statement is 30 June. During the period the Company’s Mineral Resources remained unchanged. The information in this statement has been extracted from the relevant reports as indicated below in each Mineral Resource table. The Vittangi graphite project Mineral Resource (Nunasvaara deposit) estimate was first reported in February 2012 and has not been updated to comply with the 2012 JORC Code. The Company is not aware of any new information or data that materially affects the information included in the relevant market releases for this estimate. The Company confirms that all material assumptions and technical parameters underpinning the estimate in the relevant market releases continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented here have not been materially modified. The Raitajärvi graphite project Mineral Resource estimate was first reported in February 2012 and has not yet been updated to comply with the 2012 JORC Code. The Company is not aware of any new information or data that materially affects the information included in the relevant market releases for this estimate. The Company confirms that all material assumptions and technical parameters underpinning the estimate in the relevant market releases continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented here have not been materially modified. The Vittangi iron project Mineral Resource estimate was first reported in July 2013 and has not been updated to comply with the 2012 JORC Code. The Company is not aware of any new information or data that materially affects the information included in the relevant market releases for this estimate. The Company confirms that all material assumptions and technical parameters underpinning the estimate in the relevant market releases continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented here have not been materially modified. The Masugnsbyn iron project Mineral Resource estimate was first reported in February 2012 and has not yet been updated to comply with the 2012 JORC Code. The Company is not aware of any new information or data that materially affects the information included in the relevant market releases for this estimate. The Company confirms that all material assumptions and technical parameters underpinning the estimate in the relevant market releases continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented here have not been materially modified. As at the Annual Review date of 30 June 2015, this MROR Statement has been approved by the named competent persons (see the Competent Persons Statement below). Page 10 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 MINERAL RESOURCES As at 30 June 2015 the Company’s Mineral Resources are: VITTANGI GRAPHITE PROJECT, NORTHERN SWEDEN (Talga owns 100%) Table 3 - Nunasvaara Graphite Deposit – JORC (2004) Resource1 at 10% Cg cut-off Deposit Nunasvaara Nunasvaara JORC resource category Indicated Inferred Tonnes 5,600,000 2,000,000 7,600,000 Grade Cg (%) 24.6 24.0 24.4 Total The Vittangi Project Graphite Mineral Resource was first reported in February 2012 in accordance with the 2004 JORC Code (ASX:TLG 28 February 2012). RAITAJARVI GRAPHITE PROJECT, NORTHERN SWEDEN (Talga owns 100%) Table 4 - Raitajärvi Graphite Project – JORC (2004) Resource1 at 5% Cg cut-off Grade Cg (%) Deposit 7.3 Raitajärvi 6.4 Raitajärvi 7.1 Note: Ore tonnes rounded to nearest hundred thousand tonnes JORC resource category Indicated Inferred Tonnes 3,400,000 900,000 4,300,000 Total The Raitajärvi Project Mineral Resource was first reported in February 2012 in accordance with the 2004 JORC Code (ASX:TLG 28 February 2012). VITTANGI IRON PROJECT, NORTHERN SWEDEN (Talga owns 100%) Table 5 - Vittangi Iron Project – JORC (2004) Resource1 Estimate at 15% Fe cut-off Deposit Vathanvaara Kuusi Nunasvaara Mänty Vathanvaara Sorvivuoma Jänkkä JORC resource category Inferred Inferred Inferred Inferred Inferred Total Tonnes Grade Fe (%) 51,200,000 46,100,000 16,300,000 5,500,000 4,500,000 123,600,000 36.0 28.7 31.0 38.3 33.0 32.6 Note: Ore tonnes rounded to nearest hundred thousand tonnes The Vittangi Iron Mineral Resource was first reported in July 2013 in accordance with the 2004 JORC Code (ASX: TLG 22 July 2013). MASUGNSBYN IRON PROJECT, NORTHERN SWEDEN (Talga owns 100%) Table 6 - Masugnsbyn Iron Project – JORC (2004) Resource1 Estimate at 20% Fe cut-off Grade Fe (%) 28.3 29.5 28.6 JORC resource category Indicated Inferred Tonnes 87,000,000 25,000,000 112,000,000 Deposit Masugnsbyn Masugnsbyn Total Note: Ore tonnes rounded to nearest hundred thousand tonnes The Masugnsbyn Mineral Resource was first reported in February 2012 in accordance with the 2004 JORC Code (ASX: TLG 28 February 2012). Page 11 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 COMPARISON WITH PRIOR YEAR ESTIMATES Mineral Resources During the 2015 financial year, there were no mineral resource inventory changes. Ore Reserves As at 30 June 2015 the Company had no reportable Ore Reserves in accordance with the 2012 JORC Code. 1 This information was prepared and first disclosed under the JORC Code (2004). It has not been updated since to comply with the JORC Code (2012) on the basis that the information has not materially changed since it was last reported. The Company is not aware of any new information or data that materially affects the information included in the previous announcement and that all of the previous assumptions and technical parameters underpinning the estimates in the previous announcement have not materially changed. GOVERNANCE SUMMARY The Mineral Resource estimates listed in this report are subject to Talga’s governance arrangements and internal controls. Talga Resource estimates are derived by Competent Person’s (“CP”) with the relevant experience in the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking. Geology models in all instances are generated by Talga staff and are reviewed by the CP. The CP carries out reviews of the quality and suitability of the data underlying the Mineral Resource estimate, including a site visit. Talga management conducts its own internal review of the estimate to ensure that it honours the Talga geological model and has been classified and reported in accordance with the JORC Code 2012. COMPETENT PERSONS STATEMENT The information in this report that relates to Exploration Results and Exploration Targets is based on information compiled and reviewed by Mr Simon Coxhell, a consultant to the Company and a member of the Australian Institute of Mining and Metallurgy and Mr Mark Thompson, who is an employee of the Company and a member of the Australian Institute of Geoscientists. Mr Coxhell and Mr Thompson have sufficient experience that is relevant to the activity being undertaken to qualify as a "Competent Person" as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (“JORC Code”). Mr Coxhell and Mr Thompson consent to the inclusion in the report of the matters based on this information in the form and context in which it appears. The information in this report that relates to Resource Estimation is based on information compiled and reviewed by Mr Simon Coxhell. Mr Coxhell is a consultant to the Company and a member of the Australian Institute of Mining and Metallurgy. Mr Coxhell has sufficient experience relevant to the styles of mineralisation and types of deposits which are covered in this document and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (“JORC Code”). Mr Coxhell consents to the inclusion in this report of the Matters based on this information in the form and context in which it appears. Page 12 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 FUTURE OUTLOOK AND STRATEGY Talga is well advanced in its strategic transformation into an advanced materials company straddling both the resources and high growth technology sectors. The Company is differentiated from peers in a number of ways, including:    Talga utilises homogenous high grade ore that has been purified by nature – low cost unit production with industrial scale and no physical milling; It takes the view that scale of production will catalyse growth and ‘enable’ industries and technologies with consistent and affordable large volume supply; It has adopted a strategy to work with partners to develop products that meet current industry needs. It is identifying markets with manufacturing processes suitable to address barriers to entry;  Unlike pure play graphene companies, the potential economics of Talga’s process could allow it to remain an upstream producer, keeping open a wide range of downstream applications/markets while minimizing development risk; Talga is multifaceted and has a robust business with its ultra fine graphite products alone.  Graphene is renowned as the world’s strongest material, a million times thinner than paper but 200 times stronger than steel. Discovered only 10 years ago, it is a material which can be used in a wide range of applications that are in the early stages of commercialisation. Additionally, the explosion of research into graphene has also raised applications for related ultra-thin layered micro and nano-scale graphites. Their use as performance enhancing additives opens the door to myriad markets that have potential demand for volumes that exceed those for standard flake graphite markets. Importantly, standard production methods for these niche products drive significantly higher prices than standard flake graphite sizes. Talga’s unique mining and processing methods dispense with the need for drill/blast mining and crush/grind comminution. This results in fewer steps than traditional graphite processing and liberates vast quantities of high quality graphene at the same time. As an investment Talga provides an opportunity to sit amongst technology and resource peers where exploration and mining risk is minimised courtesy of location in a first class jurisdiction, simplicity of mining and processing, extremely high grades and a gentle environmental footprint. Given the above, the future for Talga is now focused towards tangible commercial developments and validation of product and processes. Figure 6 – Schematic of Talga’s processing path advantage compared to others. Page 13 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 With trial mining methods de-risked, the focus now swings to the development of Talga’s pilot test-work facility which aims to produce significant quantities of sample material to accelerate uptake of graphene and nano/micro graphites into third party product development. With supply certainty for repeated analysis, end- user relationships will have the opportunity to mature at a far quicker rate. In the near future it will also provide an opportunity for industry participants to visit operations which should validate Talga’s benefits, and reinforce the Company’s ability to remove the graphene volume and price roadblocks currently preventing large-scale commercialisation. The opportunity to partner with brand name collaborators is intended to track pilot test work developments. TENEMENT INTERESTS As required by ASX listing rule 5.3.3, please refer to the Schedule of Mineral Tenements for details of Talga’s interests in mining tenements held by the Company. No joint ventures or farm-in/farm-out activity occurred during the quarter. 7. FINANCIAL PERFORMANCE AND FINANCIAL POSITION The financial results of the Company for the year ended 30 June 2015 are: Cash and cash equivalents ($) Net assets ($) Revenue ($) Net loss after tax ($) Loss per share (cents per share) Dividend ($) 2015 2014 5,672,645 6,609,684 104,515 (5,845,450) (4.6) - 4,301,349 5,766,900 8,939 (3,057,270) (3.7) - 8. DIVIDENDS No dividend has been paid during or is recommended for the financial year ended 30 June 2015 (30 June 2014: Nil). 9. SIGNIFICANT CHANGES IN STATE OF AFFAIRS Significant changes in the state of affairs of the Group during the financial year were as follows:  Issued Capital increased by $5,514,019 as the result of a share placement to sophisticated investors on 25 March 2015 of 13,750,000 shares at $0.40 and the exercise of 40,053, $0.35 listed share options throughout the year. Details of the changes in contributed equity are disclosed in note 11 to the Financial Statements.   On 9 October 2014, the Company announced the completion a scoping study on its Vittangi graphite/graphene project. The study was based on low capital expenditure requirements of $29.3m, a short payback period of 1.4 years and conservative operating costs with strong potential graphene returns and resulting in a Pre-tax NPV12 of $490m. Talga outlined its intention to build a graphene pilot plant in central Germany, to capitalise on commercial opportunities presenting themselves in the region where graphene technologists and end- users are requiring near term large graphene samples. A leased site was chosen at Rudolstadt in Thuringia (ASX: TLG release 18 May 2015). The Company decided to pursue its core Graphite projects whilst looking to divest its non-core Australian gold assets and as a result on 6 February 2015 the Company agreed to grant Caledonian Capital Ltd (“Caledonian”) an option to purchase all of its Australian gold assets (the “Option”) comprising Bullfinch, Mosquito Creek, Talga Talga and Warrawoona (collectively “the Projects”). The sale price was $AUD1.3m in cash - payable as a $50,000 non refundable deposit, $250,000 post 3 months due diligence and the balance of $1m on or before the 4th anniversary of due diligence. The $50,000 was received however Caledonian decided not to proceed with the Option. Since the end of  Page 14 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015  the financial year the Company has entered into a new sale agreement for the non-core Australian gold assets. Further details are provided below at point 11, Subsequent Events. In April 2015, a trial mining permit covering Talga’s exploration licence at its Vittangi graphite project was issued by the Swedish Environmental Review Commission. Subsequent remaining clearances were secured (mining, environmental and stakeholder bonds, Mines Department consent, landowner and other stakeholder compensations, etc). Talga commenced trial mine operation site works and mobilised contractors and equipment prior to year-end. Post year-end, Talga announced that it had begun mining and transporting graphite ore blocks to its pilot plant facility in Rudolstadt, Germany. There were no other significant changes in the state of affairs of the Group during the financial year not otherwise dealt with in this report and the financial statements. 10. FUTURE DEVELOPMENTS Other than as referred to in this report, further information as to likely developments in the operations of the Group and expected results of those operations would, in the opinion of the Directors, be speculative and prejudicial to the interests of the Group and its shareholders. 11. SUBSEQUENT EVENTS Other than as disclosed below, there has not been any other matter or circumstance occurring subsequent to the end of the financial year that has significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.  The trial mining program for CY15 at the Company’s wholly-owned Vittangi graphite project in Sweden was completed and the graphite ore blocks were successfully extracted and delivered to the Rudolstadt processing and storage facility in Germany.  On 11 August 2015, Talga executed an Option Agreement for the sale of three of its four Australian gold assets (Mosquito Creek, Talga Talga and Warrawoona Projects - collectively, “the Projects”) located in the Pilbara region of Western Australia to Beatons Creek Gold Pty Ltd (“Beatons”). Upon exercising the Option, Beatons can elect to purchase all or some of the Projects. The total sale price is up to $AUD1.0 million in cash and a royalty on production - payable as a $50,000 non-refundable deposit, $200,000 within 4 months and the balance of up to $750,000 (it can purchase each Project as a separate asset, in which case the purchase price for each Project will be $250,000) before the 2nd anniversary of the Option Agreement. Beatons will have no equity in any project until the full project purchase price paid. The $50,000 deposit was received on 12 August 2015.  On 3 September 2015, the Company appointed Mr Michael Lew as Business Development Manager, North America and as part of his remuneration package issued 2,000,000 unlisted options exercisable at $0.52 and expiring on 31 December 2016 with the following vesting milestones: o o o execution of binding formal agreement to collaborate on graphene products with targeted battery industry participant; strategic investment from or joint venture with target; and receipt of binding off-take for greater than 1,000 tonnes graphene. Page 15 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 12. OPERATING AND FINANCIAL REVIEW Overview Since listing, the Group has focused on mineral exploration, with the longer-term ambition being to transition from exploration to resource development with a focus on graphite and graphene production in Sweden. In Western Australia the Group has a range of gold assets that fall outside the Company’s core Swedish graphite focus. The results in Sweden have been very positive, with substantial JORC resources and metallurgical successes announced for the graphite as well as JORC resources announced for the iron ore, details of which are provided in this report. As a mineral explorer, the Group generally has little revenue outside of interest on bank deposits and occasional asset sales. The financial aspects of the Group are therefore dominated by raising equity capital and then spending the funds raised on mineral exploration and development activities. Outlook and Risks The Group’s strategy is to progress the graphite projects in Sweden from exploration to development and ultimately become a significant graphite and graphene producer and supplier. Within that context, all other projects are considered “non-core” and as at year end the Group was actively looking at divesting or entering into joint venture arrangements to commercialize those assets (refer to subsequent events disclosed in the directors’ report above and Note 21 for further details). the next 12 months. During As at 30 June 2015, the Group had $5.67 million in cash, which is sufficient to cover committed expenditure over raise $5.5 million in capital through a share placement to sophisticated investors. The funds raised were applied against the further development of the graphite/graphene projects in Sweden and operations in Germany where the Company is building a graphite-graphene Pilot Plant. the Company was able financial year, the to The near term focus of the Group is to develop its Swedish graphite projects including further exploration, metallurgical tests and working towards beneficial relationships with potential customers and off-take parties. The Group has sufficient funds to pursue those activities, although further reliance on the introduction of new capital will continue to be a part of the Group’s business model until such time as the graphite projects are fully developed and in production (milestones which are targeted for achievement in the coming years). There are specific risks associated with the activities of the Group and general risks that are largely beyond the control of the Company and the Directors. The most significant risks identified that may have a material impact on the future financial performance of the Company and the market price of the Shares are:  Mineral and Exploration Risk - The business of exploration, project development and mining contains risks by its very nature. To prosper, it depends on the successful exploration and/or acquisition of reserves, design and construction of efficient production/processing facilities, competent operation and managerial performance and proficient marketing of the product.   Operating Risks - The proposed activities, costs and use of funds of the Group are based on certain assumptions with respect to the method and timing of exploration, metallurgy and other technical tests. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from these estimates and assumptions. The proposed activities of the Company including preliminary economic studies are dependent on economic inputs from commodity prices, metallurgical tests and market tests of which there is no guarantee of positive economics. It is a risk that studies may not be completed or may be delayed indefinitely where key inputs show negative economic outcomes. Additional Requirements for Capital - As at the date of this report, the Group remains a mineral exploration and development company and hence will rely on continuing access to capital markets to fund further development in Sweden and Germany. Failure to obtain sufficient financing for Talga's activities and future projects may result in delay and indefinite postponement of exploration, development or production on Talga's properties, or even loss of a property interest. Page 16 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015  Environmental Impact Constraints - The Group's exploration programs will, in general, be subject to approval by governmental authorities. Development of any of the Group's properties will be dependent on the Project meeting environmental guidelines and, where required, being approved by governmental authorities. In April 2015, the Group was issued with a trial mining permit (valid to September 2018) by the Swedish Environmental Review Commission, which covers Talga’s exploration licence at its Vittangi graphite project in Sweden. Subsequent remaining clearances were also secured (mining, environmental and stakeholder bonds, Mines Department consent, landowner and other stakeholder compensations).  Mineral Title Risks and Indigenous Owners - Mining and exploration permits are subject to periodic renewal. There is no guarantee that current or future permits or future applications for production concessions will be approved. Permits are subject to numerous legislation conditions. The renewal of the term of a granted permit is also subject to the discretion of the relevant mining inspector. The imposition of new conditions or the inability to meet those conditions may adversely affect the operations, financial position and/or performance of the Group. Furthermore the Group could lose title to, or its interest in, tenements if licence conditions are not met or if insufficient funds are available to meet expenditure commitments. At the date of this report, all mining and exploration permits and licences were in good standing. It is also possible that, in relation to tenements which the Group has an interest in or will in the future acquire such an interest, there may be areas over which legitimate common law rights of Indigenous owners exist. In this case, the ability of the Group to gain access to tenements (through obtaining consent of any relevant Indigenous owner, body, group or landowner), or to progress from the exploration phase to the development and mining phases of operations may be adversely affected. The Group's mineral titles may also be subject to access by third parties including, but not limited to, the areas' Indigenous people. This access could potentially impact the Group's activities and/or may involve payment of compensation to parties whose existing access to the land may be affected by the Company's activities. Subsequent to the issue of a trial mining permit in April 2015 by the Swedish Environmental Review Commission, which covers Talga’s exploration licence at its Vittangi graphite project in Sweden, remaining mining, environmental and stakeholder bonds, Mines Department consent, landowner and other stakeholder compensations and clearances were also secured.  Resource Estimates - Resource estimates are expressions of judgment based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional fieldwork and analysis, estimates are likely to change. This may result in alterations to development and mining plans which may, in turn, adversely affect the Company's operations. DIRECTORS’ MEETINGS The number of meetings attended by each of the Directors of the Group during the financial year was: Directors Keith Coughlan Mark Thompson Grant Mooney Number Eligible to Attend Number Attended 9 9 9 9 9 9 Due to the size and scale of the Company, there is no Remuneration and Nomination Committee or Audit Committee. Matters typically dealt with by these Committees are, for the time being, reverted to the Board. For details of the function of the Board please refer to the Corporate Governance Statement. Page 17 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 13. ENVIRONMENTAL ISSUES The Group’s operations are subject to State and Federal laws and regulations concerning the environment. Details of the Group’s performance in relation to environmental regulations are as follows: The Group’s exploration activities are subject to the Western Australian Mining Act and the Swedish Minerals Act (“Minerallagen”). The Group has a policy of complying with or exceeding its environmental performance obligations. The Board believes that the Group has adequate systems in place for the management of its environmental requirements. The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The Directors of the Group are not aware of any breach of environmental legislation for the financial year under review. The Directors of the Group have reviewed the requirements under the Australian National Greenhouse Emission Regulation (“NGER”). NGER has no impact on the Group. 14. PROCEEDINGS ON BEHALF OF THE GROUP No person has applied for leave of Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group was not a party to any such proceedings during the year. 15. SHARE OPTIONS As at the date of this report, there were 21,112,910 ordinary shares under option:  7,712,910 listed options with an exercise price of 35 cents expiring on 30 November 2015;  500,000 unlisted options with an exercise price of 45 cents expiring on 3 October 2016;  4,000,000 unlisted options with an exercise price of 52 cents expiring on 31 December 2016;  2,000,000 unlisted options with an exercise price of 60 cents expiring on 31 December 2016;  2,000,000 unlisted options with an exercise price of 65 cents expiring on 31 December 2016;  2,500,000 unlisted options with an exercise price of 54 cents expiring on 23 June 2019;  1,400,000 unlisted options with an exercise price of 54 cents expiring on 20 August 2019;  1,000,000 unlisted options with an exercise price of 54 cents expiring on 26 March 2020. No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of any other body corporate. During or since the end of the financial year, 255,053 fully paid ordinary shares were issued as a result of the exercise of options at an exercise price of $0.35. 16. REMUNERATION REPORT (Audited) This report details the type and amount of remuneration for each director and key management personnel (KMP) (defined as those having authority and responsibility for planning, directing and controlling the activities of the Group). Remuneration Policy The performance of the Company depends upon the quality of its directors and executives. To prosper, the Company must attract, motivate and retain highly skilled directors and executives. It is the Group’s objective to provide maximum stakeholder benefit from the retention of a high quality board and KMP by remunerating them fairly and appropriately with reference to relevant employment market conditions. To assist in achieving the objective the Board links the nature and amount of director and KMP emoluments to the Group’s financial and operational performance. The Board has adopted a Remuneration Page 18 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 Committee Charter. The full Board has assumed those responsibilities that are ordinarily assigned to a Remuneration committee. The intended outcomes of this remuneration structure are to:  Attract, retain and motivate high quality Directors and KMP;  Reward Directors and KMP for Company performance;  Align the interest of Directors and KMP with those of shareholders;   Link reward with strategic goals and performance of the Company; and Ensure total remuneration is competitive with market standards. The remuneration of a Director or KMP will be decided by the Board. In determining competitive remuneration rates the Board reviews local and international trends among comparative companies and the industry generally. It also examines terms and conditions for the employee share option plan.  Non-executive director remuneration The maximum remuneration of non-executive Directors is the subject of Shareholder resolution in accordance with the Group’s Constitution, and the Corporations Act 2001 as applicable. The appointment of non-executive Director remuneration within that maximum will be made by the Board having regard to the inputs and value to the Group of the respective contributions by each non-executive Director. Shareholders at a general meeting approved an aggregate amount of $500,000 to be paid to non-executive Directors. The Board may allocate this pool (or part of it) at their discretion. The Board may award additional remuneration to non-executive Directors called upon to perform extra services or make special exertions on behalf of the Group. There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive directors.  Executive remuneration Executive remuneration may consist of both fixed and variable (at risk) elements. Fixed remuneration The level of fixed remuneration is set so as to provide a base level of remuneration which is appropriate to the position and is competitive in the market and may be in variety of forms including cash and fringe benefits. The remuneration is reviewed annually by the Board. Variable (at risk) remuneration Variable remuneration may be delivered in the form of a short term incentive scheme, cash bonuses or long term incentive schemes including share options or rights. All equity based remuneration paid to directors and executives is valued at the cost to the Group and expensed. Options are valued using the Black-Scholes methodology. Performance Based Remuneration During the financial year there was no performance based remuneration paid to Directors or KMP under any Management Incentive Plan. For further detail regarding the Group Management Incentive Plan, refer to Note 16 - Key Management Personnel Compensation. The Group has not paid any bonuses to directors or KMP in the year ended 30 June 2015. Group Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration The remuneration policy has been tailored to maximise the commonality of goals between shareholders, directors and executives. The method applied in achieving this aim to date being the issue of options to directors and issue of shares under the Management Incentive Plan to encourage the alignment of personal and shareholder interests. The Group believes this policy will be the most effective in increasing shareholder wealth. Page 19 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 Services Agreements of Executive Directors Mr Thompson’s employment conditions as Managing Director are defined by way of contract of employment with no fixed term. The Company may terminate the employment contract without cause by providing nine months written notice or making payment in lieu of notice, based on the individual’s annual salary component. Mr Thompson may terminate the employment without cause by providing six months written notice and the Company may pay Mr Thompson in lieu of notice or require him to serve out his notice. In the event of a change in control of the Company, Mr Thompson will receive a bonus payment comprising of a lump sum gross payment of 12 months' Base Salary. If within 6 months after the change in control Mr Thompson elects to terminate his employment or his employment is terminated by the Company, Mr Thompson will not be entitled to any notice of termination or payment in lieu of notice. Page 20 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 Details of Remuneration Details of the remuneration of the Directors, other key management personnel (defined as those who have the authority and responsibility for planning, directing and controlling the major activities of the Group) and specified executives of Talga are set out in the following tables: 2015 Director Short Term Benefits Post-Employment Share based payments Salary Directors Fees Other $ $ $ Non Monetary Salary (i) $ Super- annuation Retirement Benefits Equity Options Total $ $ $ $ $ Value of share based payments as proportion of remuneration % Keith Coughlan Chairman Mark Thompson Managing Director (ii) Grant Mooney Non-Executive Director - 55,000 321,500 - - 47,700 Total 321,500 102,700 - - - - - - 26,769 30,543 - - 29,769 30,543 - - - - - - - - - 55,000 0% - 378,812 0% - - 47,700 481,512 0% 0% Short Term Benefits Post-Employment Share based payments Salary (a) Directors Fees Other Non Monetary Salary (i) Super- annuation Retirement Benefits Equity (viii) Options (viii) Total $ $ $ $ $ $ $ $ $ Value of share based payments as proportion of remuneration % 2014 Director Keith Coughlan Chairman (iii) Mark Thompson Managing Director (iv) Grant Mooney Non- Executive Director (v) Piers Lewis Non- Executive Director (vi) Sean Neary
 Chairman (vii) - 24,625 239,800 - - 9,070 - - - - 11,257 18,500 - - 14,137 Total 239,800 32,637 (a) Includes annual leave paid out of $51,884. 44,952 - - - - 358,062 382,687 93% - 22,182 - 1,044,712 1,306,694 80% - - - - - - - - - - - 238,708 247,778 96% - - - - 29,757 14,137 - - 22,182 - 1,044,712 596,770 1,981,053 83% Page 21 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 Notes Directors are paid under the terms agreed by way of director’s resolution. (i) Non monetary salary includes the net movement of the balance of accrued annual leave entitlement. (ii) Year ending 30 June 2015 - From 1 July 2014 Mr Thompson was entitled to an annual salary of 275,000 excluding superannuation and from 1 January 2015 $348,000 excluding superannuation. (iii) Mr Keith Coughlan commenced on 27 September 2013 and was entitled to receive directors fees of $30,000 per annum. (iv) Year ended 30 June 2014 - Mr Thompson was entitled to an annual salary of $275,000 excluding superannuation, which was voluntarily reduced to $220,000 effective 1 July 2013. To aid further cost reductions, his annual salary was further voluntarily reduced to $198,000 from 1 August 2013 by Board resolution and no salary was paid for the month of July 2013. (v) Mr Mooney commenced on 20 February 2014 and was entitled to receive director’s fees of $25,000 per annum. (vi) Mr Lewis’ was entitled to director’s fees of $38,150 per annum, which reduced to $30,520 January 2014. effective 1 July 2013 by Board resolution. The Director’s fees were further reduced to $25,000 per annum effective 1 resigned as Non-Executive Director on 20 February 2014. By Board resolution the Board agreed that Directors fees were only payable from 1 October 2013. In February 2014 the Company appointed SmallCap Corporate Pty Ltd, a Company controlled by Mr Piers Lewis, financial controller of the Group. In the 2014 financial year, SmallCap received $18,500 for the provision of financial accounting services to the Group. Mr Lewis (vii) Mr Neary was entitled to director’s fees of $43,600 per annum, which reduced to $34,880 effective 1 July 1 2013 by board resolution. Mr Neary resigned as Non-Executive Director on the 27 September 2013. An aggregate amount of $14,137 was paid, or was due and payable to Neary Consulting Pty Ltd, a Group controlled by Mr Sean Neary, for the provision of accounting and taxation services to the Group. options 2,500,000 (viii) For the year ended 30 June 2014 the fair value of 4,000,000 shares issued under a non-recourse loan to directors and M Thompson, $358,062 to Mr K Coughlan and $238,708 to G Mooney). Note 16 (c) and (d) refers to the assumptions made in calculating the fair value of the options and the shares issued under a non- at recourse 30 June 2014. ($1,044,712 $1,641,482 granted options totaled vested shares issued These were loan. and as to No share based payments were granted to the Directors during the year ended 30 June 2015. Option and Share holdings of directors and officers The number of options over ordinary shares in Talga held by Key Management Personnel (“KMP”) of the group during the financial year is as follows: Key Management Personnel Options 2015 30 June 2015 Balance at Beginning of Year Granted as Remuneration during the Year Exercised during the Year Keith Coughlan 1,500,000 Mark Thompson 2,463,947 Grant Mooney 1,000,000 - - - - - - (1) Options lapsed during the year (granted during 2012). Other changes during the Year (1) - (2,000,000) Balance at end of Year Vested during the Year 1,500,000 463,947 - 1,000,000 Vested and Exercisable 1,500,000 463,947 1,000,000 - - - Page 22 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 The number of ordinary shares in Talga held by Key Management Personnel (“KMP”) of the group during the financial year is as follows: Key Management Personnel Shareholdings 2015 30 June 2015 Balance at Beginning of Year Granted as Remuneration during the Year Issued on Exercise of Options during the Year Balance at end of Year Other Changes during the Year Keith Coughlan - Mark Thompson 14,206,841 Grant Mooney - Share based payments - - - - - - - - - - 14,206,841 - The movement during the year, by value, of remuneration shares and of remuneration options over ordinary shares in the Company in respect of each key management person is detailed below: Directors Granted in Year $ Value of options exercised in year $ Keith Coughlan Mark Thompson Grant Mooney - - - - - - Additional disclosures relating to options and shares The table below discloses the number of share options at 30 June 2015 granted to key management persons as remuneration as well as the number of options that vested or lapsed during this year. Share options do not carry any voting or dividend rights and can be exercised once the vesting conditions have been met until their expiry date. Options awarded during the year (No.) Award date Fair value per options at award date Class Year Vesting date Exercise price Expiry date No. vested during this year No. lapsed during this year 2012 As at 30 June 2015 Mark Thompson Keith Coughlan Grant Mooney 2014 2014 2,000,000 2/12/11 $0.0579 2/2/11 $0.40 30/11/14 - 2,000,000 1,500,000 23/6/14 $0.2387 23/6/14 $0.54 23/6/19 1,000,000 23/6/14 $0.2387 23/6/14 $0.54 23/6/19 - - - - 17. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Group paid a premium of $7,895 (2014: $7,272) to insure Directors and Officers of the Group. The Directors and Officers have indemnities in place with the Group whereby the Group has agreed to indemnify the Directors and Officers in respect of certain liabilities incurred by the Director or Officer while acting as a director of the Group and to insure the Director or Officer against certain risks the Director or Officer is exposed to as an officer of the Group. Page 23 TALGA RESOURCES LTD DIRECTORS’ REPORT FOR THE YEAR ENDED 30 June 2015 18. AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration for the year ended 30 June 2015 has been received and immediately follows the Directors’ Report. No fees were paid or payable to Stantons International for non-audit services provided during the year ended 30 June 2015. 19. CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behavior and accountability, the Directors support and have adhered to principles of sound corporate governance. The Board recognises the recommendations of the Australian Securities Exchange Corporate Governance Council, and considers that Talga is in compliance with those guidelines which are of critical importance to the commercial operation of a junior listed resources Group. During the financial year, shareholders continued to receive the benefit of an efficient and cost-effective corporate governance policy for the Group. This report is made in accordance with a resolution of the Directors. Mark Thompson Managing Director Perth, Western Australia 23 September 2015 Page 24 TALGA RESOURCES LTD CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the Year Ended 30 June 2015 Revenues from ordinary activities Other Income Expenses Administration expenses Compliance and regulatory expenses Depreciation expense – office equipment Director fees and employee benefits expenses Exploration and evaluation expenditure Exploration acquisition costs written off Research and development Germany Mining expenses FX gain / (loss) realised Impairment of plant and equipment Share based payments Loss before income tax expense Income tax expense Note 2015 $ 2014 $ 2 2 8 8 104,515 494,930 8,939 294,511 (841,770) (387,413) (155,120) (421,137) (16,891) (13,111) (1,192,023) (527,552) (2,177,669) (591,031) (77,765) (42,095) (153,570) (1,910) - - - - - (11,287) (1,553,789) (1,641,482) (5,845,450) (3,057,270) 3 - - Net loss attributable to members of the parent entity (5,845,450) (3,057,270) Other comprehensive income / (loss): Items that will not be reclassified to profit or loss - - Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Total other comprehensive loss for the year Total comprehensive loss for the year (17,668) (17,668) (160,742) (160,742) (5,863,118) (3,218,012) Total comprehensive loss attributable to members of the parent entity (5,863,118) (3,218,012) Basic loss per share (cents per share) Diluted loss per share (cents per share) 15 15 (4.6) (4.6) (3.7) (3.7) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Page 26 TALGA RESOURCES LTD CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2015 Current Assets Cash and cash equivalents Trade and other receivables Assets held for sale Total Current Assets Non-Current Assets Other receivables Plant and equipment Exploration and evaluation expenditure Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables Provisions TOTAL LIABILITIES NET ASSETS Equity Issued capital Reserves Accumulated losses TOTAL EQUITY Note 2015 $ 2014 $ 4 5 6 5 7 8 9 10 11 12 13 5,672,645 4,301,349 159,864 1,000,000 21,818 - 6,832,509 4,323,167 20,900 52,872 490,551 564,323 20,900 57,257 1,568,987 1,647,144 7,396,832 5,970,311 725,881 61,267 787,148 199,521 3,890 203,411 6,609,684 5,766,900 20,876,411 15,724,298 3,278,099 1,741,978 (17,544,826) (11,699,376) 6,609,684 5,766,900 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. Page 27 TALGA RESOURCES LTD CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the Year Ended 30 June 2015 Issued Capital $ Accumulated Losses $ Reserves Total $ $ At 1 July 2013 9,702,467 (8,642,106) 261,238 1,321,599 Comprehensive income: Loss after income tax for the year Other comprehensive loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners: Issue of share capital Capital raising costs Share based compensation At 30 June 2014 - - - (3,057,270) - (3,057,270) - (160,742) (160,742) (3,057,270) (160,742) (3,218,012) 6,291,586 (269,755) - 15,724,298 - - - (11,699,376) - - 1,641,482 1,741,978 6,291,586 (269,755) 1,641,482 5,766,900 Issued Capital $ Accumulated Losses $ Reserves Total $ $ At 1 July 2014 15,724,298 (11,699,376) 1,741,978 5,766,900 Comprehensive income: Loss after income tax for the year Other comprehensive loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners: Issue of share capital Capital raising costs Share based compensation At 30 June 2015 - - - (5,845,450) - (5,845,450) - (17,668) (17,668) (5,845,450) (17,668) (5,863,118) 5,514,019 (361,906) - 20,876,411 - - - (17,544,826) - - 1,553,789 3,278,099 5,514,019 (361,906) 1,553,789 6,609,684 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. Page 28 TALGA RESOURCES LTD CONSOLIDATED STATEMENT OF CASH FLOWS For the Year Ended 30 June 2015 Cash Flows from Operating Activities Payments for exploration and evaluation Payments for mining Payments to suppliers, contractors and employees Interest received Research and development refund Proceeds of sale of tenements / option fees Other income Note 2015 $ 2014 $ (1,991,336) (153,570) (2,134,544) 104,515 440,559 50,000 4,371 (1,486,472) - (1,042,688) 8,939 231,377 - - Net cash flows used in operating activities 14 (3,680,005) (2,288,844) Cash Flows from Investing Activities Purchase of plant and equipment Proceeds from sale of plant and equipment Payment other – Security Bonds payments Net cash used in investing activities Cash Flows from Financing Activities Proceeds from issue of securities Payment for costs of issue of securities Net cash flows from financing activities (20,992) - (62,841) (83,833) (5,800) 1,530 - (4,270) 5,534,019 (398,885) 6,275,986 (232,665) 5,135,134 6,043,321 Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year 1,371,296 4,301,349 3,750,207 551,142 Cash and cash equivalents at the end of the financial year 4 5,672,645 4,301,349 The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. Page 29 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The financial report of the Group complies with all International Financial Reporting Standards (IFRS) in their entirety. The financial report covers the parent Talga Resources Limited and Controlled Entities (the “Group”). Talga Resources Limited is a public Company, incorporated and domiciled in Australia. The financial report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. The Directors have prepared the financial statements on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and extinguishment of liabilities in the ordinary course of business. Based on the analysis which is included in the Operating and Financial Review in the Directors’ Report on page 16, in the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Should the Company not be able to continue as a going concern, it may not be able to realise its assets and extinguish its liabilities in the normal course of business at the amounts stated in this financial report. The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. Business Combinations (a) 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 (i.e. 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 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. The acquisition may result in the recognition of goodwill or a gain from a bargain purchase. The method adopted for the measurement of goodwill will impact on the measurement of any non-controlling interest to be recognised in the acquiree where less than 100% ownership interest is held in the acquiree. The acquisition date fair value of the consideration transferred for a business combination plus the acquisition date fair value of any previously held equity interest shall form the cost of the investment in the separate financial statements. Consideration may comprise the sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the former owners of the acquiree and the equity interests issued by the acquirer. Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of comprehensive income. Where changes in the value of such equity holdings had previously been recognised in other comprehensive income, such amounts are recycled to profit or loss. Page 30 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Included in the measurement of consideration transferred is any asset or liability resulting from a contingent consideration arrangement. Any obligation incurred relating to contingent consideration is classified as either a financial liability or equity instrument, depending upon the nature of the arrangement. Rights to refunds of consideration previously paid are recognised as a receivable. Subsequent to initial recognition, contingent consideration classified as equity is not re-measured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or a liability is re-measured each reporting period to fair value through the statement of comprehensive income unless the change in value can be identified as existing at acquisition date. All transaction costs incurred in relation to the business combination are expensed to the profit or loss. (b) Exploration, Evaluation and Development Expenditure Exploration and evaluation costs are written off in the year they are incurred. Costs of acquisition are capitalised to areas of interest and carried forward where right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest or, where exploration and evaluation activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. When an area of interest is abandoned or the directors decide that it is not commercial, any accumulated acquisition costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting period and accumulated acquisition costs written off to the extent that they will not be recoverable in the future. Where projects have advanced to the stage that directors have made a decision to mine, they are classified as development properties. When further development expenditure is incurred in respect of a development property, such expenditure is carried forward as part of the cost of that development property only when substantial future economic benefits are established. Otherwise such expenditure is classified as part of the cost of production or written off where production has not commenced. Financial Instruments (c) Financial instruments in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial instruments are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transactions costs. The Group determines the classification of its financial instruments after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end. All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace. (i) Financial assets at fair value through profit or loss Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss. (ii) Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held- to-maturity when the Group has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Investments that are intended to be held-to-maturity, such as bonds, are subsequently measured at amortised cost. Page 31 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process. (iii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. (iv) Available-for-sale investments Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any of the three preceding categories. After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss. The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models. (v) Financial Liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method. Impairment At each reporting date, the Group assesses 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 the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. (d) Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within financial liabilities in current liabilities on the Statement of Financial Position. Page 32 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (e) Trade and Other Receivables Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the entity will not be able to collect the debts. Bad debts are written off when identified. (f) 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. All revenue is stated net of the amount of goods and services tax (GST). (g) Impairment of Assets At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from the other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generated unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the income statement immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash- generating unit) in prior years. A reversal of an impairment loss is recognised in the income statement immediately, unless the relevant asset is carried at fair value, in which case the impairment loss is treated as a revaluation increase. (h) 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 (“ATO”). 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. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the cash flow statement on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (i) Taxation The Group adopts the liability method of tax-effect accounting whereby the income tax expense is based on the profit/loss from ordinary activities adjusted for any non-assessable or disallowed items. Page 33 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding 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 income statement 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 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 Group will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law. (j) Trade and Other Payables Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. (k) Share Based Payments The Group operates an employee share and option plan. Share-based payments to employee are measured at the fair value of the instruments issued and amortised over the vesting period. Share-based payments to non- employees are measured at the fair value of goods or services received or the fair value of the equity instruments used, if it is determined the fair value of the goods and services cannot be reliably measured, and are recorded at the date the goods or services are received. Fair value is measured by use of a black and scholes option pricing model. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest. For cash-settled share-based payments, a liability equal to the portion of the goods or services received is recognised at the current fair value determined at each reporting date. The value of shares issued to employees financed by way of a non recourse loan under the employee Share Plan is recognised with a corresponding increase in equity when the company receives funds from either the employees repaying the loan or upon the loan termination. All shares issued under the plan with non recourse loans are considered, for accounting purposes, to be options. (l) Issued Capital Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received. (m) Earnings Per Share Basic earnings per share is calculated as net earnings attributable to members, adjusted to exclude costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for a bonus element. Page 34 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Diluted EPS is calculated as net earnings attributable to members, adjusted for costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that would have been recognised as expenses; and other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (n) Critical Accounting Estimates and Judgments The directors evaluate estimates and judgments incorporated into the financial report 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 Group. Key Estimates - Impairment The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value-in-use calculations which incorporate various key assumptions. Key Judgement – Exploration and evaluation costs Exploration and evaluation acquisition costs are accumulated in respect of each identifiable area of interest. These costs are carried forward in respect of an area that has not at balance sheet date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or relating to, the area of interest are continuing. Key Judgment – Environmental Issues Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the directors understanding thereof. At the current stage of the Group’s development and its current environmental impact the directors believe such treatment is reasonable and appropriate. (o) Application of new and revised Accounting Standards New and revised AASB’s affecting amounts reported and/or disclosures in the financial statements In the current year, the Group has applied a number of new and revised AASB’s issued by the Australian Accounting Standards Board (AASB) that are mandatorily effective from an accounting period on or after 1 January 2014. - AASB 2012-3 ‘Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities’ As the Group does not have any financial assets and financial liabilities that qualify for offset, the application of the amendments does not have any material impact on the disclosures or on the amounts recognised in the Group's consolidated financial statements. - AASB 2014-1 ‘Amendments to Australian Accounting Standards’ (Part A: Annual Improvements 2010–2012 and 2011–2013 Cycles). The Annual Improvements 2010-2012 has made number of amendments to various AASBs, which are summarised below.   The amendments to AASB 2 (i) change the definitions of ‘vesting condition’ and ‘market condition’; and (ii) add definitions for ‘performance condition’ and ‘service condition’ which were previously included within the definition of ‘vesting condition’. The amendments to AASB 2 are effective for sharebased payment transactions for which the grant date is on or after 1 July 2014. The amendments to AASB 3 clarify that contingent consideration that is classified as an asset or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent consideration is a financial instrument within the scope of AASB 9 or AASB 139 or a non- Page 35 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)        financial asset or liability. Changes in fair value (other than measurement period adjustments) should be recognised in profit and loss. The amendments to AASB 3 are effective for business combinations for which the acquisition date is on or after 1 July 2014. The amendments to AASB 8 (i) require an entity to disclose the judgements made by management in applying the aggregation criteria to operating segments, including a description of the operating segments aggregated and the economic indicators assessed in determining whether the operating segments have ‘similar economic characteristics’; and (ii) clarify that a reconciliation of the total of the reportable segments’ assets to the entity’s assets should only be provided if the segment assets are regularly provided to the chief operating decision-maker. The amendments to the basis for conclusions of AASB 13 clarify that the issue of AASB 13 and consequential amendments to AASB 139 and AASB 9 did not remove the ability to measure short-term receivables and payables with no stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial. The amendments to AASB 116 and AASB 138 remove perceived inconsistencies in the accounting for accumulated depreciation/amortisation when an item of property, plant and equipment or an intangible asset is revalued. The amended standards clarify that the gross carrying amount is adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated depreciation/amortisation is the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses. The amendments to AASB 124 clarify that a management entity providing key management personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity should disclose as related party transactions the amounts incurred for the service paid or payable to the management entity for the provision of key management personnel services. However, disclosure of the components of such compensation is not required. The Annual Improvements 2011-2013 has made number of amendments to various AASBs, which are summarised below. The amendments to AASB 3 clarify that the standard does not apply to the accounting for the formation of all types of joint arrangements in the financial statements of the joint arrangement itself. The amendments to AASB 13 clarify that the scope of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted for in accordance with, AASB 139 or AASB 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within AASB 132. The amendments to AASB 140 clarify that AASB 140 and AASB 3 are not mutually exclusive and application of both standards may be required. Consequently, an entity acquiring investment property must determine whether: o o the property meets the definition of investment property in terms of AASB 140; and the transaction meets the definition of a business combination under AASB 3. The application of these amendments does not have any material impact on the disclosures or on the amounts recognised in the Group's consolidated financial statements. Standards and Interpretations in issue not yet adopted At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but not yet effective. The Group does not anticipate that there will be a material effect on the financial statements from the adoption of these standards. Page 36 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) Standard/Interpretation AASB 9 ‘Financial Instruments’, and the relevant amending standards AASB 15 ‘Revenue from Contracts with Customers’ and AASB 2014-5 ‘Amendments to Australian Accounting Standards arising from AASB 15’ Effective for annual reporting periods beginning on or after 1 January 2018 Expected to be initially applied in the financial year ending 30 June 2019 1 January 2017 30 June 2018 AASB 2014-4 ‘Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation’ 1 January 2016 30 June 2017 AASB 2015-1 ‘Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle 1 January 2016 30 June 2017 AASB 2015-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101’ 1 January 2016 30 June 2017 AASB 2015-3 ‘Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality’ 1 July 2015 30 June 2016 (p) (i) Foreign Currency Functional and presentation currency The functional currency of each of the Group’s entities is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency. The functional currency of the Consolidated Entity’s subsidiaries, Talga Mining Pty Ltd, was changed from Australian dollars to Swedish Krona from 1 January 2013 and Talga Advanced Materials GmbH, to Euro from incorporation on 5 March 2015. (ii) Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies of Group entities at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortised cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences arising on retranslation are generally recognised in profit or loss. However, foreign currency differences arising from the retranslation of the following items are recognised in other comprehensive income:  Available-for-sale equity investments (except on impairment in which case foreign currency differences that have been recognised in other comprehensive income are reclassified to profit or loss);  A final liability designated as a hedge of the net investment in a foreign operation to the extent that the hedge is effective; or  Qualifying cash flow hedges to the extent the hedge is effective. Page 37 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) (iii) Foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to the functional currency at exchange rates at the reporting date. The income and expenses of foreign operations, are translated to Australian dollars at exchange rates at the dates of the transactions. Foreign currency differences are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity. However, if the foreign operation is a non-wholly owned subsidiary, then the relevant proportion of the translation difference is allocated to the non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss. When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such items are considered to form part of the net investment in the foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity. (q) Principles of Consolidation The consolidated financial statements incorporate all of the assets, liabilities and results of the parent (Talga 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 24. The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Intercompany transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group. Equity interests in a subsidiary not attributable, directly or indirectly, to the Group are presented as “non- controlling interests". The Group initially recognises non-controlling interests that are present ownership interests in subsidiaries and are entitled to a proportionate share of the subsidiary's net assets on liquidation at either fair value or at the non-controlling interests' proportionate share of the subsidiary's net assets. Subsequent to initial recognition, non-controlling interests are attributed their share of profit or loss and each component of other comprehensive income. Non-controlling interests are shown separately within the equity section of the statement of financial position and statement of comprehensive income. (r) 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 (i.e. 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 Page 38 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) 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. To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. 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 (i.e. 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. 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. 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. Page 39 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d) 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) if a market that was previously considered active (Level 1) became inactive (Level 2 or Level 3) or vice versa; or (ii) 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. 2. REVENUE AND OTHER INCOME Interest revenue Research and development refund Option fee on sale of Australian Gold tenements Other income Other - foreign exchange gain 2015 $ 104,515 440,559 50,000 4,371 - 2014 $ 8,939 273,883 - - 20,628 Page 40 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 3. INCOME TAXES (a) Prima facie income tax benefit at 30% on loss from ordinary activities is reconciled to the income tax provided in the financial statements 2015 $ 2014 $ Loss before income tax (5,845,450) (3,057,270) Income tax calculated at 30% (1,753,635) (917,181) Tax effect of: - Deferred exploration expenditures - Expenses not allowed - Section 40-880 deduction - Accrued expenses - Income not assessable Adjustment for difference in tax rate - 1,498,353 (78,227) 2,250 (132,168) - - 405,881 - - - - Future income tax benefit not brought to account 463,427 511,300 Income tax attributable to operating losses - - (b) Deferred tax assets The potential deferred tax asset arising from the tax losses and temporary differences have not been recognised as an asset because recovery of tax losses is not yet probable. Australian tax losses Provisions net of prepayments Section 40-880 deduction Deferred exploration expenditures Accrued Interest Unrecognised deferred tax assets relating to the above temporary differences 2015 $ 2014 $ 2,732,625 2,648,295 25,517 163,345 (498,812) - 7,758 123,286 (498,812) - 2,422,675 2,280,527 The estimated Swedish tax losses are approximately $3,693,000 based on a tax rate of 22%. The deferred tax benefit from the Swedish tax losses not recognised is approximately $812,460. The benefits will only be obtained if:  The Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deduction for the losses to be realised.  The Group continues to comply with the conditions in deductibility imposed by the Law; and No change in tax legislation adversely affects the Group in realising the benefits from the deductions or the losses. Page 41 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 4. CASH AND CASH EQUIVALENTS Cash at bank 5,672,645 4,301,349 2015 $ 2014 $ 5. TRADE AND OTHER RECEIVABLES CURRENT Other Debtors GST / VAT receivable Total trade and other receivables 2015 $ 62,841 97,023 159,864 2014 $ 21,818 - 21,818 All trade and other receivables are current and there are no overdue or impaired amounts. NON CURRENT Security Term Deposit 2015 $ 2014 $ 20,900 20,900 Balance relates to a term deposit taken out as security for rent of the head office. 6. ASSETS CLASSIFIED AS HELD FOR SALE 2015 $ Exploration and evaluation acquisition costs 1,000,000 2014 $ - Subsequent to the year end and as announced on 12 August 2015, Talga executed an Option Agreement for the sale of three of its four Australian gold assets (Mosquito Creek, Talga Talga and Warrawoona Projects - collectively, “the Projects”) located in the Pilbara region of Western Australia to Beatons Creek Gold Pty Ltd (“Beatons”). Upon exercising the Option, Beatons can elect to purchase all or some of the Projects. The total sale price is up to $1.0 million in cash and a royalty on production. The amount above represents the carrying amount of acquisition costs relating to these gold assets and has been transferred from non-current asset exploration and evaluation expenditure. Page 42 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 7. PLANT AND EQUIPMENT Plant and equipment at cost Less: accumulated depreciation Total plant and equipment Balance at the beginning of the financial year Additions Disposals Depreciation expense – office equipment Depreciation expense – field equipment Exchange difference Balance at the end of the financial year 8. EXPLORATION AND EVALUATION EXPENDITURE Balance at the beginning of the financial year Exploration and evaluation expenditure Written off as incurred (refer note 1(b)) Write off as exploration acquisition costs (refer note 1(b)) Transferred to Assets classified as held for sale Foreign exchange movement in assets Balance at the end of the financial year 2015 $ 207,785 (154,913) 52,872 57,257 20,992 - (16,892) (8,484) (1) 52,872 2014 $ 186,794 (129,537) 57,257 93,359 5,801 (15,576) (13,111) (12,944) (272) 57,257 2015 $ 2014 $ 1,568,987 2,177,669 (2,177,669) (77,765) (1,000,000) (671) 490,551 1,673,454 591,031 (591,031) - - (104,467) 1,568,987 This closing balance comprises acquisition of tenement costs and the excess of the purchase price over the net book value of TCL Sweden Ltd which has been allocated to tenements. 9. TRADE AND OTHER PAYABLES CURRENT PAYABLES Trade creditors Accruals Superannuation / PAYG payable Total trade and other payables Trade liabilities are non-interest bearing and normally settled on 30-day terms. 2015 $ 2014 $ 612,152 30,000 83,729 725,881 148,279 29,390 21,852 199,521 Page 43 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 10. PROVISIONS 2015 $ 2014 $ Provision for Annual Leave 61,267 3,890 11. ISSUED CAPITAL (a) Issued and Fully Paid Ordinary shares 138,356,150 20,876,411 124,566,097 15,724,298 138,356,150 20,876,411 124,566,097 15,724,298 2015 Number 2015 $ 2014 Number 2014 $ (b) Movement Reconciliation ORDINARY SHARES Balance 30 June 2013 Issue of shares pursuant to a placement Issue of shares pursuant to entitlement offer Issue of shares to contractors in lieu of cash Issue of shares pursuant to a placement Issue of shares to the managing director (i) Issue of shares per entitlement offer Date Quantity Issue Price $ $ 55,304,406 9,702,467 17/09/2013 8,295,661 0.05 414,783 24/10/2013 21,200,022 0.05 1,060,001 26/11/2013 260,000 0.06 15,600 21/03/2014 20,000,000 0.085 1,700,000 23/06/2014 4,000,000 0.37 - 26/06/2014 8,564,066 0.20 1,712,813 Issue of shares per entitlement offer - shortfall 30/06/2014 1,941,942 0.20 388,388 Issue of shares pursuant to a placement 30/06/2014 5,000,000 0.20 1,000,000 Less transaction costs Balance 30 June 2014 - - - (269,754) 124,566,097 15,724,298 Issue of shares on exercise of options 25/07/2014 312 0.35 Issue of shares on exercise of options 15/08/2014 15,000 0.35 Issue of shares on exercise of options 22/09/2014 670 0.35 Issue of shares on exercise of options 15/10/2014 10,000 0.35 Issue of shares on exercise of options 13/11/2014 3,052 0.35 Issue of shares on exercise of options 9/03/2015 1,000 0.35 109 5,250 235 3,500 1,068 350 Issue of shares pursuant to a placement 25/03/2015 13,750,000 0.40 5,500,000 Issue of shares on exercise of options 31/03/2015 4,456 0.35 1,560 Issue of shares on exercise of options 31/03/2015 122 0.35 43 Issue of shares on exercise of options 31/03/2015 5,441 0.35 1,904 Less transaction costs Balance 30 June 2015 - - - (361,906) 138,356,150 20,876,411 (i) Management Incentive Plan Shares (refer Note 16) Page 44 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 11 ISSUED CAPITAL (Cont’d) (c) Share Options At 30 June 2015 the Group had 19,612,910 ordinary shares under option.          500,000 unlisted options have an exercise price of 35 cents and expire 21 July 2015. 7,712,910 listed options have an exercise price of 35 cents and expire 30 November 2015. 500,000 unlisted options have an exercise price of 45 cents and expire 3 October 2016. 2,000,000 unlisted options have an exercise price of 52 cents and expire 31 December 2016. 2,000,000 unlisted options have an exercise price of 60 cents and expire 31 December 2016. 2,000,000 unlisted options have an exercise price of 65 cents and expire 31 December 2016. 2,500,000 unlisted options have an exercise price of 54 cents and expire 23 June 2019. 1,400,000 unlisted options have an exercise price of 54 cents and expire 20 August 2019. 1,000,000 unlisted options have an exercise price of 54 cents and expire 26 March 2020. Capital Management Management controls the capital of the Group in order to ensure that the Group can fund its operations and continue as a going concern. The Group’s capital includes ordinary share capital. There are no externally imposed capital requirements. The working capital position of the Group at 30 June 2015 is as follows: Cash and cash equivalents Trade and other receivables Assets held for sale Trade and other payables Provisions – employee entitlements Working capital position 12. RESERVES OPTION RESERVE 2015 $ 2014 $ 5,672,645 4,301,349 159,864 1,000,000 (725,881) (61,267) 21,818 - (199,521) (3,890) 6,045,361 4,119,756 2015 $ 2014 $ Balance at the beginning of the financial year 1,938,186 296,704 Options issued and fair value of management incentive plan shares (note 25) Balance at the end of the financial year 1,553,789 3,491,975 1,641,482 1,938,186 The option reserve records funds received for options issued and items recognised as expenses on valuation of share options issued. The option reserve is also used to recognise the fair value of Management Incentive Plan Shares issued with an attaching limited recourse employee loan which for accounting purposes are treated as options. Page 45 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 12. RESERVES (Cont’d) FOREIGN CURRENCY RESERVE Balance at the beginning of the financial year Movement during the year Balance at the end of the financial year 2015 $ 2014 $ (196,208) (17,668) (213,876) (35,466) (160,742) (196,208) Total Reserves 3,278,099 1,741,978 13. ACCUMULATED LOSSES 2015 $ 2014 $ Balance at the beginning of the financial year (11,699,376) (8,642,106) Loss for the year (5,845,450) (3,057,270) Balance at the end of the financial year (17,544,826) (11,699,376) 14. CASHFLOW INFORMATION Reconciliation of cash flows from operating activities with loss after income tax Loss after income tax (5,845,450) (3,057,270) 2015 $ 2014 $ Non-cash flows in loss for the year: - Depreciation expense - office and field equipment - Impairment of plant and equipment - Loss on sale of plant and equipment - Write off of exploration acquisition costs - Share based payment - Employee benefits expense - Foreign exchange loss / (gain) Changes in assets and liabilities - (Increase) / decrease in trade and other receivables - Increase / (decrease) in trade and other payables - Increase / (decrease) in provisions 25,376 - - 77,765 26,055 11,287 2,759 - 1,553,789 1,641,482 - (15,089) 15,600 (63,134) (95,204) 561,431 57,377 (5,723) (771,336) (88,564) Net cash outflows from Operating Activities (3,680,005) (2,288,844) Non Cash Financing and Investing Activities There have been nil non-cash investing and financing activities for the financial year. Page 46 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 15. LOSS PER SHARE 2015 $ 2014 $ Net loss after income tax attributable to members of the Group (5,845,450) (3,057,270) Weighted average number of shares on issue during the financial year used in the calculation of basic loss per share Number Number 128,245,913 82,125,723 This calculation does not include shares under option that could potentially dilute basic earnings per share in the future as the Group has incurred a loss for the year. 16. KEY MANAGEMENT AND PERSONNEL COMPENSATION (a) Directors and Specified Executives The names and positions held by key management personnel in office at any time during the year are: Directors Keith Coughlan Mark Thompson Grant Mooney Position Non-Executive Chairman Managing Director Non-Executive Director Duration of Appointment Appointed 27th September 2013 Appointed 21st July 2009 Appointed 20th February 2014 (b) Remuneration of Directors $481,512 (2014: $1,981,053) in remuneration was paid to Directors for the financial year comprising salary, superannuation, insurance and commercial fees. Short-term employee benefits Post-employee benefits Other long-term benefits Share-based payments Total 2015 $ 450,969 30,543 - - 2014 $ 317,389 22,182 - 1,641,482 481,512 1,981,053 (c) Remuneration Options: Granted and Vested during the year There were no options granted to key management personnel during the year ended 30 June 2015. On 23 June 2014, 1,500,000 options were granted to Keith Coughlan (Non-Executive Director) and 1,000,000 options were granted to Grant Mooney (Non-Executive Director) for no consideration. The options are exercisable at $0.54 on or before 23 June 2019. The options hold no dividend or voting rights and are not transferrable. The options vested on grant date. Page 47 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 16. KEY MANAGEMENT AND PERSONNEL COMPENSATION (Cont’d) The value of options granted to non-executive directors was calculated applying the following inputs: Exercise price: Valuation date: Expiry date: Market price of shares at grant date: Expected share price volatility: Risk free interest rate: Valuation per option: $0.37 $0.54 23 June 2014 23 June 2019 89% 3.25% 23.87 cents The expense recognised for the options during the 2014 financial year was $596,770. (d) Management Incentive Equity Plan On 23 June 2014, 4,000,000 shares were issued to Mark Thompson (Managing Director) pursuant to the Talga Management Incentive Equity Plan (‘Management Incentive Plan’). The object of the Management Incentive Plan is to provide a mechanism by which Senior Managers and/or Directors selected by the Plan Committee may acquire shares for the purpose of sharing in the future of the Company. The Management Incentive Plan provides for the issue of shares to Eligible Employees in accordance with the Management Incentive Plan Rules. To enable an Eligible Employee to acquire shares, the company may provide to an Eligible Employee an interest free loan. The Company has agreed to the provision of a limited resource, interest free loan to the Managing Director, Mr Mark Thompson, pursuant to the Management Incentive Plan for the purpose of subscribing for 4,000,000 shares. The loan has been provided on the following key terms: a. b. c. d. e. f. g. h. i. The amount of the loan to Mr Thompson is equal to the market value of 4,000,000 shares on the day of issue to fund the amount payable for the 4,000,000 shares; No interest is payable on the loan; The loan is limited in resource to amounts recovered from disposal of the shares; The loan is to be repaid if Mr Thompson’s employment is terminated and he is not a good leaver (e.g. summary dismissal or termination of employment for misconduct); The loan may be forgiven by the Company at any time; The loan is repayable 5 years after the date of issue of the shares; If, upon the expiration of the term of the Loan the Company does not exercise its right to buy back or facilitate the transfer of the shares, Mr Thompson will be entitled to sell the shares in an approved trading window of the Company; Where a share is sold, the loan amount for that share and that share only must be repaid to the Company in cleared funds within 5 business days of the sale; and The loan is secured against the shares but Mr Thompson is not personally liable for the loan. In other words, in the event the shares are sold to repay the loan but the sale proceeds are insufficient to cover the amount of the loan which is outstanding the Company cannot recover the remaining amount from Mr Thompson and the Company will be unlikely to recoup the full face value of the loan. Conversely, where the sale proceeds are greater than the amount of the loan the Company will not receive an additional repayment as Mr Thompson is entitled to the surplus proceeds. Page 48 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 16. KEY MANAGEMENT AND PERSONNEL COMPENSATION (Cont’d) The value of the shares granted under the Management Incentive Plan are considered for accounting purposes to be options and their value was calculated applying the following inputs: Exercise price: Valuation date: Expiry date: Market price of shares at grant date: Expected share price volatility: Risk free interest rate: Valuation per option: $0.37 23 June 2014 23 June 2019 $0.37 89% 3.25% 26.11 cents The expense recognised under the Management Incentive Plan during the 2014 financial year was $1,044,712. e) Related Party Transactions: No related party transactions occurred during the current or prior financial year. 17. AUDITOR’S REMUNERATION Amounts received or due and receivable by the auditors for: Auditing and review of financial reports Other services Total 18. COMMITMENTS a) Exploration commitments 2015 $ 35,364 - 35,364 2014 $ 28,114 - 28,114 In order to maintain current rights of tenure to mining tenements, the Group has the following discretionary exploration expenditure requirements up until expiry of leases. These obligations, which are subject to renegotiation upon expiry of the leases, are not provided for in the financial statements and are payable: Not longer than one year Longer than one year, but not longer that five years Longer than five years Total 2015 $ 218,404 536,765 330,201 2014 $ 324,980 209,580 - 1,085,370 534,560 If the Group decides to relinquish certain leases and/or does not meet these obligations, assets recognised in the statement of financial position may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out of exploration rights to third parties will reduce or extinguish these obligations. Page 49 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 18. COMMITMENTS (Cont’d) b) Operating lease commitments Head Office lease Not longer than one year Longer than one year, but not longer that five years Longer than five years Total 19. FINANCIAL INSTRUMENTS a. Financial Risk Management Policies 2015 $ 51,273 15,312 - 66,585 2014 $ 81,094 108,125 - 189,219 The Group’s financial instruments consist solely of deposits with banks. No financial derivatives are held. i. Financial Risk Exposures and Management. The main risk the Group is exposed to through its financial instruments is interest rate risk. Interest rate risk Interest rate risk is managed by obtaining the best commercial deposit interest rates available in the market by the major Australian Financial Institutions. Credit risk exposures Credit risk represents the loss that would be recognised if the counterparties default on their contractual obligations resulting in financial loss to the Group. The Group has adopted the policy of only dealing with creditworthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group measures credit risk on a fair value basis. The Group does not have any significant credit risk to any single counterparty or any group of counterparties having similar characteristics. The credit risk on financial assets of the Group, which have been recognised in the Statement of Financial Position, is the carrying amount, net of any provision for doubtful debts. The credit quality of financial assets that are neither past, due nor impaired can be assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates: Trade Receivables Group 1 Group 2 Group 3 Total trade receivables Cash at bank and short-term deposits Total 2015 $ - 2014 $ - 159,864 21,818 - - 159,864 21,818 5,672,645 4,301,349 5,672,645 4,301,349 Page 50 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 19. FINANCIAL INSTRUMENTS (Cont’d) Group 1 – new customers (less than 6 months). Group 2 – existing customers (more than 6 months) with no defaults in the past. Group 3 – existing customers (more than 6 months) with some defaults in the past. All defaults were fully recovered. Cash at bank and short term deposits are held in financial institutions which must have a minimum AA2 rating. ii. Liquidity Risk The Group manages liquidity risk by monitoring forecast cash flows. The Group does not have any significant liquidity risk as the Group does not have any collateral debts. iii. Net Fair Values The net fair values of: - Other assets and other liabilities approximate their carrying value. iv. Interest Rate Risk The Group has performed sensitivity analysis relating to its exposure to interest rate risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks. Interest Rate Sensitivity Analysis At 30 June 2015, the effect on loss as a result of changes in the interest rate, with all other variables remaining constant would be as follows: Change in loss - Increase in interest rate by 100 basis points - Decrease in interest rate by 100 basis points Change in equity - Increase in interest rate by 100 basis points - Decrease in interest rate by 100 basis points 2015 $ 56,726 (56,726) 56,726 (56,726) 2014 $ 43,013 (43,013) 43,013 (43,013) v. Foreign currency risk Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency. The Group has dealings in Sweden as a result of acquiring tenements in Sweden as well as Germany where the Company is building a graphite/graphene pilot plant. The Group is subject to foreign currency value fluctuations in the course of its operations. The Group plans to curtail this impact by paying foreign currency invoices in a timely fashion. At 30 June 2015, the Group has liabilities denominated in the foreign currencies detailed below: SEK Total AUD Foreign Currency 1,398,519 AUD Equivalent 219,713 219,713 A 5% movement in foreign exchange rates would increase or decrease loss before tax by approximately $10,986. Page 51 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 19. FINANCIAL INSTRUMENTS (Cont’d) The parent has a loan receivable from Talga Mining Pty Ltd denominated in SEK for SEK30,653,642 ($4,815,810) and a loan receivable from Talga Advanced Materials GmbH of EUR66,655 ($96,256). A 5% movement in foreign exchange rates would increase or decrease loss before tax by approximately $245,603. Floating Interest Rate $ Fixed Interest Rate $ Non interest bearing $ Total $ Weighted average interest rate % 2015 Financial Assets Cash and cash equivalents 4,621,271 - 1,051,374 5,672,645 2.4 Trade and other receivables - 20,900 159,864 180,764 Total financial assets 4,621,271 20,900 1,211,238 5,853,409 Financial liabilities Trade and other payables Total financial liabilities 2014 Financial Assets - - - - 725,881 725,881 725,881 725,881 - - - - Cash and cash equivalents 18,670 - 4,282,679 4,301,349 2.4 Trade and other receivables - 20,900 21,818 42,718 Total financial assets 18,670 20,900 4,304,497 4,344,067 Financial liabilities Trade and other payables Total financial liabilities 20. SEGMENT NOTE - - - - 199,521 199,521 199,521 199,521 - - - - The Group adopted AASB 8 Operating Segments with effect from 1 July 2009. AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The term ‘chief operating decision maker’ identifies a function, not necessarily a manager with a specific title. That function is to allocate resources to and assess the performance of the operating segments of an entity. The Company’s Board is the the chief operating decision maker as it relates to segment reporting. The Group operates in three operating and geographical segments, being graphite exploration and evaluation in Sweden, gold exploration and evaluation in Australia and from the 2015 year, graphite/graphene research and development in Germany. This is the basis on which internal reports are provided to the Directors for assessing performance and determining the allocation of resources within the Group. Page 52 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 20. SEGMENT NOTE (Cont’d) 2015 SEGMENT PERFORMANCE Revenues from ordinary activities Other Income Total segment revenue Sweden Germany Australia $ - - - $ - - - $ 104,515 494,930 599,445 Total $ 104,515 494,930 599,445 Segment expense (inc write offs) (1,925,457) (42,095) (483,547) (2,451,099) Reconciliation of segment result to net loss before tax Unallocated items: - Administration expenses - Compliance and regulatory expenses - Depreciation expense - Director fees and employee benefits expenses - Impairment - Share based payments - Mining - Research and Development Germany - Foreign exchange gain / (loss) Net loss before tax from continuing operations SEGMENT ASSETS As at 30 June 2015 Segment assets as at 1 July 2014 Segment asset increases/(decreases) for the year: - Cash and cash equivalents - Assets held for sale - Exploration and evaluation expenditure - Other Reconciliation of segment assets to total assets Other assets Total assets from continuing operations (841,770) (387,413) (16,891) (1,192,023) - (1,553,789) (1,910) (5,845,450) 562,677 - 5,407,634 5,970,311 82,124 36,235 1,252,937 1,371,296 - (28,446) 127,916 - - - 1,000,000 1,000,000 (1,049,990) (1,078,436) 5,745 133,661 744,271 36,235 6,616,326 7,396,832 - 7,396,832 Page 53 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 20. SEGMENT NOTE (Cont’d) SEGMENT LIABILITIES As at 30 June 2015 Reconciliation of segment liabilities to total liabilities Unallocated items: - Provision Total liabilities from continuing operations Sweden $ 219,713 Germany $ - Australia $ 506,168 Total $ 725,881 61,267 787,148 Sweden Germany Australia Total 2014 SEGMENT PERFORMANCE Revenues from ordinary activities Other income Total segment revenue Segment expense $ 10 - 10 (272,047) Reconciliation of segment result to net loss before tax Unallocated items: - Administration expenses - Compliance and regulatory expenses - Depreciation expense – office equipment - Director fees and employee benefits expenses - Impairment of plant and equipment - Share based payments - Foreign exchange gain Net loss before tax from continuing operations SEGMENT ASSETS As at 30 June 2014 Segment assets as at 1 July 2013 Segment asset increases/(decreases) for the year: - Cash and cash equivalents 639,720 27,424 - Exploration and evaluation expenditure (104,467) - Other - 562,677 $ - - - - - - - - - $ $ 8,929 8,939 273,883 273,883 282,812 282,822 (318,984) (591,031) (155,120) (421,137) (13,111) (527,552) (11,287) (1,641,482) 20,628 (3,057,270) 1,711,025 2,350,745 3,722,783 3,750,207 - (104,467) (26,174) (26,174) 5,407,634 5,970,311 Page 54 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 20. SEGMENT NOTE (Cont’d) Reconciliation of segment assets to total assets Other assets Total assets from continuing operations SEGMENT LIABILITIES Segment liabilities as at 30 June 2014 Reconciliation of segment liabilities to total liabilities Unallocated items: - Provision Total liabilities from continuing operations 21. SUBSEQUENT EVENTS - 5,970,311 22,762 - 176,759 199,521 3,890 203,411 Other than as disclosed below, there has not been any other matter or circumstance occurring subsequent to the end of the financial year that has significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.  On 11 August 2015, Talga executed an Option Agreement (“Option”) for the sale of three of its four Australian gold assets (Mosquito Creek, Talga Talga and Warrawoona Projects - collectively, “the Projects”) located in the Pilbara region of Western Australia to Beatons Creek Gold Pty Ltd (“Beatons”). Upon exercising the Option, Beatons can elect to purchase all or some of the Projects. The total sale price is up to $AUD1.0 million in cash and a royalty on production - payable as a $50,000 non-refundable deposit, $200,000 within 4 months and the balance of up to $750,000 (it can purchase each Project as a separate asset, in which case the purchase price for each Project will be $250,000) before the 2nd anniversary of the Option Agreement. Beatons will have no equity in any project until full project purchase price paid. The $50,000 deposit was received on 12 August 2015.  On 3 September 2015, the Company appointed Mr Michael Lew as Business Development Manager, North America and as part of his remuneration package issued 2,000,000 unlisted options exercisable at $0.52 and expiring on 31 December 2016 with the following vesting milestones: o execution of binding formal agreement to collaborate on graphene products with targeted battery industry participant; strategic investment from or joint venture with target; and receipt of binding off-take for greater than 1,000 tonnes graphene. o o 22. RELATED PARTIES Related party transactions with management personnel are disclosed in Note 16. Page 55 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 23. PARENT INFORMATION The following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards. STATEMENT OF FINANCIAL POSITION ASSETS Current assets Non-Current assets TOTAL ASSETS LIABILITIES Current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Accumulated losses Option reserve TOTAL EQUITY 2015 $ 2014 $ 5,544,611 1,107,214 6,651,825 4,279,690 1,127,946 5,407,636 567,435 567,435 180,650 180,650 6,084,390 5,226,986 20,876,411 15,724,407 (18,283,997) (12,435,497) 3,491,976 6,084,390 1,938,076 5,226,986 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 2015 $ 2014 $ Net loss for the year Total comprehensive loss for the year (5,848,500) (3,715,787) (5,848,500) (3,715,787) 24. CONTROLLED ENTITITES Talga Resources Limited owns the following subsidiaries: Name of Entity Talga Mining Pty Ltd Talga Advanced Materials GmbH Country of Incorporation Australia Germany Percentage Owned (%) * 2015 100% 100% 2014 100% Nil * Percentage of voting power is in proportion to ownership. Page 56 TALGA RESOURCES LTD NOTES TO THE FINANCIAL STATEMENTS For the Year Ended 30 June 2015 25. SHARE BASED PAYMENTS The following share based payments were made during the year: Series 1 – 1,600,000 options granted 20/8/14 Series 2 – 1,000,000 options granted 21/10/14 Series 3 – 1,000,000 options granted 21/10/14 Series 4 – 1,000,000 options granted 21/10/14 Series 5 – 1,000,000 options granted 23/12/14 Series 6 – 1,000,000 options granted 23/12/14 Series 7 – 1,000,000 options granted 23/12/14 Series 8 – 1,000,000 options granted 27/3/15         Series 1 Series 2 Series 3 Series 4 Grant date share price $0.385 $0.400 $0.400 $0.400 Exercise price Expected share price volatility Option life Risk free interest rate Valuation per option $0.54 102% $0.52 102% $0.60 102% $0.65 102% 5 years 2.2 years 2.2 years 2.2 years 3.25% $0.278 3.25% $0.203 3.25% $0.189 3.25% $0.182 Series 5 Series 6 Series 7 Series 8 Grant date share price $0.245 $0.245 $0.245 $0.430 Exercise price Expected share price volatility $0.52 102% $0.60 102% $0.65 102% Option life Risk free interest rate Valuation per option 2.02 years 2.02 years 2.02 years 3.25% $0.091 3.25% $0.083 3.25% $0.079 $0.54 102% 5 years 1.92% $0.313 The expense recognised for the options granted during the financial year was $1,553,789. The following reconciles the outstanding share based payment options granted at the beginning and end of the financial year: 2015 2014 Number of options Weighted average exercise price $ Number of options Weighted average exercise price $ Balance at beginning of financial year Granted during the financial year Expired during the financial year Exercised during the financial year Balance at end of the financial year Exercisable at end of the financial year 6,250,000 8,600,000 (2,950,000) - 11,900,000 11,900,000 0.46 0.57 0.41 - 0.55 0.55 3,750,000 2,500,000 - - 6,250,000 6,250,000 0.40 0.54 - - 0.46 0.46 The share based payment options outstanding at the end of the financial year had a weighted average exercise price of $0.55 (2014: $0.46) and a weighted average remaining contractual life of 2.54 years (2014: 2.44 years). 26. CONTINGENT LIABILITIES There are no contingent liabilities or contingent assets as at 30 June 2015 (2014: nil). Page 57 TALGA RESOURCES LTD DIRECTORS’ DECLARATION For the Year Ended 30 June 2015 The directors of the Group declare that: 1. the financial statements and notes, as set out on pages 26 to 57, are in accordance with the Corporations Act 2001: (a) (b) (c) comply with Accounting Standards; are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board, as stated in note 1 to the financial statements; and give a true and fair view of the financial position as at 30 June 2015 and of the performance for the year ended on that date of the Group. 2. the Chief Executive Officer and Chief Financial Officer have each declared that: the financial records of the Group for the financial year have been properly maintained in (a) accordance with section 286 of the Corporations Act 2001; (b) Standards; and the financial statements and notes for the financial year comply with the Accounting (c) the financial statements and notes for the financial year give a true and fair view. 3. in the directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Board of Directors. Mark Thompson Managing Director Perth, Western Australia 23 September 2015 Page 58 Stantons International Independence In conducting Act 2001. our audit, we have complied with the independence requirements of the Corporations Opinion In our opinion: a)the financial report 2001, including: of Taiga Resources Limited is in accordance with the Corporations Act i. Giving a true and fair view of the consolidated entity's financial as position at 30 June 2015 and and of its performance for the year ended on that date; ii.Complying with Australian 2001. Regulations Accounting Standards and the Corporations b)the consolidated financial report also complies with International Financial Reporting Standards in note 1. as disclosed Report Report on the Remuneration We have audited the remuneration report included on pages 18 to 23 of the directors' report for the year ended 30 June 2015. 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. Opinion In our opinion 2015 complies the remuneration report with section 300A of the Corporations Act 2001. of Taiga Resources Limited for the year ended 30 June Yours faithfully STANTONS INTERNATIONAL (Trading as Stantons International) AUDIT AND CONSUL TING PTY LIMITED �'t�-��·�\"" "°�1:J uu-"1 - 'cx�I Martin Mi alik Director 2015 23 September TALGA RESOURCES LTD ADDITIONAL SHAREHOLDER INFORMATION For the Year Ended 30 June 2015 The following additional information is required by the Australian Securities Exchange Limited Listing Rules. Information was to 15 September 2015. information processed prepared registry based share the up on Statement of Quoted Securities Listed on the Australian Securities Exchange are 138,571,150 fully paid ordinary shares, 7,712,910 Listed Options exercisable at $0.35 expiring 30 November 2015 and 13,400,000 unlisted options exercisable at various prices with various expiry dates (see Directors’ Report, point 15 Share Options). Distribution of Shareholding The distribution of members and their holdings of equity securities in the Group as at 15* September 2015 were as follows: Spread of Holdings 1-1,000 1,001 - 5,000 5,001 – 10,000 10,001 - 100,000 100,001 and over TOTALS Fully Paid Ordinary Shares 11,061 1,239,721 2,662,470 29,214,126 105,443,772 138,571,150 Total Shareholders 58 401 313 820 180 Listed Options 82,606 398,729 211,620 2,289,787 4,730,168 1,772 7,712,910 Total Option holders 170 158 29 65 18 440 Unmarketable Parcels The number of holders of less than a marketable parcel of ordinary shares is 131. Substantial Shareholders Shareholders who hold 5% or more of the issued capital in Talga Resources Ltd are set out below: Shareholder Lateral Minerals Pty Ltd (A Company associated with Mr Mark Thompson) Warwick Grigor Restricted Securities Ordinary Shares Shareholder Lateral Minerals Pty Ltd (A Company associated with Mr Mark Thompson) Number Held % Held 14,206,841 9,534,976 10.65 6.88 Number Held Restriction Date * 4,000,000 23 June 2019 * As approved at a shareholders meeting on 23 June 2014, the shares are secured by a loan which is repayable by 23 June 2019. Voting Rights In accordance with the Group's Constitution, on a show of hands every member present in person or by proxy or attorney or duly authorised representative has one vote. On a poll each ordinary share is entitled to one vote. There are no voting rights attached to any class of options. Page 61 TALGA RESOURCES LTD ADDITIONAL SHAREHOLDER INFORMATION For the Year Ended 30 June 2015 Number Held Twenty Largest Shareholders and Option holders The names of the twenty largest Ordinary Fully Paid shareholders as at the 15 September 2015 are as follows: % Held 10.25% 6.88% 5.28% 2.93% 2.83% 2.71% 1.94% 1.68% 1.61% 1.39% 1.32% 1.23% 1.21% 1.08% 1.05% 0.96% 0.92% 0.91% 0.82% 0.81% 47.79% Lateral Minerals Pty Ltd Warwick Grigor HSBC Custody Nominees Australia Ltd UBS Nominees Pty Ltd Yandal Investments Pty Ltd Two Tops Pty Ltd Twynam Agricultural Group Pty Ltd United Overseas Service Management Wong Kin Chun BNP Paribas Nominees (NZ) Ltd Danks Kevin Graham All States Finance Pty Ltd Gerovich Steven R & EL Erebon Pty Ltd Citicorp Nominees Pty Ltd James Bronwyn Julianne Texmode Pty Ltd Aust. Executor Trustees Ltd Merriwee Pty Ltd Patterson Anthony Lionel Ordinary Shares 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Top 20 holders of ordinary shares 14,206,841 9,534,976 7,316,965 4,063,530 3,916,000 3,750,000 2,688,694 2,329,054 2,233,246 1,929,406 1,825,000 1,700,000 1,675,000 1,500,000 1,452,209 1,327,070 1,275,000 1,255,000 1,130,000 1,118,188 66,226,179 The names of the twenty largest Listed Option holders as at the 15 September 2015 are as follows: Listed Options 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Top 20 holders of Listed Options Warwick Grigor Erebon Pty Ltd Lateral Minerals Pty Ltd All States Finance Pty Ltd Broyage Pty Ltd Hendry & Watson Cons Pty Ltd Hui Larry Two Tops Pty Ltd HSBC Custody Nominees Australia Ltd UBS Nominees Pty Ltd Vaughan Adrian William Yandal Investments Pty Ltd De Cuyper Alexander Wong Kin Chun Hendry Leone Cecelia Parker Rodger AA & MD Ackling Skye Stephen Texmode Pty Ltd Eothen Nominees Pty Ltd Watson Peter George Number Held 1,022,411 470,000 463,947 375,000 300,000 260,425 258,129 225,000 218,287 218,031 181,128 178,000 150,000 131,662 121,000 113,873 113,275 100,000 98,238 91,327 5,089,733 % Held 13.26% 6.09% 6.02% 4.86% 3.89% 3.38% 3.35% 2.92% 2.83% 2.83% 2.35% 2.31% 1.94% 1.71% 1.57% 1.48% 1.47% 1.30% 1.27% 1.18% 65.99% Page 62 TALGA RESOURCES LTD ADDITIONAL SHAREHOLDER INFORMATION For the Year Ended 30 June 2015 Unquoted Equity Securities As at 15 September 2015, the following unquoted securities were on issue:  Unlisted Options with the following terms: Expiry Date Exercise Price Number on Issue Number of Holders 3 October 2016 31 December 2016 31 December 2016 31 December 2016 23 June 2019 20 August 2019 26 March 2020 Total on issue $0.45 $0.52 $0.60 $0.65 $0.54 $0.54 $0.54 500,000 4,000,000 2,000,000 2,000,000 2,500,000 1,400,000 1,000,000 13,400,000 3 3 2 2 2 3 1 The following held greater than 20% of the Unlisted Options on issue: Name Number Held Canaccord Genuity (Australia) Limited EAS Consulting LLC 3,000,000 3,000,000 Percentage Held % 22.4 % 22.4 % Page 63 TALGA RESOURCES LTD CORPORATE GOVERNANCE STATEMENT For the Year Ended 30 June 2015 The overall goals of the corporate governance process are to: • drive shareholders value; • assure a prudential and ethical base to the Company’s conduct and activities; and • ensure compliance with the Company’s legal and regulatory obligations. The Board of Talga is committed to implementing the highest standards of corporate governance in conducting its business. The Board has established a corporate governance framework including corporate governance policies, procedures and charters with reference to the third edition of the ASX Corporate Governance Council’s Principles and Recommendations (“ASX Principles”). Further information on Talga’s corporate governance policies, procedures and charters are available on Talga’s website, www.taglaresources.com. under the section ‘About Us’. Talga has followed each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where Talga’s corporate governance practices follow a recommendation, the Company has made appropriate statements reporting on the implementation of the recommendation. In compliance with the “if not, why not” reporting regime, where, after due consideration, Talga’s corporate governance practices do not follow a recommendation, the Company has explained its reasons for not following the recommendation and disclosed what, if any, alternative practices Talga has adopted. This corporate governance statement sets out the Company's corporate governance policies and practices and is current as at 23 September 2015 as approved by the Talga Board. The eight ASX Principles and Talga’s position in respect of each of them, are set out below. Principle 1: Lay Solid Foundations for Management and Oversight Roles and Responsibilities The Board has adopted a Board Charter (disclosed on the Company’s website) that sets out the roles and responsibilities of the Board and those functions delegated to senior executives. The Board is collectively responsible for promoting the success of the Company through its key functions of setting strategic direction, overseeing management of the Company, providing overall corporate governance, monitoring financial performance, engaging appropriate management and Directors commensurate with the desired structure and objectives of the Company, and reviewing, ratifying and monitoring systems of risk management and internal control, codes of conduct, policy and legal compliance. The Managing Director, supported by other members of the Senior Management Team, is responsible for managing the day to day activities of the Company and advancing the strategic direction of the Company as set by the Board. Appointment, Induction and Training When a vacancy exists on the Board, for whatever reason, or where it is considered that the Board would benefit from the services of a new Director, the Board will determine the selection criteria for the position based on factors deemed necessary for the Board to best carry out its responsibilities. Nomination factors include, but are not limited to, competencies and qualifications, independence, other directorships, time availability, contribution to the overall balance of the composition of the Board and depth of understanding of the role and legal obligations of a Director. The Company has not made any new appointments to the Board since 20 February 2014. Should the Company appoint a new Director in the future, appropriate checks including criminal record and bankruptcy history, will be undertaken prior to the appointment. Information about a candidate standing for election or re-election as a Director is provided to shareholders via the Notice of Meeting and the information contained in the Annual Report. Upon appointment, each Director, receives a written agreement which sets out the terms of their appointment, along with a deed of indemnity, insurance and access and also an induction pack containing Page 64 TALGA RESOURCES LTD CORPORATE GOVERNANCE STATEMENT For the Year Ended 30 June 2015 information on the Company’s vision, values, strategy, governance and risk management frameworks. The Company has a written agreement in place with each Director and Senior Executive. Directors are provided with the opportunity to participate in professional development to develop and maintain the skills and knowledge needed to perform their role as Directors effectively. For further information on the above, please see Talga’s “Procedures for Selection and Appointment of Directors” policy which can be viewed on the Company’s website. Company Secretary The Company Secretary plays an important role in supporting the effectiveness of the Board. The Company Secretary is accountable to the Board through the Chairman on all matters regarding the proper function of the Board. This includes assisting the Board on governance matters, monitoring compliance with policies and procedures, co-ordinating board meetings and acting as the interface between the Board and senior executives. Details regarding the Company Secretary, including their experience and qualifications are set out in the Director’s Report. Performance Evaluation Practices The Company has a Performance Evaluation Practices policy (as disclosed on the Company’s website) with processes established to review the Boards performance and the performance of individual directors (including the Managing Director) and senior executives. The method and scope of the performance evaluation is set by the Board and may include a Board self-assessment checklist/questionnaire to be completed by each director as well as the use of external specialist consultants. The Chairman is responsible for conducting the performance appraisals of the non-executive directors in conjunction with each non-executive director. The Board will review the performance of the Managing Director. A review of the performance of the Managing Director was conducted during the period. The Chairman and the Board regularly discussed the performance and composition of the Board during the 2014-15 period, considering issues or concerns as they arose. This ongoing process has remained in-house and informal throughout the year, relying on regular discussion. The Managing Director is responsible for evaluating the performance of the Company’s senior executives. This is performed annually, meeting formally with each Senior Executive and ongoing informal monitoring throughout each financial year. During the reporting period the Managing Director conducted a formal evaluation appraisals of Senior Executives. Diversity Policy: The Company has adopted a Diversity Policy (as disclosed on the Company website) embracing a corporate culture supporting equal opportunity free from discrimination related to gender, ethnicity, cultural background, age, or other personal factors and includes requirements for the Board to develop measurable objectives for achieving diversity and annually assess both the objectives and the progress in achieving those objectives as positions become available. The Company is committed to diversity and recognises the benefits arising from a diverse mix of skills and talent amongst its directors, officers and employees to enhance Company performance and achieve the Company’s goals. The Board did not establish measurable targets for achieving gender diversity across the group during 2015. The Company is currently not of a size that justifies the establishment of measurable diversity objectives. The Board will seek to develop a reporting framework in the future as the Company grows to report the Company’s progress against the objectives and strategies for achieving a diverse workplace which can be used as a guide to be used by the Company to identify new directors, senior executives and employees. The respective proportion of men and women employees across the whole organisation is 57% (3) and 43% (4). Currently the Board comprises three members, all of whom are men. All the senior executive positions are Page 65 TALGA RESOURCES LTD CORPORATE GOVERNANCE STATEMENT For the Year Ended 30 June 2015 men. A senior executive office holding below the Board level, includes the Company Secretary, Commercial Manager and Manager Metallurgy. The Company is not a “relevant employer” under the Workplace Gender Equality Act. Principle 2: Structure the Board to Add Value Nomination Committee: The Board has not established a separate Nomination Committee. The Board considers that at this stage there would be no efficiencies or other benefits gained by establishing a separate Nomination Committee. Accordingly, the full Board has assumed those responsibilities that are ordinarily assigned to a Nomination Committee and has addressed the skill-set of current Board members and the future need to expand that skill- set by way of appointment of new directors. The Board has adopted a Nomination Committee Charter (as disclosed on the Company website) which describes the role, functions, responsibilities and processes of the full Board in its capacity as the Nomination Committee. Items that are usually required to be discussed by a Nomination Committee are marked as separate agenda items at Board meetings when required. Board Skills and Experience: The Company’s objective is to have a Board with the appropriate mix of skills, expertise and experience to effectively discharge the duties of the Board. The Board collectively has a combination of skills and experience as set out in the table below. A profile of each Director setting out their skills, experience, expertise, is set out in the Director’s Report section of the Annual Report. Expertise  Mineral Exploration  Commercial & Legal  Finance/Accounting  Governance & Compliance   Strategy & Risk Management Capital Markets Industry Qualifications  Mineral Resources  Capital Markets  Renewable Energy  Materials  Business & Accounting  Geology The Board reviews its composition on a regular basis to consider where it’s appropriate and relevant to further strengthen the Board through its development strategy. Board Independence: The Board considers the independence of directors having regard to the relationships listed in Box 2.3 of the ASX Corporate Governance Principles and Recommendations and the Company’s materiality thresholds, namely whether a Director:        is, or has been, employed in an executive capacity by the Company or any of its subsidiaries and there has not been a period of at least three years between ceasing such employment and serving on the Board; is, or has within the last three years been, a partner, director or senior employee of a provider of material professional services to the Company or any of its subsidiaries; is, or has been within the last three years, in a material business relationship (eg as a supplier or customer) with the Company or any of its subsidiaries, or an officer of, or otherwise associated with, someone with such a relationship; is a substantial security holder of the Company or an officer of, or otherwise associated with, a substantial holder of the Company; has a material contractual relationship with the Company or its subsidiaries other than as a director; has close family ties with any person who falls within any of the catergories described above; or has been a director of the Company for such a period that his or her independence may have been compromised. Page 66 TALGA RESOURCES LTD CORPORATE GOVERNANCE STATEMENT For the Year Ended 30 June 2015 The assessment of whether a Board member is independent is a matter of judgement for the Board as a whole and includes concepts of materiality. In the context of independence, materiality is considered from both a quantitative and qualitative perspective. In accordance with the definition of independence above and the materiality thresholds, the independent directors of the Company are Keith Coughlan (Chairman since 27 Sept 2013) and Grant Mooney (Non-Executive Director since 20 Feb 2014). The Board recognises the ASX Recommendations that the majority of the Board should be comprised of independent directors and the Chair of the Board should be an independent director. The Company complies with this recommendation. Principle 3: Act Ethically and Responsibly Code of Conduct: The Company has adopted a Code of Conduct Policy (as disclosed on the Company website) as to the practices necessary to maintain confidence in the Company’s integrity and objectivity, striving at all times to enhance the reputation and performance of the Company. The Code provides a framework covering the Board, officers and all employees including the responsibility and accountability of individuals for reporting reports of unethical behaviour and conflicts of interest. Conflict of Interest: Directors must keep the board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Company. Where the board believes that a significant conflict exists for a director on a board matter, the director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered. Details of Director related transactions with the Company are set out in Note 16 of the 2015 Annual Report. Principle 4: Safeguard Integrity of Corporate Reporting Audit and Risk Committee The Board has not established a separate Audit Committee and therefore it is not structured in compliance with ASX Recommendation 4.1. Given the current size of the Board and the size of the Company, the Board believes that there would be no efficiencies gained by establishing a separate Audit Committee. The Company has adopted an Audit Committee Charter (as disclosed on the Company website) which describes the role and responsibilities of the Board in lieu of a separate Audit Committee.. The Board meets on a regular basis and discusses matters normally captured under the terms of reference on an Audit Committee Charter as well as general and specific financial matters. Items that are usually required to be discussed by a Audit Committee are marked as separate agenda items at Board meetings when required. The Company’s Audit Committee Charter includes the process for (re)appointing, removal and rotation of an external auditor. The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises. An external auditor must be able to demonstrate complete independence from the Company and an ability to maintain independence throughout the engagement period. Furthermore, the auditor must have arrangements in place for the rotation of the audit engagement partner in accordance with professional standards as current from time to time, including part 2M.4 Division 5 of the Corporations Act 2001 (Cth). The Company’s external auditor is invited to and attends the Annual General to answer questions from shareholders relevant to the audit. CEO and CFO Declaration The Managing Director and Financial Controller have provided a declaration to the Board in accordance with section 295A of the Corporations Act that, in their opinion, the financial records have been properly maintained and that the financial statements comply with the appropriate accounting standards and give a true and fair Page 67 TALGA RESOURCES LTD CORPORATE GOVERNANCE STATEMENT For the Year Ended 30 June 2015 view of the financial position and performance of the Company for the reporting period and that their opinion is formed on the basis of a sound system of risk management and internal control which is operating effectively. Principle 5: Make Timely and Balanced Disclosure The Company has adopted a Continuous Disclosure Policy (as disclosed on the Company website). The policy;    raises awareness of the Company’s obligations under the continuous disclosure regime; establishes a process to ensure that information about the Company which may be market sensitive and which may require disclosure is brought to the attention of the person primarily responsible for ensuring that the Company complies with its continuous disclosure obligations in a timely manner and is kept confidential; and sets out the obligations of directors, officers, employees and contractors of the Company to ensure that the Company complies with its continuous disclosure obligations. Principle 6: Respect the Rights of Security Holders Talga recognises the value of providing current and relevant information to its shareholders and the Board is committed to open and effective communication, ensuring all shareholders are informed of all significant developments concerning the Company. The Company has in place an effective Shareholder Communications and Investor Relations Policy (as disclosed on the Company website). The Company’s Shareholder Communications and Investor Relations program includes:    actively engaging shareholders at the AGM, promoting two-way interaction, by encouraging shareholder interaction during the AGM , including encouraging questions; issuing regular Company Updates; sending and receiving shareholder communications electronically both from the Company and via the Company’s Share Registry;  maintaining the Company’s website, including posting all announcements, reports, notice of meetings and governance information; engaging in scheduled interactions with institutional investors and analysts;   meeting with shareholders upon request;   responding to direct queries from time to time; and ensuring continuous disclosure obligations are understood across the Company. In addition, Shareholders are encouraged to follow the Company by following our twitter account @Talga_Ltd and by signing up to our email subscriber list. Principle 7: Recognise and Manage Risk The Board has not established a separate Risk Committee and therefore it is not structured in compliance with ASX Recommendation 7.1. Given the current size of the Board and the size of the Company, the Board believes that there would be no efficiencies gained by establishing a separate Risk Committee. The Board’s Charter clearly establishes that the Board is responsible for ensuring there is a good sound system for overseeing and managing risk. The Company has adopted a Risk Management Policy (as disclosed on the Company website) which describes the role and responsibilities of the Board in lieu of a separate Risk Committee. The Board assumes the responsibilities of ensuring that risks and opportunities are identified on a timely basis and the Company’s objectives and activities are aligned with those risks and opportunities. The Board’s collective experience enables accurate identification of the principal risks which may affect the Company’s business. Management of these risks will be discussed by the Board at periodic (at least annual) strategic planning meetings. In addition, key operational risks and their management, will be recurring items for deliberation at Board meetings. Page 68 TALGA RESOURCES LTD CORPORATE GOVERNANCE STATEMENT For the Year Ended 30 June 2015 The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned with the risks identified by the Board. These are discussed further under the internal audit section below. The Board has received assurance from the Financial Controller and Managing Director that the declarations made in accordance with section 295A of the Corporation Act 2001 are: 1. founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board; and the Company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects. 2. In addition to operational risk management throughout the year at Board meetings, during 2015 the Board conducted a review as part of a strategy planning day. Further work is to be undertaken during 2016 to update the risk framework. Internal Audit: The Board has determined that due to the size of the Company and its operations, an internal audit function is not currently required. The Board has adopted a Risk Management Policy and processes appropriate to the size of the Company to manage the Company’s material business risks and to ensure regular reporting to the Board on whether those risks are being managed effectively in accordance with the controls in place such as:  monthly reporting to the Board in respect of operations and the financial position of the Company;  monthly rolling cashflow forecasts budgets prepared accompanied by variance analysis;  circulate minutes of and relevant Committees to the Board and the Chairman of each respective committee and provide a report to the Board on an annual basis; employing appropriately qualified employees; and a corporate governance manual which contains other policies to assist the Company to establish and maintain its governance practices.   Economic, Environmental and Social Risks: The Company’s economic, environmental and social sustainability risks are discussed in the Directors Report and financial statements. Principle 8: Remunerate Fairly and Responsibly It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high quality board by remunerating directors and employees fairly and appropriately. Remuneration Committee The Board has not established a separate Remuneration Committee. The Board considers that given the current size of the Company at this stage there would be no efficiencies or other benefits gained by establishing a separate Remuneration Committee. Accordingly, the full Board has assumed those responsibilities that are ordinarily assigned to a Remuneration Committee. The Company has adopted a Remuneration Committee Charter (as disclosed on the Company website) which describes the role, functions, responsibilities and processes of the full Board in its capacity as the Nomination Committee. Items that are usually required to be discussed by a Remuneration Committee are marked as separate agenda items at Board meetings when required. Where appropriate, independent consultants are engaged to advise on levels of remuneration. Remuneration Policy As disclosed in the Remuneration Charter, non-executive directors are remunerated at market rates for time, commitment and responsibilities. Remuneration for non-executive directors is not linked to individual performance. There are no termination or retirement benefits for non-executive directors. Pay and rewards for executive directors and senior executives consists of base pay and benefits (such as superannuation) as well as short-term and long-term incentives. Executives are offered a competitive level of base pay at market rates and are reviewed annually to ensure market competitiveness. Page 69 TALGA RESOURCES LTD CORPORATE GOVERNANCE STATEMENT For the Year Ended 30 June 2015 Details of director and senior executive remuneration, including the Company’s policy on remuneration, are contained in the Remuneration Report which forms a part of the Directors’ Report. Securities Trading Policy The Company recognises that Directors, officers and employees may hold securities in the Company and that most investors are encouraged by these holdings. The Company’s Securities Trading Policy (as disclosed on the Company website) explains and reinforces the Corporations Act 2001 requirements relating to insider trading. The policy applies to all directors, employees of the Company and their associates and closely related parties (collectively “Restricted Persons”). The policy is compliant with the ASX Listing Rules and expressly prohibits Restricted Persons buying or selling TLG securities where the Restricted Person is in possession of price sensitive or ‘inside’ information and in any event without the prior written approval of a clearance officer. Under the policy, Restricted Persons are also prohibited from entering into transactions or arrangements which limit the economic risk of participating in unvested entitlements under any equity based remuneration scheme. Page 70 TALGA RESOURCES LTD SCHEDULE OF MINERAL TENEMENTS For the Year Ended 30 June 2015 Tenement Project Jalkunen nr 1 Jalkunen nr 2 Jalkunen nr3 Kursuvaara Lautakoski nr 1 Lautakoski nr 2 Lautakoski nr 3 Nybrännan nr 1 Nybrännan nr 2 Suinavaara nr 1 Suinavaara nr 2 Tiankijoki nr 1 Kiskama nr 1 Masugnsbyn nr 1 Masugnsbyn nr 2 Lehtosölkä nr 3 Liviövaara nr 2 Gråliden nr 2 Önusträsket nr 2 Raitajärvi nr 5 Raitajärvi nr 6 Maltosrova nr 2 Maltosrova nr 3 Mörttjärn nr 1 Nunasvaara nr 2 Vathanvaara nr 1 Vittangi nr 2 Vittangi nr 3 Vittangi nr 4 Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Sweden Interest Held by Talga 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Tenement Project M45/618 P45/2689 P45/2690 P45/2691 P45/2746 P45/2747 P45/2774 E77/2139 E77/2221 E77/2222 P77/4106 E77/2251 P46/1634 P46/1636 P46/1638 P46/1666 P46/1667 P46/1668 P46/1800 E46/1035 E45/3381 P45/2661 P45/2662 P45/2781 Talga Talga Talga Talga Talga Talga Talga Talga Talga Talga Talga Talga Talga Talga Bullfinch Bullfinch Bullfinch Bullfinch Bullfinch Mosquito Creek Mosquito Creek Mosquito Creek Mosquito Creek Mosquito Creek Mosquito Creek Mosquito Creek Mosquito Creek Warrawoona Warrawoona Warrawoona Warrawoona Interest Held by Talga 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% P Prospecting Licence E Exploration Licence M Mining Licence Page 71 

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