Walkabout Resources
Annual Report 2019

Plain-text annual report

and Controlled Entities (ACN 119 670 370) ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2019 COMPANY DIRECTORY Directors Trevor Benson Allan Mulligan Michael Elliott Andrew Cunningham Company Secretary Ian Hobson ASX Code: WKT Auditors HLB Mann Judd Level 4, 130 Stirling Street Perth WA 6000 Australia Securities Exchange Listing ASX code: WKT Australian Securities Exchange Limited Level 40, Central Park 152-158 St Georges’ Terrace Perth, WA 6000 Australia Registered Office and Principal Place of Business Bankers: National Australia Bank Perth West Business Banking Centre 1238 Hay Street West Perth, WA 6005 Australia Level 3 681 Murray Street West Perth, WA 6005 Australia Telephone: +61 8 6298 7500 Facsimile: +61 8 6298 7501 Website : www.wkt.com.au Email: admin@wkt.com.au Share Register Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth WA 6000, Australia GPO Box 2975 Melbourne VIC 3001, Australia Phone: 1300 850 505 (within Australia) +61 3 9415 4000 (outside Australia) Fax: +61 3 9473 2500 Email: www.investorcentre.com/contact Web: www.computershare.com TABLE OF CONTENTS 1. DIRECTORS’ REPORT 2 2. AUDITOR’S INDEPENDENCE DECLARATION 17 4. FINANCIAL STATEMENTS 18 5. DIRECTORS' DECLARATION 48 6. INDEPENDENT AUDITOR’S REPORT 49 7. ADDITIONAL SHAREHOLDER INFORMATION 53 1 DIRECTORS’ REPORT Your Directors submit the annual financial report of the consolidated entity (or the “Group”) consisting of Walkabout Resources Ltd (“the Company”) and the entities it controlled during the period for the financial year ended 30 June 2019. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows: Directors The names of Directors who held office during or since the end of the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Name and independence status Experience, qualifications and special responsibilities and other directorships Mr Trevor Benson Appointed Chairman 13 September 2016. Chairman Executive Director Mr Allan Mulligan Executive Director Appointed Executive Chairman 22 February 2017 Trevor has extensive experience as an investment banker and has served on a number of ASX listed company boards as both Chairman and Director. He has specialised in cross border transactions within the natural resources sector across China, Africa and SE Asia, and has been an adviser to Chinese State-Owned Enterprises (SOE’s). His specialist activities include corporate funding solutions and off-take agreement negotiations within the natural resources domain. Trevor holds a Bachelor of Science Degree from the University of Western Australia. Other directorships of listed companies in the last 3 years: None Appointed Managing Director 7 August 2012 Resigned as Managing Director, retained as Executive Director 22 February 2017. Allan is a mining engineer with over thirty years of mine management and production experience. Allan has specialised in technical assessment and production economics, feasibilities, project design and costing of underground mines and prospects. He has worked extensively in exploration, mine development and operations across Africa and Australia. Allan is a Member of the Australian Institute of Mining and Metallurgy, a qualified Mining Engineer and the holder of a Mine Managers Certificate of Competency (Metalliferous) from South Africa. Allan was a founding Director of Walkabout Resources Pty Ltd. He has previously been on the board of several Western Australian explorers. Other directorships of listed companies in the last 3 years: None Mr Andrew Cunningham Appointed 13 November 2015 Technical Director Non-Executive Director Andrew has a BSc Hons in Geology from the University of Stellenbosch in South Africa and is a member of the Australian Institute of Geosciences. Andrew has extensive cross discipline technical and management experience in the minerals industry predominantly in Africa and Australia and has worked in a range of commodities and geological styles including uranium, iron ore, graphite, diamonds, gold and base metals. During the last 15 years, Andrew has managed all facets of exploration and development projects in Africa from project generation to the completion of feasibility studies. He has held senior geology and exploration positions with major international mining companies as well as various ASX and TSX listed companies. He has been working with Walkabout Resources since 2013 and brings a wide range of exploration, resource development, mine geology and management experience to the company. Other directorships of listed companies in the last 3 years: None 2 DIRECTORS’ REPORT Mr Michael Elliott Appointed 20 December 2018 Non-Executive Director Mike Elliott holds a Bachelor of Commerce from the University of New South Wales. He was the Global Mining & Metals Sector Leader at Ernst and Young (EY) for over 10 years and has over 34 years’ experience working with mining and metals clients around the world. He was a Partner at EY from 1995-2015 and was a member of the Oceania governing body of EY for 5 years. Mike advised and briefed the CEOs, CFOs and Directors of some of the largest global mining and metals companies. He has advised mining and metals clients from all over the world, from countries that include Australia, New Zealand, South Africa, China, USA, Japan, Canada, Russia, Chile, Peru, Brazil, Papua New Guinea, Zimbabwe, Gabon and Colombia. As a key advisor to a number of mining companies, Mike has participated in many of the large transactions, IPOs and privatizations that have transformed the industry. Mike is a Member of Australian Institute of Company Directors (MAICD), a Fellow of the Institute of Chartered Accountants (FCA) and a member of Financial Services Institute of Australasia. Other directorships of listed companies in the last 3 years: None Mr Thomas Murrell Appointed 1 May 2015 Investor Relations Director Resigned 15 March 2019 Independent Non-Executive Director Company Secretary Mr Ian Hobson Company Secretary Tom is recognised as an authority on investor relations and has been the Managing Director of his own company 8M Media and Communications for the past eighteen years. He has provided counsel to an elite group of companies listed on the Australian Stock Exchange ranging from Top 500 companies through to start – up biotechnology, medical and mineral exploration companies. He has been a director of Investor Central, a Singapore based financial news service since 2002. A graduate of three Australian Universities, Tom gained his MBA from the University of WA and is the immediate past President of the Business School’s Graduate Management Association representing UWA MBA alumni. Other directorships of listed companies in the last 3 years: None Appointed 14 December 2017 Ian is a fellow chartered accountant and chartered company secretary with over 32 years’ experience in the profession. Ian acts as company secretary and CFO for a number of ASX listed companies and is experienced in exploration companies. Interests in the shares and options of the company and related bodies corporate The following relevant interests in shares of the Company or a related body corporate were held by the directors at the date of this report. Director T Benson A Mulligan T Murrell (holding as at resignation date 15 March 2019) A Cunningham M Elliott Ordinary shares Options (listed) Options (unlisted) 2,886,811 6,074,656 107,509 100,000 - 4,000,000 3,354,379 110,691 - 1,203,183 37,005 3,000,000 12,300,000 - - 3 DIRECTORS’ REPORT Options of the Company were granted to Directors of the Company during the financial year as part of their remuneration package as was approved by shareholders at the Annual General Meeting on 15 November 2018. During the year, performance rights granted over unissued shares to the Directors of the Company and the entities it controlled as part of their remuneration was as follows: NIL As at the date of this report unissued shares or interests of the Company under performance rights are: NIL As at the date of this report unissued shares or interests of the Company under options are: Series Date options granted Number of shares under option Exercise price of option Expiry date of option 1 2 3 24 January 2018 20 February 2018 11 December 2018 24,783,666 15,500,000 7,000,000 $0.15 $0.15 $0.20 31 December 2019 31 December 2019 11 December 2021 The series 1 options were issued as free attaching options to subscribers to the Placement completed on 7 December 2017 and subscribers to the Rights Issue competed on 17 January 2018. The series 2 options were issued to Patersons Securities Ltd as part of the underwriting fees. Series 3 options were issued as director incentives and were approved by shareholders on 15 November 2018 at the Annual General Meeting. Principal Activities The principal activities of the consolidated entity during the financial year were the exploration and development of resources and energy assets located in Tanzania, Namibia, Scotland and Northern Ireland, with the Botswana projects on hold. Operating Results The net loss after tax of the consolidated entity amounted to $2,737,501 (2018: loss of $1,965,876). Financial Position The net assets of the Group were $18,324,904 at 30 June 2019 (2018: $15,323,369). Dividends Paid or Recommended There were no dividends paid or recommended throughout the period. 4 DIRECTORS’ REPORT Review of Operations Walkabout is actively engaged in developing the fully permitted, 100% owned high-grade Lindi Jumbo Graphite Project in South East Tanzania and has embarked on an international debt and equity fund raising exercise to secure the capital required to construct the Project. The Company’s objective of maximising the debt component of the project fund-raising has resulted in a detailed due- diligence and project review process to provide higher levels of legal, technical, commercial and jurisdiction certainty and confidence to debt funding parties. The Company continues to expect that first production will be achievable between 9 and 12 months after access is provided to full project funding. In addition, the Company has also acquired an earn-in share of a highly prospective suite of base metal and gold tenements in Scotland to complement the prospective properties in Northern Ireland and has proceeded to commence negotiation of Land Access Agreements. Lindi Jumbo Graphite Project - Tanzania During the year under review, the Company achieved a number of project development milestones; • Mining Licence – The first Mining Licence under the Tanzanian Mining Act 2010 (Amended 2017) was awarded to Lindi Jumbo Limited, the Company’s 100% held subsidiary in Tanzania. • Resource Upgrade – The Company commenced with Resource Upgrade drilling to improve confidence and expand the high-grade zones of the Resource. (See ASX announcement 26/09/2018) • Mineral Resource – The JORC 2012 Measured, Indicated and Inferred Resource tonnage at Lindi Jumbo was increased by 41%. (See ASX announcement 19/12/2018) • Relocation Assistance Program (RAP) – The RAP was approved by the Government of Tanzania and the Company commenced with the stage implementation of compensation and access Agreements. • Ore Reserve – The updated Ore Reserve delivered a 17.9% Total Graphitic Carbon grade for the life of mine, the highest in Africa. (See ASX announcement 28/02/2019) • Updated DFS – The Definitive Feasibility Study was updated with the new Ore Reserve, new graphite prices and an adjusted product ratio split and the results continued to indicate a highly robust and profitable mine design. (See ASX announcement 07/03/2019) • Binding Offtake Agreements – The Company announced two Binding Offtake Agreement term sheets with Chinese end-user companies and a graphite Marketing Agreement with international minerals trading house, Wogen Pacific. (See ASX announcements 02/04/2019, 09/04/2019 and 11/04/2019) • Early Start Activities – The Company embarked on an Early-Start construction on site and in China to prepare earthworks sites and commence with manufacturing and fabrication of long lead equipment items. • Funding Mandate – The Company executed a loan-funding mandate with an International Investment Bank and proceed to commence deep due diligence activities in Australia, China and Tanzania. 2018 Resource Upgrade A drilling and trenching program was conducted over the northern Inferred Mineral Resource area as well as a new mineralised zone directly to the south of the Gilberts Arc Graphite Deposit. The upgrade and extension program included 17 drillholes for 1,354m and 7 trenches for 654m. The global Mineral Resource increased by 41.3% to 41.8 million tonnes at 10.8% TGC containing 4.5 million tonnes of graphite (Table 1). Fifty one percent (51%) of the mineral resource that will form part of the initial mining and economic studies is now classified as Measured (6.5 Mt @ 12.1% TGC) and Indicated (8.4 Mt @ 10.5% TGC) containing 1.67 million tonnes of graphite. The global mineral resource now includes a new Inferred Resource area which lies directly to the south of the current planned open-pit area and is made up of 6 distinct mineralised domains. This area will not form part of the upcoming mining studies, amended DFS and Reserve upgrade as further work within the area will only be done post-production. 5 DIRECTORS’ REPORT Table 1: Resource category breakdown of the Gilbert Arc. Resource Category Tonnes (millions) TGC % Contained Graphite (tonnes) Measured (Including High Grade) Indicated (Including High Grade) Inferred (Including High Grade) Grand Total High Grade Domains 6.5 1.7 8.4 1.5 26.9 1.8 41.8 5.0 12.1 23.4 10.5 21.2 10.5 22.7 10.8 22.5 781,800 393,200 887,300 325,300 2,837,600 411,900 4,506,811 1,127,800 Note: Appropriate rounding applied. 2019 Ore Reserve Update The Resources considered for mining are based on the JORC 2012 Mineral Resource Estimate (see ASX announcement of 19 December 2018). The Ore Reserve is based only on the Measured and Indicated Mineral Resources in the current mining schedule which is summarised in Table 2. Thus, the Inferred Resource zone to the south of the mining pit is not currently included in the mine design reserves and remains available for further consideration or potential expansion opportunities. The Ore Reserve estimate was prepared and signed off by and independent consultancy, Bara International of Johannesburg, South Africa. Table 2: Lindi Jumbo Project Ore Reserve. Ore Reserves Category Tonnes (million) TGC % Contained Graphite (tonnes) Proven Ore Reserves Probable Ore Reserves Total Ore Reserves 2.54 2.97 5.51 19.3 16.7 17.9 489,000 498,000 987,000 2019 Updated Definitive Feasibility Study The main areas of adjustment for the 2019 study update was the application of the updated Mineral Resource (ASX Announcement 19 December 2018) to the mining plan and a revision of Capital expenditure following detailed scope of work contract agreements with contract partners. The mining depletion was completely remodelled following the upgrade of the previous Inferred Resource to the north of the pit into an Indicated Resource category. As a result of the increased LoM grade to 17,9% Total Graphitic Carbon, the average annual mill feed requirement has reduced from a average of 280,000 tonnes per year to an average of 230,000 tonnes per year. Pre-Production direct capital costs were further reduced by 6.4% to US$27.8M from US$29.7M in 2017. An upfront saving of some US$2.5m was achieved through vendor funding of a large portion of the camp infrastructure costs. Capital costs have been determined through a combination of fixed tender pricing, firm quotations and data-base references based on similar operations. The costs presented have a base date of December 2018 and are presented in United States Dollars (US$). The costs presented are definitive costs and include the US$2.1m provision for the Relocation Assistance Programme (RAP), (ASX Announcement 31 January 2019). Furthermore, updated estimates for product pricing was applied to the financial modelling. 6 DIRECTORS’ REPORT Table 3: Project financial indicators as per the Updated Definitive Feasibility Study of 2019. Financial Metric (100% ownership basis) Life of Mine Modelled Operating Costs (Life of Mine) Operating Costs (ex-transport) Operating Costs FOB Mtwara Pre-production Capital Costs Life of Mine Revenue Unit Years US$m US$/t con US$/t con US$m US$m Average Annual Free Cashflow US$m EBITDA Life of Mine Pre Tax NPV10 Pre Tax IRR Post Tax NPV10 Post Tax IRR Operating Margin Payback Period US$m US$m % US$m % % Years 2017 DFS Update 2019 DFS Update % Change 20 24 20% Increase 267.5 334.1 25% Increase 289 349 29.7 1,188 28.0 886 302 108 180 88 77 <2 282 347 2.4 % Decrease 0.6 % Decrease 27.8 6.4% Decrease 1,445 21.6% Increase 2.9% Increase 21% Increase 10.7% Increase 31.5% Increase 9.4% Increase 23.9% Increase 28.8 1,070 335 142 197 119 77 <2 Executed Key Binding Offtake and Marketing Agreements 1. Inner Mongolia Qianxin Graphite Co. Ltd (IMQG) a. Binding on both parties subject to standard conditions, b. Sale of up to 50% of planned production for 3 years, c. Pricing framework to be linked to China spot, determined up to 1-month prior delivery. 2. Qingdao Rising Dawn a. Binding on both parties subject to standard conditions, b. Sale of up to 25% of planned production for 3 years, c. Pricing framework to be linked to China spot, determined within 3 months of first delivery. 3. Wogen Pacific Ltd a. Wogen will actively market Lindi Jumbo’s concentrate globally and will initially purchase between 10,000 tpa and 30,000 tpa for a 5-year term, b. An advance payment facility of 80% of consignment value is available, c. Wogen will continuously develop graphite markets for Lindi Jumbo branded products. Resettlement Action Plan (RAP) The first two of three stages of the RAP was successfully settled under supervision of local authorities and stakeholder groups with the final tranche completed after the year end. An estimated US$2.05m including costs was allocated to this program and community feedback has been strongly in favour of the Company’s transparent approach and management of the process. Early Start Site and Manufacturing Works The Company also commenced with an integrated international project “early-start” to commence procurement, manufacturing and site-works for the Lindi Jumbo Graphite Project in south eastern Tanzania. The objective of the Early-Start Program advanced the project construction process along its critical path while project funding was being negotiated and finalised. The primary benefits are a notional reduction of the project construction timeline due to the long lead item period of manufacture of equipment in China. On-Site Earthworks Preparation of the process plant earthworks platform, the Tailings Storage Facility (TSF) footprint, explosive magazine, topsoil storage area and selected road accesses was completed under a “Side-Agreement” with the earthwork’s contractor. 7 DIRECTORS’ REPORT These works have also prepared the local community for enhanced construction activity and allowed the project team to engage in a “slow-start” for the purposes of improving quality, management, measurement, safety, environmental and project systems while potentially shortening the timeframe needed for earthworks once funding is in place. Senior executives from the Mining Commission, responsible for administering and regulating mining projects in Tanzania, visited the site and were pleased with progress and observed operating standards. Figure 1: Topsoil removal for storage at Lindi Jumbo Graphite Project processing facility site. Procurement and Manufacture in China In China, technical drawings for equipment manufacture were finalised and steel plating and associated fittings were ordered along with long lead motors and bearing units. Manufacture on the factory floor in Yantai commenced and Walkabout quality engineers and metallurgists have commenced periodic and programmed inspections. Figure 2: Lindi Jumbo Directors inspecting early-start equipment at the Jinpeng workshop in Yantai, China. Funding Activities The Company has engaged an International Investment Bank (The Bank) to advise on procuring the debt-based portion of the development funding requirement. Intense independent scrutiny of the legal, commercial and technical elements of the Project through due diligence by the Bank’s representative experts has been commenced. The Company benefits from The Bank’s experience of funding greenfield mining projects and structuring emerging market transactions especially when considering the regulatory and logistical aspects of lending to a project in Tanzania. The Company anticipates launching a Loan Note Offering when final Due Diligence reports are received from the independent legal and technical experts. 8 DIRECTORS’ REPORT UK Joint Ventures The Company executed a Farm In Agreement over three highly prospective exploration licences in south west Scotland. The target mineralisation include historic lead-zinc mines and gold and copper targets (see ASX announcement 01 October 3019). Regional and target specific reconnaissance exploration continued while longer term access agreements and the Company’s exploration programmes within the license areas were discussed with the Forestry and Land Scotland Department. Suitable heritage and community and social risk screening studies have been carried out to engage community perceptions. The land Access Agreements are critical to commencing successful exploration programmes. Namibian Eureka Lithium Project The softening of lithium prices has led the Company to defer activity on this project in order to focus management attention on funding and construction of the Lindi Jumbo Project. Corporate During the year, the Company embarked on an underwritten Share Purchase Plan (SPP) to raise A$3m for general working capital. The SPP raised A$1.5m and a further placement to sophisticated shareholders raised A$3.1m in order to commence the early start works program. The Competent Persons Statements are provided on page 54. Significant Changes in State of Affairs The following significant changes in the state of affairs of the Company occurred during the year: On 9 November 2018 the Company issued 33,333,423 fully paid ordinary shares to raise $3,000,000 at the price of $0.09 per share pursuant to a share purchase plan. On 9 May 2019 the Company completed a placement of 11,528,434 fully paid ordinary shares to raise $2,651,540 at the price of $0.23 per share from the Company’s 15% placement capacity. The Company commenced with an integrated international project “early-start” to commence procurement, manufacturing and site-works for the Lindi Jumbo Graphite Project in south eastern Tanzania. The objective of the Early-Start Program advances the project construction process along its critical path while project funding is being negotiated and finalised. The primary benefits include a notional reduction of the project construction timeline due to the period of manufacture of equipment in China. Significant Events After Balance Date The resettlement action plan payments approximating US$1 million were made in July 2019. Otherwise, no matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years. Likely Developments and Expected Results Further information has not been presented in this report as disclosure of information regarding likely developments in the operations of the consolidated entity in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the consolidated entity. Environmental legislation The consolidated entity is subject to environmental legislation in Tanzania for the development and construction works of the Lindi Jumbo Graphite Project. The group does not consider the requirements to be material given the limited work performed on site to date. 9 DIRECTORS’ REPORT Indemnification and insurance of Directors and Officers The Company has agreed to indemnify all the Directors of the Company for any liabilities to another person (other than the Company or related body corporate) that may arise from their position as Directors of the Company and its controlled entities, except where the liability arises out of conduct involving a lack of good faith. During the financial year the Company paid a premium in respect of a contract insuring the Directors and officers of the Company and its controlled entities against any liability incurred in the course of their duties to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. REMUNERATION REPORT (Audited) This report, which forms part of the Directors’ Report, outlines the remuneration arrangements in place for the Key Management Personnel (“KMP”) of the Company for the financial year ended 30 June 2019. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001. The remuneration report details the remuneration arrangements for KMP who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and its controlled entities, directly or indirectly, including any Director (whether Executive or otherwise) of the parent company. The Directors and key management personnel of the Group during the year were: Mr T Benson Mr A Mulligan Mr T Murrell Mr A Cunningham Mr M Elliott Executive Chairman Executive Director Non-executive Director (resigned 15 March 2019) Non-executive Director Non-executive Director (appointed 20 December 2018) Remuneration policy The remuneration policy of Walkabout has been designed to align Director and Executive objectives with shareholder and business objectives by providing a fixed remuneration component and potentially, at the Boards discretion, long term incentives based on key performance areas affecting the consolidated entity’s financial results. The Board of Walkabout believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and Directors to run and manage the consolidated entity, as well as create goal congruence between Directors, Executives and shareholders. The Board’s policy for determining the nature and amount of remuneration for Board members and senior executives of the consolidated entity is as follows: the remuneration policy, setting the terms and conditions for the Executive Directors and other senior executives, was developed by the Board of Directors, and approved by resolution of the Board. All Executives receive a base salary including superannuation with the possibility of options and performance incentives. The Board of Directors review executive packages annually by reference to the consolidated entity’s performance, executive performance and comparable information from industry sectors and other listed companies in similar industries. The performance of Executives is assessed annually with each executive and is based predominantly on operational and exploration activities and shareholders’ value. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options, and can award these if they can be reasonably justified. The policy is designed to attract and retain the highest calibre of Executives and reward them for performance that results in long term growth in shareholder value. Directors and Executives receive a superannuation guarantee contribution required by the Government, which is currently 9.5%, and do not receive any other retirement benefits. All remuneration paid to Directors and Executives is valued at the cost to the Company and expensed. 10 DIRECTORS’ REPORT The Board policy is to remunerate Non-executive Directors at market rates for comparable companies for time, commitment and responsibilities. The Company has established a Remuneration Committee during the year. The Remuneration Committee is responsible for determining and reviewing compensation arrangements for directors and executive team. The Board of Directors, following a recommendation from the remuneration Committee, determines payments to the Non- executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. Any changes to the maximum aggregate amount of fees that can be paid to Non-executive Directors is subject to approval by shareholders at an Annual General Meeting. The latest determination was at a General Meeting prior to the Company’s listing on ASX, held on 5 August 2006 when shareholders approved an aggregate remuneration of $200,000 per year. Fees for Non-executive Directors are not linked to performance of the consolidated entity. Non-executive directors Tom Murrell and Andrew Cunningham were paid a non- executive director fee of $25,000 p.a. each plus a consulting fee at an hourly rate. Performance-based remuneration Performance based remuneration was granted to Directors by shareholders at the Company’s Annual General Meeting dated 15 November 2018. Details of this remuneration are disclosed above in the paragraph entitled “Interests in the shares and options of the company and related bodies corporate”. Company performance, shareholder wealth and Director and executive remuneration The remuneration policy has been tailored to increase goal congruence between shareholders, Directors and Executives. There have been two methods applied in achieving this aim, the first being a fixed market competitive salary, and the second being the potential issue of options to Directors and Executives to encourage the alignment of personal and shareholder interests. In accordance with best practice corporate governance, the structure of Non-executive Director and Executive remuneration is separate and distinct. Key Management Personnel Remuneration Policy The remuneration structure for KMP is to be based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the Company. The contracts for service between the Company and KMP are on a continuing basis, the terms of which are not expected to change in the immediate future. Employment Contracts Executive Director Contract Commencement Contract Termination Remuneration Notice period T Benson 22 February 2017 No fixed term $250,000 3 months A Mulligan 7 August 2012 7 August 2015 $250,000 3 months Termination entitlement 3 months’ pay in lieu of notice 3 months’ pay in lieu of notice Mr Mulligan’s contract has been extended on a 12 month basis and is currently under review. In addition, each Executive Director is entitled to the statutory 9.5% superannuation guarantee. 11 DIRECTORS’ REPORT Table 1 details the nature and amount of remuneration for each Director of Walkabout Resources Ltd. There are no Executives who aren’t Directors. 30 June 2019 Short-term Benefits Post- employment Benefits Share-based Payment Total Performance Related Salary and fees $ Bonuses Non-cash benefit Other Superannuation Equity Options $ $ $ $ $ Trevor Benson Allan Mulligan Thomas Murrell 249,996 12,500 249,996 25,000 43,300 - Andrew Cunningham 262,393 15,000 Michael Elliott 9,645 - 815,330 52,500 - - - - - - - - - - - - 24,937 25,000 - - 1,012 50,949 $ - 172,147 - 129,111 - $ 287,433 472,143 43,300 406,504 10,657 % 4% 42% Nil 35% Nil 301,258 1,220,037 - - - - - - Not included above were amounts related to the reversal of amounts previously expensed in relation to tranche 1 of the performance rights. The amounts for each KMP were $27,845 for each of Allan Mulligan, Thomas Murrell and Andrew Cunningham and $55,690 for Trevor Benson. Bonuses were paid to directors following receipt of the Lindi Jumbo mining license based on the board’s assessment of individual input. 30 June 2018 Short-term Benefits Post- employment Benefits Share-based Payment Total Performance Related Trevor Benson Allan Mulligan Thomas Murrell Andrew Cunningham Salary and fees $ 249,996 249,996 63,284 233,062 796,338 Bonuses Non-cash benefit Other Superannuation Equity* Options $ - - - - - $ - - - - - $ - - - - - $ 23,750 23,750 - - $ 145,690 72,845 72,845 72,845 47,500 364,225 $ - - - - - • The equity issued to directors were tranche 1 & 3 of performance rights approved by shareholders at the 2018 AGM. $ 419,436 346,591 136,129 305,907 1,208,063 % 34.7% 21.0% 53.5% 23.8% Share-based payments granted in current and prior period Options were issued as compensation during the year to Directors and Executives following shareholder approval at the Annual General Meeting on 15 November 2018. Refer to note 11(b) of the financial report. 11 DIRECTORS’ REPORT Performance rights were issued as compensation during the previous year by Directors and Executives are described in previous paragraphs. Series 1 and series 2 lapsed. Series 3 vested on 17 July 2018. Shareholdings of Key Management Personnel Ordinary Shares 30 June 2019 Directors Balance at beginning of period Number Conversion of performance rights Number Acquired Number Net Change Other Balance at end of period Balance held nominally Number Number Number Trevor Benson Allan Mulligan Thomas Murrell1 Andrew Cunningham Michael Elliott2 1,720,144 5,407,988 2,521,045 592,071 - 1,000,000 500,000 500,000 500,000 - 166,667 166,668 333,334 111,112 - - - (3,354,379) - 12,300,000 2,886,811 6,074,656 - 1,203,183 12,300,000 1,655,801 - 592,071 10,300,000 30 June 2018 Directors Balance at beginning of period Number Conversion of performance rights Number Effect of consolidation Net Change Other Balance at end of period Balance held nominally Number Number Number Number Trevor Benson Allan Mulligan Thomas Murrell Andrew Cunningham 1,032,376 4,750,256 1,562,819 444,053 - - - - - - - - 687,768 657,732 958,226 148,018 1,720,144 5,407,988 2,521,045 592,071 - 1,544,689 688,271 592,071 All equity transactions with key management personnel other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arm’s length. Net change – other represents the balance on appointment / resignation. 1Resigned 15 March 2019 2Appointed 20 December 2018 12 DIRECTORS’ REPORT Option holdings of Key Management Personnel 30 June 2019 Directors Balance at beginning of period Number Granted as remuneration Number Expired Number Net Change Other Balance at end of period Balance held nominally Number Number Number Trevor Benson Allan Mulligan Thomas Murrell1 Andrew Cunningham Michael Elliott2 107,509 100,000 110,691 37,005 - - 4,000,000* - 3,000,000* - - - - - - - - (110,691) - - 107,509 4,100,000 - 3,037,005 - - 50,000 - 37,005 - 30 June 2018 Directors Balance at beginning of period Number Granted as remuneration Number Expired Number Net Change Other Balance at end of period Balance held nominally Number Number Number Trevor Benson Allan Mulligan Thomas Murrell Andrew Cunningham 1Resigned 15 March 2019 2Appointed 20 December 2018 - 271,740 1,138,652 54,538 - - - - - (271,740) (1,138,652) (54,538) 107,509 100,000 110,691 37,005 107,509 100,000 110,691 37,005 - 100,000 43,017 37,005 *7,000,000 options were granted to directors following shareholder approval at the AGM on 15 November 2018. The fair value of $0.043 per option at grant date are determined using a Black Scholes pricing method that takes into account the exercise price, the term of the option, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. The inputs to the model used for valuation of the unlisted options is set out in note 11(b) to the financial report. 13 DIRECTORS’ REPORT Performance right holdings of Key Management Personnel 30 June 2019 Series Balance at beginning of period Granted as remuneration Value per performance right granted during the year Lapsed Vested Balance at end of period Balance held nominally Directors Number Number Number Number Number Number Trevor Benson Allan Mulligan Thomas Murrell1 Andrew Cunningham Michael Elliott2 Series 1 Series 2 Series 3 Series 1 Series 2 Series 3 Series 1 Series 2 Series 3 Series 1 Series 2 Series 3 Series 1 Series 2 Series 3 869,565 1,304,348 1,000,000 434,783 869,565 500,000 `434,783 869,565 500,000 434,783 869,565 500,000 - - - The fair value of the Series 1 rights which lapsed during the year was $0.09 per right. - - - - - - - - - - - - - - - $0.09 $0 $0.09 $0.09 $0 $0.09 $0.09 $0 $0.09 $0.09 $0 $0.09 - - - (869,565) (1,304,348) - (434,783) (869,565) - (434,783) (869,565) - (434,783) (869,565) - - - - - - (1,000,000) - - (500,000) - - (500,000) - - (500,000) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 14 DIRECTORS’ REPORT 30 June 2018 Series Directors Balance at beginning of period Number Granted as remuneration Number Value per performance right granted during the year Lapsed Balance at end of period Balance held nominally Number Number Number Allan Mulligan Trevor Benson Thomas Murrell - - - - - - - - - - - - The total fair value of performance rights granted during the year is noted in the Directors’ Report under the section titled “Interests in the shares and options of the Company and related bodies Corporate”. The fair value of the rights which lapsed during the year was $0.09 per right. - (869,565) (1,304,348) - (434,783) (869,565) - (434,783) (869,565) - (434,783) (869,565) - 869,565 1,304,348 - 434,783 869,565 - 434,783 869,565 - 434,783 869,565 869,565 1,304,348 1,000,000 434,783 869,565 500,000 434,783 869,565 500,000 434,783 869,565 500,000 869,565 1,304,348 1,000,000 434,783 869,565 500,000 434,783 869,565 500,000 434,783 869,565 500,000 Series 1 Series 2 Series 3 Series 1 Series 2 Series 3 Series 1 Series 2 Series 3 Series 1 Series 2 Series 3 $0.09 $0 $0.09 $0.09 $0 $0.09 $0.09 $0 $0.09 $0.09 $0 $0.09 Andrew Cunningham 1Resigned 15 March 2019 2Appointed 20 December 2018 Other transactions with Key Management Personnel For amounts owing to key management personnel refer to Note 17 to the financial report for details. End of Remuneration Report 15 DIRECTORS’ REPORT Directors’ meetings The number of meetings of directors held during the year and the number of meetings attended by each Director were as follows: Number of meetings held Number eligible to attend Number attended Trevor Benson Alan Mulligan Thomas Murrell Andrew Cunningham Michael Elliott 12 12 12 12 12 12 12 8 12 6 12 12 8 12 6 Proceedings on Behalf of Company No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year. Auditor’s independence Section 307C of the Corporations Act 2001 requires our auditors, HLB Mann Judd, to provide the Directors of the Company with an Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out on page 17 and forms part of this Directors’ Report for the year ended 30 June 2019. Non-audit Services Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are outlined in Note 4 to the financial statements. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are of the opinion that the services do not compromise the auditor’s independence as all non-audit services have been reviewed to ensure that they do not impact the impartiality and objectivity of the auditor and none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional & Ethical Standards Board. Signed in accordance with a resolution of the Board of Directors. Trevor Benson Executive Chairman 24 September 2019 16 AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the consolidated financial report of Walkabout Resources Limited for the year ended 30 June 2019, I declare that to the best of my knowledge and belief, there have been no contraventions of: a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) any applicable code of professional conduct in relation to the audit. Perth, Western Australia 24 September 2019 D I Buckley Partner 17 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019 Note Consolidated Income Foreign exchange gain Depreciation and amortisation expense Occupancy costs Legal and compliance fees Administration expenses Consulting fees Professional fees Other expenses Exploration costs expensed or written off Share based payments Loss before income tax Income tax benefit Loss for the year Other comprehensive income Items that may be reclassified to profit or loss 2 2 2 2 3 2019 $ 2018 $ 44,464 35,236 23,923 68,439 (3,703) (201,318) (394,225) (874,276) (440,779) (132,908) (377,933) (146,213) (234,533) (6,924) (280,889) (326,544) (621,194) (227,617) (149,171) (147,596) (192,542) (276,450) (2,737,501) (2,125,252) - 159,376 (2,737,501) (1,965,876) Exchange differences on translation of foreign operations 3,751 148,920 Other comprehensive income/ (loss) for the year, net of tax (2,733,750) 148,920 Total comprehensive loss for the year (2,733,750) (1,816,956) Earnings Per Share Basic loss per share (cents per share) 5 Diluted loss per share (cents per share) (0.95) (0.95) (0.94) (0.94) The accompanying notes form part of these financial statements. 18 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019 Note Consolidated 2019 $ 2018 $ ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables TOTAL CURRENT ASSETS NON-CURRENT ASSETS Trade and other receivables Property, plant and equipment Deferred exploration and evaluation expenditure TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Employee benefits TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Share capital Reserves Accumulated losses TOTAL EQUITY 6 7 7 8 9 10 11 12 4,719,663 6,412,501 99,528 82,714 4,819,191 6,495,215 5,000 2,520,560 12,514,419 15,039,979 5,000 8,939 9,563,843 9,577,782 19,859,170 16,072,997 1,427,472 106,794 1,534,266 1,534,266 665,536 84,092 749,628 749,628 18,324,904 15,323,369 71,260,507 65,462,255 814,977 874,193 (53,750,580) (51,013,079) 18,324,904 15,323,369 The accompanying notes form part of these financial statements. 19 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 30 JUNE 2019 Consolidated Note Share Capital Accumulated Losses Foreign Currency Translation Reserve Share based Payment Reserve Option Reserve Total $ $ $ $ $ $ Balance as at 1 July 2018 65,462,255 (51,013,079) (93,203) 364,225 603,171 15,323,369 Net loss for the year Exchange differences arising on translation of foreign operations Total comprehensive loss for the year Share based payment - consultants Conversion of director Performance Rights Share based payment reversal Issue of director options - - - 72,500 225,000 - - Shares issued during the year Transaction costs 5,738,725 (237,973) (2,737,501) - - 3,751 (2,737,501) 3,751 - - - - - - - - - - - - - - - - (225,000) (2,737,501) 3,751 (2,733,750) 72,500 - - - - - (139,225) (139,225) 301,258 301,258 - - - - 5,738,725 (237,973) Balance as at 30 June 2019 71,260,507 (53,750,580) (89,452) - 904,429 18,324,904 Balance as at 1 July 2017 53,582,608 (49,047,203) (242,123) 87,775 Net loss for the year Exchange differences arising on translation of foreign operations Total comprehensive loss for the year Share based payment Share based payment reversal - - - - - Shares issued during the year 13,175,857 Transaction costs (1,296,210) (1,965,876) - - 148,920 (1,965,876) 148,920 - - - - - - - - - - - 364,225 (87,775) - - - - - - 4,381,057 (1,965,876) 148,920 (1,816,956) 364,225 (87,775) - - 13,175,857 603,171 - (693,039) Balance as at 30 June 2018 65,462,255 (51,013,079) (93,203) 967,396 - 15,323,369 The accompanying notes form part of these financial statements. 20 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019 CASH FLOWS FROM OPERATING ACTIVITIES Payments to suppliers and employees Research & development incentive received Interest received Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Exploration and evaluation expenditure Payments for property, plant & equipment Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Funds received in advance Issue costs Net cash provided by financing activities Net (decrease) / increase in cash held Cash at beginning of financial year Effect of foreign currency on cash balances Cash at end of financial year Note Consolidated 2019 $ 2018 $ (2,331,224) (1,670,659) - 44,464 159,376 35,236 14 (2,286,760) (1,476,047) (2,693,382) (4,756,345) (2,515,324) (8,722) (5,208,706) (4,765,067) 5,738,726 13,175,857 301,875 (237,973) - (791,501) 5,802,628 12,384,356 (1,692,838) 6,412,501 - 6,143,242 269,259 - 4,719,663 6,412,501 6 6 The accompanying notes form part of these financial statements. 21 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Preparation 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 consolidated entity consisting of Walkabout Resources Ltd and its subsidiaries. For the purposes of preparing the consolidated financial statements, the Group is a for-profit entity. The financial statements have been prepared on a historical cost basis. Cost is based on the fair values of the consideration given in exchange for assets. The financial statements are presented in Australian dollars. The Company is a listed public company, incorporated in Australia and operating in Australia, Botswana, Tanzania, Malawi, Northern Ireland, Scotland and Namibia. The entity’s principal activities are mineral exploration. (b) Adoption of new and revised standards Standards and Interpretations on issue not yet adopted AASB 16 Leases AASB 16 replaces AASB 117 Leases. AASB 16 removes the classification of leases as either operating leases or finance leases for the lessee – effectively treating all leases as finance leases. Most leases will be capitalised on the statement of financial position by recognising a ‘right-of-use’ asset and a lease liability for the present value obligation. This will result on an increase on the recognised assets and liabilities in the statement of financial position as well as change in expense recognition, with interest and depreciation replacing operating lease expense. Lessor accounting remains similar to current practice, i.e. lessors continue to classify leases as finance and operating leases. AASB 16 is effective from annual reporting periods beginning on or after 1 July 2019, with early adoption permitted for entities that also adopt AASB 15. (c) (d) Statement of Compliance The financial report was authorised for issue on 24 September 2019. 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 The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Walkabout Resources Ltd (‘the Company or parent entity’) as at 30 June 2019 and the results of all subsidiaries for the year then ended. Walkabout Resources Ltd and its subsidiaries are referred to in this financial report as the Group or the consolidated entity. The financial statements of the subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Control exists where the company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing when the Group controls another entity. 22 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - continued (d) Basis of Consolidation - continued Business combinations have been accounted for using the acquisition method of accounting. Unrealised gains or transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in the statement of comprehensive income and within equity in the consolidated statement of financial position. Losses are attributed to the non-controlling interests even if that results in a deficit balance. The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised within equity attributable to owners of Walkabout Resources Limited. When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. (e) Critical accounting judgements and key sources of estimation uncertainty 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. Exploration and evaluation expenditure: The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgment in determining whether it is likely that future economic benefits are likely either from future exploitation or sale or where activities have not reached a stage which permits a reasonable assessment of the existence of reserves. Share-based payment transactions: 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. Fair value is determined by an external valuer using a Black and Scholes model, using the assumptions detailed in Note 19. From time to time the Company makes share-based payments to other parties, other than employees, for goods or services. Where the fair value of the goods and services cannot be reliably estimated, the Company measures their fair value by reference to the fair value of the equity instruments granted. 23 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - continued (f) (g) (h) Going Concern For the year ended 30 June 2019, the Group recorded a net loss of $2,737,501 (2018: $1,965,876) and a net cash outflows of $1,692,838 (2018: inflow $6,143,242). At 30 June 2019, the Group had cash available of $4,719,663 and exploration, lease and the Lindi Jumbo Graphite Project construction commitments for the next 12 months of $2,989,256. Notwithstanding the above, the financial report has been prepared on the basis of accounting principles applicable to a going concern, which assumes the commercial realisation of the future potential of the Company’s and Group’s assets and the discharge of their liabilities in the normal course of business. The Board considers that the Company is a going concern. Additional funding will be required to progress their exploration and evaluation assets and fund construction commitments of the Lindi Jumbo graphite Project in the near future. The Directors are confident that sufficient funding can be raised. During the year, the Group successfully raised $5,500,753 after costs. It is also noted that there are a significant number of options on issue with an exercise price of $0.15 which are ‘in the money’ and are likely to be exercised. The Company has been actively pursuing funding for the Lindi Jumbo mine development and working capital. Having carefully assessed the uncertainties relating to the likelihood of securing additional funding, the Group’s ability to effectively manage their expenditures and cash flows from operations and the opportunity to farm out participating interests in existing tenements, the Directors believe that the Group will continue to operate as a going concern for the foreseeable future. Therefore, the Directors consider it appropriate to prepare the financial report on a going concern basis. 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 Walkabout Resources Ltd. Foreign Currency Translation Both the functional and presentation currency of Walkabout Resources Ltd 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 balance date. All exchange differences in the consolidated financial report are taken to the statement of comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. The functional currency of the foreign operations in Botswana, Tanzania, Malawi, Namibia and Northern Ireland is Pula, Schillings, Kwacha, Namibian Dollars and Sterling respectively. As at the balance date the assets and liabilities of these subsidiaries are translated into the presentation currency of Walkabout Resources Ltd at the rate of exchange ruling at the balance 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 (i) Income Recognition Interest income Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. 24 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - continued (j) (k) 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. Income Tax The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary difference and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. 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 balance date. Deferred income tax is provided on all temporary differences at the balance 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 balance 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 balance 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 balance 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. 25 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - continued (k) Income tax - continued Tax consolidation legislation The Company and its 100% owned Australian resident subsidiaries 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. The Company recognises 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 funding agreement are recognised as a contribution to (or distribution from) controlled entities in the tax consolidated Group. (l) Other taxes Revenues, expenses and assets are recognised net of the amount of GST and VAT except: • when the GST and VAT incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST and VAT 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 and VAT included. (m) The net amount of GST and VAT 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 and VAT 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 and VAT recoverable from, or payable to, the taxation authority. Impairment of assets The Group assesses at each balance 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 balance 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. 26 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES - continued (n) (o) (p) 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. For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. Trade and other receivables Trade receivables are measured on initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method, less any allowance for impairment. 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 will 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 Comprehensive Income 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 comprehensive income. AASB 9 Financial Instruments – Impact of adoption AASB 9 replaces the provisions of AASB 139 that relate to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. The adoption of AASB 9 Financial Instruments from 1 July 2018 resulted in changes in accounting policies. The new accounting policies are set out in note below. In accordance with the transitional provisions in AASB 9(7.2.15) and (7.2.26), comparative figures have not been restated. (i) Classification and Measurement On 1 July 2018 (the date of initial application of AASB 9), the Group’s management has assessed which business models apply to the financial assets held by the group and has classified its financial instruments into the appropriate AASB 9 categories. There were no changes to the classification and measurement of financial assets. (ii) Impairment of financial assets The Group has one type of financial asset that is subject to AASB 9’s new expected credit loss model, being trade and other receivables. The group was required to revise its impairment methodology under AASB. There was no material impact of the change in impairment methodology on the group’s retained earnings and equity. While cash and cash equivalents are also subject to the impairment requirements of AASB 9, there was no material impairment loss identified. AASB 9 Financial Instruments – Accounting policies applied from 1 July 2018 (i) Investments and other financial assets Classification From 1 July 2018, the group classifies its financial assets in the following measurement categories: • • those to be measured subsequently at fair value (either through OCI, or through profit or loss); and those to be measured at amortised cost. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity instruments that are not held for trading, this will depend on whether the group has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI). 27 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES – continued The Group reclassifies debt investments when and only when its business model for managing those assets changes. Measurement At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Debt instruments Subsequent measurement of debt instruments depends on the group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt instruments: • • • Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss. FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the statement of profit or loss. FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises. Impairment From 1 July 2018, the group assesses on a forward-looking basis the expected credit loss associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables the group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Management has determined that assessment of expected credit loss associated with trade receivables is immaterial. Fair Values The fair values of Consolidated Entity’s financial assets and financial liabilities approximate their carrying values due to short –term in nature. No financial assets or financial liabilities are readily traded on organised markets in standardised form. 28 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES – continued (q) Derecognition of financial assets and financial liabilities (Applicable to 30 June 2018 and 30 June 2019) (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: (r) • • • 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: 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. (a) (b) 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, 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 de recognition 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. Impairment of financial assets (Applicable to 30 June 2018) The Group assesses at each balance date whether a financial asset or group of financial assets is impaired. (i) Financial assets carried at amortised cost 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. 29 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES – continued (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 the statement of comprehensive income. 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. (s) Property, Plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is calculated on a diminishing value basis or units of production basis over the estimated useful life of the assets at the following rates: Plant and equipment – 20% Computer equipment – 30% Motor Vehicles – 33.3% Furniture and Fittings – 22.2% Mine properties – Amortised over units of production. 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 balance 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 the statement of comprehensive income in the cost of sales line item. (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. Mine Properties Mining assets, including mineral property interests and mine plant facilities, are initially recorded at cost. Costs incurred to develop the property are capitalised as incurred until the mine is considered to have moved into the production phase, after which they are measured at cost less accumulated depreciation and impairment. Costs include expenditure that is directly attributable to the acquisition of and construction of the asset. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset as appropriate only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. Borrowing costs are capitalised to the extent that they are directly attributable to the acquisition and construction of qualifying assets. Qualifying assets are assets that take a substantial time to get ready for their intended use. These costs are capitalised until the asset moves into the production phase. Other borrowing costs are expensed. Depreciation and amortisation of mineral property interests and mine plant facilities are computed principally by the units of production method over the life of mine, based on estimated quantities of economically recoverable proved and probable reserves, which can be recovered in future from known mineral deposits. Changes in management’s estimates of economically recoverable reserves and resources impact depreciation and amortisation on a prospective basis. Where a depreciable asset is used in the construction or extension of a mine, the depreciation is capitalised against the mine’s cost. 30 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES – continued (s) Property, plant and equipment - continued (t) (u) (v) 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. 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. Provisions 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. Provisions are not recognised for future operating losses. When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as separate assets but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income 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 a borrowing cost. Employee leave benefits (i) Wages, salaries, annual leave and sick leave Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the balance date are recognised in other payables in respect of employees’ services up to the balance date, they are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. (ii) Long service leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the balance date. Consideration is given to expect future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the balance date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. (w) Share-based payment transactions 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). There are currently two plans in place to provide these benefits: • • the incentive Performance Rights Plan, which provides benefits to Directors, Key Management and other eligible participants; and the Incentive Share Plan, which provides benefits to Directors, Key Management and other eligible participants 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. Where appropriate, fair value is determined by using a Black-Scholes model, further details of which are given in Note 11(b). From time to time the Company makes share-based payments to other parties, other than employees, for goods or services. Where the fair value of the goods and services cannot be reliably estimated, the Company measures their fair value by reference to the fair value of the equity instruments granted. 31 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES – continued (w) (x) (y) Share- based payments transactions - continued In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Walkabout Resources Ltd (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). The cumulative expense recognised for equity-settled transactions at each balance 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. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share (see Note 5). 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. Incremental costs directly attributable to the issue of new shares or options for the acquisition of a new business are not included in the cost of acquisition as part of the purchase consideration. 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 are 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. (z) 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 exploitation 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 balance 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. The decision to capitalise or expense exploration and evaluation expenditure is made separately for each area of interest. 32 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES – continued (z) Exploration & evaluation - continued 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. (aa) Parent entity financial information The financial information for the parent entity, Walkabout Resources Ltd, disclosed in Note 16 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 Walkabout 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 grant by the company of options over its equity instruments to the employees of subsidiary undertakings in the group is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity. 33 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 2: INCOME AND EXPENSES Interest received Expenses Foreign exchange (gain) / losses Depreciation Exploration costs expensed Exploration costs written off Consolidated 2019 $ 2018 $ 44,464 35,236 (23,923) 3,703 87,886 58,327 68,439 6,924 - 192,542 NOTE 3: INCOME TAX EXPENSE a. The components of income tax expense comprise: The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense in the financial statements as follows: Accounting profit before tax from continuing operations (2,737,501) (2,125,252) Income tax expense / (benefit) calculated at 27.5% (2018: 27.5%) Non-deductible expenses Difference in tax rate of subsidiaries operating in other jurisdictions Unused tax losses not recognised as deferred tax assets Effect due to derecognition of losses on Takatokwane Project Effect due to change in accounting policy in relation to exploration spend (753,579) 210,889 (189) (48,989) - - (584,444) 198,423 6,342 1,464,424 (724,236) 731,059 Other deferred tax assets and tax liabilities not recognised 591,868 (1,091,568) R & D tax incentive Income tax expense/(benefit) reported in the consolidated statement of comprehensive income - - (159,376) (159,376) b. Unrecognised deferred tax balances The following deferred tax assets and (liabilities) have not been brought to account: Deferred tax assets / (liabilities) comprise: 25 Losses available for offset against future taxable income – revenue 6,412,678 6,461,664 • • Losses available for offset against future taxable income – capital • Depreciation timing differences • • Accrued expenses and liabilities • • Exploration expenditure capitalised • c. Income tax benefit not recognised direct in equity • Share issue costs Ggg 20,622 (1,998) 117,480 (2,125,232) 4,423,550 20,622 2,211 32,133 (2,451,824) 4,064,806 - - - - The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Group can utilise the benefits thereof. 34 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE: 4: AUDITORS REMUNERATION Remuneration of the auditor for: Auditing or reviewing the financial report – HLB Mann Judd Taxation compliance services – HLB Mann Judd NOTE 5: EARNINGS PER SHARE Basic and diluted earnings per share Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Earnings Earnings used in the calculation of basic and diluted earnings per share Consolidated 2019 $ 2018 $ 53,035 20,780 73,815 32,000 7,400 39,400 (0.95) (0.95) (0.94) (0.94) Consolidated 2019 $ 2018 $ Loss from continuing operations (2,737,501) (1,965,876) Weighted average number of ordinary shares Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS 288,568,565 209,223,375 Weighted average number of ordinary shares outstanding during the year used in calculating diluted EPS 288,568,565 209,223,375 No. No. NOTE 6: CASH AND CASH EQUIVALENTS Cash at bank and in hand 4,719,663 6,412,501 Cash at bank earns interest at floating rates based on daily bank deposit rates NOTE: 7: TRADE AND OTHER RECEIVABLES CURRENT Other debtors NON-CURRENT Security bonds 99,528 82,714 5,000 5,000 35 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018 NOTE 8: PROPERTY, PLANT AND EQUIPMENT NON-CURRENT Property, plant and equipment At cost Accumulated depreciation Total property, plant and equipment a. Movements in Carrying Amounts Consolidated 2019 $ 2018 $ 2,631,000 (110,440) 2,520,560 115,676 (106,737) 8,939 Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year. Plant & Equipment Balance at the beginning of the year Additions Depreciation expense Balance at end of the year Mine Properties – work in progress Balance at the beginning of the year Additions Amortisation expense Balance at end of the year NOTE 9: DEFERRED EXPLORATION EXPENDITURE NON-CURRENT Costs carried forward in respect of: Exploration and evaluation phase – at cost Balance at beginning of year Purchase of tenements Expenditure incurred Foreign currency exchange variation Expenditure written off (i) Carrying amount at end of year 36 Consolidated 2019 $ 2018 $ 8,939 2,028 (3,703) 7,264 7,141 8,722 (6,924) 8,939 Consolidated 2019 $ 2018 $ - 2,513,296 - 2,513,296 - - - - Consolidated 2019 $ 2018 $ 9,563,843 4,498,677 159,195 1,865,318 2,713,187 166,080 (87,886) 3,050,928 148,920 - 12,514,419 9,563,843 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 9: DEFFERRED EXPLORATION EXPENINDUTRE continued (i) During the 2019 financial year, exploration and evaluation expenditure totalling $87,886 was written off as a result of tenement relinquishments and the Directors’ assessment of the value of some of the Groups’ projects and as a result no further exploration is planned. Ultimate recovery of exploration and evaluation expenditure carried forward is dependent upon the recoupment of costs through successful development and commercial exploitation, or alternatively, by sale of the respective areas. NOTE 10: TRADE AND OTHER PAYABLES CURRENT Trade payables Placement funds from related parties received in advance (refer note 17) Sundry payables and accrued expenses Trade payables are non-interest bearing and are normally settled on 30 day terms. NOTE 11: SHARE CAPITAL Consolidated 2019 $ 2018 $ 753,894 462,677 300,000 373,578 1,427,472 - 202,859 665,536 Consolidated 2019 $ 2018 $ a) Ordinary Shares (i) Issued and paid-up capital 316,587,593 (2018: 268,416,321) fully paid ordinary shares 71,260,507 65,462,255 (ii) Movements in share capital Opening balance 2019 2018 No. of Shares $ No. of Shares $ 268,416,321 65,462,255 119,746,122 53,582,608 Issued on exercise of options 559,411 87,184 - - Issued for cash – share purchase plan 33,333,427 3,000,000 26,132,314 1,520,901 Issued for cash – entitlement issue - - 67,104,080 6,710,408 Issued in lieu of cash 250,000 72,500 - - Issued for cash – placements 11,528,434 2,651,540 55,433,805 4,944,548 Conversion of Director performance rights 2,500,000 225,000 - - Less costs of issues Closing balance 316,587,593 71,498,480 268,416,321 66,758,465 - (237,973) - (1,296,210) 316,587,593 71,260,507 268,416,321 65,462,255 (iii) Holders of ordinary shares have the right to receive dividends as declared and in the event of winding up the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of shares held and the amount paid up. At shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each holder in person or by proxy has one vote on a show of hands. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. 37 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 11: SHARE CAPITAL - continued b) Options Movements in Options Opening balance Issued for nil consideration – issued to directors* Issued for nil consideration – entitlement issue Issued in lieu of cash* Exercised Issued for nil consideration – placements Expired Closing balance Consolidated 2019 2018 No. of Options No. of Options 40,664,321 7,000,000 - - (559,411) - - 47,104,910 27,550,019 - 16,776,311 15,500,000 - 8,388,010 (27,550,019) 40,664,321 Upon exercise, the options have the same rights as fully paid ordinary shares. *Director options exercisable at $0.20 and expiring 11 December 2021 7,000,000 options were granted to directors following shareholder approval at the AGM on 15 November 2018, The fair value of the options at grant date are determined using a Black Scholes pricing method that takes into account the exercise price, the term of the option, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. The following table lists the inputs to the model used for valuation of the unlisted options: Item Volatility (%) Risk free interest rate (%) Expected life of option (years) Expected dividend yield Exercise price per terms and conditions Underlying security price at grant date Expiry date Value per option c) Performance Rights Movements in performance rights Opening balance Issued to Directors Conversion to ordinary shares Expired Closing balance Inputs 95% 2.155% 3.07 Nil $0.20 $0.095 11 December 2021 $0.0430 Consolidated 2019 2018 No. of Perf Rights No. of Perf Rights 8,586,957 - (2,500,000) (6,086,957) - 6,086,957 8,586,957 - (6,086,957) 8,586,957 During the year $139,225 in previous recognised expense was reversed through profit or loss as Series 1 did not vest and has expired. The performance rights had a fair value of $0.09. 38 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 11: SHARE CAPITAL - continued The vesting conditions were: Series 1 performance rights shall vest upon an announcement to the ASX platform upon securing 80% of the initial funding requirement for project development within 12 months of the shareholder approval to grant the rights. Series 2 performance rights shall vest upon an announcement to the ASX platform of commencement of first commercial production of graphite concentrate from the Lindi Jumbo Project within 18 months of the shareholder approval to grant the rights. Series 3 performance rights vested on issue being achieving a market capitalisation of $28 million and were converted to the equivalent number of ordinary shares for nil consideration. No other rights have converted. d) Capital 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 2018. The capital structure of the Group consists of 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, dividends 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. NOTE 12: RESERVES Opening Balance 1 July Translation of foreign operations Issue of share-based payments Issue of options Conversion of performance rights Expiry of non-market vesting condition Closing Balance 30 June Consolidated 2019 $ 2018 $ 874,193 3,751 - 301,258 (225,000) (139,225) 814,977 (154,348) 148,920 364,225 603,171 - (87,775) 874,193 Foreign Currency Translation Reserve The foreign currency translation reserve records exchange differences arising on translation of foreign subsidiary accounts. Opening Balance 1 July Translation of foreign operations Closing Balance 30 June (93,203) 3,751 (89,452) (242,123) 148,920 (93,203) Share Based Payments Reserve The share based payments reserve records the value of equity benefits provided to employees and Directors as part of their remuneration. Opening Balance 1 July Issue of share based payment Conversion of performance rights Expiry of non-market vesting condition Closing Balance 30 June 364,225 - (225,000) (139,225) - 87,775 364,225 - (87,775) 364,225 39 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 12: RESERVES continued Option Reserve The option reserve records the value of options issued to service providers as part of their remuneration. Opening Balance 1 July Issue of options to broker (share issue costs) Issue of options to directors Closing Balance 30 June NOTE 13: SEGMENT REPORTING 603,171 - 301,258 904,429 - 603,171 - 603,171 Walkabout Resources Ltd operates predominantly in one industry and four geographical segments being the mining and exploration industry in Australia, Tanzania, Namibia, Northern Ireland, Scotland and Botswana as a segment that is being exited. Segment Information Identification of reportable segments The Company has identified its operating segments based on the internal reports that are reviewed and used by the board of directors in assessing performance and determining the allocation of resources. The Company is managed primarily on the basis of its graphite project in Tanzania, copper projects in Northern Ireland and Scotland, other developing prospects in Tanzania and Namibia and its corporate activities, with the coal exploration in Botswana being exited. Operating segments are therefore determined on the same basis. Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic characteristics. Types of reportable segments Graphite Segment assets, including acquisition cost of exploration licences and all expenses related to the tenements in Tanzania are reported in this segment. Coal Segment assets, including acquisition cost of exploration licences and all expenses related to the tenements in Botswana and Tanzania are reported in this segment. Lithium Segment assets, including acquisition cost of exploration licences and all expenses related to the tenements in Tanzania and Namibia are reported in this segment. Copper Segment assets, including acquisition cost of exploration licences and all expenses related to the tenements in Northern Ireland and Scotland are reported in this segment. Corporate Corporate, including treasury, corporate and regulatory expenses arising from operating an ASX listed entity. Segment assets, including cash and cash equivalents, and investments in financial assets are reported in this segment. Basis of accounting for purposes of reporting by operating segments Accounting policies adopted Unless stated otherwise, all amounts reported to the Board of Directors as the chief operating decision maker with respect to operating segments are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Company. Segment assets Where an asset is used across multiple segments, the asset is allocated to the segment that receives the majority of economic value from the asset. In the majority of instances, segment assets are clearly identifiable on the basis of their nature and physical location. Unless indicated otherwise in the segment assets note, deferred tax assets and intangible assets have not been allocated to operating segments. 40 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 13: SEGMENT REPORTING continued Segment liabilities Liabilities are allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the Company as a whole and are not allocated. Segment liabilities include trade and other payables. Unallocated items The following items of revenue, expense, assets and liabilities are not allocated to operating segments as they are not considered part of the core operations of any segment: • • • • • net gains on disposal of equity investments; income tax expense; deferred tax assets and liabilities; intangible assets; and discontinuing operations. (i) Segment performance Continuing Operations Corporate Coal Gold Graphite Copper Lithium Total 30 June 2019 Segment revenue $ 44,464 $ - Segment result (2,114,572) (59,983) Included with segment results: • • • Depreciation Interest revenue (3,703) 44,464 - - Share-based - payment (234,533) Acquisition of non- current assets 2,028 - Segment assets 4,616,079 Segment liabilities (948,546) 15,931 (1,654) 30 June 2018 Segment revenue 35,236 - - $ $ $ - $ $ - 44,464 - - - - - - - - - - - (378,246) (166,120) (18,580) (2,737,501) - - - - - - - - - (3,703) 44,464 (234,533) 4,667,351 464,357 92,747 5,226,483 13,600,451 1,284,716 341,993 19,859,170 (494,055) (89,084) (927) (1,534,266) - - - - - - 35,236 Segment result (1,448,588) (128,620) (131,282) (87,300) (168,436) (1,650) (1,965,876) Included with segment results: • • Depreciation Interest revenue Income tax • benefit (6,924) 35,236 159,376 - - - • Share-based - payment (276,450) Acquisition of non- current assets 1,798 - - - - - - - - - - - - - - - - - - (6,924) 35,236 159,376 (276,450) 4,136,516 749,863 178,800 5,066,977 Segment assets 6,389,493 16,297 31,458 8,614,891 749,863 270,995 16,072,997 Segment liabilities (538,330) (122,882) (31,458) (6,940) (50,018) - (749,628) 41 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 14: CASH FLOW INFORMATION Reconciliation of net cash flow from operating activities with loss after Income Tax Loss after income tax (2,737,501) (1,965,876) Cash flows excluded from loss attributable to operating activities Consolidated 2019 $ 2018 $ Non-cash flows in loss - Foreign exchange gain - Exploration written off - Depreciation - Share based payments Decrease / (increase) in trade and other receivables Increase / (decrease) in trade payables and accruals (23,923) 87,886 3,703 234,533 (21,480) 170,022 - - 6,924 276,450 (7,985) 214,440 Net cash used in operating activities 2,286,760 (1,476,047) NOTE 15: EVENTS AFTER THE BALANCE DATE The final stages of the resettlement action plan payments were made in July 2019 approximating US$1 million. Otherwise, no matters or circumstances have arisen since the end of the financial year which significantly affected or could significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years. 42 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 16: PARENT ENTITY DISCLOSURES Financial position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Total liabilities EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY Financial performance 2019 $ 2018 $ 4,608,815 15,039,979 19,648,794 948,546 948,546 6,371,619 9,486,145 15,857,764 534,395 534,395 71,260,508 814,977 65,462,255 963,311 (53,375,238) (51,102,197) 18,700,247 15,323,369 Total comprehensive loss for the period (2,273,041) (1,816,956) The parent entity has no contingent liabilities or commitments at balance date. NOTE 17: RELATED PARTY TRANSACTIONS Amounts owing to related parties at year end: Other Related Parties Thomas Murrell Andrew Cunningham Michael Elliott – placement funds received in advance Consolidated 2019 $ - 23,350 300,000 2018 $ 14,634 26,800 - Transactions between related parties are on normal commercial terms which are no more favourable than those available to other parties unless otherwise stated. - Fees paid are for the provision of geological and marketing services to the Company. The fees payable to Directors and options issued to Directors are disclosed in the Remuneration Report included in this Financial Report. Key management personnel remuneration is disclosed in Note 23. There are no other related party transactions that have occurred throughout the year. 43 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 Controlled Entities Consolidated Parent Entity: Walkabout Resources Ltd Subsidiaries of Walkabout Resources Ltd: Reveal Resources Pty Ltd Walkabout Resources Australia Pty Ltd Walkabout Resources (Pty) Ltd Wizard Investments (Pty) Ltd Triprop Energy (Pty) Ltd Walkabout Resources Pty Ltd Walkabout Resources Pty Ltd Lindi Jumbo Ltd Aardvark Minerals (Pty) Ltd Shackleton Resources Ltd Antrim Metals Ltd JDH Exploration Pty Ltd Country of Incorporation Australia Australia Australia Botswana Botswana Botswana Malawi Tanzania Tanzania Namibia Northern Ireland UK UK Percentage Owned (%)* 2019 2018 100% 100% 100% 70% 40%1 100% 100% 100% 100% 100% 50% 75%2 100% 100% 100% 70% 40%1 100% 100% 100% 100% 100% 50% - * Percentage of voting power is in proportion to ownership 1 The Group has consolidated Triprop Energy (Pty) Ltd as the Directors’ consider the Group controls this company through the terms of the farm-in agreement. 2 JDH Exploration Pty Ltd was acquired during the year and holds exploration permits in Scotland. Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are therefore not disclosed in this note. NOTE 18: FINANCIAL INSTRUMENTS a. Financial Risk Management The consolidated entity’s financial instruments consist of deposits with banks, accounts receivable and payable, loans to a controlled entity and a cash advance to a third party. i. Treasury Risk Management The Company’s funds are held with an Australian “four pillar” bank with the majority residing in a high interest low transaction fee account. The Company’s overall risk management strategy seeks to assist the consolidated group in meeting its financial targets, whilst minimising potential adverse effects on financial performance. Risk management policies are approved and reviewed by the Board on a regular basis. These include the formulation of credit risk policies and future cash flow requirements. Financial Risks The main risks the group is exposed to through its financial instruments are interest rate risk, foreign currency risk, liquidity risk and credit risk. Foreign currency risk The group is exposed to fluctuations in foreign currencies arising from the purchase of goods and services in currencies other than the group’s measurement currency. ii. Iii b. Foreign Currency Risk Sensitivity At 30 June 2019, there would have been an immaterial change in post-tax loss for the year as a result of a 4% change in the value of the Australian Dollar to the Botswana Pula and an 6% change in the value of the Australian Dollar to the Tanzanian Schilling. The effect on equity would be the same. 44 Consolidated 2019 Consolidated 2018 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 18: FINANCIAL INSTRUMENTS - Continued c. Liquidity risk Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The following table details the Company’s and the Group’s expected maturity for its non-derivative financial liabilities. These have been drawn up based on undiscounted contractual maturities of the financial assets including interest that will be earned on those assets except where the Group anticipates that the cash flow will occur in a different period. Less than 1 month 1 – 3 Months 3 months – 1 year 1 – 5 years 5+ years $ $ $ Non-interest bearing 1,049,833 270,845 106,794 1,049,833 270,845 106,794 Less than 1 month 1 – 3 Months 3 months – 1 year 1 – 5 years 5+ years $ $ $ Non-interest bearing 544,158 121,378 84,092 544,158 121,378 84,092 d. Credit risk The main exposure to credit risk as at 30 June 2019 relates to three separate advances made to the Company’s wholly owned subsidiaries, Walkabout Resources Pty Ltd ($18,690,622), Reveal Resources Pty Ltd ($448,105), Lindi Jumbo Limited ($2,648,001) and Shackleton Resources Ltd ($1,374,649). These separate advances have been made for the purpose of funding the day to day operations of the subsidiaries and their exploration activities. The loans are unsecured. The risk associated with these advances is exploration risk. These advances will not be repaid if the exploration does not provide an economic deposit. This risk is mitigated by providing the best opportunity to make an economic discovery by utilising exploration professionals of the highest standard and by obtaining the necessary funding. e. Interest Rate Risk The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities are detailed in the liquidity risk section of this note. At balance date, the Group is not materially exposed to interest rate risk. f. Fair Value The carrying amount of the Group’s financial assets and liabilities approximate their carrying amount at balance date. 45 $ - - $ - - $ - - $ - - NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 19: SHARE-BASED PAYMENT PLANS The following share-based payment arrangements were in place as at 30 June 2019: Series Date options granted Number of shares under option Exercise price of option Expiry date of option Vesting date Fair value at grant date $ 1 11 December 2018 7,000,000 $0.20 11 December 2021 301,258 11 December 2018 On 15 November 2018, shareholders granted the directors 7,000,000 options with no vesting conditions. Further detail on the valuation of the options are provided in note 11(b). NOTE 20: CONTINGENT LIABILITES The Directors are not aware of any contingent liabilities as at the date of this report. NOTE 22: CAPITAL AND LEASING COMMITMENTS a. Property Lease Commitments Payable — minimum lease payments - - not later than 12 months between 12 months and 5 years b. Capital Expenditure Commitments Minimum expenditure commitments for mining tenements: - - not later than 12 months between 12 months and 5 years NOTE 23: DIRECTORS AND EXECUTIVES DISCLOSURES Details of Key Management Personnel Directors Trevor Benson Executive Chairman Allan Mulligan Executive Director Thomas Murrell Non-Executive Director (Resigned 15 March 2019) Andrew Cunningham Non-Executive Director Michael Elliott Non-Executive Director Consolidated 2019 $ 2018 $ 67,863 - 67,863 61,443 - 61,443 2,989,256 1,265,471 4,254,727 1,872,413 1,496,202 3,368,615 Key management personnel remuneration has been included in the Remuneration Report section of the Directors’ Report. 46 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019 NOTE 23: DIRECTORS AND EXECUTIVES DISCLOSURE CONT. The totals of remuneration paid to key management personnel of the Company and the Group during the year are as follows: Short-term employment benefits Post-employment benefits Other long-term benefits Share-based payments Total KMP compensation Consolidated 2019 $ 2018 $ 867,830 50,949 - 301,258 1,220,037 796,338 47,500 - 364,225 1,208,063 47 1. In the opinion of the directors of Walkabout Resources Ltd (the ‘Company’): DIRECTORS’ DECLARATION a. the accompanying financial statements and notes 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 2019 and of their performance for the year then ended; and complying with Australian Accounting Standards, the Corporations Regulations 2001, professional reporting requirements and other mandatory requirements. 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. c. the financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board. 2. This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2019. This declaration is signed in accordance with a resolution of the Board of Directors. Trevor Benson Executive Chairman Dated this 24th day of September 2019 48 INDEPENDENT AUDITOR’S REPORT To the members of Walkabout Resources Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Walkabout Resources Limited (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2019, 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, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its financial performance for the year then ended; and b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report. 49 Key Audit Matter How our audit addressed the key audit matter Carrying amount of deferred exploration expenditure Note 9 of the financial report In accordance with AASB 6 Exploration for and Evaluation of Mineral Resources, the Group capitalises all exploration and evaluation expenditure, including acquisition costs and subsequently applies the cost model after recognition. the carrying amount of Our audit focussed on the Group’s assessment of the capitalised exploration and evaluation asset, as this is one of the most significant assets of the Group. Mine properties work in progress Note 8 of the financial report On 7 May 2019, the Company announced on the ASX that it was commencing ‘Early-Start’ works for its Lindi Jumbo Graphite project in Tanzania. The carrying amount of mine properties work in progress at balance date was $2,513,296 and is being recognised in accordance with AASB 116 Property, Plant and Equipment. Our audit focussed on the Group’s assessment of the carrying amount of the capitalised asset due the significance to readers of the financial report. Previously all costs in relation to the Lindi Jumbo Graphite Project were being recognised in accordance with AASB 6 Exploration for and Evaluation of Mineral Resources. Going Concern Note 1(f) of the financial report Our procedures included but were not limited to the following: ▪ We obtained an understanding of the key processes associated with management’s review of the carrying values of each area of interest; ▪ We considered the Directors’ assessment of potential indicators of impairment; ▪ We obtained evidence that the Group has current rights to tenure of its areas of interest; ▪ We examined the exploration budget for the year ending 30 June 2019 and discussed with management the nature of planned ongoing activities; and ▪ We examined the disclosures made in the financial report. Our procedures included but were not limited to the following: ▪ We obtained an understanding of management’s assessment to recognised costs in accordance with AASB 116 Property, Plant and Equipment; ▪ We considered the Directors’ assessment of potential indicators of impairment; ▪ We substantiated a sample of costs incurred; ▪ With the commencement of construction, we considered whether the carry forward Lindi Jumbo Graphite Project Exploration and Evaluation asset should be transferred to development costs in accordance AASB 138 Intangible Assets: and ▪ We examined the disclosures made in the financial report. The Group recorded a net loss of $2,737,501 and had net cash outflows of $1,692,838. As at 30 June 2019 the Group had cash and cash equivalents of $4,719,663 and exploration, lease and the Lindi Jumbo Graphite Project construction commitments for the next 12 months of $2,989,256. Our procedures included but were not limited to the following: ▪ We considered the appropriateness of the going concern basis of accounting by evaluating the underlying assumptions in cash flow projections prepared by management; including sensitivity analysis; If the going concern basis of preparation of the financial statements was inappropriate, the carrying amount of certain assets and liabilities may have significantly differed. In addition, ▪ We considered the progress of the ongoing process for funding of the Lindi Jumbo Graphite Project; ▪ We discussed with the Board plans in place to mitigate the going concern risk; 50 Going Concern Note 1(f) of the financial report management and the auditor must consider whether a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Disclosure is required in the financial report should the significant doubt exist. The going concern basis of accounting was a key audit matter due to the significance to users of the financial report and the significant judgement involved with forecasting cash flows ▪ We have considered the timing of settlement of trade and other payables and contractual commitments existing at balance date; ▪ We have considered the likelihood that options on issue will be exercised within the relevant period; ▪ Our responsibilities in respect of the going concern basis of accounting are included below under Auditor’s responsibilities for the audit of the financial report; and ▪ We examined the disclosures made in the financial report. Information other than the financial report and auditor’s report thereon The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: - Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. 51 - - - Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. - We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included within the directors’ report for the year ended 30 June 2019. In our opinion, the Remuneration Report of Walkabout Resources Limited for the year ended 30 June 2019 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards HLB Mann Judd Chartered Accountants Perth, Western Australia 24 September 2019 D I Buckley Partner 52 ADDITIONAL INFORMATION FOR ASX LISTED PUBLIC COMPANIES The following additional information is provided as at 16 September 2019. Distribution of Shareholders Fully Paid Ordinary Shares Listed Options Category (size of holding) Number of Holders Number of Shares Number of Holders Number of Options 1 – 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 100,000 100,001 – and over 450 486 371 1,073 446 2,826 147,404 1,431,916 2,883,569 40,425,998 271,963,936 316,852,823 84 104 56 150 77 471 32,771 303,892 397,943 5,233,661 33,815,399 39,783,666 The number of shareholdings held in less than marketable parcels is 574 The names of the substantial shareholders are: Shareholder Hong Kong Tiande Baorun Trade Co Limited Number Ordinary 23,043,656 % 7.27 Voting Rights The voting rights attached to each class of equity security are as follows: Ordinary shares - Each ordinary share is entitled to one vote Options - Options are not entitled to a vote Performance Rights - Performance rights are not entitled to a vote Corporate Governance The 2019 corporate governance statement is located on the Company’s website at www.wkt.com.au. Unlisted securities : There are 2 holders of unlisted options exercisable at 20 cents and expiring 11 December 2021 as follows: Name Allan Mulligan Andrew Cunningham Total Holding 4,000,000 3,000,000 7,000,000 % Held 57% 43% 100% 53 ADDITIONAL INFORMATION FOR ASX LISTED PUBLIC COMPANIES 20 Largest Shareholders – Ordinary Shares Name Number Held % Held 1 HONG KONG TIANDE BAORUN TRADE CO LIMITED 2 MARCOLONGO NOMINEES PTY LTD 23,043,656 12,576,512 3 BNP PARIBAS NOMINEES PTY LTD 8,852,945 7.27 3.97 2.79 2.54 2.16 1.96 1.42 1.42 1.35 1.33 1.32 1.31 1.00 0.95 0.92 0.91 0.84 0.78 0.76 0.74 8,065,124 6,836,099 6,200,000 4,500,000 4,500,000 4,291,519 4,213,703 4,196,053 4,160,390 3,182,200 3,024,234 2,907,850 2,886,811 2,673,600 2,465,000 2,400,000 2,349,499 113,325,195 203,583,643 35.76 64.24 4 OODACHI PTY LTD

5 MR JOHN RICHARD TURNER + MRS CLARE FRANCES TURNER 6 PANTAI INVESTMENTS PTY LTD 7 GERROA SERVICES PTY LIMITED 8 P & M ZUVIC PTY LIMITED 9 IAN DAVID PENNY 10 MR ALLY MBARAK MOHAMED 11 MR ALLAN MULLIGAN 12 CITICORP NOMINEES PTY LIMITED 13 MRS ROBYN JOY CRASE 14 MR NAVEEN TEJPAL + MRS JYOTI TEJPAL 15 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 16 MR TREVOR BRUCE BENSON 17 MR ROBERT LINCOLN WESTLAKE 18 MR SHANNON EDWARD RUTTY 19 MR DAVID ALAN CLARKSON + MRS HEATHER JOY CLARKSON 20 BNP PARIBAS NOMS PTY LTD Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (Total) Total Remaining Holders Balance 54 ADDITIONAL INFORMATION FOR ASX LISTED PUBLIC COMPANIES 20 Largest option holders — listed options expire 31/12/2019 exercisable at $0.15 Name Number Held % Held 1. MR ROBERT LINCOLN WESTLAKE 2. MARCOLONGO NOMINEES PTY LTD 3. MR TREVOR ALAN POWER 2,529,480 2,292,012 2,200,000 4. MR MATIU RUDOLPH + MRS JANELLE LESLEY RUDOLPH 1,507,561 6.36 5.76 5.53 3.79 3.64 3.62 3.54 2.70 2.64 2.26 2.20 2.13 1.97 1.75 1.50 1.46 1.45 1.31 1.30 1.26 1.26 1,450,000 1,440,229 1,410,000 1,072,517 1,050,000 900,000 874,161 847,933 782,610 697,764 596,815 580,056 575,673 520,000 515,288 500,000 500,000 22,842,099 16,941,567 57.42 42.58 5. MR ROGER GOES 6. HONG KONG TIANDE BAORUN TRADE CO LIMITED 7. MR STEPHEN JOHN HOGAN 8. MR CHRISTOPHER POHLNER 9. MR STEPHEN JOHN HOGAN + MS KAREN MAREE HOGAN 10. MR JUNYAN ZHOU 11. MR GRAHAM PAUL STRAUSS 12. OODACHI PTY LTD

13. MR ANDREW WILLIAM BUTLER 14. MR HAYDEN JOHN DAHM 15. ARAWHERO PTY LTD 16. MR ROBERT KEITH HOWARD 17. MR VIKRAM ASHWIN MODY 18. MR MARK ANTHONY MURTAGH 19. MR MICHAEL GORDON SHAW 20. MR DAVID PAUL INGLIS 20. MR LUKE STANNARD + MRS CHERIE SARAH ELIZABETH HALFPENNY-STANNARD Totals: Top 21 holders of LISTED OPTIONS EXPIRE 31/12/2019 @$0.15 (Total) Total Remaining Holders Balance 55 ADDITIONAL INFORMATION FOR ASX LISTED PUBLIC COMPANIES Tenement Schedule Project / Location Tenement Type Tenement Number Interest Held Comment Application Recommended Application Subject to ongoing commitments Antrim Metals JV Antrim Metals JV Earning 50% and then 75% New licence Earning 75% Earning 75% Earning 75% Renewed Earning 65% Renewed Earning 65% Renewed Lindi Lindi Lindi Lindi Kimoingan Eureka Eureka NE Antrim Glenariff The Sheddings Gortnamoyagy Tyrone Lisburn Scotland Scotland Scotland ML PLA PLA PL PL EPL EPL MPL MPL MPL MPL MPL Mines Royal Option Mines Royal Option Mines Royal Option Mines Royal Option Tanzania 579/2018 13376/2018 13352/2018 9993/2014 11119/2017 Namibia 6308 6309 100% 100% 70% 70% 100% 100% 100% Northern Ireland and Scotland LON01/14 LON02/14 LON03/14 LON05/14 KOZ01/16 SK01/18 St Johns Town of Dalry Newton Stewart Rhins of Galaway Botswana 50% 50% 100% 100% 0% 100% 0% 0% 0% 70% 40% 40% Takatokwane Takatokwane Takatokwane PL PL PL 35/2007 157/2009 160/2009 56 Lindi Jumbo Graphite Project 2012 JORC Mining Reserve – Annual Review as at 30 June 2019 2018 Resource Upgrade A drilling and trenching program was conducted over the northern Inferred Mineral Resource area as well as a new mineralised zone directly to the south of the Gilberts Arc Graphite Deposit. The upgrade and extension program included 17 drillholes for 1,354m and 7 trenches for 654m. The global Mineral Resource increased by 41.3% to 41.8 million tonnes at 10.8% TGC containing 4.5 million tonnes of graphite (Table 1). Fifty one percent (51%) of the mineral resource that will form part of the initial mining and economic studies is now classified as Measured (6.5 Mt @ 12.1% TGC) and Indicated (8.4 Mt @ 10.5% TGC) containing 1.67 million tonnes of graphite. The global mineral resource now includes a new Inferred Resource area which lies directly to the south of the current planned open-pit area and is made up of 6 distinct mineralised domains. This area will not form part of the upcoming mining studies, amended DFS and Reserve upgrade as further work within the area will only be done post-production. Table 1: Resource category breakdown of the Gilbert Arc. Resource Category Tonnes (millions) TGC % Contained Graphite (tonnes) Measured (Including High Grade) Indicated (Including High Grade) Inferred (Including High Grade) Grand Total High Grade Domains 6.5 1.7 8.4 1.5 26.9 1.8 41.8 5.0 12.1 23.4 10.5 21.2 10.5 22.7 10.8 22.5 Note: Appropriate rounding applied. 781,800 393,200 887,300 325,300 2,837,600 411,900 4,506,811 1,127,800 2019 Ore Reserve Update The Resources considered for mining are based on the JORC 2012 Mineral Resource Estimate (see ASX announcement of 19 December 2018). The Ore Reserve is based only on the Measured and Indicated Mineral Resources in the current mining schedule which is summarised in Table 2. Thus, the Inferred Resource zone to the south of the mining pit is not currently included in the mine design reserves and remains available for further consideration or potential expansion opportunities. The Ore Reserve estimate was prepared and signed off by and independent consultancy, Bara International of Johannesburg, South Africa. Table 2: Lindi Jumbo Project Ore Reserve. Ore Reserves Category Tonnes (million) TGC % Contained Graphite (tonnes) Proven Ore Reserves Probable Ore Reserves Total Ore Reserves 2.54 2.97 5.51 19.3 16.7 17.9 489,000 498,000 987,000 2019 Updated Definitive Feasibility Study The main areas of adjustment for the 2019 study update was the application of the updated Mineral Resource (ASX Announcement 19 December 2018) to the mining plan and a revision of Capital expenditure following detailed scope of work contract agreements with contract partners. The mining depletion was completely remodelled following the upgrade of the previous Inferred Resource to the north of the pit into an Indicated Resource category. As a result of the increased LoM grade to 17,9% Total Graphitic Carbon, the average annual mill feed requirement has reduced from a average of 280,000 tonnes per year to an average of 230,000 tonnes per year. 57 Pre-Production direct capital costs were further reduced by 6.4% to US$27.8M from US$29.7M in 2017. An upfront saving of some US$2.5m was achieved through vendor funding of a large portion of the camp infrastructure costs. Capital costs have been determined through a combination of fixed tender pricing, firm quotations and data-base references based on similar operations. The costs presented have a base date of December 2018 and are presented in United States Dollars (US$). The costs presented are definitive costs and include the US$2.1m provision for the Relocation Assistance Programme (RAP), (ASX Announcement 31 January 2019). Furthermore, updated estimates for product pricing was applied to the financial modelling. Walkabout conducts an annual review of its Mineral Resources and Ore Reserves. This process is managed by the Directors and competent person. As of 30 June 2019, the Mineral Resources and Ore Reserves statement remains the same as that stated above. The governance arrangements and internal controls in place with respect to its estimates of mineral resources and ore reserves and the estimation process include oversight of the competent person by the managing director and review by the board. No mining has commenced and no additional mining studies have been completed. Competent Person’s Statement The information in this report that relates to Exploration Results and Exploration Targets is based on and fairly represents information and supporting documentation prepared by Mr Andrew Cunningham (Director of Walkabout Resources Limited). Mr Cunningham is a member of the Australian Institute of Geoscientists and has sufficient experience of relevance to the styles of mineralisation and types of deposits under consideration, and to the activities undertaken to qualify as Competent Persons as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Cunningham consents to the inclusion in this report of the matters based on his information in the form and context in which they appear. The information in this report that relates to Mineral Resources is based on and fairly represents information compiled by Mr Lauritz Barnes, (Consultant with Trepanier Pty Ltd), Mr Aidan Platel (Consultant with Platel Consulting Pty Ltd), Mr Andrew Cunningham (Director of Walkabout Resources Limited) and Ms Bianca Manzi (Bianca Manzi Consulting). Mr Barnes, Mr Platel, Mr Cunningham and Ms Manzi are members of the Australian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists and have sufficient experience of relevance to the styles of mineralisation and types of deposits under consideration, and to the activities undertaken to qualify as Competent Persons as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Specifically, Ms Manzi is the Competent Person for the geological database. Mr Barnes is the Competent Person for the resource estimation. Both Mr Platel and Mr Cunningham completed the site inspections. Mr Barnes, Mr Platel, Mr Cunningham and Ms. Manzi consent to the inclusion in this report of the matters based on their information in the form and context in which they appear. The information in this report that relates to Ore Reserves is based on and fairly represents information and supporting documentation prepared by Mr Clive Wyndham Brown who is a Principal Consultant (Mining) at Bara International Ltd. Mr Brown is a Mining Engineer and a Fellow of the South African Institute of Mining and Metallurgy and has sufficient experience of relevance to the styles of mineralisation and types of deposits under consideration, and to the activities undertaken to qualify as Competent Persons as defined in the 2012 Edition of the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Brown consents to the inclusion in this report of the matters based on his information in the form and context in which they appear. 58 

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