CORPORATE DIRECTORY
DIRECTORS
Keith Coughlan (Chairman)
Mark Thompson (Managing Director)
Grant Mooney (Non-Executive Director)
Steve Lowe (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: admin@talgaresources.com
Website: www.talgaresources.com
ABN
32 138 405 419
SECURITIES EXCHANGE LISTING
The Company is listed on ASX
Home Exchange: Perth
ASX Codes: TLG (Shares)
TLGOA (Options)
SHARE REGISTRY
Security Transfer Australia
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
TABLE OF CONTENTS
Corporate Directory
Chairman’s letter
Directors’ Report
Board of Directors
Information on Directors
Information on Company Secretary
Corporate Structure
Principal Activities and Significant Changes in State of Affairs
Review of Operations
Mineral Resources and Ore Reserve Statement
Tenement Interests
Financial Performance and Financial Position
Dividends
Risks
Subsequent Events
Directors Meetings
Environmental Regulations
Share Options
Remuneration Report
Indemnification and Insurance of Directors and Officers
Auditor’s Independence Declaration
Corporate Governance
Auditor’s Independence Declaration
Financial Report
2
3
4
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6
7
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8
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25
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CORPORATE DIRECTORY
DIRECTORS
SECURITIES EXCHANGE LISTING
The Company is listed on ASX
Home Exchange: Perth
ASX Codes: TLG (Shares)
TLGOA (Options)
SHARE REGISTRY
Security Transfer Australia
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
Keith Coughlan (Chairman)
Mark Thompson (Managing Director)
Grant Mooney (Non-Executive Director)
Steve Lowe (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: admin@talgaresources.com
Website: www.talgaresources.com
ABN
32 138 405 419
2
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016
TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
CHAIRMAN’S LETTER
Dear Talga Shareholders
It has been a very busy and productive year for Talga. The
Company has made great strides towards our ultimate
goal of becoming a global scale producer of graphite and
graphene. As a result we are strategically placed to play a
growing role in the emerging trend towards low emission
energy production and storage via devices such as
batteries and fuel cells, conductive coatings and a host of
technology applications that require advanced materials.
The highlights for the year have been many, with one
of the year’s most substantial achievements being
commencement of first processing at the graphene pilot
test facility established at Rudolstadt in Germany. The
results of this were outstanding, with the production of
high quality graphene product for commercial evaluation
by potential offtake customers and products exceeding
98-99% purity. The plant was progressively expanded
during the year to take larger size graphite samples from
our Vittangi deposit in Sweden as part of the scaling up of
the production process.
Technology Officer, Dr Siva Bohm; new Products Manager
Dr Sai Shivareddy; and post balance date, new Projects
Manager – Europe, Mr Martin Phillips. At a board level we
were joined by former Sirius Resources Chair Mr Stephen
Lowe as a non- Executive Director.
The Company has identified key specific market sectors
that complement our primary product specifics. This is
a differentiating factor for Talga against its peers and
positively exposes the Company to global opportunities
in four key markets:
• The $11 billion plus corrosion protection sector;
• The $24 billion a year energy market covering batteries
• The $18 billion conductive ink sector; and
• The $450 billion concrete market where our
emerging carbon technology products can deliver
major gains in construction uses in buildings,
roadways and infrastructure.
and membranes;
On the ground, Talga completed a successful trial mining
program at our high grade Vittangi graphite deposit, with
mined blocks used in our pilot test facility in Germany. In
addition, we have trebled the Company’s total graphite
resource inventory to over 43 million tonnes and defined
major graphite exploration targets and potential resource
extensions for drill testing in the new year. These were
important gains for the Company during the year, as
they mean Talga is now well placed to achieve the level
of inventory, grade and scale to support our strategy
for a sustainable, long-term, international graphite and
graphene corridor through Europe.
The Company has broadened its range of collaborative
agreements throughout the graphene industry, from high
technology development companies to multi-national
industrial conglomerates. Along the way we enhanced
and strengthened our Intellectual Property assets through
the lodgment of Patents and Trademarks.
The Company is in a very sound financial position
following the raising of approximately $ 14 million via a
combination of share placement, option exercise and
the sale of non-core Australian gold assets. This included
cornerstone support from the Scandanavian-based
Smedvig group and we welcome all new investors who
joined the Talga story over 2015-16.
These target markets offer Talga revenue opportunities
during our current pilot plant processing test work, and
longer term potential income streams using patent
p rotected products and systems.
The past year has laid the groundwork for Talga to transition
from advanced materials developer to product producer.
Our key goals are successful completion of all test and
product work programs, the scale- up to commercial
production, binding
customer offtake
agreements, and ultimately process plant financing.
long- term
We believe that we are well poised to deliver on all
objectives.
I would like to take this opportunity to thank every member
of the Talga team for their hard work and dedication in
bringing the Company to this position. I would also like
to thank all of our shareholders for your ongoing support.
Talga looks forward to you enjoying what we believe, will
be a genuinely rewarding year in 2016-17.
We also welcomed a number of new senior corporate
appointments to the Talga team over the course of the
year. On an operational level these included new Chief
Keith Coughlan
Chairman
3
DIRECTORS’ REPORT
The Directors present their report, together with the financial statements of Talga Resources Ltd (“Talga”) and its
controlled entities (“Group”), for the financial year ended 30 June 2016.
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
Steve Lowe
POSITION
DATE OF APPOINTMENT
Non- Executive Chairman
Appointed 27th September 2013
Managing Director
Appointed 21st July 2009
Non- Executive Director
Appointed 20th February 2014
Non- Executive Director
Appointed 17th December 2015
MARK THOMPSON
GRANT MOONEY
KEITH COUGHLAN
STEVE LOWE
4
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016 TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
GRANT MOONEY
5
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 25 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 and Phosphate
Australia Ltd.
Mr Mooney is a member of the Institute of Chartered Accountants in Australia.
Steve Lowe (Non- Executive Director) (appointed 17th December 2015)
Mr Lowe’s background is in business management and taxation and he has over 18 years’ experience
consulting to a range of corporate and high wealth clients. Mr Lowe is currently a non-executive director of
Coziron Resources Ltd and Windward Resources Ltd.
Mr Lowe is a Fellow of the Taxation Institute of Australia and a Member of the Australian Institute of Company
Directors.
6
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016 TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
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.
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 AND SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The principal activities of the Group during the financial year were graphite exploration and development,
including trial mining, in Sweden and graphite/graphene research and development through the Group’s pilot
plant test facility in Germany.
trademarks;
owned Swedish project raw ore;
Significant changes in the state of affairs of the Group during the financial year were as follows:
• Established a pilot test process facility in Germany to produce graphene and graphite directly from 100%
• Successfully completed an initial trial mining program in Sweden;
• Trebled total graphite resource inventory;
• Enhanced and strengthened the Group’s intellectual property assets through the lodgement of patents and
• Established a range of collaboration agreements with graphene industry participants;
• Strengthened and increased the size of the Board with the addition of non-executive director Stephen Lowe;
• Raised ~$10 million through a share placement, received ~$2.3 million from the exercise and underwriting
• Executed an agreement to sell non- core Australian gold assets for $1 million; and
• Increased the number of employees and subsidiary companies.
Further details are provided in the Review of Operations.
of listed options and initiated a ~$900,000 share options rights issue (concluded in July 2016);
7
6. REVIEW OF OPERATIONS
During the financial year the Group continued its
principal activities of graphite to graphene processing
and product development in Germany and mineral
resource exploration and development in Sweden.
Talga owns the highest grade graphite mineral
resource
in the world and has developed an
innovative process to make the mass production of
high quality graphene possible. The novel mining and
processing method allows the conversion of Talga’s
100% owned natural raw graphite source in Sweden
into high quality graphene and graphite products,
using a patent pending industrially scalable and
environmentally friendly electrochemical system.
Today’s industrial products contain additives that
can be replaced with better performing graphene
equivalents - graphene adoption will not be a
technological odyssey, it will initially come from
the improvement of known materials. By owning
and optimising the whole supply chain, from
unique natural carbon source to product, Talga
possesses the ability to potentially commercialise
these graphene products for vastly lower costs than
prevailing technologies.
A summary of the major operational highlights is
summarised below:
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TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016 TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
graphene, graphite and their functional derivatives;
Officer, applied products scientists, process engineer, chemists and chemical technicians;
for Polymer Research confirming high quality graphene suitable for targeted applications;
Project Development
• Establishment of pilot test processing facility to scale up novel method for mass production of high quality
• Successful commissioning of facility with testing by Dresden Technical University and the Max Planck Institute
• Establishment of technical team and appointment of graphene manufacturing specialist Chief Technology
• Graphene and graphite samples produced and dispatched to industry for commercial evaluation; and
• Positive initial battery test results using Talga graphite in anodes for Li- ion batteries.
Exploration
• Trebling of total graphite resource inventory to over 43 million tonnes (Mt) following estimate of the Jalkunen
project maiden JORC (2012) total resource of 35Mt @ 14.9% graphite (Cg), Talga’s 3rd graphite resource
in Sweden;
• Increased size, grade and status of the Nunasvaara graphite deposit (Vittangi project) to JORC (2012) total
• Defined major graphite and cobalt exploration targets and potential graphite resource extensions for drill
resource of 9.8Mt @ 25.3% Cg; and
testing in FY17.
9
Trial Mining
• Designed and permitted multi- year open pit trial mining program at the Vittangi graphite project;
• Successfully completed initial trial mining campaign and test of novel mining methodology; and
• Transported mined graphite ore blocks to the Company’s German test processing facility.
Commercial and Corporate
Major industry collaborations
• Entered supply and research agreement with arm of global industrial conglomerate Tata Group;
• Sample supply agreement secured with US-based lithium- ion battery development corporation;
• Concluded range of agreements for sample supply and product development with market leading
• Collaboration term sheet signed with UK based graphene functionalisation company, Haydale Graphene
participants spanning the paints, battery, construction and sporting goods sectors; and
Industries Plc to jointly explore business opportunities and refined graphene products.
partners with funds to support Talga’s business plan;
Funding initiatives
• ~$10 million placement concluded in June 2016 to introduce European based strategic investment
• Initiated a ~$900,000, 1:4 underwritten rights issue of options to shareholders that subsequently listed and
• November 2015 listed options (expiry date 30 November 2015) underwritten and subscriptions received
• Agreement executed for sale three Australian gold projects for total up to $AUD1.0 million.
traded at a premium to issue price (ASX:TLGOA);
for $2.3 million; and
10
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016 Corporate – other
• Strengthening of Board with appointment of
non-executive director Mr Stephen Lowe who
has extensive business development experience
and financial expertise;
• Admission as Associated Member to the European
Commission €1 billion funded Graphene Flagship
alongside Bosch and LEGO Group;
• Successful
roadshows
international
and
presentations leading to pipeline of new
customers and product opportunities;
• Patents lodged covering Talga’s novel mining and
processing method with additional post FY16 patent
application over a graphene metal pre- treatment
coating and manufacturing method; and
• Trademarks lodged to form brands and marketing
platform for Talga’s graphene and graphite
products.
TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
Our natural raw
graphite source
in Sweden has
exceptional purity
that enables a more
eco-friendly path to
creating high quality
graphene products.
11
Future Outlook and Strategy
Talga has recently updated its commercialisation strategy to focus on a small number of targeted ‘fit for
purpose’ graphene products which will complement supply of raw graphene and graphite materials.
The Company has identified four industry sectors as prime markets (coatings, composites, building products
and energy storage/harvesting). Within these sectors the initial focus is directed to the following products:
• A metal pre-treatment coating;
• An electrically conductive ink suitable for printing, polymer composites and battery electrodes;
• A conductive cement product; and
• A high performance membrane for energy storage/harvesting and filtration applications.
Talga is now moving towards developing and commercialising these target products with customers that span
coatings, consumer electronics, energy and composite material industries, in which graphene’s applications are
many and varied.
Talga believes its strategy to produce value added (dispersed, functionalised and formulated) products will
provide the most effective, near-term opportunities for commercialisation. In- house and industry partner
testing programs, as well as field and benchmarking product trials will continue and be expanded to validate
products and secure commitments from customers. In this way, Talga can utilise its world leading position to
vertically integrate and potentially enable, licensing and royalty revenue along with raw material sales in
parallel and prior to full scale development.
Strategically placed
to play a role in
the growing trend
towards more
efficient, functional,
eco-friendly and
high performance
materials for
new energy and
technology products
12
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016 TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
7. MINERAL RESOURCES AND ORE RESERVE STATEMENT
Summary
This statement represents the Mineral Resources and Ore Reserves (“MROR”) for Talga Resources Ltd as at 30
June 2016.
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’ (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.
As at the Annual Review date of 30 June 2016, this MROR statement has been approved by the named
competent persons (see the Competent Persons Statement below).
MINERAL RESOURCES
As at 30 June 2016 the Company’s Mineral Resources are:
VITTANGI GRAPHITE PROJECT, NORTHERN SWEDEN (Talga owns 100%)
Table 1 - Nunasvaara Graphite Deposit – JORC (2012) Resource at 10% Cg cut- off
DEPOSIT
Nunasvaara
Nunasvaara
Total
JORC RESOURCE CATEGORY
TONNES
GRADE CG (%)
Indicated
Inferred
6,900,000
2,900,000
9,800,000
24.2
28.1
25.3
Note: Ore tonnes rounded to nearest hundred thousand tonnes
The Vittangi project graphite mineral resource was disclosed in May 2016 in accordance with the 2012 JORC Code
(ASX:TLG 30 May 2016).
JALKUNEN GRAPHITE PROJECT, NORTHERN SWEDEN (Talga owns 100%)
Table 2 - Jalkunen Graphite Project – JORC (2012) Resource at 10% Cg cut-off
DEPOSIT
Jalkunen
JORC RESOURCE CATEGORY
TONNES
GRADE CG (%)
Inferred
31,500,000
14.9
Note: Ore tonnes rounded to nearest hundred thousand tonnes
The Jalkunen project graphite mineral resource was disclosed in August 2015 in accordance with the 2012 JORC
Code (ASX:TLG 27 August 2015).
13
RAITAJARVI GRAPHITE PROJECT, NORTHERN SWEDEN (Talga owns 100%)
Table 3 - Raitajärvi Graphite Project – JORC (2004) Resource at 5% Cg cut- off
DEPOSIT
Raitajärvi
Raitajärvi
Total
JORC RESOURCE CATEGORY
TONNES
GRADE CG (%)
Indicated
Inferred
3,400,000
900,000
4,300,000
7.3
6.4
7.1
Note: Ore tonnes rounded to nearest hundred thousand tonnes
The Raitajärvi project graphite mineral resource was disclosed in August 2013 in accordance with the 2004
JORC code (ASX:TLG 26 August 2013). 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.
VITTANGI IRON PROJECT, NORTHERN SWEDEN (Talga owns 100%)
Table 4 - Vittangi Iron Project – JORC (2004) Resource Estimate at 15% Fe cut-off
DEPOSIT
JORC RESOURCE CATEGORY
TONNES
GRADE FE (%)
Vathanvaara
Kuusi Nunasvaara
Mänty Vathanvaara
Sorvivuoma
Jänkkä
Total
Inferred
Inferred
Inferred
Inferred
Inferred
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 project mineral resource was disclosed in July 2013 in accordance with the 2004 JORC Code
(ASX: TLG 22 July 2013). 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.
MASUGNSBYN IRON PROJECT, NORTHERN SWEDEN (Talga owns 100%)
Table 5- Masugnsbyn Iron Project – JORC (2004) Resource Estimate at 20% Fe cut- off
DEPOSIT
Masugnsbyn
Masugnsbyn
Total
JORC RESOURCE CATEGORY
TONNES
GRADE FE (%)
Indicated
Inferred
87,000,000
25,000,000
112,000,000
28.3
29.5
28.6
Note: Ore tonnes rounded to nearest hundred thousand tonnes
The Masugnsbyn iron project mineral resource was disclosed in February 2012 in accordance with the
2004 JORC Code (ASX: TLG 28 February 2012). 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
14
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016 TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
and that all of the previous assumptions and technical parameters underpinning the estimates in the previous
announcement have not materially changed.
COMPARISON WITH PRIOR YEAR ESTIMATES
Mineral Resources
During the 2016 financial year, the Company announced two mineral resource inventory changes.
A maiden mineral resource for the Jalkunen graphite project was estimated by CoxRocks Pty Ltd in accordance
with the JORC code 2012 and announced to ASX on 27 August 2015. At 30 June 2016 the Jalkunen graphite
project JORC (2012) compliant inferred mineral resource was 31.5 million tonnes at 14.9% graphite at a cut- off
grade of 10% graphite.
A revised resource estimate for the Vittangi graphite project was prepared by CoxRocks Pty Ltd utliising new drill
and open pit trial mine data and announced to ASX on 30 May, 2016. This re- estimated the former JORC (2004)
total mineral resource of 7.6 million tonnes at 24.6% graphite at a cut- off grade 10% graphite (as at 30 June 2015)
to JORC (2012) compliant total mineral resource of 9.8 million tonnes @ 25.3% graphite at a cut- off grade of 10%
Cg (as at 30 June 2016).
Other resource estimates across the Company’s projects remain unchanged from the Company’s Mineral
Resource Statement as at 30 June 2015.
Ore Reserves
As at 30 June 2016 the Company had no reportable Ore Reserves in accordance with the 2012 JORC Code.
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.
COMPETENT PERSONS STATEMENT
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.
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.
15
8. 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.
9. FINANCIAL PERFORMANCE AND FINANCIAL POSITION
As a developer of graphene mineral processing and a mineral explorer, the Group currently has little revenue
outside of interest on bank deposits and occasional asset sales.
The financial results of the Group for the year ended 30 June 2016 are:
Cash and cash equivalents ($)
Net assets ($)
Income ($)
Net loss after tax ($)
Loss per share (cents per share)
Dividend ($)
10. DIVIDENDS
2016
11,763,678
13,570,098
859,488
(6,225,324)
(4.3)
-
2015
5,672,645
6,609,684
599,445
(5,845,450)
(4.6)
-
No dividend has been paid during or is recommended for the financial year ended 30 June 2016 (30
June 2015: Nil).
11. RISKS
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 - . Talga is now an advanced materials company straddling both the
resources and high growth technology sectors. It has a strategy to produce value added products that would
provide the most effective, near- term opportunities for commercialisation and potential cashflows. The
Group’s cash as at 30 June 2016 is $11.8 million which is more than sufficient to cover committed expenditure
beyond the next 12 months. However, without regular income outside interest proceeds or assets sales, it
will rely on continuing access to capital markets (including the exercise of listed and unlisted Talga
16
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016 TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
options) 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.
• 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 license 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 licenses 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 license 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.
17
12. 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.
• As announced on 26 August and 16 September 2016, Talga completed the sale of its Pilbara gold projects
to Beatons Creek Gold Pty Ltd (“Beatons”). Beatons exercised its option (the “Sale Agreement”) to purchase
the Mosquito Creek, Talga Talga and Warrawoona projects located in the Pilbara region of Western
Australia (see ASX:TLG 12 Aug 2015). Beatons, an Australian subsidiary of the TSX Venture-listed
Novo Resources Corp. (“Novo”), previously acquired 100% ownership of 3 mining leases at Beatons Creek
from Millennium Minerals Limited. These mining leases form part of Novo’s Beatons Creek gold project north
of the township of Nullagine in the East Pilbara district of Western Australia. Following the $250,000 option
fee already received by Talga under the Sale Agreement, Beatons offered and Talga agreed to accept
765,115 shares of Novo in lieu of cash payments for the AUD$750,000 transaction balance remaining. Talga
will also be due a 1.5% net smelter royalty on any minerals produced from the projects;
• On 14 July 2016, Talga concluded the non-renounceable options rights issue undertaken pursuant to
• On 7 July 2016, a new 100% owned subsidiary, Talga Technologies Limited, was incorporated in the UK.
the prospectus dated 17 June 2016 (See ASX:TLG 20 June 2016); and
13. 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
Stephen Lowe
NUMBER ELIGIBLE TO ATTEND
NUMBER ATTENDED
10
10
10
6
10
10
9
6
Due to the size and scale of the Group, 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.
14. ENVIRONMENTAL REGULATIONS
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”) to report its annual greenhouse gas emissions and energy use. For the
year ending 30 June 2016 the Group was below the reporting threshold and is therefore not required to register
or report. The Directors will continue to monitor the Group’s registration and reporting obligations.
18
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016 TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
15. SHARE OPTIONS
As at the date of this report, there were 81,113,336 ordinary shares under option:
NUMBER OF OPTIONS
EXERCISE PRICE
Listed
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
Unlisted
44,920,582
500,000
4,000,000
2,000,000
2,000,000
6,900,000
8,892,754
2,000,000
2,500,000
1,500,000
2,500,000
1,400,000
1,000,000
1,000,000
$0.45
$0.45
$0.52
$0.60
$0.65
$0.60
$0.45
$0.42
$0.54
$0.42
$0.35
$0.54
$0.54
$0.54
EXPIRES
31 December 2018
3 October 2016
31 December 2016
31 December 2016
31 December 2016
4 October 2018
31 December 2018
3 May 2019
23 June 2019
7 July 2019
10 August 2019
20 August 2019
26 March 2020
17 December 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;
• 2,987,474 fully paid ordinary shares were issued as a result of the exercise of options at
• 4,940,436 fully paid ordinary shares were issued as a result of the underwriting of un- exercised listed options
(that expired on 30 November 2015) at an exercise price of $0.35; and
• 285,000 options with a $0.35 exercise price expired on 21 July 2015.
an exercise price of $0.35;
19
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 Group 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
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.
20
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016
TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
• 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 2016.
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.
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.
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.
21
2016
Director
Short Term Benefits
Post-Employment
Salary
Directors
Fees
Non
Monetary
Salary (i)
Super-
annuation
Retirement
Benefits
Share based
payments
Sub-
Total
Equity Options (ii)
Total
Value of
share based
payments as
proportion of
remuneration
$
$
$
$
$
$
$
$
$
%
Keith
Coughlan
Chairman
Mark
Thompson
Managing
Director (iv)
Grant
Mooney
Non-
Executive
Director
Steve
Lowe(iii)
Non-
Executive
Director
Total
2015
-
50,228
-
4,772
-
55,000
361,752
-
61,700
19,308
-
442,760
-
-
-
-
55,000
0%
511,200
953,960
54%
-
47,700
0%
4,138
-
47,700
-
43,562
-
23,596
-
-
361,752
117,386
61,700
30,460
2,242
-
-
25,838
-
122,000
147,838
83%
571,298
-
633,200 1,204,498
53%
Director
Short Term Benefits
Post-Employment
Salary
Directors
Fees
Non
Monetary
Salary (i)
Super-
annuation
Retirement
Benefits
Share based
payments
Sub-
Total
Equity Options
Total
Value of
share based
payments as
proportion of
remuneration
$
$
$
$
$
$
$
$
$
%
Keith
Coughlan
Chairman
Mark
Thompson
Managing
Director (iv)
Grant
Mooney
Non-
Executive
Director
Total
-
55,000
-
-
321,500
-
26,769
30,543
-
47,700
-
-
321,500
102,700
29,769
30,543
-
-
-
-
55,000
378,812
47,700
481,512
-
-
-
-
-
-
-
-
55,000
0%
378,812
0%
47,700
481,512
0%
0%
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 and long- service
leave entitlements.
(ii) For the year ended 30 June 2016 the fair value of 5,500,000 options granted to directors totaled
$633,200. Note 16 (c) refers to the assumptions made in calculating the fair value of the options
issued. These options were vested as at 30 June 2016.
(iii) Mr Stephen Lowe commenced on 17 December 2015 and was entitled to receive director’s fees of
$47,700 per annum.
(iv) Year ended 30 June 2016 - From 1 July 2015 Mr Thompson was entitled to an annual salary of
$348,000 plus superannuation and from 1 July 2014 $295,000 plus superannuation.
No share based payments were granted to the Directors during the year ended 30 June 2015.
22
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016 TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
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 2016
30 June 2016
Balance at
Beginning of
Year
Granted as
Remuneration
during the
Year
Exercised
during the
Year
Other
changes
during the
Year
Balance at
end of Year
Vested during
the Year
Vested and
Exercisable
Keith Coughlan
1,500,000
-
-
-
1,500,000
-
1,500,000
Mark Thompson (i)
463,947
4,500,000
(63,947)
(400,000)
4,500,000
4,500,000
4,500,000
Grant Mooney
1,000,000
-
Stephen Lowe
-
1,000,000
-
-
-
-
1,000,000
-
1,000,000
1,000,000
1,000,000
1,000,000
(i) 400,000 listed options received by Mr Thompson, pursuant to a capital raising in April 2014, lapsed during the
year.
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 2016
30 June 2016
Keith Coughlan
Mark Thompson (i)
Grant Mooney
Stephen Lowe(ii)
Balance at
Beginning of Year
Granted as
Remuneration
during the Year
Issued on Exercise
of Options during
the Year
Other Changes
during the Year
Balance at end of
Year
-
14,206,841
-
-
-
-
-
-
-
63,947
-
-
-
-
-
-
14,270,788
560,000
560,000
(i) Mr Thompson shareholding includes 4,000,000 shares issued during the 2014 financial year as part
of a Management Incentive Plan. This was provided via a non- recourse interest free loan. The loan
amounts to $1,480,000 and is repayable by 23 June 2019.
(ii) Mr Lowe had an interest in 485,000 shares prior to his appointment on 17 December 2015 and increased his
interest by 75,000 shares through an on market trade since joining the Board.
Share based payments
The movement during the year, by value of remuneration options over ordinary shares in the Company
in respect of each key management person is detailed below:
Directors
Keith Coughlan
Mark Thompson
Grant Mooney
Stephen Lowe
Granted in Year $ Value of options exercised in Year $
-
511,200
-
122,00
-
-
-
-
Additional disclosures relating to options and shares
The table below discloses the number of share options at 30 June 2016 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.
23
Class
Year
As at 30 June 2016
Options
awarded
during the
year (No.)
Award
date
Fair value
per options
at award
date
Vesting
date
Exercise
price
Expiry
date
No. vested
during this
year
No. lapsed
during this
year
Mark Thompson
2016
4,500,000
Keith Coughlan
Grant Mooney
Stephen Lowe
2014
2014
1,500,000
1,000,000
2016
1,000,000
1/12/15
23/6/14
23/6/14
17/12/15
$0.1136
$0.2387
$0.2387
$0.1220
1/12/15
$0.60
4/10/18
4,500,000
23/6/14
23/6/14
17/12/15
$0.54
23/6/19
$0.54
23/6/19
-
-
$0.54
17/12/20
1,000,000
-
-
-
-
17. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Group paid a premium of $9,794 (2015: $7,895) to insure Directors and Officers of the Group. The
Directors and Officers have indemnities in place with the Group whereby the Company 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.
18. AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration for the year ended 30 June 2016 has been received and immediately
follows the Directors’ Report. Apart from share option valuation fees of $500, there were no other fees paid to
Stantons International for non- audit services provided during the year ended 30 June 2016. The Directors are
satisfied that the provisions of non- audit services during the year is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services
disclosed did not compromise the external auditor’s independence.
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 2016
24
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016 TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
25
FINANCIALS FOR
YEAR ENDED
30 JUNE 2016
FINANCIALS FOR
YEAR ENDED
30 JUNE 2016
TALGA RESOURCES LTD
FOR THE YEAR ENDED 30 JUNE 2016
TABLE OF CONTENTS
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 Auditors Report
Additional Shareholder Information
Corporate Governance Statement
Schedule of Mineral Tenements
28
29
30
31
32
57
58
60
63
70
27
28
TALGA RESOURCES LTDFOR THE YEAR ENDED 30 JUNE 2016TALGA RESOURCES LTD For the Year Ended 30 June 2016 !!!!!!!!!!!!!!!!!!Page!19!Consolidated(Statement(of(Profit(or(Loss(and(Other(Comprehensive(Income((!!2016!2015!!Note!$!$!!!!!Revenues!from!ordinary!activities!2!89,741!104,515!Other!Income!2!769,747!494,930!Expenses!!!!Administration!expenses!!(1,101,424)!(841,770)!Compliance!and!regulatory!expenses!!(441,284)!(387,413)!Depreciation!expense!–!office!equipment!!(53,614)!(16,891)!Employee!benefits!expenses!and!Directors!Fees!!(1,175,743)!(1,192,023)!Exploration!and!evaluation!expenditure!8!(608,302)!(2,177,669)!Exploitation!costs!Sweden!!(51,752)!