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2023 ReportVolt Resources Limited (formerly Mozambi Resources Limited) a n d c o n t r o l l e d e n t i t i e s ABN 28 106 353 253 Financial Report for the year ended 30 June 2016 Volt Resources Limited ABN 28 106 353 253 Financial Report for the Year Ended 30 June 2016 Corporate Directory Directors’ Report Auditor’s Independence Declaration Independent Auditor’s Report Directors’ Declaration Consolidated Statement of Profit or Loss Consolidated Statement of Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Additional ASX Information Page 3 4 21 22 24 25 26 27 28 29 30 56 Page | 2 Volt Resources Limited ABN 28 106 353 253 Corporate Directory Directors Securities Exchange Listing Mr Stephen Hunt – Executive Chairman Australian Securities Exchange Mr Alwyn Vorster – Non-Executive Director Home Exchange: Perth, Western Australia Mr Matthew Bull – Non-Executive Director Codes: VRC, VRCO Company Secretary Mr Stephen Brockhurst Registered and Principal Administration Office Website and Email www.voltresources.com info@voltresources.com Level 11, London House 216 St Georges Terrace PERTH WA 6000 Tel: +(618) 9481 0389 Auditors HLB Mann Judd Level 4, 130 Stirling Street PERTH WA 6000 Share Registry Advanced Share Registry Services 110 Stirling Hwy NEDLANDS WA 6009 Postal Address PO Box 1156 NEDLANDS WA 6909 Tel: (+618) 9389 8033 Page | 3 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Your Directors present their report on the consolidated entity consisting of Volt Resources Limited (formerly Mozambi Resources Limited) (“the Company” or “VRC”) and the entities it controlled during the financial year ended 30 June 2016 (“Consolidated Entity” or “Group”). Directors The names of the Directors of Volt Resources Limited in office during the financial year and until the date of this report are: Mr Stephen Hunt – Executive Chairman (appointed 15 December 2015) Mr Matthew Bull – Non Executive Director Mr Alwyn Vorster – Non Executive Director (appointed 1 April 2016) Mr Adrien Wing – Non Executive Chairman (resigned 15 December 2015) Mr Alan Armstrong – Non Executive Director (resigned 22 August 2016) Company Secretary Mr Stephen Brockhurst Principal activities The principal activities of the Group during the financial year were graphite exploration in Tanzania. Annual activities report During the reporting period, substantial progress has been achieved advancing the Board’s strategic objectives. In particular, the rapid projected evolution of the electric vehicle and power utility storage sectors globally are propelling growing demand for lithium-ion batteries and in turn, presenting unparalleled new opportunities for high quality natural graphite suppliers. With highly targeted marketing, Volt Resources now has several current and prospective customers in China, Europe and the USA testing samples of its super jumbo and jumbo flake graphite. Concurrently, the team in Perth is advancing the Prefeasibility Study and activities on the ground in Tanzania are ramping-up to ensure that future clients’ natural graphite requirements will be met. Holistically, there was considerable activity on multiple fronts across Volt Resources, with key developments highlighted below. NEW CORPORATE NAME In April 2016, following shareholder approval, the Company formally changed its name to Volt Resources Limited (ASX: VRC), from Mozambi Resources Limited (ASX: MOZ) to better reflect the new business dynamics. NAMANGALE PROJECT IN SOUTHERN TANZANIA During the first half of the fiscal year, Volt Resources finalised the acquisition of a 1,955 square kilometre tenement package in southern Tanzania (Figure 1: Volt Resources Project Area). Shortly after finalising this acquisition, inaugural drilling commenced at Namangale North (previously Namangale 1) and Namangale South (previously Namangale 2 and 3). Page | 4 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Figure 1: Volt Resource’s project area At the conclusion of the 2015 drilling campaign, the following results were achieved: 82 reverse circulation holes and 4,472m drilled; and, 10 diamond holes and 535m drilled. Subsequent resource modelling determined a substantial maiden JORC compliant graphite resource (Table 1: JORC compliant resource post 2015 drilling campaign). Deposit INDICATED Namangale North INFERRED Namangale North Namangale South Total Tonnes (Mt) 62.6 133.4 18.4 214.4 Grade (% TGC) 5.1 5.1 5.4 5.1 Table 1: JORC compliant resource post 2015 drilling campaign The 2016 drilling results showed the mineralisation intersected was consistent with the work undertaken in 2015 and moreover, indicated material areas of extension within each deposit. Resource modelling on the 2016 drilling campaign results is now underway. Deposit Reverse circulation Diamond drill Total Namangale North Namangale South Total 15 43 58 1,776m 4,183m 5,959m 15 7 22 1,385m 447m 1,832m 30 50 80 3,161m 4,630m 7,791m Table 2: Drilling completed at each deposit in 2016 Page | 5 Volt Resources Limited ABN 28 106 353 253 Directors’ Report PREFEASIBILITY STUDY Completing the Prefeasibility Study (PFS) by the end of 2016 is a critical milestone the Board aims to achieve as part of its strategy to continue de-risking the Namangale project. Post the close of the reporting period, the Board appointed a dedicated project manager, Mr Mark Hoffman, to work closely with consultants BatteryLimits Pty Ltd to facilitate this outcome. Project engineers from BatteryLimits have been to the mine site in Tanzania and produced detailed plans on where to locate key infrastructure such as the central processing facility, tailings dam, waste dumps and access roads. The Namangale project is located only 10km away from sealed roads, then 130km direct to the deep-water port of Mtwara. Currently, the port has an export capacity of 400,000 tonnes per annum and its prevailing utilisation is around 35%. However, should it be needed, capacity could be increased to 750,000 tonnes per annum across the same number of berths if incremental equipment is installed to handle containerised traffic. The Environmental and Social Impact Survey (ESIS) is progressing as planned for both deposits. This is important as the ESIS is a material component of the mining license application process in Tanzania. NAMANGALE METALLURGICAL RESULTS Establishing a global supply chain hinges on being able to demonstrate the ability to deliver a consistent high quality product that meets customers’ requirements. During the course of 2016, Volt Resources has been able to demonstrate improving purity and flake distribution from optimised metallurgical test-work conducted across the Namangale North and South deposits. Key salient highlights during 2016 include: Production of graphite flake concentrate from a simple crush and flotation process, without using toxic industrial chemicals. Across the Namangale North and South deposits, multiple results showing total graphitic carbon (TGC) exceeding 99%. Ability to produce super jumbo and jumbo flake concentrate samples for clients up to 99.6% TGC. Graphite flake distribution with up to 81.3% in the super jumbo, jumbo and large flake categories (Figure 2: Flake distribution achieved from Test 49 at Namangale South during Jan – Aug 2016). (%) 40 35 30 25 20 15 10 5 0 Super jumbo Jumbo Large Medium Fine Amorphous Figure 2: Flake distribution achieved from Test 49 at Namangale South during Jan – Aug 2016 Reflecting on these excellent metallurgical results, the Board believes the test-work results clearly demonstrate to prospective customers the Namangale deposit is world-class. Further, the Board believes the product from Namangale Page | 6 Volt Resources Limited ABN 28 106 353 253 Directors’ Report will meet the commercial application requirements of most customer groups, but particularly the lithium-ion battery sector which is currently the major demand driver for natural graphite. NAMANGALE SOUTH Test 49 Nam S Oxide Test 48 Nam S Oxide Test 53 Nam S Oxide Weight (%) 21.4 35.8 24.1 5.6 5.2 2.9 2.8 2.1 TGC (%) 96.5 97.8 97.6 96.9 96.3 94.4 87.2 81.7 Weight (%) 18.2 36.8 25.7 6.0 5.7 3.2 2.8 1.6 TGC (%) 98.6 98.4 97.9 97.0 96.2 94.9 88.7 81.5 Weight (%) 5.5 26.7 29.0 9.0 9.2 7.2 8.7 4.7 TGC (%) 97.4 99.6 99.5 99.6 99.4 99.1 98.5 94.1 Test 34 Nam S Oxide Test 30 Nam S Oxide Test 28 Nam S Oxide Weight (%) 10.3 29.7 27.1 8.0 8.8 6.6 6.6 2.9 TGC (%) 99.1 98.8 98.1 97.5 97.3 96.9 95.9 92.4 Weight (%) TGC (%) Weight (%) 5.9 28.1 30.3 8.4 10.1 7.6 7.3 2.2 99.3 98.8 97.8 97.3 96.9 96.7 95.7 91.6 10.2 30.5 27.0 8.1 10.0 5.9 6.2 2.2 TGC (%) 98.6 98.0 96.6 95.6 95.0 94.4 92.7 87.5 Size (µm) 500 300 180 150 106 75 25 -25 Size (µm) 500 300 180 150 106 75 25 -25 Table 3: Results from metallurgical test-work conducted on Namangale South test pit during January - August 2016 NAMANGALE NORTH – RESULT SUMMARY Test 50 Nam N Oxide Size (µm) 500 300 180 150 106 75 25 -25 Weight (%) 1.8 14.7 26.9 11.5 15.2 12.8 12.1 5.0 TGC % 98.3 97.3 95.8 94.8 94.7 94.2 91.4 79.4 Test 47 Nam N Oxide Test 52 Nam N Oxide Weight (%) TGC % Weight (%) TGC % 3.6 16.7 26.4 10.8 14.4 11.3 11.5 5.2 96.8 94.6 92.6 92.0 91.8 91.3 86.2 69.7 0.3 7.3 22.3 12.0 17.3 15.1 18.1 7.7 97.9 99.2 98.8 98.4 98.2 98.0 96.9 91.2 Table 4: Results from metallurgical test-work conducted on Namangale North test pit during January - August 2016 Page | 7 Volt Resources Limited ABN 28 106 353 253 Directors’ Report GLOBAL MARKETING FOCUS Establishing a rapport with prospect global clients early on in Volt Resources’ evolution has been a critical Board objective. With each graphite project unique and the market generally opaque, it is important to gather first hand intelligence on what prospective clients require and tailor the product offering accordingly. More importantly, it is critical to maintain regular dialogue with prospective customers to understand any nuanced changes in their requirements so this can be factored into the mix. The Board remains vigilant that continually differentiating the product offering is strategically important to ensure the success of the project. During the reporting period, the Company successfully signed Memoranda of Understandings (MOU) with three large groups in China for 100,000 tonnes per annum (Table 5: China-based MOU partners). This was a significant vote of confidence in Volt Resources’ business model considering metallurgical test-work remains ongoing for further optimisation. Of particular significance was signing up Optimum Nano which is one of China’s largest integrated lithium- ion battery producer. Customer Business description Annual graphite required (Tonnes) Optimum Nano Huzhou Chuangya Large scale integrated lithium-ion battery producer Large scale anode & electrolyte manufacturer Shenzhen Sinuo Specialised anode & spherical graphite producer Table 5: China-based MOU partners 60,000 20,000 20,000 In August 2016, in order to expand and focus on securing more traditional western off-take MOUs, the Board appointed Mr Michael Lew as VP Business Development for North America and Europe. Based in New York, Mr Lew is currently Director, Emerging Opportunities for the National Alliance for Advanced Transportation Batteries International. Having heavily interacted with battery manufacturers, particularly those aligned with transport and energy storage, Mr Lew is highly suited to leverage his extensive North American and European network to promote Volt Resources’ natural graphite products. In September 2016, the three China-based partners were sent graphite concentrate samples from the Namangale South deposit with up to 99.6% TGC. They will be conducting independent testing on the samples to ensure it meets with their specifications for downstream applications. The Board is optimistic that there will be further samples required and these groups will sign binding off-take agreements at the conclusion of their respective testing programmes. Incrementally, graphite concentrate samples from the Namangale South deposit were also sent to prospective customers in Europe and the USA. The Board is highly encouraged by this development and expects further samples to be dispatched to prospective customers in the USA and Europe in coming months as Mr Lew settles into his new role. To date, the spread of customer activities that samples were sent to comprises an integrated lithium-ion battery and electric vehicle manufacturer, graphite anode producer, graphite trading house and graphene product specialist. CAPITAL RAISING & EAS ADVISORS Over the course of the reporting period, Volt Resources has raised $12m from shareholders via a rights issue, share placements and options exercised. Proceeds have been used for general working capital and primarily to fund the PFS. At 30 June 2016, Volt Resources had $7.6m cash on hand which the Board believes is more than adequate to fund working capital requirements and the PFS. In May 2016, EAS Advisors LLC (“EAS”) was appointed as Volt Resources’ corporate advisor to the North American investment community. Since its inception in 2008, EAS has achieved a solid legacy assisting select ASX companies to secure funding to deliver growth. Notably, it has participated in over $3.5bn worth of transactions. Page | 8 Volt Resources Limited ABN 28 106 353 253 Directors’ Report The Board is now working closely with EAS on executing Volt Resources’ business plan. For instance, EAS organised the recent investor roadshow in New York and has made introductions to prospective customers. GRAPHITE INDUSTRY OUTLOOK The Board remains up to date on developments within the graphite industry that directly impact Volt Resources’ prospects. In particular, the Board is encouraged by developments in China and the pursuit of “green solutions” to the pollution problems. Combined with events in developed nations, many industry commentators now expect a near eight-fold increase in electric vehicle demand to circa 6 million by 2020 (from 800k in 2015) and rapid evolution of the utility power storage market. Indeed, Volt Resources has primary evidence about the positive knock-on effect this rapid growth is having on the lithium- ion battery sector. All three MOU partners confirmed to a Board member, on a recent visit to China, that their capacity will expand between 200-300% over the next 2-3 years to meet future demand. This scenario augurs favourably for Volt Resources with its high quality natural graphite. Longer-term, industry expert, UK-based Benchmark Minerals Intelligence expects more than US$20bn to be outlayed on building lithium-ion battery mega-and-giga factories over the next 3-5 years. Excluding Tesla’s facility in Nevada, there are seven facilities currently under construction in China. Placing this in context, BMI conservatively forecasts that demand for spherical graphite, derived from natural sourced concentrate, from the lithium-ion battery sector alone could underpin a 200% increase in demand to circa 160,000 tonnes per annum by 2020 (Figure 3: BMI forecast for spherical graphite derived from natural feedstock). Figure3: BMI forecast for spherical graphite derived from natural feedstock Assuming a yield of 50% to derive spherical graphite, this implies a minimum of 320,000 tonnes of naturally sourced graphite concentrate will be needed by 2020 (2015: circa 107,000 tonnes) to meet just the lithium-ion battery sector’s requirements. However, this figure may prove to be overly conservative if the disruptive impact of electric vehicles and power storage utilities has been underestimated. Based on current market forecast, the Board believes its strategy to strengthen Volt Resources’ marketing focus and traction with prospective clients to secure off-take MOUs that convert into binding agreements, is critical. Moreover, the Board is acutely cognisant that it must continue to demonstrate to prospective clients the ability to deliver high quality graphite concentrate products. In parallel, the Board is rapidly executing the business plan to ensure all key studies and regulatory requirements are progressed with urgency to ensure the Namangale project is continually de-risked and succeeds in getting into production as quickly as possible. Page | 9 02040608010012014016018020152020FSpherical graphite demand ('000 tpa) Volt Resources Limited ABN 28 106 353 253 Directors’ Report Competent Person Statement The information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Matthew Bull, a Competent Person who is a member of Australian Institute of Geoscientists. Mr Bull is a Director of Volt Resources. Mr Bull has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and 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’. Mr Bull consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Significant changes in state of affairs There were no significant changes in the state of affairs of the Group during the year other than as noted above or elsewhere in this report. Information on Directors Current Directors Mr Stephen Hunt – Executive Chairman Qualifications – Bachelor of Business (Maj. Marketing), AICD member Special responsibilities – Chairman Other current directorship of Listed Public Companies – Nil Former Directorship (of Listed Public Companies) in last three years – Magnis Resources Interests in Shares and Options over Shares in the Company – 5,088,454 ordinary shares; 2,000,000 listed options (VRCO); 10,000,000 performance rights Mr. Hunt has more than 25 years of experience in the marketing of steel and mineral products worldwide. His career includes 15 years at BHP Billiton Ltd. where he spent 5 years in the London office marketing minerals to European and Middle Eastern customers. Stephen has built on his extensive network and developed his own minerals trading company, which has a strong Chinese focus. He brings along with him 15 years of cumulative board experience with ASX limited companies and most recently was a founding director of Magnis Resources Limited. Mr Alwyn Vorster – Non-Executive Director Qualifications – BSc Geology; MBA, MSc Mineral Economics Special responsibilities – Nil Other current directorship of Listed Public Companies – Managing Director of BC Iron Ltd Former Directorship (of Listed Public Companies) in last three years – Managing Director of Iron Ore Holdings Ltd (2010- 2014) Interests in Shares and Options over Shares in the Company: 2,000,000 listed options (VRCO); 8,000,000 performance rights (subject to shareholder approval) Mr Vorster is a mining professional with more than 25 years of experience working with numerous large and smaller mining companies in technical and commercial roles covering the total supply chain from geology, mining, rail and port, shipping, marketing and sales. He has held various CEO roles during his career, including with BC Iron Ltd, API Management and with Iron Ore Holdings Ltd. Mr Vorster is an executive committee member of the Australia China Business Council, a member of the Australian Institute of Company Directors, and a board member of the RSPCA WA. He brings significant project development, transactional and company risk management experience to the Board. Page | 10 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Mr Matthew Bull – Non-Executive Director Qualifications – Bsc geology (hons) Special responsibilities - Nil Other current directorship of Listed Public Companies – Nil Former directorships (of Listed Public Companies) in last three years - Nil Interests in Shares and Options over Shares in the Company: 3,838,885 fully paid ordinary shares 3,000,000 unlisted options Matthew has over 10 years’ experience in the mining and exploration industry. He has worked in a wide range of commodities including graphite, gold and iron ore. He has considerable experience on the operation greenfield and resource development drilling exploration programs. His previous positions include consultant geologist working on Discovery Africa’s Tanzanian Graphite Project and CEO/Chief Geologist at Baru Resources. Company Secretary Mr Stephen Brockhurst Qualifications – B.Com Special responsibilities – Company Secretary Stephen is a Director of Mining Corporate and has many years of experience in delivering company secretarial services to predominantly mining and exploration companies. Former Directors Mr Alan Armstrong – former Non-Executive Director Qualifications – B.Bus (Accounting/Finance), CA Alan was previously employed as a senior accountant with Shakespeare Partners in Perth. Having 8 years’ experience in taxation and business services, he joined Shakespeare Partners in 2012. Prior to this he was employed by Christies Accountants and Advisors in regional NSW. Operating in the mid-tier sector, he has gained experience in various client facing roles over his career to date. He is a member of Chartered Accountants Australia and New Zealand. Mr Adrien Wing – former Non-Executive Chairman and Company Secretary Qualifications – B.Bus (Accounting), CPA Adrien practised in the audit and corporate divisions of a medium sized chartered accounting firm before focusing on providing company secretarial and corporate accounting services to a number of publicly listed companies on the Australian Securities Exchange. His experience extends to all corporate and secretarial matters relating to ASX listed entities, including liaising with shareholders and stakeholders such as ASIC and ASX, managing statutory and reporting obligations, corporate governance and all other board processes. He is experienced with public companies’ investment banking and capital raising processes through IPO's, Reverse Take-Overs (RTO’s), Private Placements and Rights Issues as well as M&A initiatives and applicable due diligence. Page | 11 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Meetings of Directors The following table sets out the number of meeting of the Company’s directors held during the year ended 30 June 2016, and the number of meetings attended by each director. Directors’ Meetings Eligible to attend 9 17 17 5 8 Attended 9 17 16 5 8 Mr Stephen Hunt Mr Alan Armstrong Mr Matthew Bull Mr Alwyn Vorster Mr Adrien Wing Share options At the date of this report the following options have been granted over unissued capital. Number 2,200,000 4,200,000 4,200,000 4,200,000 4,200,000 10,500,000 248,693,926 7,500,000 7,500,000 7,500,000 300,693,926 Exercise Price 25c 12c 10c 8c 6c 2c 2c 12c 14c 16c Expiry Date 30/11/2016 30/04/2019 30/04/2019 30/04/2019 30/04/2019 31/12/2017 31/12/2017 12/08/2017 12/08/2018 12/08/2019 Unlisted Unlisted Unlisted Unlisted Unlisted Unlisted Listed - VRCO Unlisted Unlisted Unlisted Performance rights 19,000,000 performance rights have been issued during the 2016 financial year. A balance of 10,000,000 remain outstanding and 9,000,000 performance rights have been converted into shares during the financial year. Subsequent events On 15 August 2016, Mr Adrien Wing resigned as Company Secretary and was replaced by Mr Stephen Brockhurst. On 22 August 2016, Mr Alan Armstrong resigned as a director of the Company. Since balance date the following equity issues have occurred: - 46,474,723 shares issued upon the exercise of options - 1,250,000 shares issued for marketing and consulting services in lieu of cash consideration - 7,500,000 options for corporate advisory services exercisable at $0.12 on or before 12 August 2017 - 7,500,000 options for corporate advisory services exercisable at $0.14 on or before 12 August 2018 - 7,500,000 options for corporate advisory services exercisable at $0.16 on or before 12 August 2019 Page | 12 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Likely Developments The Group intends to continue its exploration activities on its existing tenements, assess the viability of existing tenements and to acquire further suitable tenements for exploration and/or development as opportunities arise. Environmental regulation The Group has a policy of exceeding or at least complying with its environmental performance obligations. During the financial year, the Group did not materially breach any particular or significant Commonwealth, State, Territory or other regulation in respect to environmental management. Dividends No dividends have been declared, provided for or paid in respect of the financial year ended 30 June 2016 (2015: None). Indemnification and insurance of Officers and Auditors Since the end of the year, the Group has paid a premium in respect of a contract insuring the directors and secretaries of the Group (as named above), against liabilities incurred as such a director, secretary or executive officer to the extent permitted by the Corporation Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Group has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Group or of any related body corporate against a liability incurred as such an officer or auditor. Proceedings on behalf of company No person has applied for leave of court to bring proceedings on behalf of the Group or intervene in any proceeding to which the Group is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Group was not a party to any such proceedings during the year. Corporate Governance In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of the Consolidated Entity support, and adhere to, good corporate governance practices. Refer to the Company’s Corporate Governance Statement at www.voltresources.com. Non-audit services No fees for non-audit services were paid or payable to the external auditor of the Parent Entity during the year ended 30 June 2016 (2015: nil). Auditor’s Independence Declaration The Auditor’s independence declaration is included on page 21 of the financial report and forms part of this directors’ report. Page | 13 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Remuneration Report – Audited This remuneration report outlines the key management personnel remuneration arrangements of the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, key management personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the specified executives. For the purposes of this report, the term 'executive' encompasses the chief executive, senior executives and secretaries of the Parent and the Group. Details of key management personnel (i) Directors Current: Stephen Hunt Matthew Bull Alwyn Vorster Former: Adrien Wing Alan Armstrong Executive Chairman (appointed 15 December 2015) Non-Executive Director Non-Executive Director (appointed 1 April 2016) Non-Executive Chairman (resigned 15 December 2015) Non-Executive Director (former Managing Director) (resigned 22 August 2016) (ii) Company Secretary Stephen Brockhurst (appointed 15 August 2016) Adrien Wing (resigned 15 August 2016) Remuneration committee The remuneration committee of the board of directors of the Company is responsible for determining and reviewing remuneration arrangements for the directors and executives. The remuneration committee assesses the appropriateness of the nature and amount of remuneration of executives on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of a high quality, high performing director and executive team. Remuneration philosophy 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. To this end, the charter adopted by the remuneration committee aims to align rewards with achievement of strategic objectives. The remuneration framework applied provides for a mixture of fixed and variable pay and a blend of short and long term incentives as appropriate. Remuneration structure In accordance with best practice corporate governance, the structure of non-executive director and executive remuneration is separate and distinct. Non-executive directors The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at General Meeting. The Company’s policy is to remunerate non-executive directors at market rates (for comparable companies) for time, commitment and responsibilities. Fees for non-executive directors are not linked to the performance of the Company, however to align directors’ interests with shareholders’ interests, directors are encouraged to hold shares in the Company, and subject to approval by shareholders, are permitted to participate in the Employee Share Option Plan. Page | 14 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Remuneration Report (Cont.) Retirement benefits and allowances No retirement benefits or allowances are paid or payable to directors of the Company (other than statutory or mandatory superannuation contributions, where applicable). Executives Base pay Executives are offered a competitive level of base pay which comprises the fixed (unrisked) component of their pay and rewards. Base pay for senior executives is reviewed annually to ensure market competitiveness. There are no guaranteed base pay increases included in any senior executives’ contracts. Short term incentives Payment of short term incentives is dependent on the achievement of key performance milestones as determined by the remuneration committee. For the periods ended 30 June 2015 and 2016, these milestones required performance in relation to key strategic, non-financial measures linked to drivers of performance in future reporting periods. No bonuses have been paid or are payable in respect of the year to 30 June 2016. There have been no forfeitures of bonuses by key management personnel during the current or prior periods and no cash bonuses remained unvested at year-end. Long Term Incentives - Share-based compensation Both performance rights and share options have been issued to Directors and executives as part of their remuneration. Share-based compensation instruments are not issued based on performance criteria, however, they are issued with vesting conditions and exercise prices set specifically to increase goal congruence between Directors, executives and shareholders. Performance rights and options granted under the Plan carry no dividend or voting rights. The company currently has no policy in place to limit an individual’s risk exposure in relation to the issue of company securities as remuneration. Service agreements On 30 September 2015, the Company entered into a consultancy agreement with Mr Alan Armstrong, in his capacity as Managing Director. The agreement is with Loup Soltaire Pty Ltd, an associated company of Mr Armstrong. Material terms of the contract are as follows: Role – to provide managerial consultancy advice, particularly in regards to development and production programs; Term of agreement – 3 years Consultancy fee of $8,334 per month, increased to $12,500 per month from March 2016 (including Director Fees) Termination of the agreement by the Company can occur upon giving 6 months notice, or payment in lieu thereof, of 6 months consulting fees. Mr Armstrong resigned on 22 August 2016. Page | 15 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Remuneration Report (Cont.) Service agreements (Cont.) These conditions were achieved during the financial year and 9,000,000 shares issued for nil consideration to satisfy the terms of the Performance Rights. On 11 December 2015, the Company entered into a consultancy agreement with Mr Stephen Hunt, in his capacity as Chairman. Under an established Performance Rights Plan, following shareholder approval, Mr Hunt was also issued 10,000,000 Performance Rights in the following tranches and subject to vesting conditions: Tranche 1 – 2,500,000 Performance Rights vest on completion of the Prefeasibility Study (as defined by the JORC Code) on the Namangale Project to be achieved by 31 March 2017. Tranche 2 – 2,500,000 Performance Rights vest on the execution of an Off-Take Agreement in respect of the Namangale Project for a minimum of 50% of the minimum production contemplated in the Pre-Feasibility Study to be achieved by 30 June 2017. Tranche 3 – 2,500,000 Performance Rights vest on the execution of contracts for finance sufficient to fund the commissioning of mining operations at Namangale Project to be achieved by 30 September 2017. Tranche 4 – 2,500,000 Performance Rights vest on the commencement of mining, and processing of first ore recovered from the Namangale Project to be achieved by 31 March 2019. On 21 March 2016, the Company entered into an agreement with Mr Alwyn Vorster, in his capacity as Non-Executive Director to commence from 1 April 2016 at $48,000 per annum, excluding any additional consulting services. Under an established Performance Rights Plan, subject to shareholder approval, Mr Vorster will be issued 8,000,000 Performance Rights in the following tranches subject to vesting conditions: Tranche 1 – 2,000,000 Performance Rights vest on completion of the Pre-Feasibility Study (as defined by the JORC Code) on the Namangale Project to be achieved by 31 March 2017. Tranche 2 – 2,000,000 Performance Rights vest on the execution of an Off-Take Agreement in respect of the Namangale Project for a minimum of 50% of the minimum production contemplated in the Pre-Feasibility Study to be achieved by 30 June 2017. Tranche 3 – 2,000,000 Performance Rights vest on the execution of contracts for finance sufficient to fund the commissioning of mining operations at Namangale Project to be achieved by 30 September 2017. Tranche 4 – 2,000,000 Performance Rights vest on the commencement of mining, and processing of first ore recovered from the Namangale Project to be achieved by 31 March 2019. These Performance Rights remain subject to shareholder approval however if this is not obtained, a cash payment of the same value will be made on the vesting of each tranche. Page | 16 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Remuneration Report (Cont.) Remuneration of key management personnel 2016 Short term benefits Post-employment benefits Cash salary and fees $ Consult- ing $ 36,530 92,500 12,000 179,500 54,500 4,400 141,030 238,400 106,670 131,236 8,000 12,000 237,906 20,000 378,936 258,400 Non- monetary benefits $ - - - - - - - - Super- annuation $ 3,470 - - 3,470 - 12,373 12,373 15,843 Retirement Benefits $ - - - - - - - - Non-executive Directors Matthew Bull Adrien Wing* Alwyn Vorster** Sub-total non-executive directors Executive Directors Alan Armstrong Stephen Hunt Sub-total executive directors Total Key Management Personnel Share based payments Performance rights/ options $ 114,500 98,000 40,000 Total $ 334,000 245,000 56,400 252,500 635,400 98,000 40,000 212,670 195,609 138,000 408,279 390,500 1,043,679 Performance related % 34.3 40.0 70.9 46.1 20.4 * Amounts shown as remuneration for Mr Wing are fees paid to Northern Star Nominees Pty Ltd (“Northern Star”), a Company controlled by Mr Wing, which provides company secretarial, accounting, financial and general management services as well as administrative support to the Company. The amounts include payments for services provided by Mr Wing. ** The options issued to Mr Vorster were issued while he was a consultant, before his appointment as a Director. 2015 Short term benefits Post-employment benefits Cash salary and fees $ Cash bonus $ Non-executive Directors Matthew Bull Adrien Wing* Robert Hemphill Julian Jarman Sub-total non-executive directors Executive Directors Alan Armstrong Alex Neuling** Sub-total executive directors Total Key Management Personnel 3,044 38,600 33,733 33,611 108,988 35,000 42,326 77,326 186,314 - - - - - - - - - Non- monetary benefits $ - - - - - - - - - Super- annuation $ 289 - - 3,193 3,482 - - - 3,482 Retirement Benefits $ - - - - - - - - - Share based payments Performance rights/ options $ - 20,100 - - Total $ 3,333 58,700 33,733 36,804 20,100 132,570 20,100 - 55,100 42,326 20,100 97,426 40,200 229,996 Performance related % - 34.2 - - - 36.5 - * Amounts shown as remuneration for Mr Wing are fees paid to Northern Star Nominees Pty Ltd (“Northern Star”), a Company controlled by Mr Wing, which provides company secretarial as well as administrative support to the Company. The amounts include payments for services provided by Mr Wing. ** Amounts shown as remuneration for Mr Neuling are fees paid to Erasmus Consulting Pty Ltd (“Erasmus”), a Company controlled by Mr Neuling, which provides company secretarial, accounting, financial and general management services as well as administrative support to the Company. The amounts include payments for services provided by Mr Neuling, Mrs Natalie Madden and by other members of staff employed or retained by Erasmus. Page | 17 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Remuneration Report (Cont.) Share Based Compensation Options Details of options over ordinary shares provided as remuneration to each Director of Volt Resources Limited and each of the key management personnel of the parent entity and Group are set out below. When exercised, each option is convertible into one ordinary share of Volt Resources Limited. Terms and conditions of share-based payment arrangements affecting remuneration of key management personnel in the current financial year or future financial years: Grant date 26/11/2012 27/05/2014 25/02/2015 07/08/2015 01/04/2016 07/04/2016 Number 2,200,000 9,000,000 6,000,000 3,000,000 2,000,000 2,000,000 Vesting date 26/11/2012 27/05/2014 25/02/2015 07/08/2015 01/04/2016 07/04/2016 Expiry date 30/11/2016 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 Exercise price Grant date fair value $0.25 $0.02 $0.02 $0.02 $0.02 $0.02 $0.006 $0.0048 $0.0067 $0.0055 (M Bull) $0.02 (A Vorster) $0.02 (S Hunt) % vested 100 100 100 100 100 100 Details of options granted as compensation to key management personnel during the current financial year: During the financial year Name Matthew Bull Alwyn Vorster * Stephen Hunt No. granted No. vested 3,000,000 2,000,000 2,000,000 3,000,000 2,000,000 2,000,000 % of grant vested 100% 100% 100% % of grant forfeited n/a n/a n/a % of compensation for the year consisting of options 4.9% 70.9% 20.4% * The options issued to Mr Vorster were issued while he was a consultant, before his appointment as a Director. During the year, there were no options exercised that were granted to key management personnel as part of their compensation. The following table summarises the value of options granted, exercised or lapsed during the financial year, in relation to options granted to key management personnel as part of their remuneration: Matthew Bull (i) Alwyn Vorster (ii) Stephen Hunt (ii) Value of options granted at the grant date (i) $ 16,500 40,000 40,000 Value of options exercised at the exercise date $ - - - Value of options lapsed at the date of lapse $ - - - (i) The value of options granted during the financial year is calculated as at the grant date using the Black-Scholes model. (ii) The value of listed options granted during the financial year is based on the ASX market price at the time of grant. Performance Rights 3,000,000 performance rights each have been issued to Mr Alan Armstrong, Matthew Bull and Adrien Wing during the 2016 financial year. Based upon a valuation of the performance rights at the grant date an amount of $98,000 has been included in remuneration for each of the recipients. These performance rights targets were met and have been converted into shares during the financial year. 10,000,000 performance rights were issued to Mr Stephen Hunt for nil value due to non-market performance conditions and these remain outstanding at the date of this report. Page | 18 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Remuneration Report (Cont.) Key management personnel equity holdings Fully paid ordinary shares of Volt Resources Limited Balance at beginning of period * Issued as remuneration Ord 30 June 2016 Directors Alan Armstrong Matthew Bull Adrien Wing Stephen Hunt Alwyn Vorster 30 June 2015 Directors Alan Armstrong Matthew Bull Adrien Wing Alex Neuling Robert Hemphill Julian Jarman Ord 500,000 - 3,000,000 - 378,788 3,878,788 Balance at beginning of period * Ord Issued as remuneration Ord - - 3,000,000 682,000 174,250 3,250,001 7,106,251 On Exercise of Options/Perf Rights Net Other Change Balance at end of period* Ord Ord Ord 3,000,000 3,000,000 1,000,000 - - 500,000 838,885 1,700,056 4,173,454 1,136,363 4,000,000 3,838,885 5,700,056 4,173,454 1,515,151 7,000,000 8,348,758 19,227,546 On Exercise of Options/Perf Rights Net Other Change Balance at end of period* Ord Ord Ord - - - - - - - 500,000 500,000 - - - - - 500,000 - 3,000,000 682,000 174,250 3,250,001 7,606,251 - - - - - - - - - - - - - * or when appointed/resigned Share options of Volt Resources Limited Balance at beginning of period * Granted as remune- ration Exercised Net change Other Balance at end of period * Exercisable Options vested during the year Not Exercisable Vested as at end of period 30 June 2016 Directors Alan Armstrong 3,000,000 - Matthew Bull Adrien Wing Stephen Hunt Alwyn Vorster - 3,000,000 9,000,000 - - - 2,000,000 2,000,000 12,000,000 7,000,000 - - - - - - - - 3,000,000 3,000,000 3,000,000 3,000,000 850,028 9,850,028 9,850,028 - - 2,000,000 2,000,000 2,000,000 2,000,000 850,028 19,850,028 19,850,028 - - - - - - - 3,000,000 - 2,000,000 2,000,000 7,000,000 * or when appointed/resigned Page | 19 Volt Resources Limited ABN 28 106 353 253 Directors’ Report Remuneration Report (Cont.) Share options of Volt Resources Limited (Cont.) Vested as at end of period Balance at beginning of period * Granted as remune- ration Exercised Net change Other Balance at end of period * Exercisable Not Exercisable - - 3,000,000 - 6,000,000 3,000,000 3,350,000 3,350,000 3,000,000 - - - 15,700,000 6,000,000 - - - - - - - - - - - - - - 3,000,000 3,000,000 - - 9,000,000 9,000,000 3,350,000 3,350,000 3,350,000 3,350,000 3,000,000 3,000,000 21,700,000 21,700,000 - - - - - - - Options vested during the year 3,000,000 - 3,000,000 - - - 6,000,000 30 June 2015 Directors Alan Armstrong Matthew Bull Adrien Wing Alex Neuling Robert Hemphill Julian Jarman * or when appointed/resigned All share options issued to key management personnel were made in accordance with the provisions of the employee share option plan. During the financial year, no options were exercised by key management personnel (2015: nil). For details of the employee share option plan and of share options granted during the 2016 and 2015 financial years, please refer to Note 13. Other transactions with key management personnel of the Group During the 2015 financial year, the Group has paid $3,800 to MB Exploration Pty Ltd, a company related to Mr Matthew Bull, for consulting services on normal commercial terms. For 2016, consulting arrangements have been included with the remuneration disclosures above. During the 2015 financial year, the Group paid $19,080 as a placement fee, on normal commercial terms to Alignment Capital Pty Ltd. In addition, from April 2014 Alignment Capital Pty Ltd (a related party of Mr Julian Jarman) was paid $5,000 per month as an ongoing retainer for corporate advisory services on normal commercial terms. Mr Jarman resigned as a Director on 1 June 2015. During the 2016 financial year, the Group paid $4,950 as an underwriting fee, on normal commercial terms to Mr Stephen Hunt. End of Remuneration Report Signed in accordance with a resolution of the Directors made pursuant to s.298 (2) of the Corporations Act 2001. On behalf of the Directors Stephen Hunt Chairman 29 September 2016 Page | 20 AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of Volt Resources Limited (formerly Mozambi Resources Limited) for the year ended 30 June 2016, I declare that to the best of my knowledge and belief, there have been no contraventions of: a) b) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and any applicable code of professional conduct in relation to the audit. Perth, Western Australia 29 September 2016 L Di Giallonardo Partner HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation HLB Mann Judd (WA Partnership) is a member of International, a worldwide organisation of accounting firms and business advisers. Page | 21 INDEPENDENT AUDITOR’S REPORT To the members of Volt Resources Limited (formerly Mozambi Resources Limited) Report on the Financial Report We have audited the accompanying financial report of Volt Resources Limited (“the company”), which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of profit or loss, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the Group comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Directors’ responsibility for the financial report The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1(c), the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements, the consolidated financial statements comply with International Financial Reporting Standards. Auditor’s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. Our audit did not involve an analysis of the prudence of business decisions made by directors or management. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation HLB Mann Judd (WA Partnership) is a member of International, a worldwide organisation of accounting firms and business advisers. Page | 22 Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor’s opinion In our opinion: (a) the financial report of Volt Resources Limited is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Group’s financial position as at 30 June 2016 and its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(c). Report on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2016. 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. Auditor’s opinion In our opinion, the Remuneration Report of Volt Resources Limited for the year ended 30 June 2016 complies with section 300A of the Corporations Act 2001. HLB Mann Judd Chartered Accountants Perth, Western Australia 29 September 2016 L Di Giallonardo Partner Page | 23 Volt Resources Limited ABN 28 106 353 253 Directors’ Declaration 1. In the opinion of the directors of Volt Resources Limited (formerly Mozambi Resources Limited) (the ‘Company’): a. the accompanying financial statements and notes and the additional disclosures are in accordance with the Corporations Act 2001 including: i. ii. giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2016 and of its performance for the year then ended; and complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations regulations 2001; and b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. 3. The financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2016. This declaration is signed in accordance with a resolution of the Board of Directors. Stephen Hunt Chairman 29 September 2016 Page | 24 Volt Resources Limited Consolidated statement of profit or loss for the year ended 30 June 2016 Note Consolidated 2016 $ 2 2 3 9 Revenue Office costs Corporate management costs Corporate compliance costs Evaluation expenses Marketing and investor relations Share based payments Other gains and losses Foreign exchange gain / (loss) Other expenses Loss before income tax Income tax expense Loss after tax from continuing operations Discontinued operations Loss after tax from continuing operations Net loss for the year Loss attributable to: Owners of the parent Non-controlling interests 2015 $ 4,781 (37,987) (256,159) (74,050) (32,008) (47,621) (216,200) - 16,428 (19,330) (662,146) - 24,100 (53,877) (627,620) (428,417) - (223,210) (1,773,609) (73,670) (40,282) (129,990) (3,326,575) - (3,326,575) (662,146) (479,980) - (3,806,555) (662,146) (3,812,285) 5,730 (3,806,555) (658,310) (3,836) (662,146) Loss from continuing operations per share (cents per share) Basic loss per share Diluted loss per share 4 4 Loss from discontinued operations per share (cents per share) Basic loss per share Diluted loss per share 4 4 (0.57) (0.57) (0.08) (0.08) (0.27) (0.27) - - The accompanying notes form part of these financial statements. Page | 25 Volt Resources Limited Consolidated statement of other comprehensive income for the year ended 30 June 2016 Consolidated 2016 $ 2015 $ Loss for the year (3,806,555) (662,146) Other comprehensive income Items that may be reclassified to profit or loss: Exchange differences on translating foreign operations Other comprehensive loss for the year net of income tax (25,829) (25,829) 255 255 Total comprehensive loss for the year (3,832,384) (661,891) Total comprehensive loss attributable to: Owners of the parent Non-controlling interests (3,838,114) 5,730 (3,832,384) (658,055) (3,836) (661,891) The accompanying notes form part of these financial statements. Page | 26 Volt Resources Limited Consolidated statement of financial position as at 30 June 2016 Note Consolidated 2016 $ 2015 $ Current Assets Cash and cash equivalents Trade and other receivables Prepayments Total Current Assets Non-Current Assets Trade and other receivables Other financial assets Deferred exploration expenditure Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Total Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Parent entity interest Non-controlling interests Total Equity 5 6 6 7 9 10 11 12 7,617,762 104,120 103,973 7,825,855 2,400 20,000 10,750,378 10,772,778 18,598,633 1,108,067 1,108,067 1,108,067 554,125 16,823 - 570,948 - 224,475 478,703 703,178 1,274,126 159,924 159,924 159,924 17,490,566 1,114,202 51,722,526 3,830,516 32,466,385 2,903,738 (37,846,371) (34,034,086) 17,706,671 (216,105) 17,490,566 1,336,037 (221,835) 1,114,202 The accompanying notes form part of these financial statements. Page | 27 Consolidated statement of changes in equity for the year ended 30 June 2016 Volt Resources Limited Consolidated Balance as at 1 July 2014 Loss for the year Exchange differences arising on translation of foreign operations Total comprehensive Loss for the year Shares issued during the year Less transaction costs Recognition of share-based payments Balance at 30 June 2015 Issued Capital $ 31,758,385 - - - 839,200 (131,200) - 32,466,385 Accumulated Losses $ (33,375,776) (658,310) - (658,310) - - - (34,034,086) Reserves $ 2,758,783 - 255 255 - - 144,700 2,903,738 Total $ 1,141,392 (658,310) 255 (658,055) 839,200 (131,200) 144,700 1,336,037 Non- controlling interests $ (217,999) (3,836) - (3,836) - - - (221,835) Total $ 923,393 (662,146) 255 (661,891) 839,200 (131,200) 144,700 1,114,202 Balance as at 1 July 2015 32,466,385 (34,034,086) 2,903,738 1,336,037 (221,835) 1,114,202 Loss for the year Exchange differences arising on translation of foreign operations Total comprehensive Loss for the year Shares issued during the year Less transaction costs Recognition of share-based payments Balance at 30 June 2016 - - - 19,968,609 (712,468) - 51,722,526 (3,812,285) - (3,812,285) - - - (37,846,371) - (25,829) (25,829) - - 952,607 3,830,516 (3,812,285) (25,829) (3,838,114) 19,968,609 (712,468) 952,607 17,706,671 5,730 - 5,730 (3,806,555) (25,829) (3,832,384) - 19,968,609 (712,468) - 952,607 - (216,105) 17,490,566 The accompanying notes form part of these financial statements. Page | 28 Consolidated statement of cash flows for the year ended 30 June 2016 Volt Resources Limited Cash flows from operating activities Payments to suppliers and employees Note Consolidated 2016 $ Inflows/(Outflows) 2015 $ (1,386,523) (354,068) Net cash applied to operating activities 5 (1,386,523) (354,068) Cash flows from investing activities Payments for exploration expenditure Payments for acquisition of subsidiary Payments for deposits and bonds Payment for other financial assets Interest received Net cash applied to investing activities Cash flows from financing activities Proceeds from share issues Share issue costs Net cash provided by financing activities (3,038,679) (23,688) (342,002) (22,400) - - - (178,275) 24,100 4,781 (3,378,981) (197,182) 12,341,609 (512,468) 11,829,141 688,000 (97,700) 590,300 Net increase in cash and cash equivalents 7,063,637 39,050 Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 5 554,125 7,617,762 515,075 554,125 The accompanying notes form part of these financial statements Page | 29 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 1. Statement of significant accounting policies Basis of Preparation (a) These financial statements are general purpose financial statements, which have been prepared in accordance with the requirements of the Corporations Act 2001, Accounting Standards and Interpretations and comply with other requirements of the law. The accounting policies detailed below have been consistently applied to all of the years presented unless otherwise stated. The financial statements are for the Group consisting of Volt Resources Limited and its subsidiaries. The financial statements have also been prepared on a historical cost basis. Cost is based on the fair values of the consideration given in exchange for assets. The Company is a listed public company, incorporated in Australia. The entity’s principal activities are mineral exploration in Tanzania (as more fully described in the Directors’ Report & Note 16). Going Concern The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. Adoption of new and revised standards (b) Standards and Interpretations applicable to 30 June 2016 In the year ended 30 June 2016, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Group and effective for the current annual reporting period. As a result of this review, the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Group’s business and, therefore, no change is necessary to Group accounting policies. The Directors have also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2016. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Group’s business and, therefore, no change necessary to Group accounting policies. Statement of Compliance (c) The financial report was authorised for issue on 29 September 2016. The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS). Basis of Consolidation (d) The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. Control is achieved when the Company: • has power over the investee; • is exposed, or has rights, to variable returns from its involvement in with the investee; and • has the ability to its power to affect its returns. The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements listed above. Page | 30 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of profit or loss from the date the Company gains control until the date when the Company ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the controlling interest having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies in line with the Group’s accounting policies. All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members are eliminated in full on consolidation. Critical accounting judgements and key sources of estimation uncertainty (e) The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Share-based payment transactions: The Group measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using the Black and Scholes formula taking into account the terms and conditions upon which the instruments were granted. (f) Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: (i) Interest income Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. (g) Borrowing Costs Borrowing costs are recognised as an expense when incurred except those that relate to the acquisition, construction or production of qualifying assets where the borrowing cost is added to the cost of those assets until such time as the assets are substantially ready for their intended use or sale. (h) Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. (i) Cash and cash equivalents Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Page | 31 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 Trade and other receivables (j) Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less provision for impairment. Trade receivables are generally due for settlement within periods ranging from 15 days to 30 days. Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Group may not be able to collect all amounts due according to the original contractual terms. Factors considered by the Group in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Group. The impairment allowance is set equal to the difference between the carrying amount of the receivable and the present value of estimated future cash flows, discounted at the original effective interest rate. Where receivables are short-term discounting is not applied in determining the allowance. The amount of the impairment loss is recognised in the statement of profit or loss within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the statement of profit or loss. Derecognition of financial assets and financial liabilities (k) (i) Financial assets A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when: the rights to receive cash flows from the asset have expired; the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or the Group has transferred its rights to receive cash flows from the asset and either: (a) (b) has transferred substantially all the risks and rewards of the asset, or has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Group could be required to repay. When continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price. (ii) Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. Page | 32 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 (l) Impairment of financial assets The Group assesses at each reporting date whether a financial asset or group of financial assets is impaired. Financial assets carried at amortised cost (i) If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of an allowance account. The amount of the loss is recognised in profit or loss. The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date. (ii) Financial assets carried at cost If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value (because its fair value cannot be reliably measured), or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset. (iii) Available-for-sale investments If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss for the period. Reversals of impairment losses for equity instruments classified as available-for-sale are not recognised in profit. Reversals of impairment losses for debt instruments are reversed through profit or loss if the increase in an instrument's fair value can be objectively related to an event occurring after the impairment loss was recognised in profit or loss. (m) Foreign currency translation Both the functional and presentation currency of Volt Resources Limited and its Australian subsidiaries is Australian dollars. Each entity in the Group determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date. All exchange differences in the consolidated financial report are taken to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Page | 33 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 The functional currency of foreign operations through Dugal Resources Lda and Xiluva Mozambi Lda, is Mozambique New Metical (MZN). As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of Volt Resources Limited at the rate of exchange ruling at the reporting date and their statements of comprehensive income are translated at the weighted average exchange rate for the year. The exchange differences arising on the translation are taken directly to a separate component of equity, being recognised in the foreign currency translation reserve. On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in profit or loss. (n) Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Page | 34 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 Tax consolidation legislation Volt Resources Limited and its 100% owned Australian resident subsidiary have implemented the tax consolidation legislation. Current and deferred tax amounts are accounted for in each individual entity as if each entity continued to act as a taxpayer on its own. Volt Resources Limited recognises both its own current and deferred tax amounts and those current tax liabilities, current tax assets and deferred tax assets arising from unused tax credits and unused tax losses which it has assumed from its controlled entities within the tax consolidated group. Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts payable or receivable from or payable to other entities in the Group. Any difference between the amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) controlled entities in the tax consolidated group. Other taxes (o) Revenues, expenses and assets are recognised net of the amount of GST except: when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Property, plant and equipment (p) Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Plant and equipment – over 3 years The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. (i) Impairment The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired. The recoverable amount of plant and equipment 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 an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value. An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in profit or loss for the year as a separate line item. Page | 35 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 (ii) Derecognition and disposal An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. (q) Financial assets Financial assets 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 assets 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 assets 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. 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 reporting 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. Page | 36 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 (r) Intangible assets Intangible assets acquired separately Intangible assets acquired separately are recorded at cost less accumulated amortisation and impairment. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated useful life and amortisation method is reviewed at the end of each annual reporting period, with any changes in these accounting estimates being accounted for on a prospective basis. Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets acquired separately. (s) Impairment of assets The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash- generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount. 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. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease). An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. (t) Trade and other payables Trade payables and other payables are carried at amortised cost 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. Trade and other payables are presented as current liabilities unless payment is not due within 12 months. (u) Borrowings All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised. Page | 37 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 Provisions (v) Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate assets but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss net of any reimbursement. Provisions are measured at the present value or management’s best estimate of the expenditure required to settle the present obligation at the end of the reporting period. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as an interest expense. (w) Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (x) Earnings per share Basic earnings per share is calculated as net profit or loss attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share is calculated as net profit or loss attributable to members of the parent, 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 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. (y) Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors of Volt Resources Limited. (z) Non-current assets (or disposal groups) held for sale and discontinued operations Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition. Page | 38 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale and the assets of the disposal group classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial position. A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co- ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss. (aa) Business combinations The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or business under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the group recognises any non-controlling interest in the acquiree either at fair value or at the non- controlling interest’s proportionate share of the acquiree’s net identifiable assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified as either equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss. (bb) Share-based payment transactions (i) Equity settled transactions: The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions). The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a Black-Scholes model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Volt Resources Limited (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period). Page | 39 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The statement of comprehensive income charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings/loss per share (see Note 4). (cc) Exploration and evaluation Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: (i) the rights to tenure of the area of interest are current; and (ii) at least one of the following conditions is also met: (a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or (b) exploration and evaluation activities in the area of interest have not at the reporting 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 in relation to, the area of interest are continuing. Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset 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 in previous years. Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development. Page | 40 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 (dd) Parent entity financial information The financial information for the parent entity, Volt Resources Limited, disclosed in Note 20 has been prepared on the same basis as the consolidated financial statements, except as set out below. (i) Investments in subsidiaries, associates and joint venture entities Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the financial statements of Volt Resources Limited. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments. (ii) Share-based payments The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using a Black-Scholes model. 2. Revenue and Expenses (a) Revenue Continuing Operations Interest Income (b) Expenses Loss before income tax has been determined after charging: Continuing Operations Depreciation Impairment loss recognised on other receivables Share-based payments Ordinary shares Liability to be settled in ordinary shares Performance rights Options Further details of share-based payments can be found in Note 13. Consolidated 2016 $ 2015 $ 24,100 4,781 - - (2,548) (19,087) (698,500) (440,000) (294,000) (341,109) (1,773,609) - - - (216,200) (216,200) Page | 41 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 3. Income Tax The prima facie income tax benefit on pre-tax accounting loss reconciles to the income tax expense in the financial statements as follows: Accounting loss before income tax Income tax benefit calculated at 28.5% (2015: 30%) Share based payments Non-deductible expenses Capital raising costs deductible Income tax losses not brought to account Consolidated 2016 $ 2015 $ (3,806,555) 1,084,868 (505,479) (20,996) 47,856 (606,249) (662,146) 198,644 (64,860) (5,726) 66,635 (194,693) Income tax benefit from continuing operations reported in the consolidated statement of profit or loss Income tax benefit attributable to discontinued operations - - - - The tax rate used in the above reconciliation is the corporate tax rate of 28.5% (2015: 30%) payable by Australian corporate entities on taxable profits under Australian tax law for small businesses. The Group has tax losses arising in Australia of $17,464,906 (2015: $15,004,046) that are available indefinitely for offset against future taxable profits of the companies in which the losses arose. The availability of these losses is subject to the satisfaction of either the same business or continuity of ownership tests. Deferred tax assets have not been recognised in respect of these items because it is not sufficiently probable that future taxable profit will be available against which the Group can utilise the benefits thereof. 4. Loss per share Basic / diluted loss per share – continuing operations: Loss per share Consolidated 2016 Cents per share 2015 Cents per share (0.57) (0.27) Loss after tax (used in calculation of basic / diluted loss per share) (3,326,575) (658,310) Basic / diluted loss per share – discontinued operations: Loss per share Loss after tax (used in calculation of basic / diluted loss per share) (0.08) (479,980) - - Consolidated 2016 No. 2015 No. Weighted average number of ordinary shares used as the denominator in calculating basic / diluted loss per share 583,282,168 243,663,510 As the entity is loss-making in both the current and prior year, no potential ordinary shares are considered to be dilutive as they would act to decrease the loss per share. The options on issue (Note 11) represent potential ordinary shares but are not dilutive and accordingly have been excluded from the weighted average number of ordinary shares and potential ordinary shares used in the calculation of diluted earnings per share. Page | 42 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 5. Cash and Cash Equivalents Cash at bank and on hand Cash at bank earns interest at floating rates based on daily bank deposit rates (i) Reconciliation to Statement of Cash Flows: Cash and cash equivalents (ii) Reconciliation of loss for the year to net cash outflows from operating activities Loss for the year Depreciation Interest received Non-capitalised exploration expenditure Impairment of other assets Foreign Exchange (gain)/loss Share based payments (Increase)/decrease in trade and other receivables (Increase)/decrease in prepayments Increase/(decrease) in creditors and accruals Net cash used in operating activities 6. Trade and Other Receivables Other receivables – Current Rental Bond – Non-current 7. Other Financial Assets Term deposit Options to acquire shares/projects Total Page | 43 Consolidated 2016 $ 7,617,762 2015 $ 554,125 7,617,762 7,617,762 554,125 554,125 (3,806,555) (662,146) - (24,100) 479,980 73,670 - 1,773,609 (87,297) (103,973) 308,143 2,548 (4,781) - 19,087 (16,428) 216,200 20,891 - 70,561 (1,386,523) (354,068) Consolidated 2016 $ 2015 $ 104,120 2,400 106,520 16,823 - 16,823 Consolidated 2016 $ 2015 $ 20,000 - 20,000 - 224,475 224,475 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 Option to acquire shares in Nachi Resources Limited On 22 May 2015, the Group signed a term sheet granting the option to acquire eighteen tenement applications in Tanzania via the acquisition of 100% of the share capital of the entity that owns the tenements, Nachi Resources Limited. The option was paid for with an initial consideration of 3,300,000 ordinary shares issued in the Company at a value of $46,200, plus a cash payment of US$75,000. Option to acquire exploration licences in Mozambique On 10 February 2015, the Group signed a term sheet granting the option to acquire to prospective graphite licences in the Balama-Montepuez province of Mozambique. The option was extended to 4 November 2015 and allowed to lapse during the financial year. 8. Property, Plant and Equipment Cost Accumulated depreciation Net carrying amount Consolidated 2016 $ 2015 $ - - - - - - A reconciliation of movements in plant & equipment during the current & prior financial year is as follows: Opening balance Depreciation Closing balance 9. Deferred Exploration Expenditure Opening balance Acquisition of Tanzania graphite project (ii) Expenditure during the year Impairment – Bowen River and Carmilla coal tenements (i) Closing balance - - - 2,548 (2,548) - Consolidated 2016 $ 2015 $ 478,703 455,015 7,637,536 3,114,119 (479,980) - 23,688 - 10,750,378 478,703 Capitalised exploration and evaluation expenditure represents the accumulated cost of acquisition and subsequent expenditure cost on properties which are in the exploration and evaluation phase. Ultimate recoupment of these costs is dependent on the successful development and commercial exploitation, or alternatively sale, of the respective areas of interest. Discontinued Operation (i) During the year, tenements comprising the Australian Coal assets were relinquished and, accordingly, the amounts previously capitalised in the financial report were written off. Due to these assets representing a separate geographical segment per the segment reporting at Note 16, this represents a discontinued operation. The loss after tax from discontinued operations was $479,980 (2015: $nil). Page | 44 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 Acquisition of Subsidiary (ii) During the year, the Group acquired 100% of Nachi Resources Limited (a company registered in Tanzania). As Nachi Resources Limited does not constitute a business, this transaction has been accounted for as an asset acquisition, being the acquisition of exploration and evaluation assets. The total consideration paid to acquire Nachi Resources Limited was as follows: Consideration paid Option fee carried forward from 30 June 2015 Cash consideration Shares issued to vendors Options issued to vendors Other transaction costs – Shares issued Other transaction costs – Options issued Other transaction costs Total consideration paid Net tangible assets acquired Other identifiable assets acquired – exploration and evaluation Total identifiable assets acquired Excess of consideration paid over identifiable assets acquired 10. Trade & Other Payables Trade Creditors & Accruals Total Trade & Other Payables $ 142,034 322,722 6,895,000 150,000 93,500 15,000 19,280 7,637,536 - 7,637,536 7,637,536 - Consolidated 2016 2015 $ $ 1,108,067 159,924 1,108,067 159,924 Trade payables are non-interest bearing and are normally settled on 30-day terms. 11. Contributed Equity Share Capital Ordinary shares issued and fully paid 906,180,471 308,645,421 51,722,526 32,466,385 Consolidated Consolidated 2016 Shares 2015 Shares 2016 $ 2015 $ Page | 45 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 11. Contributed Equity (Cont.) Movements in Share Capital during the current and prior financial years are as follows: Ordinary Shares Balance as at 30 June 2014 Placement Consulting fees in lieu of payment Consulting fees in lieu of payment Consulting fees in lieu of payment Tanzania option Placement Less costs of issue Balance as at 30 June 2015 Rights issue Rights issue Nachi acquisition Consulting Consulting Options exercised Consulting Nachi acquisition Placement Performance rights Options exercised Consulting Placement Nachi acquisition Corporate advisory Placement Performance rights Options exercised Performance rights Options exercised Placement Options exercised (not yet issued) Less costs of issue Balance as at 30 June 2016 Date No. Issue Price $ 212,541,987 31,758,385 24/12/14 52,999,998 $0.006 26/2/15 21/4/15 15/5/15 28/5/15 16/6/15 30/7/15 18/8/15 18/8/15 18/8/15 26/10/15 26/10/15 4/11/15 4/11/15 9/11/15 2/12/15 2/12/15 25/2/16 25/2/16 8/4/16 8/4/16 8/4/16 8/4/16 8/4/16 25/5/16 20/06/16 20/06/16 2,500,000 $0.008 5,881,868 various 588,235 3,300,000 30,833,333 $0.017 $0.014 $0.012 308,645,421 77,161,569 50,500,000 5,000,000 16,000,000 14,200,000 4,516,285 1,500,000 39,000,000 50,000,000 3,000,000 2,176,785 2,000,000 30,171,212 132,000,000 1,404,529 107,893,938 3,000,000 13,776 3,000,000 14,996,956 40,000,000 $0.012 $0.012 $0.017 $0.012 various $0.02 $0.04 various $0.035 nil $0.02 $0.04 $0.033 $0.04 $0.04 $0.033 nil $0.02 nil $0.02 $0.10 318,000 20,000 75,000 10,000 46,200 370,000 (131,200) 32,466,385 925,843 606,000 85,000 192,000 322,500 90,250 60,000 1,563,500 1,750,000 - 43,536 80,000 995,650 5,280,000 44,000 3,560,500 - 276 - 299,939 4,000,000 69,615 (712,468) 906,180,471 51,722,526 Page | 46 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 11. Contributed Equity (Cont.) Options The following options were in existence during the current and prior reporting periods: Number Grant date 475,000 2,200,000 50,000,000 9,000,000 26,499,999 2,000,000 5,000,000 6,000,000 50,000,000 20,000,000 1,000,000 3,000,000 48,441,667 38,580,785 24,208,784 6,125,000 1,041,667 11,750,000 12,500,000 2,000,000 1,500,000 3,500,000 4,200,000 4,200,000 4,200,000 4,200,000 2,000,000 02/08/2012 26/11/2012 27/05/2014 27/05/2014 26/02/2015 26/02/2015 20/02/2015 20/02/2015 19/03/2015 21/04/2015 15/05/2015 10/08/2015 10/08/2015 07/08/2015 18/08/2015 22/10/2015 22/10/2015 04/11/2015 11/11/2015 01/04/2016 07/04/2016 07/04/2016 25/05/2016 25/05/2016 25/05/2016 25/05/2016 20/06/2016 Fair value at grant date $ $0.0260 $0.0060 $0.0048 $0.0048 n/a n/a $0.0067 $0.0067 $0.001 $0.001 $0.001 $0.006 $0.005 N/A N/A $0.012 N/A $0.02 N/A $0.02 $0.025 $0.02 $0.029 $0.026 $0.024 $0.022 $0.09 Exercise price $ Expiry date $0.25 $0.25 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.02 $0.06 $0.08 $0.10 $0.12 $0.02 02/08/2016 30/11/2016 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 31/12/2017 30/04/2019 30/04/2019 30/04/2019 30/04/2019 31/12/2017 The options carry no dividend or voting rights. Upon exercise, each option is convertible into one ordinary share to rank pari passu in all respects with the Company’s existing fully paid ordinary shares. All options on issue vested at the grant date. The following table illustrates the number and weighted average exercise prices of and movements in share options during the year: 2016 2015 Outstanding at the beginning of the year Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at the end of the year Exercisable at the end of the year Weighted average exercise price $0.02 $0.03 - $0.02 - $0.03 Weighted average exercise price $0.03 $0.02 - - - $0.02 Number 61,675,000 110,499,999 - - - 172,174,999 172,174,999 Number 172,174,999 170,672,452 - (21,703,802) - 321,143,649 321,143,649 Page | 47 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 Share options exercised during the year 21,703,802 shares were issued during the year to 30 June 2016 as a result of the exercise of options (2015: nil). Share options outstanding at the end of the year The share options outstanding at the end of the year had a weighted average exercise price of $0.03 (2015: $0.02) and a weighted average remaining contractual life of 571 days (2015: 910 days). 12. Reserves Share-based Payments Reserve Balance at beginning of year Share based payments Balance at end of year Consolidated 2016 $ 2015 $ 2,979,900 952,607 3,932,507 2,835,200 144,700 2,979,900 The share-based payments reserve has historically been used to record the fair value of share-based payments made by the Company to employees and directors as part of their remuneration. Foreign currency translation reserve Balance at beginning of year Currency translation differences Balance at end of year (76,162) (25,829) (101,991) (76,417) 255 (76,162) The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries. Total Reserves 3,830,516 2,903,738 13. Share-based Payments Under an established Performance Rights Plan, Mr Matthew Bull, Mr Adrien Wing and Mr Alan Armstrong were issued 3,000,000 Performance Rights each in the following tranches and subject to the following vesting conditions: Tranche 1 – 1,000,000 Performance Rights vest on the market capitalisation of the Company of $25 million or more within 3 years of the issue date. Tranche 2 – 1,000,000 Performance Rights vest on the market capitalisation of the Company of $40 million or more within 4 years of the issue date. Tranche 3 – 1,000,000 Performance Rights vest the Company successfully raising an aggregate of not less than $5,000,000 for the purposes of development of the Tanzanian assets, working capital and other opportunities. These conditions were achieved during the financial year and 9,000,000 shares issued for nil consideration to satisfy the terms of the Performance Rights. Page | 48 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 On 11 December 2015, the Company entered into a consultancy agreement with Mr Stephen Hunt, in his capacities as Chairman. Under an established Performance Rights Plan, following shareholder approval, Mr Hunt was also issued 10,000,000 Performance Rights in the following tranches and subject to vesting conditions: Tranche 1 – 2,500,000 Performance Rights vest on completion of the Pre-Feasibility Study (as defined by the JORC Code) on the Namangale Project to be achieved by 31 March 2017. Tranche 2 – 2,500,000 Performance Rights vest on the execution of an Off-Take Agreement in respect of the Namangale Project for a minimum of 50% of the minimum production contemplated in the Pre- Feasibility Study to be achieved by 30 June 2017. Tranche 3 – 2,500,000 Performance Rights vest on the execution of contracts for finance sufficient to fund the commissioning of mining operations at Namangale Project to be achieved by 30 September 2017. Tranche 4 – 2,500,000 Performance Rights vest on the commencement of mining, and processing of first ore recovered from the Namangale Project to be achieved by 31 March 2019. Summary of the Performance Rights issued during the year ended 30 June 2016 over Ordinary Shares: Type Expiry Date Vesting Status Number Market Conditions Fair Value $ Expensed S Hunt - 1 S Hunt - 2 S Hunt - 3 S Hunt - 4 Other - 1 Other - 2 Other - 3 30/03/2017 30/06/2017 30/09/2017 31/03/2019 22/10/2018 22/10/2019 22/10/2018 Not yet vested 2,500,000 Not yet vested 2,500,000 Not yet vested 2,500,000 Not yet vested 2,500,000 1,000,000 Vested 1,000,000 Vested 1,000,000 Vested No No No No Yes Yes Yes n/a n/a n/a n/a $97,800 $91,200 $105,000 nil nil nil nil $97,800 $91,200 $105,000 The following share-based payments were made during the year: Description Consulting and corporate services (i) Consulting and corporate services Consulting and corporate services Director remuneration (i) Director remuneration Director remuneration Share issue costs Acquisition of Tanzania graphite project and exploration expenses Acquisition of Tanzania graphite project and exploration expenses Security type Unlisted Options Listed Options Ordinary shares Unlisted Options Listed Options Performance Rights Ordinary shares Listed Options Number issued 14,250,000 14,250,000 33,604,529 3,000,000 2,000,000 13,000,000 1,500,00 8,250,000 Fair value $ Vested expense $ 426,720 344,500 618,500 16,500 40,000 294,000 115,000 165,000 52,609 344,500 618,500 16,500 40,000 294,000 115,000 165,000 Ordinary shares 177,000,000 6,988,500 6,988,500 (i) The fair value of the equity settled unlisted share options granted during the current year is estimated as at the date of grant using the Black Scholes model taking into account the terms and conditions upon which the options were granted. Expected volatility (%) Risk-free interest rate (%) Expected Option life (days) Exercise price Grant date share price Tranche 1 100% 1.87% 1,079 $0.06 $0.05 Consultant Options Tranche 2 100% 1.87% 1,079 $0.08 $0.05 Tranche 3 100% 1.87% 1,079 $0.10 $0.05 Tranche 4 100% 1.87% 1,079 $0.12 $0.05 Director Options M Bull 100% 1.87% 880 $0.02 $0.012 Page | 49 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 14. (a) Financial Instruments Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from 2015. The capital structure of the Group consists of debt, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings. None of the Group’s entities are subject to externally imposed capital requirements. Operating cash flows are used to maintain and expand operations, as well as to make routine expenditures such as tax, and general administrative outgoings. Gearing levels are reviewed by the Board on a regular basis in line with its target gearing ratio, the cost of capital and the risks associated with each class of capital. (b) Categories of financial instruments Financial assets Loans and receivables Cash and cash equivalents Other financial assets Financial liabilities Trade & other payables Consolidated 2016 $ 2015 $ 106,520 16,823 7,617,762 554,125 20,000 224,475 (1,108,067) 159,924 (c) Financial risk management objectives The Group is exposed to market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group seeks to minimise the effect of these risks, by using derivative financial instruments to hedge these risk exposures where appropriate. The use of financial derivatives is governed by the Group’s policies approved by the board of directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments, and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by management on a continuous basis. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. (d) Market risk The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, commodity prices and exchange rates. There has been no change to the Group’s exposure to market risks or the manner in which it manages and measures the risk from the previous period. Page | 50 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 (e) Foreign currency risk management The Group undertakes certain transactions denominated in foreign currencies, hence exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters. No forward contracts or other hedging instruments have been used during the current or prior year as the Group’s foreign exchange exposure is not considered to be sufficiently material to justify such activities. The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the balance date expressed in Australian dollars are as follows: US dollars Liabilities Assets 2016 $ - 2015 $ - 2016 $ 12,273 2015 $ - Foreign currency sensitivity analysis The Group is exposed to US Dollar (USD) currency fluctuations. The following table details the Group’s sensitivity to a 10% increase and decrease in the Australian dollar against the relevant foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. A positive number indicates an increase in profit or loss and other equity where the Australian Dollar strengthens against the respective currency. For a weakening of the Australian Dollar against the respective currency there would be an equal and opposite impact on the profit and other equity and the balances below would be negative. Result for the year Other equity (f) Interest rate risk USD Impact 2016 $ 1,227 - 2015 $ - - As at and during the year ended on reporting date the Group had no significant interest-bearing assets or liabilities other than liquid funds on deposit. As such, the Group’s income and operating cash flows (other than interest income from funds on deposit) are substantially independent of changes in market interest rates. The Group’s exposure to interest rate risk for each class of financial assets and liabilities is set out below. Consolidated 2016 $ 2015 $ Financial Assets Cash assets Floating interest 7,617,762 554,125 Group and Parent Company sensitivity The sensitivity analyses below have been determined based on the exposure to interest rates at the balance date and the stipulated change taking place at the beginning of the financial year and held constant through the reporting period. Page | 51 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 At balance date, if interest rates had been 80 basis points higher or lower and all other variables were held constant, the Group’s net result would increase or decrease by $60,942 (2015: $4,433). This is mainly attributable to the Group’s exposure to interest rates on its variable rate cash holdings. (g) Credit risk The Group seeks to trade only with recognised, trustworthy third parties and it is the Group’s policy to perform credit verification procedures in relation to any customers wishing to trade on credit terms with the Group. The Group has no significant concentrations of credit risk. (h) Liquidity risk Prudent liquidity management involves the maintenance of sufficient cash, marketable securities, committed credit facilities and access to capital markets. It is the policy of the board to ensure that the Group is able to meet its financial obligations and maintain the flexibility to pursue attractive investment opportunities through keeping committed credit lines available where possible, ensuring the Group has sufficient working capital and preserving the 15% share issue limit available to the Company under the ASX Listing Rules. Maturities of financial liabilities Group - As at reporting date the Group had total financial liabilities of $668,067 (2015: $159,924), comprised of non-interest-bearing payables to related parties, trade creditors and accruals with a maturity of less than 6 months. (i) Net fair value The carrying amount of financial assets and liabilities recorded in the financial statements approximate their fair value as at 30 June 2016. 15. Commitments and Contingencies In order to maintain and preserve rights of tenure to granted exploration tenements, the Group is required to meet certain minimum levels of exploration expenditure. As at reporting date these future minimum exploration expenditure commitments are as follows: Not longer than 1 year Longer than 1 year and not longer than 5 years Longer than 5 years Total 2016 $ 279,418 838,256 - 1,117,674 2015 $ 500,000 1,220,000 - 1,720,000 Page | 52 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 16. Segment Reporting a) Description 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 function of the chief operating decision maker is performed by the Board collectively. Information reported to the Board for the purposes of resource allocation and assessment of performance is focused broadly on the Group’s diversified activities across different sectors. The Group’s reportable segments under AASB 8 are therefore as follows: Mineral Exploration – Tanzania Mineral Exploration – Australia Information regarding the activities of these segments during the current and prior financial period is set out in the following tables. b) Segment revenues and results Mineral Exploration – Tanzania Mineral Exploration – Australia Total for continuing operations Investment income Share based payments Central administration costs and directors’ salaries Loss before tax (continuing operations) Segment revenue Segment profit/(loss) Year ended 2016 $ - - - Year ended 2015 $ - - - Year ended 2016 $ - (479,980) (479,980) 24,100 (1,773,609) (1,577,066) (3,806,555) Year ended 2015 $ - - - 4,781 (216,200) (450,727) (662,146) Segment assets and liabilities Segment assets Mineral Exploration – Tanzania Mineral Exploration – Australia Total segment assets Unallocated Consolidated total assets Segment liabilities Mineral Exploration – Tanzania Mineral Exploration – Australia Total segment liabilities Unallocated Consolidated total liabilities 2016 $ 10,750,378 - 10,750,378 7,848,255 18,598,633 $ 184,647 - 184,647 923,420 1,108,067 2015 $ - 478,703 478,703 795,423 1,274,126 $ - - - 159,924 159,924 Page | 53 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 c) Other segment information Impairment Year ended 2016 $ - - - Year ended 2015 $ - - - Additions to non-current assets Year ended 2016 $ 10,750,378 - 10,750,378 Year ended 2015 $ - 23,688 23,688 Mineral Exploration – Tanzania Mineral Exploration – Australia 17. Subsidiaries The consolidated financial statements include the financial statements of Volt Resources Limited and the subsidiaries listed in the following table. Name Mine Mixers Pty Ltd Dugal Pty Ltd Dugal Resources Lda Xiluva Mozambi Lda Mozambi Resources Pty Ltd Mozambi Ventures Lda MNBB Pty Ltd Blackall Capital Pty Ltd Principal activity Dormant Dormant Dormant Dormant Dormant Dormant Dormant Dormant Mozambi Graphite Pty Ltd Dormant Nachi Resources Limited Graphite Exploration Country of Incorporation Australia Australia Mozambique Mozambique Australia Mozambique Australia Australia Australia Tanzania % Equity Interest 2016 100 2015 100 100 70 80 100 80 100 100 100 100 100 70 80 100 80 100 100 100 - Volt Resources Limited is the ultimate Australian parent entity and ultimate parent of the Group. None of the non-wholly owned subsidiaries are considered to have material non-controlling interests to the Group. 18. Auditor’s Remuneration Amounts received or due and receivable by HLB Mann Judd for: An audit or review of the financial report 31,000 25,000 31,000 25,000 Consolidated 2016 $ 2015 $ Page | 54 Volt Resources Limited Notes to the Financial Statements for the Year ended 30 June 2016 19. Key Management Personnel Remuneration Total remuneration paid to key management personnel during the year: Short-term benefits Post-employment benefits Share based payments 20. Parent Entity Information Consolidated 2016 $ 637,336 15,843 390,500 2015 $ 186,314 3,482 40,200 1,043,679 229,996 The following details information related to the parent entity, Volt Resources Limited, at 30 June 2016. The information presented here has been prepared using consistent accounting policies as presented in Note 1. Financial position Parent Assets Current Assets Non-Current Assets Total Assets Liabilities Current Liabilities Total Liabilities Equity Issued capital Reserves Accumulated losses Total Equity Financial performance Loss for the year Total comprehensive loss for the year There are no commitments in respect to the parent entity. 21. Subsequent Events 2016 $ 7,818,413 2015 $ 1,046,431 10,586,123 248,162 18,404,536 1,294,593 (913,970) (159,924) (913,970) (159,924) 51,722,526 3,932,507 32,466,385 2,979,900 (38,164,467) (34,311,616) 17,490,566 1,134,669 (3,852,851) (658,817) (3,852,851) (658,817) On 15 August 2016, Mr Adrien Wing resigned as Company Secretary and was replaced by Mr Stephen Brockhurst. On 22 August 2016, Mr Alan Armstrong resigned as a director of the Company. Since balance date the following equity issues have occurred: - 46,474,723 shares issued upon the exercise of options - 1,250,000 shares issued for marketing and consulting services in lieu of cash consideration - 7,500,000 options for corporate advisory services exercisable at $0.12 on or before 12 August 2017 - 7,500,000 options for corporate advisory services exercisable at $0.14 on or before 12 August 2018 - 7,500,000 options for corporate advisory services exercisable at $0.16 on or before 12 August 2019 Page | 55 Volt Resources Limited Additional ASX Information The shareholder information set out below was applicable as at 6 September 2016. 1. Twenty largest holders of quoted equity securities Rank Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Kabunga Holdings Pty Ltd HSBC Custody Nominees CS Fourth Nominees Pty Limited Citicorp Nominees Pty Limited Gasmere Pty Ltd Mr Hsien Michael Soo Chata Holdings Pty Ltd Gerard C Toscan Management Dejul Trading Pty ltd Mr Anthony Michael Malyniak Mr Ian Hunter S A Coupe Pty Limited Ms Leticia Kokutengeneza Mr John Richard Turner & Mrs Clare Frances Turner Endjua Pty Ltd Moultrie Super Fund Pty Ltd Bring on Retirement Ltd Mr Robert Adrian Jones Mr Leslie Thomas King & Mrs Heather King Gasmere Pty Ltd Total Top 20 Other Total Ordinary Shares On Issue 2. Substantial shareholders Number of units % of units 15.17 2.56 1.71 1.59 1.49 1.37 1.26 1.16 0.95 0.93 0.90 0.84 0.84 0.80 0.80 0.79 0.71 0.68 0.65 0.63 35.81 64.19 100% 144,164,203 24,305,351 16,223,409 15,127,509 14,151,515 13,012,500 12,000,000 11,026,750 9,000,000 8,857,928 8,531,933 8,000,000 7,946,698 7,580,000 7,570,500 7,500,000 6,720,545 6,469,105 6,200,000 5,972,956 340,360,902 610,046,792 950,407,694 The Company has not been notified of any substantial shareholders as at 6 September 2016. 3. Distribution of holders of equity securities 1 - 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 > 100,001 Total Ordinary shares 251 236 244 1,487 1,015 3,233 Listed Options 40 33 20 130 239 462 559 shareholders held fewer than a marketable parcel of shares based on the share price at 6 September 2016. Page | 56 Volt Resources Limited Additional ASX Information 4. Voting rights Subject to any rights or restrictions for the time being attached to any class or classes of shares, at meetings of shareholders or classes of shareholders: 1. 2. 3. each shareholder entitled to vote may vote in person or by proxy, attorney or representative; on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and on a poll, every person present who is a shareholder or a proxy, attorney or representative of a shareholder shall, in respect of each fully paid share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares, shall have such number of votes being equivalent to the proportion which the amount paid (not credited) is of the total amounts paid and payable in respect of those shares (excluding amounts credited). 5. Twenty largest holders of Options Rank Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Kabunga Holdings Pty Ltd BBD Custodians Pty Ltd JBO Assets Pty Ltd Red Marlin Pty Ltd Mr John Richard Turner & Mrs Clare Frances Turner Reid Machine Pty Ltd Mr David Lachlan Wildy Taka Custodians Pty Ltd TWW Assets Pty Ltd Moultrie Super Fund Pty Ltd Bring on Retirement Mr Laurie Barichello Mr Steven John Bodey Valplan Pty Ltd Dr Tony Crea Vassago Pty Ltd Mr Brian Peter Bypass Mr Floyd Barry Aquino Mr Ian Hunter Mr Anthony Michael Malyniak Total Top 20 Other Total Listed Options Number of units % of units 4.13 2.82 2.77 2.36 2.35 2.23 2.18 2.10 2.02 1.98 1.98 1.59 1.51 1.46 1.38 1.30 1.27 1.21 1.19 1.19 39.01 60.99 100% 10,421,835 7,115,000 6,978,571 5,940,000 5,932,000 5,634,167 5,501,000 5,284,167 5,103,571 5,000,000 5,000,000 4,000,000 3,813,856 3,670,000 3,467,500 3,281,250 3,166,667 3,061,028 3,000,000 3,000,000 98,370,612 153,820,814 252,191,426 Page | 57 Volt Resources Limited Additional ASX Information 6. Unquoted equity security holdings greater than 20% The Company has 29,500,000 unlisted options on issue as of 6 September 2016. The options do not carry a right to vote at a general meeting of shareholders. Expiry date 30/11/2016 31/12/2017 30/04/2019 30/04/2019 30/04/2019 30/04/2019 Exercise price $0.25 $0.02 $0.06 $0.08 $0.10 $0.12 No. of options 2,200,000 10,500,000 4,200,000 4,200,000 4,200,000 4,200,000 29,500,000 No. of holders 4 5 1 1 1 1 7. Securities subject to voluntary escrow No securities are subject to voluntary escrow. 8. On-market buy back There is currently no on-market buy-back program for any of the Company’s listed securities. 9. Company secretary, registered and principal administrative office and share registry The Company Secretary is Mr Stephen Brockhurst. The Company’s registered and principal administration office is Level 11, London House, 216 St Georges Terrace, Perth WA 6000. The Company’s Share Registry is maintained by Advanced Share Registry Limited, 110 Stirling Hwy Nedlands WA 6009. Page | 58 Volt Resources Limited Additional ASX Information 10. Tenement listing Status Beneficial interest Exploration (prefix: “PL”) licence 100% Mining tenements held at 30 June 2016: Tanzania Project Location Tanzania graphite Tenement Number Tanzania, Africa PL10642, PL10643, PL10644, PL10665, PL10666, PL10667, PL10668, PL10716, PL10717, PL10718, PL10719 Beneficial interests held in farm-in or farm-out agreements at the end of the quarter Farm-in agreements The Company owns a 70% interest in Dugal Resources Lda, a Mozambican entity which holds a 100% interest in the following licences: Licence 3245L 3246L Owner Camal Companhia Lda Camal Companhia Lda Location Tete province & Commodities Copper, Zinc, Lead 18,240 Area (ha) & Tete province Base Metals 20,240 Page | 59
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