ABN: 87 145 011 178 2016 Annual Report 2016 Annual Report 2016 Annual Report Corporate Directory & Contents Corporate Directory Board of Directors Mr Thomas Sanders Mr Mark Edwards Mr Michael Kitney Executive Chairman Non-Executive Director Non-Executive Director Auditors Rothsay Chartered Accountants Level 1, 4 Ventnor Avenue West Perth, Western Australia 6005 Senior Management Mr Alastair Barker Miss Michelle Simson Manager Corporate Exploration Manager Affairs/Company Secretary Solicitors Steinepreis Paganin Level 4, 16 Milligan Street Perth, Western Australia 6000 Principal Place of Business & Registered Office 12 Walker Avenue West Perth, Western Australia 6005 +61 8 9226 3666 +61 8 9226 3668 Tel: Fax: Email: breaker@breakerresources.com.au Website: www.breakerresources.com.au ABN 87 145 011 178 Front Cover: Lake Roe; Inside Front Covers: Drill Crew (top); RC Lake Rig with Diamond Rig in the Background (bottom) Share Registry Advanced Share Registry Services 110 Stirling Highway Nedlands, Western Australia 6009 Tel: Fax: Website: www.advancedshare.com.au +61 8 9389 8033 +61 8 9262 3723 Securities Exchange Listing in Breaker Shares and Partly Paid Shares Resources NL are quoted on ASX Limited (codes: BRB and BRBCA). The Home Exchange is Perth, Western Australia. Contents Chairman’s Letter ____________________________________________________________________________________________ 2 Review of Activities __________________________________________________________________________________________ 3 Tenement Schedule ________________________________________________________________________________________12 Directors’ Report ____________________________________________________________________________________________13 Auditor’s Independence Declaration ______________________________________________________________________24 Statement of Profit or Loss and Other Comprehensive Income ___________________________________________25 Statement of Financial Position _____________________________________________________________________________26 Statement of Changes in Equity ____________________________________________________________________________27 Statement of Cash Flows ___________________________________________________________________________________28 Notes to the Financial Statements __________________________________________________________________________29 Directors’ Declaration ______________________________________________________________________________________47 Independent Audit Report _________________________________________________________________________________48 ASX Additional Information _________________________________________________________________________________50 2016 Annual Report 1 Chairman’s Letter Dear Fellow Shareholder, The 2015/16 year has been a breakthrough one for Breaker with significant gold discoveries at the Bombora and Bombora North Prospects at the Company’s Lake Roe Gold Project, 100km east of Kalgoorlie. Importantly, these discoveries form part of a 4.4km zone of economic interest defined by nearly 40,000m of drilling that is itself open in all dimensions. Subject to further drilling and continued exploration success, the Lake Roe Gold Project has the geological potential to host a major greenfields gold discovery and we are excited about this. The Lake Roe Gold Project is well located near Kalgoorlie, one of the world’s premier mining jurisdiction and two operating gold treatment plants are situated nearby. The gold mineralisation is shallow and is hidden by relatively thin transported cover, typically 5m to 10m. The majority of the gold identified to date is hosted by fractionated dolerite, WA’s premier gold host rock, but significant gold potential is also apparent on the sheared and altered margin of a granite 400m to the east. The large strike and width dimensions of the gold mineralised areas on a wide drill line spacing indicates that the resource potential is substantial. The shallow, wide nature of the gold mineralisation identified to date reinforces the potential for open pit mining. In addition, the persistent occurrence of high- grade sulphide lodes observed in each of three completed phases of RC drilling highlights the potential for long-term underground mining. High-grade sulphide lodes typically extend to substantial depths based on similar gold deposits in other parts of WA’s Eastern Goldfields. Drill results in the southern 2.2km part of the 4.4km zone of interest have been very encouraging and RC drilling is currently underway to prepare this area for resource definition drilling, which is planned to start in December 2016. In light of the strong results, the Company has mobilised a second RC drill rig to site to start scoping the 2.2km-long zone directly north of Bombora North, where wide-spaced aircore drilling previously returned intersections of up to 7.61g/t gold accompanied by strong alteration and strike-continuous gold pathfinder elements. The focus in the upcoming year will be on establishing and building a significant gold resource. Given the gold prospectivity we will also prioritise further gold discovery and will accelerate the drilling where advantageous. This will translate to strong and steady newsflow. In closing, I would like to thank our committed team, including contractors and suppliers, for their persistence, dedication and professionalism. I would also like to thank our shareholders for their patience and long-term support, and to welcome our new shareholders as we embark on what promises to be another exciting year. Yours sincerely Tom Sanders Chairman 2 Breaker Resources NL Review of Activities Review of Exploration Activities Breaker Resources NL’s (Breaker) exploration strategy focuses on the use of structural analysis and innovative multi-element geochemical techniques to identify areas with the potential to host large new gold deposits hidden by transported cover. Under-cover areas in WA’s high-endowment Eastern Goldfields Superterrane are largely unexplored. They represent a new search space that is now amenable to exploration using modern geochemical techniques that were not available 20 years ago. The Company’s main focus is its 100%-owned Lake Roe Gold Project. Since announcing what appeared to be a large new gold system in August 2015, Breaker has made two separate primary gold discoveries and confirmed its initial findings after completing nearly 40,000m of follow-up drilling. The results to date at the Lake Roe Gold Project are consistent with the early stages of a major gold discovery but further drilling is needed to confirm this. The width, grade and shallow depth of the gold mineralisation encountered in recent reconnaissance reverse circulation (RC) drilling at Lake Roe highlight the open pit and underground mining potential. The persistent occurrence of high-grade lode-style gold mineralisation in several completed RC drill programs is also encouraging – sulphide lodes tend to extend to substantial depths based on similar gold deposits in other parts of WA’s Eastern Goldfields. The large strike and width dimensions of the gold mineralised areas identified to date on a wide drill line spacing suggests that the open pit and underground tonnage potential may be substantial. As a result, Breaker is planning to start an extended phase of resource definition drilling in early December 2016 commencing in the southern 2.2km of the 4.4km zone of economic interest, subject to regulatory approval. In light of the good results, the Company has mobilised a second RC drill rig to site to start scoping the 2.2km-long zone directly north of Bombora North where there is significant scope for further discovery. Drill intersections of up to 7.61g/t gold1 accompanied by strong alteration were obtained in this area from wide-spaced aircore drilling. In order to assess the detailed geometry and controls of the gold mineralisation, Breaker plans to undertake selective diamond drilling as required, in conjunction with the RC drilling which is ongoing. The diamond drilling component will be 50% funded (up to $150,000) under the WA Government’s Exploration Incentive Scheme 2016/17 Co-Funded Drilling Program grant awarded to the Company in the June 2016 quarter. Photo 1: RC Drilling at Lake Roe Although the core focus is the Lake Roe Project, Breaker has identified significant gold potential on its Dexter and Ularring Rock projects, where multiple targets have been recognised, many of which are drill-ready. The Company’s exploration activities at Lake Roe since the 2014/15 Annual Report include three phases of aircore drilling (21,153m), three phases of RC drilling (11,061m), and one phase of diamond drilling (709m). Geological mapping and miscellaneous research and development activities, including petrology and multi-element studies, were also completed. Other exploration activities in the 2015/16 period include reconnaissance aircore drilling at the Duketon North Project and environmental rehabilitation works at the Dexter Project. Breaker continues to monitor and evaluate tenement acquisition opportunities and rationalise its tenement holdings where appropriate. This has resulted in the sale of the Mt Gill and Kurrajong tenements. At the end of the reporting period, the Company held a total of 12 exploration licences and 3 tenement applications with a total area of 2,115km2. 2016 Annual Report 3 Review of Activities Lake Roe Gold Project The Lake Roe Project is located 100km east of Kalgoorlie, 60km south-southeast of the 3.5Moz Karari-Carosue Dam gold deposits and 35km north of the 0.9Moz Karonie gold deposit. As at the date of this report, it comprises five granted tenements and one application with an overall area of 556km2. Since identifying a large new greenfields gold system in an area of thin transported cover in July 2015, the Company has undertaken ~33,000m of “scoping style” reconnaissance drilling comprising four aircore program, three phases of RC drilling, and one phase of diamond drilling. from the Company’s maiden diamond drilling and its most recent phase of RC drilling are pending as at the time of this report. Results The main target is high-grade gold mineralisation hosted mainly by a 400m-500m-thick fractionated dolerite situated in a domal geometry between two major shear zones in an area of shallow cover (typically 5m to 10m in thickness). The targeted dolerite forms part of a 1,500m-thick greenstone sequence situated geometrically above the east-dipping Keith-Kilkenny Shear Zone, in a similar structural setting to the Carosue and Karonie gold deposits along strike. A secondary target at the Lake Roe Project is the regional-scale Claypan Shear Zone, situated 400m to the east of the fractionated dolerite near the margin of a syenite-associated granite. Figure 1: Lake Roe Location Plan Gold mineralisation at the Bombora and Bombora North Prospects is similar and is hosted primarily by the upper (western) iron-rich part of the dolerite, a significant component of which is granophyric in nature. Lode mineralisation in the fractionated dolerite is dominated by sulphide-impregnated fault zones (lodes) with up to 5% pyrite and pyrrhotite accompanied by silica, biotite, chlorite and carbonate alteration and minor quartz-pyrite veinlets. Quartz stockwork mineralisation, which is also present, is hosted mainly by the granophyric part of the dolerite and appears to be spatially associated with the sulphide lodes. Phase 1 Aircore Drilling (2014/15) Initial reconnaissance aircore drilling at Lake Roe (87 holes for 3,187m) as reported in 2014/15 identified gold mineralisation over a distance of 6km, returning a best intersection of 5m at 6.12g/t Au (incl. 2m at 14.42g/t Au and 1m at 22.44g/t Au)2 on a wide drill hole spacing (80m-160m). Significantly, twenty percent of the drill holes terminated in +50ppb gold mineralisation defining cohesive end-of-hole alteration up to 300m wide accompanied by anomalous pathfinder elements (Ag, As, Sb)2, consistent with a gold system of scale. Phase 2 and 3 Aircore Drilling (2015/16) Two subsequent phases of infill geochemical aircore drilling in the southern 2km of the system (Bombora Prospect) comprising 292 drill holes for 13,346m, validated the presence of a significant gold system, intersecting oxide gold mineralisation in fractionated dolerite, and on a granite contact to the immediate east. More significant drill results3 in the dolerite included: 3.3m @ 3.48g/t Au from 24m in BAC0884; 15m @ 1.46g/t Au from 32m in BAC0912; 12m @ 1.46g/t Au from 39m including 2m at 5.56g/t in BAC1011; and 4m @ 3.66g/t Au from 24m including 2m at 7.01g/t in BAC0989. 4 Breaker Resources NL Review of Activities Many drill holes terminated in mineralisation. Significant gold mineralisation was also identified near the granite contact 400m to the east of Bombora, where drill results such as 7m at 2.58g/t Au (incl. 2m at 8.38g/t)4 were obtained on an 80m drill hole spacing. The Phase 2 and 3 aircore drilling enabled the interpretation of primary gold positions which were then targeted by reconnaissance reverse circulation drilling in February 2016. Phase 1 RC Drilling (2015/16) – Bombora Maiden reconnaissance RC drilling at Bombora (36 holes for 6,703m) successfully discovered high-grade gold up to 25g/t in primary sulphide lodes5 over a ~400m distance open that is open to the north. Significantly, the RC drilling confirmed that the geological processes needed to transport, focus and deposit gold at economic grades have clearly been active, thereby effectively reducing the exploration risk profile to “brownfields”. More significant drill intersections5 include: 5m @ 3.69g/t Au from 29m including 3m @ 5.23g/t in BBRC0001; 4m @ 5.08g/t Au from 75m in BBRC0002; 10m @ 2.78g/t Au from 38m including 2m @ 10.74g/t and 1m @ 24.91g/t in BBRC0009; 10m @ 2.00g/t Au from 192m including 5m @ 3.35g/t in BBRC0012; and 3m @ 8.53g/t Au from 31m including 2m @ 12.74g/t in BBRC0015. Importantly, the knowledge gleaned from the aircore and RC drilling completed at Bombora provided the foundation for making a preliminary assessment of the controls on the gold distribution in the dolerite. In particular this drilling highlighted the potential for more primary gold hosted by the fractionated dolerite situated in a favourable (north-northwest) orientation extending 4km to the north of Bombora, where the subsequent Phase 4 aircore drilling was focused. The results also upgraded the gold potential of other NNW-trending areas such as the largely untested sheared and altered granite contact to the east of the Claypan Shear, where significant gold mineralisation was encountered by the Phase 2/3 aircore drilling. Phase 4 Aircore Drilling (2015/16) In the June 2016 quarter, Breaker completed a 7,807m geochemical aircore drill program (359 holes) to assess the gold potential of the fractionated dolerite over a 4km distance directly north of the Bombora discovery. The drilling was undertaken on a drill line spacing of 200m with a drill hole spacing of 20m (6600800N to 6604800N) or 40m (6602600N to 6604000N) where thicker transported cover was encountered. All holes were drilled to refusal with an average depth of 21.7m. This program successfully encountered strong gold anomalism up to 10.53g/t in two main areas designated the Bombora North and Crescent Prospects6. Forty three percent of the 1m end-of-hole (EOH) samples ended in plus 50ppb gold mineralisation with a maximum EOH grade of 8.70g/t gold5. More significant drill intersections5 include: 4m @ 4.73g/t Au from 10m including 2m @ 7.95g/t in BAC1220; 2m @ 4.22g/t Au from 7m including 1m @ 7.73g/t in BAC1231; 10m @ 1.49g/t Au from 11m in BAC1234; and 3m @ 3.56g/t Au from 28m including 2m @ 4.81g/t in BAC1294. Although the primary gold potential at Bombora North is relatively obvious based on the strength of the aircore results, the gold potential extending 2.2km to the north of Bombora North (towards the Crescent Prospect) is interpreted to be equally prospective but less obviously. Lower downhole average gold values in this area are partially the result of thicker transported cover (up to 30m) on a wide drill hole 2016 Annual Report 5 Review of Activities spacing (40m), resulting in less effective drill penetration of the lower (mineralised) part of the weathering profile. Strong alteration vectors, locally significant gold intersections, and anomalous pathfinder elements indicate a high level of prospectivity. Significantly, the Phase 4 aircore drilling also identified a second zone of fractionated dolerite adjacent to the syenitic granite contact to the east of the Crescent Prospect. The Crescent Prospect appears to correspond with a westward deflection of the Claypan Shear and is open to the north and south. The interaction of the Claypan Shear with the prospective fractionated dolerite significantly enhances the gold prospectivity in the area. The results at Crescent also enhance the gold prospectivity extending 2km to the north of the Crescent Prospect where the aeromagnetic signature is noticeably subdued, indicating the possibility of significant alteration. Figure 2: Lake Roe – RC (L) and Aircore (R) Downhole Average Gold over Aeromagnetics Phase 2 RC Drilling (2016/17) – Bombora North A 20-hole, 2,450m RC drill program commenced in August 2016 to evaluate the primary gold potential of a 600m strike length of the Bombora North Prospect. Significant gold was intersected on each of the six 100m- or 200m-spaced drill lines tested. Mineralisation remains open to the north, south and at depth. More significant drill intersections7 include: 18m @ 2.97g/t Au from 12m including 10m @ 5.03g/t or 3m @ 14.59g/t or 2m @ 20.09g/t in BBRC0049; 18m @ 2.16g/t Au from 112m including 14m @ 2.70g/t or 3m @ 6.18g/t and 1m @ 12.60g/t in BBRC0050; 12m @ 1.36g/t Au from 22m including 5m @ 3.13g/t in BBRC0045; 10m @ 1.82g/t Au from 78m including 4m @ 3.57g/t or 1m @ 10.88g/t in BBRC0055; and 33m @ 0.78g/t Au from 8m including 8m @ 1.94g/t in BBRC0038. 6 Breaker Resources NL Review of Activities The intersected mineralisation widths, the distance between drill sections, and the untested strike potential all indicate sound potential for the definition of a large tonnage resource. The indicative geometry and grade of the gold mineralisation intersected indicates sound potential for open pit and underground mining. Figure 3: Lake Roe – Phase 2 RC Downhole Average Gold Figure 4: Lake Roe – Section 6602200mN 2016 Annual Report 7 Review of Activities Phase 3 RC Drilling (2016/17) – Bombora-Bombora North Gap Based on the strength of the RC drill results at Bombora North, the Company commenced a third phase of RC drilling (17 holes for 1,908m) with the objective of testing the 1.2km gap between the Bombora and Bombora North gold discoveries and establishing a continuous 2.2km zone of gold mineralisation. Drilling was undertaken on a 200m drill line spacing commencing from the south (5 lines). Preliminary assay results have been reported for the first three drill lines. Results for the two northern lines are yet to be reported. Significant gold was intersected on each of the three drill lines tested. Key results8 include: 26m @ 2.55g/t Au from 19m including 9m @ 4.45g/t in BBRC0070; 12m @ 4.41g/t Au from 48m including 9m @ 5.70g/t and 3m @ 12.15g/t in BBRC0071; 17m @ 1.59g/t Au from 28m including 8m @ 3.16g/t and 3m @ 9.71g/t in BBRC0063; and 4m @ 10.08g/t Au from 156m in BBRC0065. An infill drill hole completed at Bombora North intersected 11m at 3.11g/t Au from 8m, including 7m at 4.55g/t Au in BBRC00578. Phase 1 Diamond Drilling (2016/17) Figure 5: Lake Roe – Section 6601200mN Diamond drilling was recently undertaken at the Bombora and Bombora North Prospects to assess the detailed geometry and controls of the gold mineralisation. One diamond drill hole was also completed to test the granite contact to the east of Bombora. This drilling will be 50% funded (up to $150,000) under the WA Government’s Exploration Incentive Scheme 2016/17 Co-Funded Drilling Program grant awarded to the Company in the June 2016 quarter. The first two diamond drill holes at Bombora North identified visible gold (Photo 2) in each of the first two diamond drill holes on 66001800N, the southern-most drill line at Bombora North9. In addition, the initial diamond hole, utilising BBRC0056 as a pre-collar, confirmed the presence of lamprophyre. This is a relatively rare, deeply-sourced ultra-potassic intrusive rock that has a documented spatial and possible temporal association with large Archean gold deposits in WA and overseas (Golden Mile, Darlot, Superior Province in Canada). Since then, lamprophyre has also been confirmed in RC chips at the Bombora discovery to the south. Results are pending. 8 Breaker Resources NL Review of Activities Photo 2: Lake Roe – Visible gold (circled) in quartz veins in sulphide lode (BBRD0056; 110.1m) Next Steps RC results relating to the remaining 600m gap between the Bombora and Bombora North discoveries are imminent, as are results from the recently completed diamond drilling. Based on the strength of the results to date, further RC drilling is now underway to progressively close the drill line spacing to 100m between the Bombora and Bombora North discoveries. The objective is to prepare the 2.2km Bombora-Bombora North discovery zone for the resource definition drilling which is planned to start in early December 2016, subject to regulatory approval. A second RC drill rig has arrived on site to start scoping the 2.2km-long zone to the north of Bombora North, where wide-spaced aircore drilling previously returned intersections of up to 7.61g/t gold1. Dexter Gold Project The Dexter Project is located in the southern part of the Burtville and Yamarna Terranes, 140km southeast of Laverton. The project straddles the intersection of the Yamarna, Dexter and Sefton Shear Zones and includes extensive areas of historically unexplored sheared Archean greenstone. Thin aeolian sand and variable thicknesses of Permian sediment are present. The Company previously identified the regional scale Three Bears-Tallows gold-in-soil anomaly, situated near the junction of the Yamarna and Dexter Shear Zones in 2012 (16km-long, up to 0.3g/t gold and 17g/t silver10). Follow-up aircore drilling identified widespread zones of secondary redox gold enrichment with grades up to 3m at 7.1g/t gold11. The 12km-long Sandshoes anomaly, situated 20km to the southwest of the Three Bears-Tallows Prospect, was identified in late 2013 near the intersection of the Sefton Lineament and the Dexter Shear Zone (up to 30ppb Au12). During 2015/16, the focus of activities at the Dexter Project was environmental rehabilitation of drill holes and an in-depth review of all exploration to date. Efforts to locate the bedrock gold source of the Three Bears-Tallows and Sandshoes anomalies continue. Further drilling at these prospects, and an initial program at the Mt Douglas Prospect in the northern project area, are contemplated, potentially with a joint venture partner to accelerate progress. During the year, a comprehensive review of the prospectivity of the Attila West Project resulted in the majority of the project being surrendered. The remaining small area (E38/2530; 4 blocks; 1.2km2) has now been merged with the Dexter Project. 2016 Annual Report 9 Review of Activities Ularring Rock Project The Ularring Rock tenement E70/4686 is located 100km east of Perth. The tenement covers the Centre Forest and Southern Brook gold-copper prospects, where historic RC drill intercepts of copper-gold mineralisation include 61m @ 0.83g/t Au, and 37m @ 0.72g/t Au and 0.26% Cu. An assessment of this project has highlighted considerable potential. The available data indicates a district scale mineralisation system best developed in the western sector of the tenement where remnant high-grade metamorphosed greenstone is present. The historical drill coverage is limited. Multiple structural and geochemical targets are apparent including a large bullseye groundwater tungsten anomaly. Further work, including private landholder access negotiations and soil sampling are planned to advance these targets to the drilling stage. The Company will likely seek a suitable joint venture arrangement to progress exploration. Duketon North Gold Project The Duketon North Project is located north of the 10Moz Moolart Well-Garden Well-Rosemont gold camp, 160km north-northwest of Laverton. The main gold target is greenstone-hosted mineralisation associated with a structurally complex part of the Duketon greenstone belt directly along strike from Moolart Well. This area includes a 25km-long area of mafic and ultramafic rocks targeted by historic nickel exploration. Outcrop is limited and the surface regolith is dominated by 1-2m transported sand, which overlies transported gravel and clay in locally developed palaeochannels (commonly 20m-30m thick) some of which are evident in aeromagnetic data. The underlying weathered bedrock is progressively stripped off towards the northern tenement boundary. A 4km long gold-in-soil anomaly was identified by the Company in mid-2015. The anomaly is located adjacent to a major shear that appears to displace the well mineralised Duketon greenstone belt, and possibly the Moolart Well mine sequence. The stacked (en-echelon) geometry of the gold-in-anomaly suggests a possible bedrock gold source. The soil anomaly is situated on a prominent bend in the greenstone belt next to a wide (0.7km to 1.4km) gold-prospective dolerite unit. Significant sericite-quartz alteration has been documented petrology). (historical Breaker completed a 4,126m program of reconnaissance aircore drilling in late-July 2016 to test for the presence of a new gold system. The drill program consisted of several 400m to 800m spaced drill traverses across the soil anomalies, on drill hole spacing of 100m. results were encountered. No significant Kurrajong & Mt Gill Gold Projects Photo 3: Aircore Drilling at Duketon North The 54km2 Kurrajong Project is located in the Yamarna Terrane 35km along strike from the recent 3.8Moz Gruyere gold discovery, 175km east-northeast of Laverton and the 167km2 Mt Gill Project is located 30km along strike from the Attila-Alaric-Central Bore gold deposits, 135km northeast of Laverton and targets gold associated with a ~20km length of the Yamarna Shear Zone and greenstone belt. Previous activities identified widespread gold and pathfinder anomalies however no field work was conducted during 2015/16. In May 2016, Breaker announced the sale of the Kurrajong and Mt Gill tenements to enable an increased focus on the Lake Roe Gold Project. 10 Breaker Resources NL Review of Activities Review of Corporate Activities To enable an aggressive drilling program to continue at the Lake Roe Gold Project, Breaker completed a number of capital raisings during the reporting period. In September 2015 the Company announced a pro rata renounceable entitlement issue on the basis of one new share for every five shares held at an issue price of $0.04. The offer closed on 13 October 2015 and raised $553,755 before costs. On 29 April 2016 the Company announced the conduct of a placement and share purchase plan (SPP) at an issue price of $0.13. The fully underwritten SPP closed on 25 May 2016 heavily subscribed and sub- underwriters subsequently elected to exercise their rights to a top-up placement. A total of $2.09million (before costs) was raised. Subsequent to the reporting period, a $12.4million placement to prominent Australian and overseas institutions and sophisticated and professional investors was completed. A total of 760,590 fully paid ordinary shares in the Company was issued during the year in part consideration for drilling services undertaken at Lake Roe and a number of shares were converted from partly paid to fully paid. As at 30 June 2016, Breaker’s capital structure was as follows: 99,596,129 fully paid ordinary shares; 6,886,248 partly paid ordinary shares; and 2,500,000 unlisted options at various exercise prices and expiry dates. In January 2016, Breaker announced receipt of a research and development incentive refund of $0.507 million under the federal government’s R&D Tax Incentive Scheme in relation to exploration activities conducted in 2014/15. The Company was represented at a number of conferences during 2015/16 including the RIU Explorers in Fremantle, RIU Resources Round-up in Sydney and Resources Rising Stars on the Gold Coast. The Company’s Annual General Meeting was held on 18 November 2015. On 10 June 2016 Breaker conducted a general meeting of shareholders where a number of resolutions, mainly relating to the placement/SPP capital raising were tabled. On 30 June 2016, the Company dispatched notices to all eligible shareholders advising of tax credits available through Breaker’s participation in the federal government’s Exploration Development Incentive Scheme (EDI). The EDI is intended to encourage shareholder investment in exploration companies undertaking greenfields mineral exploration in Australia. It enables eligible companies to create exploration credits by giving up a portion of their tax losses from eligible exploration expenditure and distributing these to shareholders. At the beginning of the period the Company’s fully paid ordinary shares were trading at $0.0467 and as at 30 June 2016, the price was $0.165. References 1: ASX Release 25 July 2016 2: ASX Release 28 August 2015 3: ASX Release 31 July 2015 4: ASX Releases 29 January 2016 & 16 March 2016 5: ASX Release 18 April 2016 6: ASX Release 25 July 2016 7: ASX Release 13 September 2016 8: ASX Release 20 September 2016 9: ASX Release 30 August 2016 10: ASX Release 13 November 2013 11: ASX Release 28 March 2013 12: ASX Release 31 October 2013 Competent Persons Statement The information in this report that relates to Exploration Targets and Exploration Results is based on information compiled by Tom Sanders, Competent Person, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Sanders is an executive of Breaker Resources NL and his services have been engaged by Breaker on an 80% of full time basis; he is also a shareholder in the Company. Mr Sanders has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Sanders consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. Exploration results mentioned in the Review of Activities as being reported prior to 1 December 2013 were done so under JORC Code 2004 and there has been no material change to the information since this time. 2016 Annual Report 11 Tenement Schedule Tenement Schedule The following is a summary of tenements held by Breaker Resources NL as at 30 June 2016. Project Dexter Duketon North Kurrajong Lake Roe Mt Gill Murchison Pinjin Ularring Rock Tenement Number E38/2530 E38/2695 E38/2934 E39/1611 E39/1614 E38/3019 E38/2531 E28/2515 E28/2522 E28/2551 E28/2555 E28/2556 E28/2559 E38/2513 E38/2529 E51/1682 E28/2629 E70/4686 Status Granted Granted Granted Granted Granted Granted Granted Granted Application Granted Granted Granted Granted Granted Granted Application Application Application Percentage Held/Earning % 100 100 100 100 100 100 Subject to sale process1 100 100 100 100 100 100 Subject to sale process1 100 100 100 Notes: 1 The Company announced the sale of the Kurrajong and Mt Gill Projects on 31 May 2016. As at 30 June 2016, the tenements remained in Breaker’s name, pending transfer. Photo: Wildflowers in the Eastern Goldfields 12 Breaker Resources NL Directors’ Report Directors’ Report The directors of Breaker Resources NL herewith submit the financial report for the year ended 30 June 2016. In order to comply with the provisions of the Corporations Act 2001 (Cth), the directors report as follows: Information about Officeholders Directors The names of the directors of the Company during the financial year and up to the date of this report are provided below. All of the directors held their positions for the entire financial year period. Mr Thomas Sanders BSc (Geology); MSc (Mineral Economics); MAusIMM; FAICD Executive Chairman (appointed 2 July 2010) Tom Sanders is a geologist with over 35 years’ experience in the Australian mining industry. He has extensive experience in project generation, exploration, feasibility, mining and corporate management with a strong emphasis on gold and nickel in Western Australia (WA). Mr Sanders has published works on nickel and gold in WA, in addition to regional mineralisation studies on the eastern Kimberley region under contract to the Geological Survey of WA. Mr Sanders has managed a large number of exploration projects, several of which he progressed into production during a 23 year period based in the Kalgoorlie region in WA. He has extensive production experience on several underground and open pit gold and nickel operations. Mr Sanders was responsible for identifying Breaker’s initial projects and guiding the Company to a successful ASX listing in 2012. Mr Sanders previously founded Navigator Resources Limited and steered that company from initial project acquisition to ASX-listing. He then managed the building of a two million ounce gold resource inventory through discovery and acquisition and identified the Cummins Range rare earth resource. During the past three (3) years, Mr Sanders has not served as a director on any other listed company. Mr Mark Edwards BJuris; LLB Non-Executive Director (appointed 2 July 2010) Mark Edwards is a solicitor with over 25 years of experience in resources and corporate law. He has advised a number of ASX-listed companies active in the resources sector and on a range of resources projects in Australia and overseas, including significant nickel, gold and iron ore projects. His professional work has involved him in many facets of the resources industry ranging from ASX listings, exploration and mining joint ventures to project development agreements and project financing. During the past three (3) years, Mr Edwards has not served as a director on any other listed company. Mr Michael Kitney Assoc. Met; Post Grad Dip (Extractive Metallurgy); MSc (Mineral Economics); MAusIMM Non-Executive Director (appointed 2 July 2010) Mike Kitney is a process engineer with over 40 years’ experience in the mining industry. He has participated in the development and construction of projects throughout Australia, Africa, south east Asia and the former Soviet Union. Mr Kitney’s particular strengths are in production and mineral processing, all aspects of environmental management, project evaluation and assessment and leadership of interdisciplinary project teams. He brings to the Company vast project development expertise and practical experience in commissioning new projects. 2016 Annual Report 13 Directors’ Report Mr Kitney has previously held senior technical and project management positions with Alcoa Australia Limited, Minproc Engineers Limited, Property Company of London plc, British Phosphate Commissioners, Nelson Gold Corporation Limited and Avocet Mining plc. He is currently the Chief Operating Officer of ASX-listed Kasbah Resources Limited. During the past three (3) years, Mr Kitney has served as a director on ASX-listed General Mining Corporation Limited (appointed 20 October 2015; ceased 5 August 2016). Company Secretary The name of the company secretary of the Company during or since the end of the financial year and up to the date of this report, and the term of their appointment, are provided below. Miss Michelle Simson EMBA (Dist.); GradDipACG; ACIS; AGIA Company Secretary (appointed 22 October 2012) Michelle Simson has 20 years’ administration experience, including the last 12 years in the resources industry working in both exploration and mining companies in the commodities of gold and uranium. She has previously held positions with Agincourt Resources Limited, Nova Energy Limited and Navigator Resources Limited and has completed an Executive Master of Business Administration with Distinction at the University of Western Australia and a Graduate Diploma in Applied Corporate Governance. She is a Chartered Secretary and member of the Governance Institute of Australia. During the past three (3) years, Miss Simson has not served as a director on any other listed company. Board Committee Membership As at the date of this report, the Board has an Audit Committee, Nomination Committee, Remuneration Committee and a Risk Committee. All directors currently comprise membership of each of the committees and the chairmen of the respective committees are: Audit Committee: Mark Edwards; Nomination Committee: Tom Sanders; Remuneration Committee: Mike Kitney; and Risk Committee: Tom Sanders. Directors’ Meetings The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director is as follows: Board of Directors Committee Meetings Audit Nomination Remuneration Risk Director Held Present Held Present Held Present Held Present Held Present Tom Sanders Mark Edwards Mike Kitney 6 6 6 6 6 5 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 14 Breaker Resources NL Directors’ Report Directors’ Interests The following table sets out each director’s relevant interest in shares and options in shares of the Company or a related body corporate as at the date of this report. Director Tom Sanders Mark Edwards Mike Kitney Fully paid ordinary shares Partly paid ordinary shares Number 20,989,230 1,636,108 1,468,544 Number 1,309,871 65,000 58,125 Unlisted share options Number 0 0 0 During and since the end of the financial year Nil share options have been granted to directors of the Company as part of their remuneration (2015: Nil). Directors’ and Officers’ Insurance During the financial year, Breaker paid a premium to insure the directors and secretary of the Company. Details of the premium are subject to a confidentiality clause under the contract of insurance. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of the Company and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include such liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to the Company. It is not possible to apportion the premium between amounts relating to the insurance against legal costs and those relating to other liabilities. Corporate Structure Breaker Resources NL is a no liability public company limited by shares, domiciled and incorporated in Australia. Principal Activities During the year the Company carried out exploration activities on its tenements in Western Australia with the objective of identifying gold and other economic mineral deposits. Operational Review Activities Review A review of the exploration activities undertaken during the year commences on page 1. Financial Review During the year total exploration expenditure incurred by the Company amounted to $2,219,306 (2015: $1,284,015). In line with the Company’s accounting policies, all exploration expenditure is written off as it is incurred. Net administration expense amounted to $30,055 (2015: ($389,247)). The Company’s operating loss after income tax for the year is $2,249,361 (2014: $894,768). At year end the Company held cash or similar reserves of $657,392 (2015: $1,209,437). 2016 Annual Report 15 Directors’ Report Operating Results for the Year Summarised operating results are as follows: Revenues and profit/(loss) from ordinary activities before income tax expenses 589,239 (2,249,361) Revenues Results $ $ Shareholder Return Summarised shareholder return is as follows: Basic profit/(loss) per share Dividends 2016 cents 2015 cents (2.80) (1.30) No dividends were paid or declared during the year. No recommendation for payment of dividends has been made. Share Options As at the date of this report, there are 2,500,000 unissued ordinary shares of Breaker Resources NL in respect of which options are outstanding. This number comprises: Type of option Unlisted Unlisted Unlisted Number 1,000,000 1,000,000 500,000 Exercise price Expiry date $0.50 $0.478 $0.40 31 December 2016 31 December 2016 30 June 2019 No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of any other body corporate. Share Options Issued The following options were issued by Breaker Resources NL during the financial year: Type of option Number Exercise price Expiry date Comment Unlisted 500,000 $0.40 30 June 2019 Issued to consultant as per agreement dated 18 May 2016 Shares Issued on Exercise of Options There were Nil shares issued due to the exercise of options during the financial year. Share Options that Expired/Lapsed The following options expired or lapsed during the financial year. Type of option Number Exercise price Expiry date Reason for lapse Unlisted Unlisted 3,000,000 3,000,000 $0.278 $0.228 30 June 2016 30 June 2016 Expiry Expiry 16 Breaker Resources NL Directors’ Report Significant Changes in State of Affairs During the financial year there were no significant changes in the state of affairs of the Company other than those referred to in the Financial Statements and notes thereto. Subsequent Events There were no matters or circumstances arising since the end of the reporting period that have significantly affected or may significantly affect the operations of the Company and the results of those operations or the state of the affairs of the Company in the financial period subsequent to 30 June 2016. Likely Developments and Expected Results The Company expects to maintain a similar status and level of activities to that at present and hence there are no likely developments in the entity's operations. Environmental Regulations and Performance Breaker is subject to significant environmental regulation in respect to its exploration activities. The Company aims to ensure that the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The directors of the Company are not aware of any breach of environmental legislation for the year under review. Proceedings on Behalf of the Company No persons have applied for leave pursuant to section 237 of the Corporations Act 2001(Cth) to bring, or intervene in, proceedings on behalf of Breaker Resources NL. Non-Audit Services There were no non-audit services performed during the year by the auditors for the Company (or by another person or firm on the auditor’s behalf). Auditor’s Independence Declaration The Auditor’s Independence Declaration is included on page 14 and forms part of the Directors’ Report for the financial year ended 30 June 2016. Remuneration Report This Remuneration Report, which forms part of the Directors’ Report, sets out information about the remuneration of Breaker Resources NL’s key management personnel for the financial year ended 30 June 2016. The information provided in this report has been audited as per the requirements of section 308(3C) of the Corporations Act 2001 (Cth). The report is set out under the following main headings: Key management personnel; Principles used to determine the components and amount of compensation; Details of remuneration; Details of share-based compensation; and Details of service agreements and employment contracts. 2016 Annual Report 17 Directors’ Report Key Management Personnel For the purposes of this report, key management personnel of the Company are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly. The key management personnel during the year were: Tom Sanders Mark Edwards Mike Kitney Alastair Barker Michelle Simson Executive Chairman Non-Executive Director Non-Executive Director Exploration Manager Manager Corporate Affairs/Company Secretary Principles Used to Determine the Components and Amount of Compensation Remuneration Committee The role of the Remuneration Committee is to assist the Company in fulfilling its corporate governance responsibilities relating to remuneration by reviewing and making appropriate recommendations on: remuneration packages of executive directors, non-executive directors and officers; employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed; recruitment, retention and termination policies and procedures for senior executives; and superannuation arrangements. Remuneration Policy The remuneration policy of Breaker Resources NL has been designed to align key management personnel objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the Company’s results. The Board of Breaker Resources NL believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage the Company. The policy for determining the nature and amount of remuneration for senior executives of the Company is summarised below: The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the Board. The Board reviews executive packages annually reference to the Company’s performance, executive performance and comparable by information from industry sectors and other listed companies in similar industries. The Board may exercise discretion in relation to approving incentives, bonuses and options. 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 wealth. Executives are also entitled to participate in the employee option plan. Where applicable, executives receive a superannuation guarantee contribution required by the government, which during the reporting period was 9.5%. Some individuals may choose to sacrifice part of their salary to increase payments towards superannuation. All remuneration paid to key management personnel is valued at the cost to the Company and expensed. Options are valued using the Black-Scholes methodology. The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the non-executive directors and remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. reviews their 18 Breaker Resources NL Directors’ Report The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the annual general meeting. The remuneration pool limit is $300,000 and is currently utilised to a level of $64,000 per annum. The base fee paid to non-executive directors is $32,000 per annum. Fees for non-executive directors are not linked to the performance of the Company however to align directors’ interests with shareholder interests, the directors are encouraged to hold shares in the Company and are able to participate in the employee option plan, although any allocation must be approved by shareholders in general meeting. There is no retirement benefit plan for directors. Performance Based Remuneration The Company currently has no individual performance based remuneration component built into key management personnel remuneration packages. Company Performance, Shareholder Wealth and Key Management Personnel Remuneration The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment objectives and key management personnel performance. Currently, this is facilitated through the issue of options to key management personnel to encourage the alignment of personal and shareholder interests. The Company believes this policy will be effective in increasing shareholder wealth. Use of Remuneration Consultants The Company did not employ the services of any remuneration consultants during the financial year ended 30 June 2016. Details of Remuneration The key management personnel of the Company are disclosed above. Remuneration packages contain the following elements: Short-term employee benefits – cash salary and fees, cash bonuses, non-monetary benefits and other; Post-employment benefits – including superannuation and termination; and Share-based payments – shares and options granted. The remuneration for each director and each of the other key management personnel of the Company during the year was as follows: Key management personnel Tom Sanders 2016 2015 Mark Edwards 2016 2015 Mike Kitney 2016 2015 Short-term Post-employment Share-based payments Salary &fees $ 220,104 220,854 32,000 32,000 30,612 32,000 Non- monetary Super- annuation Retirement benefits Options $ - - - - - - $ - - - - 1,388 - $ - - - - - - $ - - - - - - Total $ 220,104 220,854 32,000 32,000 32,000 32,000 2016 Annual Report 19 Directors’ Report Key management personnel Alastair Barker 2016 2015 Michelle Simson 2016 2015 Short-term Post-employment Share-based payments Salary &fees $ 179,344 181,667 128,708 151,355 Non- monetary Super- annuation Retirement benefits Options $ - - - - $ - - 20,285 24,645 $ - - - - $ - - - - Total $ 179,344 181,667 148,993 176,000 No director or executive appointed during the year received a payment as part of his or her consideration for agreeing to hold the position. Details of Share-Based Compensation Shares Nil shares in the Company were issued to key management personnel as part of their remuneration during the year (2015: Nil). Options Nil options in the Company were issued to key management personnel as part of their remuneration during the year (2015: Nil). There were Nil options exercised or sold by key management personnel during the year (2015: Nil). During the year, the following share-based payment arrangements for key management personnel were in existence: Option series Grant date Expiry date 60502 60503 60510 60511 1 August 2011 30 June 2016 1 August 2011 30 June 2016 10 July 2012 31 December 2016 Fair value per option at grant Vesting date cents 2.31 1.90 8.52 5 August 2011 9 August 2011 11 July 2012 20 November 2012 31 December 2016 20.13 27 November 2012 A total of 6,000,000 options (comprising Series 60502 and 60503) expired on 30 June 2016. Shareholdings of Key Management Personnel The numbers of ordinary shares in the Company during the financial year in which each director of Breaker Resources NL and other key management personnel of the Company holds a relevant interest, including their closely related parties, are detailed below: 20 Breaker Resources NL Directors’ Report Key management personnel Tom Sanders 2016 2015 Mark Edwards 2016 2015 Mike Kitney 2016 2015 Alastair Barker 2016 2015 Michelle Simson 2016 2015 Key management personnel Tom Sanders 2016 2015 Mark Edwards 2016 2015 Mike Kitney 2016 2015 Alastair Barker 2016 2015 Michelle Simson 2016 2015 Fully Paid Ordinary Shares Granted as compen- sation Received on exercise of options Balance at start of year Number Number Number 14,925,826 14,449,747 1,180,000 1,180,000 1,191,250 1,191,250 62,500 62,500 - - - - - - - - - - - - - - - - - - - - - - Other changes Number Balance at year end Number 6,063,404 476,079 20,989,230 14,925,826 456,108 - 1,636,108 1,180,000 277,294 - 1,468,544 1,191,250 166,412 - - - 228,912 62,500 - - Partly Paid Ordinary Shares Balance at start of year Number Granted as compensation Other changes Number Number Balance at year end Number 1,309,871 1,309,871 65,000 65,000 58,125 58,125 6,250 6,250 - - - - - - - - - - - - - - - - - - - - - - 1,309,871 1,309,871 65,000 65,000 58,125 58,125 6,250 6,250 - - Option Holdings of Key Management Personnel The numbers of options over ordinary shares in the Company during the financial year in which each director of Breaker Resources NL and other key management personnel of the Company holds a relevant interest, including their closely related parties, are detailed below: 2016 Annual Report 21 Directors’ Report Key management personnel Balance at start of year Granted as compen- sation Exercised Other changes Balance at year end Vested and exercisable Number Number Number Number Number Number Tom Sanders 2016 2015 Mark Edwards 2016 2015 Mike Kitney 2016 2015 Alastair Barker 5,000,000 6,944,871 500,000 565,000 500,000 570,625 2016 2015 1,000,000 1,031,250 Michelle Simson 2016 2015 1,000,000 1,000,000 - - - - - - - - - - - - - - - - - - - - (5,000,000) - - (1,944,871) 5,000,000 5,000,000 (500,000) - - (65,000) 500,000 500,000 (500,000) - - (70,625) 500,000 500,000 - 1,000,000 1,000,000 (31,250) 1,000,000 1,000,000 - - 1,000,000 1,000,000 1,000,000 1,000,000 As a result of the conduct of the Company’s pro rata entitlement issue in October 2015, and in accordance with the relevant terms and conditions, the exercise prices of various unlisted options on issue were adjusted, as per the formula provided in ASX Listing Rule 6.22.2, effective 20 October 2015 (the market price of BRB securities at this time was 6 cents). Details of the adjustments made to options held by key management personnel are outlined below. Key management personnel Unlisted options held Number Tom Sanders 2,000,000 30/06/16 Tom Sanders 3,000,000 30/06/16 Mark Edwards 500,000 30/06/16 Mike Kitney 500,000 30/06/16 Michelle Simson 1,000,000 31/12/16 Exercise price pre- adjustment Fair value pre- adjustment Exercise price post- adjustment Fair value post- adjustment Expiry date cents 23.1 28.1 23.1 23.1 48.1 cents 11.11 10.26 11.11 11.11 9.11 cents cents 22.8 27.8 22.8 22.8 47.8 0.60 0.45 0.60 0.60 0.22 All other terms and conditions of the unlisted options remained unchanged. Details of Service Agreements and Employment Contracts Service agreements are in place between the Company and Executive Chairman Tom Sanders and Exploration Manager Alastair Barker. Manager Corporate Affairs/Company Secretary Michelle Simson is employed via contract. Details of these arrangements as at 30 June 2016 are provided below: Service Agreement: Tom Sanders – Executive Chairman Term of agreement – Initial term of two (2) years and further terms of two (2) years, subject to termination provisions; commenced 18 April 2012 (subject to ASX listing). An annual consultancy fee of $220,104 (inclusive of superannuation, plus GST) is paid to Goldfields Geological Associates, an entity controlled by Mr Sanders, for the provision of services by Mr Sanders on a minimum of 80% of fulltime basis. 22 Breaker Resources NL Directors’ Report The agreement continues until terminated by either Goldfields Geological Associates or the Company. Subject to the Corporations Act 2001 (Cth) and the ASX Listing Rules, Mr Sanders is entitled to a minimum notice period of 12 months and the Company is entitled to a minimum notice period of three (3) months. Goldfields Geological Associates will be reimbursed for expenses incurred on the Company’s behalf. Service Agreement: Alastair Barker – Exploration Manager Term of agreement – Initial term of two (2) years and further terms of one (1) year subject to termination provisions; commenced 18 April 2012 (subject to ASX listing). An annual consultancy fee of $179,344 (inclusive of superannuation, plus GST) is paid to Horizon Resources Pty Ltd, an entity controlled by Mr Barker, for the provision of services by Mr Barker on a minimum of 80% of fulltime basis. The agreement continues until terminated by either Horizon Resources Pty Ltd or the Company. Subject to the Corporations Act 2001 (Cth) and ASX Listing Rules, Mr Barker is entitled to a minimum notice period of 12 months (or six (6) months after the initial term). The Company is entitled to a minimum notice period of three (3) months. Employment Contract: Michelle Simson – Manager Corporate Affairs/Company Secretary Base salary of $176,000 per annum (inclusive of superannuation). Payment of termination benefit on termination by the employer, other than for gross misconduct, equals three (3) months’ salary. Notice period of three (3) months. Signed in accordance with a resolution of directors made pursuant to section 298(2) of the Corporations Act 2001 (Cth). On behalf of the directors TOM SANDERS Executive Chairman Perth, 19 August 2016 2016 Annual Report 23 Auditor’s Independence Declaration 24 Breaker Resources NL Statement of Profit or Loss Statement of Profit or Loss and Other Comprehensive Income for the Financial Year ended 30 June 2016 Income Government grant and incentive Interest income Other income Total income Expenses Administration expenses Depreciation expenses Employee benefits expenses Exploration and evaluation expenses Interest expenses Total expenses Notes 2016 $ 2015 $ 4 4 4 4 4 4 507,439 27,227 54,573 589,239 926,686 36,138 58 962,882 (389,105) (83,893) (146,296) (326,732) (93,450) (153,367) (2,219,306) (1,284,015) - (86) (2,838,600) (1,857,650) Profit/(Loss) before income tax (2,249,361) (894,768) Income tax expense 6 - - Profit/(Loss) for the year (2,249,361) (894,768) Other comprehensive income - - Total comprehensive income/(expense) for the year (2,249,361) (894,768) Profit/(Loss) attributable to owners of the Company (2,249,361) (894,768) Total comprehensive income/(expense) attributable to owners of the Company (2,249,361) (894,768) Basic and diluted profit/(loss) per share attributable to the ordinary equity holders of the Company (cents per share) 15 (2.80) (1.30) The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 2016 Annual Report 25 Statement of Financial Position Statement of Financial Position as at 30 June 2016 Current Assets Cash and cash equivalents Term deposits Trade and other receivables Other financial assets Total Current Assets Non-Current Assets Plant and equipment Prepaid service Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Total Current Liabilities Total Liabilities Net Assets Equity Contributed equity Reserves Accumulated profit/(loss) Notes 2016 $ 2015 $ 7 7 8 9 10 11 12 657,392 1,131,045 150,631 36,410 1,209,437 30,000 51,483 36,410 1,975,478 1,327,330 12,635 38,512 51,147 96,528 - 96,528 2,026,625 1,423,858 272,000 272,000 130,065 130,065 272,000 130,065 1,754,625 1,293,793 13 12,414,330 325,953 9,743,750 412,640 (10,985,658) (8,862,597) Capital and reserves attributable to owners of the Company 1,754,625 1,293,793 Total Equity 1,754,625 1,293,793 The above Statement of Financial Position should be read in conjunction with the accompanying notes. 26 Breaker Resources NL Statement of Changes in Equity Statement of Changes in Equity for the Financial Year ended 30 June 2016 Attributable to owners of the Company Contributed Equity $ Notes Share- based Payments Reserve $ Accumulated Profit/(Losses) $ Total $ Balance at 30 June 2014 9,743,749 469,533 (8,024,722) 2,188,560 Profit/(Loss) for the year Total comprehensive income/(expense) for the year Transfer to accumulated losses Transactions with owners in their capacity as owners: Contributions of equity net of transaction costs - - - - (894,768) (894,768) (894,768) (894,768) (56,893) 56,893 - 1 13 1 - - Balance at 30 June 2015 9,743,750 412,640 (8,862,597) 1,293,793 Profit/(Loss) for the year Total comprehensive income/(expense) for the year Options issued during the year Options expired and transferred to accumulated losses Transactions with owners in their capacity as owners: Contributions of equity net of transaction costs - - - - - (2,249,361) (2,249,361) - (2,249,361) (2,249,361) 39,613 - 39,613 (126,300) 126,300 - 13 2,670,580 - - 2,670,580 Balance at 30 June 2016 12,414,330 325,953 (10,985,658) 1,754,625 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes. 2016 Annual Report 27 Statement of Cash Flows Statement of Cash Flows for the Financial Year ended 30 June 2016 Cash flows from operating activities Payments to suppliers and employees Notes 2016 $ 2015 $ (569,770) (593,219) Payments for exploration and evaluation expenditure (1,932,620) (1,363,527) Receipts from government grant and incentive Other income received Interest received Interest paid 507,439 54,573 27,227 - 2,707,832 58 36,138 (86) Net cash inflow/(outflow) from operating activities 17 (1,913,151) 787,196 Cash flows from investing activities Investment in term deposits Net cash inflow/(outflow) from investing activities Cash flows from financing activities Proceeds from issue of ordinary shares Share issue transaction costs Repayment of borrowings Net cash inflow/(outflow) from financing activities (1,101,045) (1,101,045) (30,000) (30,000) 2,649,183 (187,032) - 2,462,151 1 - (5,335) (5,334) Net increase/(decrease) in cash and cash equivalents (552,045) 751,862 Cash and cash equivalents at the beginning of the period 1,209,437 457,575 Cash and cash equivalents at the end of the period 7 657,392 1,209,437 The above Statement of Cash Flows should be read in conjunction with the accompanying notes. 28 Breaker Resources NL Notes to the Financial Statements Notes to the Financial Statements for the Year ended 30 June 2016 1. General information Breaker Resources NL is a public company listed on the Australian Securities Exchange, incorporated in Australia and operating in Australia. The Company’s registered office and its principal place of business is 12 Walker Avenue, West Perth WA 6005. Breaker Resources NL’s principal activity is mineral exploration and it is a for-profit entity for the purposes of preparing the Financial Statements. These Financial Statements are for Breaker Resources NL as an individual entity and are presented in the Australian currency. The Financial Statements were authorised for issue by the directors on 19 August 2016. The directors have the power to amend and reissue the Financial Statements. 2. Significant accounting policies The principal accounting policies adopted in the preparation of the Financial Statements are set out below. (a) Basis of preparation These general purpose financial statements have been prepared in accordance with the Corporations Act 2001 (Cth) (Corporations Act) and Australian Accounting Standards and Interpretations (Standards) issued by the Australian Accounting Standards Board (AASB). The Financial Statements and notes of the Company also comply with International Financial Reporting Standards issued by the International Accounting Standards Board. These Financial Statements have been prepared under the historical cost convention. Historical cost is generally based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise noted. Going concern The Financial Statements have been prepared on the basis of going concern which assumes continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. (b) New and revised accounting standards i. Amendments to Standards that are mandatorily effective for the current year In the current year, the Company has applied one applicable amendment to Standards issued by the AASB that are mandatorily effective for an accounting period that begins on or after 1 July 2015, and therefore relevant for the current year end. AASB 2015-3 ‘Amendments to Australian Accounting Standards arising from the Withdrawal of AASB 1031 Materiality’ This amendment completes the withdrawal of references to AASB 1031 in all Standards, allowing that Standard to effectively be withdrawn. The application of the amendment does not have any material impact on the disclosures or on the amounts recognised in the Company’s financial statements. 2016 Annual Report 29 Notes to the Financial Statements ii. Standards in issue not yet adopted At the date of authorisation of the Financial Statements, the Standards applicable to the Company’s business listed below were in issue but not yet effective. The potential effect of the revised Standards on the Company’s financial statements has not yet been determined. AASB 9 ‘Financial Instruments’ and the relevant amending standards, effective for annual reporting periods beginning on or after 1 January 2018, expected to be initially applied in the financial year ending 30 June 2019; AASB 2014-3 ‘Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations’, effective for annual reporting periods beginning on or after 1 January 2016, expected to be initially applied in the financial year ending 30 June 2017; AASB 2014-4 ‘Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation’, effective for annual reporting periods beginning on or after 1 January 2016, expected to be initially applied in the financial year ending 30 June 2017; AASB 2014-9 ‘Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements’, effective for annual reporting periods beginning on or after 1 January 2016, expected to be initially applied in the financial year ending 30 June 2017; AASB 2014-10 ‘Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture’, effective for annual reporting periods beginning on or after 1 January 2016, expected to be initially applied in the financial year ending 30 June 2017; AASB 2015-1 ‘Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle’, effective for annual reporting periods beginning on or after 1 January 2016, expected to be initially applied in the financial year ending 30 June 2017; AASB 2015-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101’, effective for annual reporting periods beginning on or after 1 January 2016, expected to be initially applied in the financial year ending 30 June 2017; AASB 2016-1 ‘Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses’, effective for annual reporting periods beginning on or after 1 January 2017, expected to be initially applied in the financial year ending 30 June 2018; and AASB 2016-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB107’, effective for annual reporting periods beginning on or after 1 January 2017, expected to be initially applied in the financial year ending 30 June 2018. (c) Segment reporting An operating segment is defined as a component of an entity that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. 30 Breaker Resources NL Notes to the Financial Statements Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company’s 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. (d) Government grants Government grants are not recognised until there is reasonable assurance that the Company will comply with the conditions attaching to them and that the grants will be received. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognised in profit or loss in the period in which they become receivable. (e) (f) Interest income Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable. Income tax The income tax expense for the year is the tax payable on the current year’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 differences 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 operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It creates provisions, where appropriate, on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Financial Statements. However, the deferred tax income is not accounted for if it arises from initial recognition of an asset or liability in a transaction that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise these temporary differences and losses. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. 2016 Annual Report 31 Notes to the Financial Statements (g) Impairment of assets At the end of each reporting period, the Company reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered an impairment loss. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so 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 prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. (h) Cash and cash equivalents For the purpose of presentation in the Statement of Cash Flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short term highly liquid investments with original maturities of three (3) months or less that are readily convertible to known amounts of cash and which are not subject to significant risk of changes in value, and bank overdrafts. (i) (j) Trade and other receivables Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. Financial assets Classification The Company classifies all of its financial assets as loans and receivables. Management determines the classification of its financial assets at initial recognition. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinate payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified as non- current assets. Due to the short-term nature of the current receivables, their carrying amount is assumed to be the same as their fair value. For the non-current receivables, the fair values are also not significantly different to their carrying amounts. Collectability of loans and receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment) is used where there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables or in an otherwise timely manner. The amount of the impairment allowance is the difference between the asset’s carrying amount and the estimated future cashflows. None of the Company’s loans and receivables has an applicable interest rate hence the cash flows are not discounted. 32 Breaker Resources NL Notes to the Financial Statements The amount of the impairment loss is recognised in the Statement of Profit or Loss and Other Comprehensive Income within impairment expenses. When a loan or receivable for which an impairment allowance has been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the Statement of Profit or Loss and Other Comprehensive Income. Recognition and derecognition Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Company commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Company has transferred substantially all of the risks and rewards of ownership. Impairment The Company assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets is impaired. If there is any evidence of impairment for any of the Company’s financial assets carried at amortised cost, 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. The cash flows are discounted at the financial asset’s original effective interest rate. The loss is recognised in the Statement of Profit or Loss and Other Comprehensive Income. (k) Plant and equipment All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. 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 Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the Statement of Profit or Loss and Other Comprehensive Income during the reporting period in which they are incurred. Depreciation of plant and equipment is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term. All plant and equipment is depreciated at the rate of 25% per annum. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (refer to Note 2(g)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Profit or Loss and Other Comprehensive Income. (l) Exploration and evaluation costs Exploration and evaluation costs are written off in the year they are incurred. (m) Trade and other payables These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured, non-interest bearing and are paid on normal commercial terms. They are presented as current liabilities unless payment is not due within 12 months after the reporting period. 2016 Annual Report 33 Notes to the Financial Statements (n) Employee benefits Short-term obligations Liabilities for wages and salaries, including non-monetary benefits, and annual leave that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The short-term employee benefit obligations are presented as payables. Other long-term employee benefit obligations The liabilities for long service leave and annual leave that are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are 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 end of the reporting period using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the end of the reporting period of government bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. (o) Share-based payments The Company provides benefits to employees (including directors and contractors) and suppliers in the form of share-based payment transactions, whereby employees and suppliers render goods or services in exchange for shares or rights over shares (equity-settled transactions) (refer to Note 18). The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which any performance conditions are fulfilled, ending on the date on which the relevant employees or suppliers become fully entitled to the award (vesting date). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects: the extent to which the vesting period has expired; and the number of options that, in the opinion of the directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. 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. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award. 34 Breaker Resources NL Notes to the Financial Statements Options over ordinary shares have also previously been issued as consideration for other services. These options have been treated in the same manner as employee options described above, with the expense being included as part of exploration expenditure. (p) 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. (q) Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included with other receivables or payables in the Statement of Financial Position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as operating cash flows. (r) Critical judgements, estimates and assumptions The preparation of these Financial Statements requires the use of certain critical accounting estimates, which, by definition, will seldom equal the actual results. It also requires management to exercise its judgement in the process of applying the Company’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Financial Statements are: Environmental issues Balances disclosed in the Financial Statements and notes thereto are not adjusted for any pending or enacted environmental legislation, and the directors’ understanding thereof. At the current stage of the Company’s development and its current environmental impact, the directors believe such treatment is reasonable and appropriate. Taxation Balances disclosed in the Financial Statements and the notes thereto related to taxation are based on the best estimates of the directors. These estimates take into account both the financial performance and position of the Company as they pertain to current income taxation legislation, and the directors’ understanding thereof. No adjustment has been made for pending or future taxation legislation. The current income tax position represents the directors’ best estimate, pending an assessment by the Australian Taxation Office. 3. Financial risk management The Company’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Company. Risk management is carried out by the full Board via the audit and risk committees as the Company believes that it is crucial for all directors to be involved in this process. The Executive Chairman, with the assistance of senior management as required, has responsibility for identifying, assessing, treating and monitoring risks and reporting to the Board on risk management. 2016 Annual Report 35 Notes to the Financial Statements (a) Market risk Foreign exchange risk As all current operations are within Australia the Company is not exposed to foreign exchange risk. Commodity price risk Given the current level of operations the Company is not exposed to commodity price risk. Interest rate risk The Company is exposed to movements in market interest rates on cash and cash equivalents. The Company policy is to monitor the interest rate yield curve out to six (6) months to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The entire balance of cash and bank deposits for the Company of $1,788,437 (2015: $1,239,437) is subject to interest rate risk. The weighted average interest rate received on cash and cash equivalents by the Company was 2.22% (2015: 2.16%). Sensitivity analysis At 30 June 2016, if interest rates had changed by -/+ 100 basis points from the weighted average rate for the year with all other variables held constant, post-tax loss for the Company would have been $9,334 lower/higher (2015: $8,335) as a result of lower/higher interest income from cash and cash equivalents. (b) Credit risk The Company has no significant concentrations of credit risk. The maximum exposure to credit risk at balance date is the carrying amount of those assets as disclosed in the Statement of Financial Position and Notes to the Financial Statements. As the Company does not presently have any debtors, lending, significant stock levels or any other credit risk, a formal credit risk management policy is not maintained. (c) Liquidity risk The Company manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable securities are available to meet the current and future commitments of the Company. Due to the nature of the Company’s activities, being mineral exploration, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. The Board constantly monitors the state of equity markets in conjunction with the Company’s current and future funding requirements, with a view to initiating appropriate capital raisings as required. The financial liabilities of the Company are generally confined to trade and other payables as disclosed in the Statement of Financial Position. All trade and other payables are non-interest bearing and due within 12 months of the reporting date. (d) Fair value estimation The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. All financial assets and financial liabilities of the Company at the balance date are recorded at amounts approximating their carrying amount due to their short-term nature. 36 Breaker Resources NL Notes to the Financial Statements 4. Income and expenses (a) Income from continuing operations includes the following revenue items: Government grant and incentive(i) Interest income Other 2016 $ 507,439 27,227 54,573 589,239 2015 $ 926,686 36,138 58 962,882 Notes (i) The amounts represent Research and Development tax incentive. There are no unfulfilled conditions or other contingencies attaching to this incentive. The Company did not benefit directly from any other forms of government assistance. (b) Loss for the year includes the following specific expenses: Depreciation expenses Exploration and evaluation expenses (c) Employee benefit expenses: Wages and superannuation Directors’ fees Annual leave provision Other 5. Operating segments 2016 $ 83,893 2,219,306 2015 $ 93,450 1,284,015 2016 $ 2015 $ 77,358 64,000 3,595 1,343 94,811 64,000 (7,309) 1,865 146,296 153,367 For management purposes, the Company has identified only one (1) reportable segment as exploration activities undertaken in Australia. This segment includes activities associated with the determination and assessment of the existence of commercial economic reserves from the Company’s mineral assets in this geographic location. Segment performance is evaluated based on the operating profit and loss and cash flows and is measured in accordance with the Company’s accounting policies. Segment revenue Reconciliation of segment revenue to total revenue before tax: Government grant and incentive Interest revenue Other income Total revenue 2016 $ 2015 $ 50,000 - 507,439 27,227 4,573 589,239 926,686 36,138 58 962,882 2016 Annual Report 37 Notes to the Financial Statements Segment result Reconciliation of segment result to loss before tax: Depreciation expenses Other corporate and administration income/(expenses), net Net profit/(loss) before tax 2016 $ 2015 $ (2,169,306) (1,284,015) (83,893) 3,838 (2,249,361) (93,450) 482,697 (894,768) Segment operating assets 9,808 81,557 Reconciliation of segment operating assets to total assets: Other corporate and administration assets Total assets Total assets includes additions to non-current assets 2,016,817 2,026,625 1,342,301 1,423,858 - Segment operating liabilities 227,992 92,884 Reconciliation of segment operating liabilities to total liabilities: Other corporate and administration liabilities Total liabilities 6. Income tax Income tax expense Current tax Deferred tax Numerical reconciliation of income tax expense to prima facie tax payable Profit/(Loss) from continuing operations before income tax expense Prima facie tax benefit at the Australian tax rate of 28.5% (2015: 30%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Capital raising costs R& D incentive Entertainment Share-based payment 44,008 272,000 37,181 130,065 2016 $ 2015 $ - - - - (2,249,361) (895,075) (641,068) (268,523) (16,906) (144,620) - 314 (8,172) (278,006) 205 - (802,280) (554,496) Movements in unrecognised temporary differences (43,881) (20,255) Tax effect of current year tax losses for which no deferred tax asset has been recognised Income tax expense 846,111 574,751 - - 38 Breaker Resources NL Notes to the Financial Statements Unrecognised temporary differences Deferred tax liabilities (at 28.5%) on income tax account (2015: 30%) Prepayments Plant and equipment FBT payable DTA used to offset DTL Deferred tax liabilities Deferred tax assets (at 28.5%) on income tax account (2015: 30%) Accruals Provisions Capital raising costs Carry forward tax losses DTA used to offset DTL 2016 $ 2015 $ 25,418 2,071 - 9,673 26,172 545 (27,489) (36,390) - - 5,700 3,547 52,720 2,164,598 (27,489) 2,199,076 8,400 2,217 69,888 1,726,266 (36,390) 1,770,381 Deferred tax liabilities (28.5%) - - Net deferred tax assets have not been brought to account as it is not probable within the immediate future that tax profits will be available against which deductible temporary differences and tax losses can be utilised. The Company’s ability to use losses in the future is subject to the Company satisfying the relevant tax authority’s criteria for using these losses. The Company participated in the federal government’s 2014/15 Exploration Development Incentive Scheme for eligible exploration entities. There is no financial effect on the Company’s taxation position for the current reporting period however carry forward losses will be reduced in future period/s to reflect the exploration credits distributed to eligible shareholders In 2016, the governance enacted a change in the income tax rate for small business entities from 30% to 28.5%. Breaker Resources NL satisfies the criteria to be a small business entity. 7. Cash and cash equivalents Cash at bank and in hand Cash and cash equivalents as shown in the Statement of Financial Position and the Statement of Cash Flows 2016 $ 2015 $ 657,392 1,209,437 657,392 1,209,437 Term deposits classified separate to cash on face of Statement of Financial Position 1,131,045 30,000 Cash and cash equivalents include short-term deposits made for varying periods of between one (1) month and three (3) months depending on the immediate cash requirements of the Company and earn interest at the respective short-term deposit rates. 2016 Annual Report 39 Notes to the Financial Statements Term deposits separated from cash and cash equivalents as at 30 June 2016 had maturities from four (4) months to six (6) months earning interest income at an average rate of 2.30%. 8. Trade and other receivables Prepayments GST receivable and FBT instalment Other receivables 2016 $ 89,188 59,903 1,540 150,631 2015 $ 32,243 19,240 - 51,483 The carrying amounts of trade and other receivables are assumed to be the same as their fair values, due to their short-term nature. 9. Other financial assets Bond for office lease 10. Plant and equipment 2016 $ 2015 $ 36,410 36,410 2016 2015 Furniture & office equipment $ Exploration equipment $ Motor vehicles $ Total $ Furniture & office equipment $ Exploration equipment $ Motor vehicles $ Total $ Cost 54,831 108,717 213,838 377,386 54,831 108,717 213,838 377,386 Accumulated depreciation (52,004) (103,126) (209,621) (364,751) (39,860) (79,130) (161,868) (280,858) Net book amount 2,827 5,591 4,217 12,635 14,971 29,587 51,970 96,528 Opening net book amount 14,971 29,587 51,970 96,528 28,642 56,408 104,928 189,978 Depreciation charge (12,144) (23,996) (47,753) (83,893) (13,671) (26,821) (52,958) (93,450) Closing net book amount 2,827 5,591 4,217 12,635 14,971 29,587 51,970 96,528 11. Prepaid service Prepaid service 2016 $ 2015 $ 38,512 - During the year, the Company issued 500,000 options to a supplier in exchange of the use of certain intellectual property owned by the supplier for a period of three (3) years. The prepaid service was recognised as a share-based payment and amortised over the agreed period of use of the property. 40 Breaker Resources NL Notes to the Financial Statements 12. Trade and other payables Trade creditors Other payables and accruals 2016 $ 239,552 32,448 272,000 2015 $ 94,670 35,395 130,065 Trade payables are unsecured and are usually paid within 30 days of recognition. The carrying amounts of trade and other payables are assumed to be the same as their fair values, due to their short-term nature. 13. Contributed equity (a) Share capital 2016 2015 Notes Number $ Number $ Ordinary shares fully paid (b),(d) 99,596,129 12,345,467 68,875,008 9,674,875 Ordinary shares partly paid (b),(d) 6,886,248 68,863 6,887,498 68,875 Total issued capital 106,482,377 12,414,330 75,762,506 9,743,750 2016 2015 Number $ Number $ 75,762,506 9,743,750 75,762,503 9,743,749 (b) Movements in ordinary share capital Beginning of the year Issued during the year: Fully paid shares via option exercise Fully paid shares via a pro-rata - - renounceable entitlement issue 13,843,875 553,755 Fully paid shares issued in exchange of services Placement to sophisticated and 760,590 208,429 professional investors 6,538,426 850,000 Fully paid shares under a Share Purchase Plan 8,423,133 1,095,428 3 - - - - - - 1 - - - - - - Fully paid shares issued to a director Transaction costs End of the year (c) Movements in options on issue Beginning of the year Issued Exercised Expired or lapsed End of the year 1,153,847 150,000 - (187,032) 106,482,377 12,414,330 75,762,506 9,743,750 2016 Number 8,000,000 500,000 - 2015 Number 36,537,498 - (3) (6,000,000) (28,537,495) 2,500,000 8,000,000 2016 Annual Report 41 Notes to the Financial Statements All options on issue are exercisable on a 1:1 basis for the Company’s ordinary shares and carry no rights to dividends and no voting rights. The options are exercisable at prices between $0.40 and $0.50 and expire between 31 December 2016 and 30 June 2019. (d) Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one (1) vote, and upon a poll each share is entitled to one (1) vote, in proportion to the number of and amounts paid on the shares held. Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. The partly paid ordinary shares have a total issue price of $0.20 and are paid up to $0.01. The balance is payable by calls made by the Company no earlier than four (4) years after the date of issue (December 2013). Upon becoming fully paid, each partly paid share will rank equally in all respects with the other issued fully paid shares in the Company. (e) Capital risk management The Company’s objective when managing capital is to safeguard its ability to carry on as a going concern, so that it may continue to provide returns for shareholders and benefits for other stakeholders. Due to the nature of the Company’s activities, being mineral exploration, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of capital risk management is the current working capital position against the requirements of the Company to meet exploration programs and corporate overheads. The Company’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Company at 30 June 2016 and 30 June 2015 is as follows: Cash and cash equivalents Term deposits Trade and other receivables Other financial assets Trade and other payables Working capital position 14. Dividends 2016 $ 657,392 1,131,045 150,631 36,410 (272,000) 1,703,478 2015 $ 1,209,437 30,000 51,483 36,410 (130,065) 1,197,265 No dividends were paid during the financial year. No recommendation for payment of dividends has been made. 42 Breaker Resources NL Notes to the Financial Statements 15. Loss per share (a) Reconciliation of earnings used in calculating profit/(loss) per share 2016 $ 2015 $ Profit/(Loss) attributable to the owners of the Company used in calculating basic and diluted profit/(loss) per share (2,249,361) (894,768) (b) Weighted average number of shares used as the denominator Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share 80,224,437 68,875,006 2016 Number 2015 Number (c) Information on classification of options As the Company has made a loss for the year ended 30 June 2016, all options on issue are considered antidilutive and have not been included in the calculation of diluted earnings per share. These options could potentially dilute basic earnings per share in the future. 16. Commitments (a) Exploration Commitments The Company must maintain current rights of tenure to tenements, which requires outlays of expenditure in 2016/17. Under certain circumstances these commitments are subject to the possibility of adjustment to the amount and/or timing of such obligations however they are expected to be fulfilled in the normal course of operations. Estimated expenditure on mining, exploration and prospecting leases for 2016/17 as at the date of this report: 2016 $ 2015 $ 792,000 905,250 (b) Capital Commitments There are no capital expenditure commitments for the Company as at 30 June 2016. (c) Lease Commitments: Company as Lessee The Company leases its office under a non-cancellable operating lease expiring within one (1) year. The lease contains options to renew terms up to two (2) years commencing on the expiry date. Commitments for minimum lease payments in relation to non-cancellable operating leases are payable as follows: Within one (1) year Later than one (1) year but not later than five (5) years 2016 $ 44,523 - 44,523 2015 $ 65,422 - 65,422 2016 Annual Report 43 Notes to the Financial Statements 17. Reconciliation of loss after income tax to net cash outflow from operating activities Reconciliation of net loss after income tax to net cash flow from operating activities Net profit/(loss) for the year Non-cash items Depreciation of non-current assets Share-based payments expenses Change in operating assets and liabilities (Increase)/decrease in trade and other receivables Increase/(decrease)in trade and other payables Net cash inflow/(outflow) from operating activities 2016 $ 2015 $ (2,249,361) (894,768) 83,893 209,530 (99,148) 141,935 (1,913,151) 93,450 - 1,767,402 (178,888) 787,196 18. Share-based payments (a) Employee share options The Company provides benefits to employees (including directors) and contractors of the Company in the form of share-based payment transactions, whereby employees render services in exchange for options to acquire ordinary shares. Options are granted under the plan for no consideration. The table below summarises the share-based payment options granted by Breaker Resources NL: 2016 2015 Weighted average exercise price cents Weighted average exercise price cents Number Number 8,000,000 31.5 8,400,000 32.3 - 6,000,000 2,000,000 2,000,000 - - 48.9 48.9 - 400,000 8,000,000 8,000,000 - - 31.5 31.5 Outstanding at the beginning of the year Granted Forfeited/cancelled/expired Outstanding at year end Exercisable at year end A total of 6,000,000 unlisted options held by Directors expired during the year ended 30 June 2016. The weighted average remaining contractual life of share options outstanding at the end of the financial year was 0.5 year (2015: 1.1 years) and the exercise prices ranged from 47.8 cents to 50 cents (2015: 23.1 cents to 50 cents). The Company changed the exercise prices of some options during the year. The impact on the fair value of the options immediately before and after the modification was insignificant. 44 Breaker Resources NL Notes to the Financial Statements (b) Other party options In addition to options issued to employees, the Company may also issue unlisted options to other parties. The table below summarises the other share-based payment options granted by Breaker Resources NL: 2016 2015 Outstanding at the beginning of the year Granted Forfeited/cancelled/expired Outstanding at year end Exercisable at year end Number - 500,000 - 500,000 500,000 Weighted average exercise price cents Weighted average exercise price cents Number - 40.0 - 40.0 40.0 - - - - - - - - - - The weighted average fair value of the other party options granted during the year was 7.92 cents (2015: Nil). The fair value of the options was estimated using a Black-Scholes pricing model. Expected volatility was based on the historical movement of the underlying share price around its average share price. The assumption that the historical volatility is indicative of future trends may also not necessarily be the actual outcome. Inputs into the pricing model Grant date share price Exercise price Expected volatility Option life Risk-free interest rate $0.20 $0.40 85% 3.08 years 1.65% (c) Share-based payments expenses During the year, the Company incurred $209,530 arising from share-based payment transactions (2015: Nil). An amount of $126,300 was transferred from the share-based payment reserve to accumulated losses as a result of the expiry of 6,000,000 options. 19. Key management personnel transactions The aggregate compensation made to directors and other members of key management personnel of the Company is set out below: Short term benefits Post-employment benefits 2016 $ 599,580 13,615 613,195 2015 $ 627,251 15,269 642,520 There were no loans to/from key management personnel during the year. Detailed remuneration disclosures are provided in the Remuneration Report on page 7. 2016 Annual Report 45 Notes to the Financial Statements 20. Related party transactions The Company had no transactions with related parties during the year except for payments to the key management personnel disclosed in the Remuneration Report on page 7. There were no guarantees provided to related parties during the year. 21. Remuneration of auditor During the year the following fees were paid or payable for services provided by the auditor of the Company, its related practices and non-related audit firms: (a) Audit services Rothsay Chartered Accountants – audit and review of financial reports Total remuneration for audit services 2016 $ 2015 $ 20,000 20,000 20,000 20,000 (b) Non-audit services There were Nil non-audit services provided by the auditor of the Company, Rothsay Chartered Accountants, during the year (2015: Nil). 22. Subsequent events There were no matters or circumstances arising since the end of the reporting period that have significantly affected, or may significantly affect the operations of the Company and the results of those operations or the state of the affairs of the Company in the financial period subsequent to 30 June 2016. 46 Breaker Resources NL Directors’ Declaration Directors’ Declaration The directors declare that: the Financial Statements comprising the Statement of Profit or Loss and Other Comprehensive Income, Statement of Financial Position, Statement of Changes in Equity, Statement of Cash Flows and accompanying notes set out on pages 19 to 36 are in accordance with the Corporations Act 2001 (Cth), including: i. complying with Accounting Standards, the Corporations Regulations 2001 (Cth) and other mandatory professional reporting requirements; and ii. giving a true and fair view of the Company’s financial position as at 30 June 2016 and of its performance for the financial year ended on that date; in the opinion of the directors there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; a statement that the attached financial statements are in compliance with International Financial Reporting Standards has been included in the Notes to the Financial Statements; and the directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the Corporations Act 2001 (Cth). Signed in accordance with a resolution of the directors made pursuant to section 295(5) of the Corporations Act 2001 (Cth). On behalf of the directors TOM SANDERS Executive Chairman Perth, 19 August 2016 2016 Annual Report 47 Independent Audit Report 48 Breaker Resources NL Independent Audit Report 2016 Annual Report 49 ASX Additional Information ASX Additional Information Additional information required by the Australian Securities Exchange and not shown elsewhere in this report is provided below. The information is current as at 30 September 2016. Corporate Governance Statement The 2016 Corporate Governance Statement of Breaker Resources NL is available on the Company’s website at http://www.breakerresources.com.au/company/corporate-governance. Distribution of Equity Securities Analysis of numbers of equity security holders by size of holding: 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001 and over Fully paid ordinary shares Partly paid shares Number of holders Number of shares Number of holders Number of shares 36 115 127 342 127 17,037 382,419 1,089,808 14,337,293 85,687,623 747 101,514,180 11 33 7 26 9 86 4,560 92,920 54,751 1,066,489 4,497,903 5,716,623 Unmarketable Parcel There are 19 holders of unmarketable parcels of fully paid ordinary shares, based on the closing market price of $0.67 on 30 September 2016. Restricted Securities There are no restricted securities on issue. Voting Rights All fully paid ordinary shares carry one (1) vote per share without restriction. Holders of partly paid shares are entitled to a fraction of one (1) vote which is equivalent to the proportion which the amount paid bears to the total issue price. Unlisted options carry no attaching voting rights. Substantial Shareholders The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act, and the details of their holding at the time of notification, are: Shareholder Voting interest Number Voting power % 1 Mr Thomas Stephen Sanders & Mrs Helen Sanders 19,900,877 20.81 50 Breaker Resources NL ASX Additional Information Top 20 Shareholders The names of the 20 largest holders of quoted fully paid ordinary shares (ASX: BRB) are: Shareholder Ordinary shares Number Equity held % HSBC Custody Nominees (Australia) Limited Mr Thomas Stephen Sanders & Mrs Helen Sanders Mr Thomas Stephen Sanders & Mrs Helen Sanders Kurraba Investments Pty Ltd T T Nicholls Pty Ltd Jasper Hill Resources Pty Ltd JP Morgan Nominees Australia Limited Mark Robert Edwards Tecca Pty Ltd Ausdrill International Pty Ltd 1 2 3 4 5 6 7 8 9 10 11 Mr Michael John Kitney & Mrs Dale Jayne Kitney 12 13 14 15 16 17 18 19 20 Mr Ross Ellwood Shannon & Mrs Ruth Shona Shannon Kahala Holdings Pty Ltd Southern Terrain Pty Ltd Bradley Scott Dvorak Gold Elegant (HK) Investment Limited Citicorp Nominees Pty Ltd Cheetah Holdings Pty Ltd Alderhaus Pty Ltd Patersons Securities Limited 11,960,429 11,956,073 9,009,157 5,000,000 3,459,196 3,009,325 1,917,948 1,532,035 1,525,941 1,509,016 1,468,544 1,395,693 1,300,000 1,271,500 1,194,171 1,023,768 1,000,000 1,000,000 900,000 880,385 62,313,181 11.782 11.778 8.875 4.925 3.408 2.964 1.889 1.509 1.503 1.487 1.447 1.375 1.281 1.253 1.176 1.008 0.985 0.985 0.887 0.867 61.384 The names of the 20 largest holders of quoted partly paid shares (ASX: BRBCA) are: Shareholder Ordinary shares Number Equity held % Mr Thomas Stephen Sanders & Mrs Helen Sanders HSBC Custody Nominees (Australia) Limited Cornerstone Capital Pty Ltd Cheetah Holdings Pty Ltd Mr Murray Leslie Siviour Jasper Hill Resources Pty Ltd T T Nicholls Pty Ltd Mr Gavin Victor Hayres & Ms Amanda Yip Mr Graham Robert Foreman 1 2 3 4 5 6 7 8 9 10 Mr David Anthony O’Dea 11 12 13 Westcap Pty Ltd Tecca Pty Ltd 14 15 Mark Robert Edwards 16 Mr Luke Patrick Thomas Sanders 17 Mr Michael John Kitney & Mrs Dale Jayne Kitney 18 19 20 Mr Neil William Strong Kahala Holdings Pty Ltd Henconnor Pty Ltd Southern Terrain Pty Ltd Future Super Pty Ltd 1,309,871 1,062,500 873,912 285,314 248,171 247,732 219,768 145,345 130,000 90,000 87,000 75,669 69,140 65,217 65,000 65,000 58,125 46,294 45,454 45,000 22.913 18.586 15.287 4.991 4.341 4.334 3.844 2.542 2.274 1.574 1.522 1.324 1.209 1.141 1.137 1.137 1.017 0.810 0.795 0.787 5,234,512 91.567 2016 Annual Report 51 ASX Additional Information Unquoted Securities Details of unquoted securities on issue are: Class Securities Number Holders Number Unlisted 47.8 cent options, exercisable on or before 31 December 2016 1,000,000 Unlisted 50 cent options, exercisable on or before 31 December 2016 1,000,000 Unlisted 40 cent options, exercisable on or before 30 June 2016 Unlisted 62.9 cent options, exercisable between 23 August 2017 and 31 December 2019 500,000 200,000 1 1 1 1 Holders of 20% or more of the class Details of holders of 20% or more of a class of unquoted securities are: Class Unlisted 50 cent options, exercisable on or before 31 December 2016 Unlisted 40 cent options, exercisable on or before 30 June 2019 On-market Buy-back There is no current on-market buy-back. Holder Securities Number Held % Mr Alastair Barker 1,000,000 100 Lithify Pty Ltd 500,000 100 Inside Rear Cover: RC Drilling at the Lake Roe Project (top); Aircore Drill Rig on Lake Roe (bottom) 52 Breaker Resources NL ABN: 87 145 011 178 12 Walker Avenue, West Perth, Western Australia 6005 Tel: +61 8 9226 3666 | Fax: +61 8 9226 3668 Email: breaker@breakerresources.com.au www.breakerresources.com.au