DGR GLOBAL LIMITED AND CONTROLLED ENTITIES ACN FINANCIAL REPORT

Transcription

1 DGR GLOBAL LIMITED AND CONTROLLED ENTITIES ACN FINANCIAL REPORT FOR THE HALFYEAR ENDED 31 DECEMBER 2018

2 Corporate Information DIRECTORS William Stubbs (Chairman) Nicholas Mather (Managing Director) Brian Moller Vincent Mascolo Ben Cleary COMPANY SECRETARY Karl Schlobohm REGISTERED OFFICE AND PRINCIPAL BUSINESS OFFICE DGR Global Limited Level Eagle Street Brisbane QLD 4000 Phone: Fax: SOLICITORS HopgoodGanim Lawyers Level 8, Waterfront Place 1 Eagle Street Brisbane QLD 4000 SHARE REGISTER Link Market Services Limited Level 21, 10 Eagle Street Brisbane QLD 4000 Telephone: Facsimile: AUDITOR BDO Audit Pty Ltd Level 10, 12 Creek Street Brisbane QLD 4000 COUNTRY OF INCORPORATION Australia STOCK EXCHANGE LISTING Australian Securities Exchange ASX Code: DGR INTERNET ADDRESS AUSTRALIAN BUSINESS NUMBER ABN DGR Global Limited financial report for the halfyear ended 31 December

3 Directors' Report Your Directors submit the financial report of the consolidated entity for the halfyear ended 31 December DIRECTORS The names of persons who held office during or since the end of the halfyear: William Stubbs Nicholas Mather Brian Moller Vincent Mascolo Ben Cleary (NonExecutive Chairman) (Managing Director and Chief Executive Officer) (NonExecutive Director) (NonExecutive Director) (NonExecutive Director) REVIEW OF OPERATIONS The loss after income tax for the half year ended 31 December 2018 was 603,449 (31 December 2017: profit of 575,301). DGR Global s business is resourceproject generation and discovery across a range of commodities, including copper, gold, nickel, cobalt, lithium, tin, iron ore, titanium, bauxite, coal, oil and gas. The group focuses on delivering value through the discovery of ore bodies by the application of innovative exploration techniques and reassessment strategies of existing predevelopment projects and new greenfields areas. DGR Global is generating and developing several independently funded and managed resource companies in order to progress each of these projects. The Company also maintains its cornerstone investor position in subsidiaries that move to listing on a recognised stock exchange. The DGR business model has been soundly endorsed by the best performing hedge fund in the world for 2016, with Tribeca Investment Partners providing 10 million in converting note funding to further develop the resources company creation business 1. Exploration and Development of Subsidiaries During the halfyear the group was strongly focused on advancing exploration projects within the parent and subsidiary companies. Field reconnaissance programs including mapping, soil, stream and rock sampling, and reverse circulation and diamond core drilling were undertaken. Significant activities which occurred during the halfyear included: In association with Armour Energy Limited, DGR advanced its 83.18% interest in a highly prospective oil project in the Kanywayaba Block, Uganda 2. Albatross Bauxite Pty Ltd (100%) Surrender of the last bauxite EPM following initial exploration results. Two new EPM applications over lithium and caesium pegmatites in Southern Queensland have been granted during the half year. Auburn Resources Limited (49.42%) Developing as a nickelcoppercobaltgoldzinc company, with fundraising and exploration undertaken for advancement towards ultimate listing. Potential for world class copper gold discoveries at Mt Abbot, Calgoa and Marodian Projects, and large sulphide nickel cobalt copper discoveries near Hawkwood 3. Exploration target defined for the Ban Ban Zinc Project following 3D modelling and reinterpretation of historical drilling data along with a soil sampling program. Pinnacle Gold Pty Ltd (94%) Five (5) EPMs held over prospective gold targets situated between the former Black Jack and Mt Leyshon Mines near Charters Towers, Qld. Coolgarra Minerals Pty Ltd (100%) Five (5) granted EPMs and 1 EPM application for gold, nickel, cobalt and antimony in North Queensland. DGR Global Limited financial report for the halfyear ended 31 December

4 Investments SolGold plc (11.11%) LSE/TSX: SOLG Focus on high grade world class copper gold porphyry system at Cascabel in Ecuador. Cascabel is close to the capital and ports, is at low elevation, and has adequate water supplies and access to hydropower. Updated NI compliant Alpala Mineral Resource Estimate released in November 2018 doubles the initial estimate reported less than 12 months ago refer SolGold website for details 4. Over 160,000 metres of drilling now completed, with further significant long, high grade drill intersections announced to the London and Toronto Stock Exchanges during the quarter. These can be viewed on the SolGold company website. Twelve (12) drilling rigs have been operating at Cascabel 5. Sampling and mapping continued across SolGold s additional 72 wholly owned Mineral Concessions in Ecuador to remain the dominant explorer in the country. Extensive high grade copper and gold mineralisation already discovered in outcrops on several concessions in Southern Ecuador, particularly at the La Hueca, Timbara and Porvenir Projects 6. High grade epithermal gold mineralisation discovered at the Blanca and Cisne Loja Project 7. Fresh discovery at Porvenir Target SolGold raises 45m at 45p per share from BHP 9. Armour Energy Limited (22.02%) ASX: AJQ The LPG system of the Kincora Gas Plant has been successfully recommissioned and the whole plant is fully operational. Gas, LPG and condensate from existing production wells has been processed and sold for the last twelve months 10. Awarded further Roma Shelf petroleum acreage near the Kincora plant during the quarter 11. Government of Uganda issues Armour an Exploration Licence over the highly prospective Kanywataba Block in the Albertine Graben, Uganda. Less than 40% of the Albertine Graben has been subjected to exploration to date where 101 wells of approximately 115 wells drilled have encountered hydrocarbons 12. Armour receives cost contribution grant up to 6 million to enable accelerated drilling of three production wells at Kincora under the Federal Government Gas Acceleration Program (GAP) 13. Initial production from the first well under the GAP initiative, Myall Creek 4A, commenced during the quarter, and the second well Myall Creek 5A was drilled and cased for future production 14. Armour progressed to firm contracted gas supply agreement with APLNG 15. Holds highly prospective whole basin oil and gas positions in Northern Territory and North West Qld covering 139,000 km 2, and a track record of exploration success. IronRidge Resources Limited (22.18%) LSE: IRR Primary focus on gold (in Chad and Ivory Coast) and lithium (in Ghana and Ivory Coast) now firmly established with extensive tenement packages secured in all three countries. Recent market update highlighted the major new gold discovery at the Dorothe Project and nearby Ouchar and Echbara licence areas in Chad, gold projects in Ivory Coast, and lithium projects with proven big, high grade lithium spodumene pegmatites in Ghana and Ivory Coast 16. 8,000 metre RC drilling program at the Ewoyaa lithium pegmatite project in Ghana has been completed, and assay results indicate high grades over significant intervals 17. IronRidge raises 5.4m at 20p per share for development of gold and lithium projects 18. Retaining highly prospective hematite rich iron targets evident in Tchibanga and Belinga Sud licence areas in Gabon total tenure 5,400 km 2. Tchibanga is less than 70 km from the port of Mayumba. Dark Horse Resources Limited (16.73%) ASX: DHR Focussed on gold and developing a lithium spodumene business in Argentina. Commercially disappointing results from the drilling program in the environs of the Las Tapias Mine (lithium) leads to a diversification of focus in the company s Argentinian lithium business 19. Initial assay results from the extensive field exploration programme over the Santa Cruz gold projects reveals encouraging gold and silver results on several tenements 20. Following the sale of subsidiary NavGas Pty Ltd (includes 6 PELAs in South Australia and ATP 1183 on the Roma Shelf in Qld.) to Lakes Oil NL (LKO), DHR held 9.6 billion shares in LKO at the end of the period. Legal due diligence progressing on the exclusivity agreement executed to acquire the highly prospective San Jorge Lithium Brine Project in Argentina 21. DGR Global Limited financial report for the halfyear ended 31 December

5 Aus Tin Mining Limited (18.24%) ASX: ANW High grade cobalt results from drilling at Mt Cobalt west of Gympie, Qld. Initial target zone 350m long and 25m wide open at depth 22. Field reconnaissance locates historic workings and weathered host rock 190m south of the earlier target. Rock chip samples submitted for assay. Preliminary metallurgical testwork highlights the potential to beneficiate target zone material 32. Based on new geophysics data a drilling program is underway at Pembroke adjacent to Mt Cobalt 24. Significant progress at the Granville Tin Project in Tasmania and civil works well advanced for Level 2 operations 25. August 2013 JORC resource estimate confirmed Taronga as a world class tin project. The details of the resource (79% indicated) can be viewed on the ASX or on the company website. Metallurgical flow sheet completed for Taronga prefeasibility study. Ore described as coarse grained, having simple metallurgy, and highly amenable to preconcentration. Further successful ore sorting trial for Taronga Tin utilizing XRay Transmission technology on different ore size ranges ore completed during the quarter 26. Corporate Supported associated companies with loans on commercial terms. Advancement of new development projects in Australia, Africa and the Americas focussed on base metals, gold, cobalt, lithium, bauxite, oil and gas. Footnotes: 1 DGR ASX Releases 22/8 and 25/10/17 2 AJQ ASX Release 14/9/17 3 DGR ASX Releases 3/7, 5/7/17, 8/11/18 4 SOLG LSE & TSX Release 20/11/18 5 SOLG LSE & TSX Releases 5/10, 13/11/18 6 SOLG LSE & TSX Releases 24/2, 25/5/18 7 SOLG LSE & TSX Releases 20/3, 7/6, 18/7/18 8 SOLG LSE & TSX Release 2/1/19 9 SOLG LSE & TSX Releases 16/10, 8/11/18 10 AJQ ASX Releases 21/1, 12/2/18 11 AJQ ASX Releases 15/11, 21/12/18 12 AJQ ASX Release 19/9/17 13 AJQ ASX Releases 28/3, 29/6/18 14 AJQ ASX Releases 8/10, 1,12,21,27/11,13/12/18 15 AJQ ASX Release 6/12/18 16 IRR LSE:AIM Releases 2/5, 16/8, 24/9/18 17 IRR LSE:AIM Releases 8/10, 20/11, 10/12/18 18 IRR LSE:AIM Release 21/11/18 19 DHR ASX Releases 9/10, 12/11/18 20 DHR ASX Releases 5/9, 12/11/18 21 DHR ASX Releases 5/9, 12/11/18 22 ANW ASX Releases 23/1, 16/2/18 23 ANW ASX Releases 5/3, 14/3/18 24 ANW ASX Releases 4/10, 2/11, 9/11/18 25 ANW ASX Releases 12/4, 19/12/18 26 ANW ASX Releases 2/7, 24/10/18 The current aggregate market value of DGR s listed assets may be represented as follows: Investment Number of Shares Number of Options Market Value # / Warrants A (unlisted) SolGold plc 204,151, ,580,253 Dark Horse Resources Ltd 330,613,371 1,322,453 IronRidge Resources Ltd 68,522,667 24,901,501 Aus Tin Mining Ltd 360,833,715 5,051,672 Lakes Oil Resources Ltd 742,159, ,159 Armour Energy Ltd 111,899,712 8,840,077 Total market value of DGR Global s listed assets 181,438,116 Total DGR Global shares on issue 613,181,877 Value attributable to each DGR share # Market value represents the market quoted price for listed investments at 4 March No value has been attributable to the options or prospects in development. DGR Global Limited financial report for the halfyear ended 31 December

6 EVENTS AFTER REPORTING PERIOD The Directors are not aware of any events since 31 December 2018 that impact upon the financial report as at 31 December AUDITOR S INDEPENDENCE DECLARATION The auditor s independence declaration, under section 307C of the Corporations Act 2001, is set out on page 7 for the halfyear ended 31 December This report is signed in accordance with a resolution of the Board of Directors. Nicholas Mather Managing Director Brisbane Date: 15 March 2019 Competent Person s Statement The information herein that relates to Exploration Results is based on information compiled by Nicholas Mather B.Sc. (Hons) Geol., who is a Member of The Australian Institute of Mining and Metallurgy. Mr Mather is employed by Samuel Capital Pty Ltd which provides certain consultancy services including the provision of Mr Mather as the Managing Director of DGR Global Limited (and a Director of DGR Global Limited s subsidiaries). Mr Mather has more than five years experience which is relevant to the style of mineralisation and type of deposit being reported and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves (the JORC Code). This public report is issued with the prior written consent of the Competent Person(s) as to the form and context in which it appears. DGR Global Limited financial report for the halfyear ended 31 December

7 Tel: Fax: Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia DECLARATION OF INDEPENDENCE BY D P WRIGHT TO THE DIRECTORS OF DGR GLOBAL LIMITED As lead auditor for the review of DGR Global Limited for the halfyear ended 31 December 2018, I declare that, to the best of my knowledge and belief, there have been: 1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and 2. No contraventions of any applicable code of professional conduct in relation to the review. This declaration is in respect of DGR Global Limited and the entities it controlled during the period. D P Wright Director BDO Audit Pty Ltd Brisbane, 15 March 2019 DGR Global Limited financial report for the halfyear ended 31 December BDO Audit Pty Ltd ABN is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN , an Australian company limited by guarantee. BDO Audit Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

8 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the halfyear ended 31 December 2018 Revenue and other income Revenue 2 798, ,000 Other income 2 2,473,380 7,602,136 Total revenue and other income 3,271,380 8,400,136 Exploration costs written off Finance costs Employee benefits expenses Depreciation expenses Legal expenses Administration and consulting expenses Share of profits (losses) of associates 6 Share based payments employment expense Movement in fair value of Convertible note liability Consolidated 6 Months to 6 Months to Note 31 December 31 December (18,500) (118,561) (539,547) (303,179) (1,080,977) (1,095,246) (13,800) (15,102) (16,357) (17,061) (956,354) (967,148) (1,709,989) (3,212,416) (46,189) (844,806) (290,649) (122,764) Movement in fair value of Convertible note asset (224,313) Profit/ (loss) before income tax (1,625,295) 1,703,853 Income tax (expense)/benefit 3 Profit / (loss) for the period Other comprehensive income 1,021,846 (1,128,552) (603,449) 575,301 Items that will not be reclassified to profit or loss Net fair value gains (losses) on financial assets at fair value through other comprehensive income 46,475,214 (30,057,776) Share of associates other comprehensive income (45,021) Tax effect of net fair value gains (losses) on financial assets at fair 3 value through other comprehensive income (13,929,297) 9,017,333 Other comprehensive income for the period, net of tax 32,500,896 (21,040,443) Total comprehensive income for the period 31,897,447 (20,465,142) Profit / (loss) for the period attributable to: Members of the parent company (598,042) 568,192 Noncontrolling interests (5,407) 7,109 (603,449) 575,301 Total comprehensive income for the period attributable to: Members of the parent company 31,902,854 (20,472,251) Noncontrolling interests (5,407) 7,109 Earnings per share 31,897,447 (20,465,142) Cents Cents Basic earnings per share 4 (0.1) 0.1 Diluted earnings per share 4 (0.1) 0.1 The consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the notes to the financial statements. DGR Global Limited financial report for the halfyear ended 31 December

9 Consolidated Statement of Financial Position as at 31 December 2018 Note Consolidated 31 December 30 June CURRENT ASSETS Cash and cash equivalents 1,638,085 2,841,511 Trade and other receivables 1,367,362 1,483,286 Other current assets 39,710 Current tax assets 12,488 5,101 Total Current Assets 3,017,935 4,369,608 NONCURRENT ASSETS Other financial assets 5 155,074, ,812,320 Investments accounted for using the equity method 6 20,000,322 17,991,832 Property, plant and equipment 417, ,731 Exploration and evaluation assets 8,118,887 6,572,307 Total NonCurrent Assets 183,611, ,803,190 TOTAL ASSETS 186,629, ,172,798 CURRENT LIABILITIES Trade and other payables 1,850,115 1,461,117 Total Current Liabilities 1,850,115 1,461,117 NONCURRENT LIABILITIES Deferred tax liabilities 3 37,202,395 24,287,557 Other financial liabilities 10,090,553 7,939,904 Provisions 1,100,937 1,089,554 Total NonCurrent Liabilities 48,393,885 33,317,015 TOTAL LIABILITIES 50,244,000 34,778,132 NET ASSETS 136,385, ,394,666 EQUITY Issued capital 8 33,545,921 33,545,921 Reserves 117,463,776 84,650,218 Accumulated losses (15,890,131) (15,292,089) Equity attributable to members of the parent entity 135,119, ,904,050 Noncontrolling interests 1,265, ,616 TOTAL EQUITY 136,385, ,394,666 The consolidated statement of financial position should be read in conjunction with the notes to the financial statements. DGR Global Limited financial report for the halfyear ended 31 December

10 Consolidated Statement of Cash Flows for the halfyear ended 31 December 2018 Consolidated Note 6 months to 31 6 months to 31 December December CASH FLOWS FROM OPERATING ACTIVITIES Receipts in the course of operations 706, ,819 Payments to suppliers and employees (1,809,673) (2,141,049) Interest received 805,779 35,140 Interest and other costs of finance paid (237,081) (61,207) Realised foreign exchange gains/(losses) (751) 13,232 Income tax paid (546,114) Net cash outflow from operating activities 11 (535,625) (2,282,179) CASH FLOWS FROM INVESTING ACTIVITIES Security deposit (payment)/refunds (10,500) Payments for property, plant and equipment (4,792) Payments for investments in associates (2,100,000) (3,611,705) Payments for exploration and evaluation assets (1,077,326) (2,070,612) Net loans to related parties 966,780 Net cash (outflow)/inflow from investing activities (3,192,618) (4,715,537) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares 2,773,550 Share issue costs (14,833) Proceeds from the issue of shares in subsidiaries to noncontrolling interests 584,817 Proceeds from borrowings 2,000,000 8,085,000 Costs of borrowings (60,000) (240,000) Net cash (outflow)/inflow from financing activities 2,524,817 10,603,717 Net increase/(decrease) in cash and cash equivalents (1,203,426) 3,606,001 Cash and cash equivalents at 1 July 2,841,511 1,361,255 Cash and cash equivalents at 31 December 1,638,085 4,967,256 The consolidated statement of cash flows should be read in conjunction with the notes to the financial statements. DGR Global Limited financial report for the halfyear ended 31 December

11 Consolidated Statement of Changes in Equity for the halfyear ended 31 December 2018 Issued Capital Accumulated Losses Share Based Payment Reserve Financial Assets Reserve Change in P roportionat e Interest Reserve Profit Reserve Total Noncontrolling Interests Total Equity At 1 July ,787,204 (15,226,707) 6,898,865 85,107,269 17,927,599 8,854, ,348, , ,848,323 Net profit (loss) for the period 568, ,192 7, ,301 Other comprehensive income (21,040,443) (21,040,443) (21,040,443) Total comprehensive income for the period 568,192 (21,040,443) (20,472,251) 7,109 (20,465,142) Transactions with owners in their capacity as owners Exercise of options 2,773,550 2,773,550 2,773,550 Share issue costs, net of tax (14,833) (14,833) (14,833) Share based payments 844, , ,806 At 31 December ,545,921 (14,658,515) 7,743,671 64,066,826 17,927,599 8,854, ,479, , ,986,704 Net profit (loss) for the period (633,574) (633,574) (16,519) (650,093) Other comprehensive income (14,038,856) (14,038,856) (14,038,856) Total comprehensive income for the period Transactions with owners in their capacity as owners Exercise of options (633,574) (14,038,856) (14,672,430) (16,519) (14,688,949) Share issue costs, net of tax Share based payments 96,911 96,911 96,911 At 30 June ,545,921 (15,292,089) 7,840,582 50,027,970 17,927,599 8,854, ,904, , ,394,666 Net profit (loss) for the period (598,042) (598,042) (5,407) (603,449) Other comprehensive income 32,500,896 32,500,896 32,500,896 Total comprehensive income for the period Transactions with owners in their capacity as owners Issue of shares to noncontrolling interests (598,042) 32,500, ,473 31,902, ,473 (5,407) 780,609 31,897,447 1,047,082 Share based payments 46,189 46,189 46,189 At 31 December ,545,921 (15,890,131) 7,886,771 82,528,866 18,194,072 8,854, ,119,566 1,265, ,385,384 The consolidated statement of changes in equity should be read in conjunction with the notes to the financial statements. DGR Global Limited financial report for the halfyear ended 31 December

12 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Summary of Significant Accounting Policies Corporate information The financial report of DGR Global Limited and its controlled entities (the Group ) for the half year ended 31 December 2018 was authorised for issue in accordance with a resolution of the Directors on 15 March DGR Global Limited is a public company limited by shares that is incorporated and domiciled in Australia. Basis of preparation of halfyear financial statements This general purpose financial report for the halfyear ended 31 December 2018 has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act The halfyear financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report. It is recommended that the halfyear financial report be read in conjunction with the annual report for the year ended 30 June 2018 and considered together with any public announcement made by DGR Global Limited during the halfyear ended 31 December 2018 in accordance with the continuous disclosure obligations of the ASX listing rules. Going concern The halfyear report has been prepared on a going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the ordinary course of business. For the period ended 31 December 2018 the Group generated a consolidated loss of 603,449 and incurred operating cash outflows of 535,625. As at 31 December 2018 the Group had cash and cash equivalents of 1,638,085, net current assets of 1,167,820 and net assets of 136,385,384. Together with the convertible note funding, current related party loans and DGR s ability to sell down investments in listed entities, the Directors consider it appropriate to prepare the financial statements on a going concern basis. Comparatives When required by Accounting Standards, comparatives have been adjusted to conform to changes in presentation for the current halfyear. Significant accounting policies The group has applied the same accounting policies and methods of computation in its interim consolidated financial statements as in its 2018 annual financial statements, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2018, and will be adopted in the 2019 annual financial statements. The group has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018 which did not have any impact on the 31 December 2017 comparative results. In the previous years, the group derived its revenue from providing management services to its affiliated entities. Revenue from providing management services is recognised in the accounting period in which the services are rendered. DGR Global Limited financial report for the halfyear ended 31 December

13 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Revenue and Other Income Profit (loss) before income tax has been determined after: 6 Months to 31 6 Months to 31 December December Revenue Management fees 798, ,000 Total revenue 798, ,000 Other income Interest 805, ,125 Foreign exchange gains 13,232 Reversal of impairment of investment in associates 1,663,500 5,617,282 Fair value movement on convertible notes 1,842,597 Other income 4,101 3,900 Total other income 2,473,380 7,602, Income Tax 6 Months to 31 6 Months to 31 December 2018 December 2017 (a) Components of tax expense/(benefit) in profit or loss comprise: Current tax (7,387) 146,957 Deferred tax (1,014,460) 981,595 (1,021,846) 1,128,552 Components of tax expense/(benefit) in other comprehensive income comprise: Deferred tax (13,929,297) (9,017,333) (13,929,297) (9,017,333) (b) The prima facie tax on profit / (loss) before income tax is reconciled to the income tax expense/(benefit) as follows: Prima facie tax on profit / (loss) before income tax at 30% (2017: 30%) (487,589) 511,156 Add tax effect of: Permanent differences 21, ,888 Other 2,731 (18,492) Derecognise tax losses 2,455 Income tax expense/(benefit) (460,922) 1,128,552 Less tax effect of: Recognition of prior year losses (197,873) Other (363,051) Income tax expense/(benefit) (1,021,846) 1,128,552 DGR Global Limited financial report for the halfyear ended 31 December

14 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Income Tax (continued) (c) Recognised deferred tax assets and liabilities 31 December 2018 Opening balance Net charged to income Net charged to other comprehensive income Net charged to other equity Closing balance Deferred tax asset Carried forward tax losses 2,357, ,588 3,254,040 Accruals/provisions 241,430 (15,080) 226,350 Capital raising costs expensed 106,627 (19,800) 86,827 Other temporary differences ,705, ,776 3,567,285 Deferred tax liability Financial assets at fair value through other comprehensive income (21,732,550) (13,942,803) (35,675,353) Convertible note (179,381) (179,381) Investment in associates (4,322,261) 620,543 13,506 (3,688,211) Exploration and evaluation assets (870,656) (288,480) (1,159,136) Property Plant and Equipment (67,599) (67,599) (26,993,066) 152,682 (13,929,297) (40,769,680) Net deferred tax recognised (24,287,557) 1,014,458 (13,929,297) (37,202,395) Deferred tax assets not recognised Unused tax losses 1,790,677 8,183 1,798,860 Unused capital losses 67,848 67,848 Temporary differences Tax benefit at 30% 557,558 2, ,013 DGR Global Limited financial report for the halfyear ended 31 December

15 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Income Tax (continued) (c) Recognised deferred tax assets and liabilities (continued) 30 June 2018 Opening balance Net charged to income Net charged to other comprehensive income Net charged to other equity Closing balance Deferred tax asset Carried forward tax losses 1,716, ,196 2,357,452 Accruals/provisions 164,945 76, ,430 Capital raising costs expensed 83,964 22, ,627 Investment in associates 372,124 (372,124) AFS revaluation 405,059 (405,059) 2,742, ,220 (405,059) 2,705,509 Deferred tax liability Financial assets at fair value through other comprehensive income (36,024,309) (1,308,596) 15,600,355 (21,732,550) Related party loans (110,011) 110,011 Investment in associates (4,313,455) (8,806) (4,322,261) Exploration and evaluation assets (1,328,462) 457,806 (870,656) Property Plant and Equipment (67,599) (67,599) (41,843,837) (749,585) 15,600,355 (26,993,066) Net deferred tax recognised (39,101,489) (381,365) 15,195,296 (24,287,557) Deferred tax assets not recognised Unused tax losses 1,762,042 28,635 1,790,677 Unused capital losses 67,848 67,848 Temporary differences Tax benefit at 30% 548,967 8, ,558 DGR Global Limited financial report for the halfyear ended 31 December

16 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Income Tax (continued) In order to recoup carried forward losses in future periods, either the Continuity of Ownership Test (COT) or Same Business Test must be passed. The majority of losses are carried forward at 31 December 2018 under COT. Deferred tax assets which have not been recognised as an asset, will only be obtained if: (i) (ii) the Company derives future assessable income of a nature and of an amount sufficient to enable the losses to be realised; the Company continues to comply with the conditions for deductibility imposed by the law; and (iii) no changes in tax legislation adversely affect the Company in realising the losses. 4. Earnings Per Share Calculation of basic and diluted earnings per share is in accordance with AASB 133 Earnings per Share. Earnings in cents per ordinary share: 6 Months to 31 December Months to 31 December 2016 Basic earnings (loss) per share cents (0.1) 0.1 Diluted earnings (loss) per share cents (0.1) 0.1 Net profit (loss) used in calculating basic and diluted earnings per share (598,042) 568,192 Number Number Weighted average number of ordinary shares used in the calculation of Basic earnings per share 613,181, ,431,331 Diluted earnings per share 613,181, ,431,331 The 42,075,000 options and 50,000,000 convertible notes on issue at 31 December 2018 are out of the money are considered nondilutive. These out of the money options and convertible notes may become dilutive in the future. DGR Global Limited financial report for the halfyear ended 31 December

17 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Other Financial Assets 31 December June 2018 Financial assets at fair value through other comprehensive income 142,587,267 96,115,003 Convertible notes 10,951,055 11,175,368 Cash on deposit held as security 314, ,000 Security bonds 1,222,200 1,207, ,074, ,812,320 Financial assets at fair value through other comprehensive income Balance at beginning of reporting period 96,115, ,522,943 Additions 406,030 Additions conversion of Lakes Oil NL convertible notes 367,500 Investments accounted for using the equity method initially recognised at fair value 7,469,829 Fair Value adjustment through other comprehensive income 46,472,264 (50,651,299) Balance at end of reporting period 142,587,267 96,115,003 Financial assets at fair value through other comprehensive income comprise an investment in the ordinary issued capital of SolGold plc, listed on the London Stock Exchange ( LSE ) and Toronto Stock Exchange ( TSX ), an investment in the ordinary issued capital of Block X Capital Inc, listed on the TSX, an investment in the ordinary issued capital of Aus Tin Mining Ltd a company listed on the Australian Securities Exchange, an investment in the ordinary issued capital of Lakes Oil NL a company listed on the Australian Securities Exchange and an investment in the ordinary issued capital of Dark Horse Resources Ltd a company listed on the Australian Securities Exchange. Classification of assets at fair value through other comprehensive income For equity securities that are not held for trading, the Company has made an irrevocable election at initial recognition to recognise changes in fair value through other comprehensive income rather than profit or loss. These securities are presented separately in the statement of financial position. Cash on deposit held as security Cash on deposit held as security is held in a term deposit account restricted under a bond with the Department of Natural Resources and Mining as security for rehabilitation works required. Security bonds Security bonds are held with the Department of Natural Resources and Mining as security for rehabilitation works required. Convertible notes 31 December June 2018 Opening balance at beginning of reporting period 11,175,368 10,173,116 Additions Armour Energy Convertible notes Additions Lakes Oil NL Convertible notes Additions Conversion of Armour Energy Convertible note interest 733,407 Fair Value movement (224,313) 636,345 Conversion of Lakes Oil NL convertible notes into ordinary shares (367,500) Closing balance at end of reporting period 10,951,055 11,175,368 DGR Global Limited financial report for the halfyear ended 31 December

18 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Other Financial Assets (continued) Convertible notes (continued) On 16 December 2016, DGR Global subscribed for 9.4 million worth of Convertible Notes in Armour Energy, in part repayment of the Bridging Finance Facility, the key terms of the notes are as follows: Issue Price: Face value of 0.11 per Convertible Note Interest Rate: 15% per annum Interest Payments: Interest paid half yearly in arrears and the interest may be paid in certain circumstances at Armour s election by the issue of further Convertible Notes Maturity Date: 30 September 2019 Conversion Terms: Convertible at any time at the Convertible Note holder s election into one ordinary share in Armour subject to usual adjustment mechanisms in certain circumstances. On 5 April 2017 interest accrued on the Armour Energy convertible notes to 31 March 2017 of 405,616 was paid via the issue of additional convertible notes at Armour Energy s election. On 5 October 2017, interest accrued on the Armour Energy convertible notes to 30 September 2017 of 733,407 was paid via the issue of additional convertible notes at Armour Energy s election. Additionally, during the financial year ended 30 June 2017 DGR subscribed for 367,500 worth of Convertible Notes in Lakes Oil. The key terms of the notes are as follows: Issue Price: Face value of 10 per Convertible Note Interest Rate: 10% Interest Payments: Interest is payable half yearly at the rate of 50 cents per Note Maturity Date: 31 May 2018 Conversion Terms: Each holder of Notes can elect to convert the Notes early by notice to Lakes Oil with effect from 30 November 2016, 31 May 2017 or 30 November 2017 (Early Conversion Dates). 6. Investments Accounted for Using the Equity Method Name Armour Energy Ltd IronRidge Resources Ltd Country of incorporation and principle place of business Australia Australia Principle Activity Oil & Gas Exploration Mineral Exploration Shares Ownership Interest Carrying Amount 31 December 30 June % % 31 December June 2018 ORD 22% 22% 10,070,974 7,635,576 ORD 22% 26% 9,929,348 10,356,256 20,000,322 17,991,832 DGR Global Limited financial report for the halfyear ended 31 December

19 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Investments Accounted for Using the Equity Method (continued) (A) Movements during the period in equity accounted investments 31 December June 2018 Balance at beginning of reporting period 17,991,832 17,035,638 Additional investment 2,100,000 4,816,283 Disposal of investment Share of associates profits (losses) after income tax (1,709,989) (6,236,853) Share of associates other comprehensive income (45,021) 376,703 Net reversal of impairment 1,663,500 4,991,112 Reclassification on loss of significant influence to financial assets classified at fair value through other comprehensive income derecognised carrying amount (2,991,051) Balance at end of reporting period 20,000,322 17,991,832 Net reversal of impairment relates to the investment in Armour Energy Ltd. At 30 June 2018 the share price of Armour Energy Ltd was At 31 December 2018 the share price of Armour Energy Ltd had risen to The investment in Armour Energy Ltd has been written up to the lower of fair value, less costs to sell or the equity accounted value, while the investment in IronRidge Ltd has been impaired following the recognition of the Group s share of losses for the period. (B) Fair value of investments in associates with published price quotations 31 December June 2018 Fair value of investment in Armour Energy Ltd 10,070,974 7,635,576 Fair value of investment in IronRidge Resources Ltd 19,597,618 34,095,692 29,668,592 41,731,268 DGR Global Limited financial report for the halfyear ended 31 December

20 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Investments Accounted for Using the Equity Method (continued) (C) Summarised financial information of associates The results of the Group s associates and its aggregated assets (including goodwill) and liabilities are as follows: Ownership interest % Current assets Noncurrent assets Current liabilities Noncurrent liabilities Revenues Profit/loss Other comprehensive income 31 December 2018 Armour Energy Ltd 22% 16,175, ,626,534 53,178,205 11,805,884 13,115,698 (5,285,774) (745,620) IronRidge Resources Ltd 22% 12,486,133 22,028,544 1,588,448 45,766 (2,462,228) 537,304 28,661, ,655,078 54,766,653 11,805,884 13,161,464 (7,748,002) (208,316) 30 June 2018 Armour Energy Ltd 22% 9,037,623 92,483,704 10,543,173 46,132,323 14,748,819 (11,557,788) 1,487,500 Dark Horse Resources Ltd* 23,214 (2,216,375) IronRidge Resources Ltd 26% 9,208,488 16,890,343 1,452,776 52,648 (13,191,397) 176,843 18,246, ,374,047 11,995,949 46,132,323 14,801,467 (24,749,185) 1,664,343 * Transferred to financial assets carried at fair value through other comprehensive income. The profit/loss and other comprehensive income represent results up to the date of loss of significant influence on 19 April DGR Global Limited financial report for the halfyear ended 31 December

21 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Investments Accounted for Using the Equity Method (continued) (D) Reconciliation of the carrying amount of the Group s investment in associates Armour Energy Ltd Dark Horse Resources Ltd IronRidge Resources Ltd 31 December 30 June 31 December 30 June 31 December 30 June Opening carrying amount 7,635,576 5,253,500 1,867,429 10,356,256 9,914,709 Share of profits (loss) after tax (1,163,918) (2,592,947) (430,762) (546,071) (3,213,146) Share of other comprehensive income (164,184) 333, ,163 42,988 Additional investment 2,100,000 1,204,578 3,611,705 (Impairment)/reversal 1,663,500 3,436,730 1,554,383 Reclassification to financial assets at fair value through Other Comprehensive Income (2,991,050) Closing carrying amount 10,070,974 7,635,576 9,929,348 10,356,256 (E) Reconciliation of the share of net assets to the carrying amount of the Group s investment in associates Armour Energy Ltd Dark Horse Resources Ltd IronRidge Resources Ltd 31 December 30 June 31 December 30 June 31 December 30 June Share of net assets 11,410,329 10,060,995 7,303,038 6,003,258 Goodwill 15,782,736 16,360,171 2,626,310 4,352,998 Net impairment (17,122,091) (18,785,590) Closing carrying amount 10,070,974 7,635,576 9,929,348 10,356,256 DGR Global Limited financial report for the halfyear ended 31 December

22 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Other financial liabilities 31 December June 2018 Convertible notes 10,090,553 7,799,904 Related party loans 140,000 10,090,553 7,939,904 Movements in carrying value 31 December 30 June Opening balance 7,799,904 Face value of convertible notes issued 2,000,000 8,000,000 Movement in fair value 290,649 (200,096) Closing balance 10,090,553 7,799,904 On 26 September 2018, DGR Global Ltd reached an agreement with Tribeca Investment Partners for a series of amendments to the terms of the 10 million convertible note funding arrangements. DGR Global subsequently drew down on the remaining 2 million during the half year ended 31 December The principal terms of the amended convertible notes are as follows: Number of notes issued: 50,000,000 Issue price: Interest rate: Interest payments: Face value of 0.20 per convertible note 12% per annum Interest is payable in cash and is paid quarterly in arrears. Maturity date: 26 September 2020 Conversion terms: Security: Convertible at any time at the Convertible Note holder s election into one ordinary share in DGR subject to usual adjustment mechanisms in certain circumstances Secured DGR Global Limited financial report for the halfyear ended 31 December

23 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Issued Capital 31 December June ,181,877 (30 June 2018: 613,181,877) fully paid ordinary shares 35,004,941 35,004,941 Share issue costs (1,459,020) (1,459,020) 33,545,921 33,545,921 Ordinary shares participate in dividends and the proceeds on winding up the Company. At shareholder meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on show of hands. There is no par value or authorised capital. (a) Ordinary Shares 31 December 2018 Number 30 June 2018 Number 31 December June 2018 Opening balance 613,181, ,511,877 35,004,941 32,231,391 2 August 2017 (1) 2,000, , September 2017 (2) 17,720,000 1,151, November 2017 (3) 22,950,000 1,491,750 Closing balance 613,181, ,181,877 35,004,941 35,004,941 1 On 2 August 2017, 2,000, ordinary shares were issued upon the exercise of options. 2 On 29 September 2017, 17,720, ordinary shares were issued upon the exercise of options. 3 On 27 November 2017, 22,950, ordinary shares were issued upon the exercise of options. (b) Options As at 31 December 2018, there were 42,075,000 unissued ordinary shares of DGR Global Ltd under option, held as follows: Options on Issue in DGR Global Ltd Number Exercise Expiry Price Unlisted employee options 19,375, /11/20 Unlisted Director options 17,500, /11/20 Unlisted employee options 3,000, /02/21 Unlisted employee options 1,000, /02/21 Unlisted employee options 1,200, /02/21 During the half year there were no options exercised. 9. Contingent Liabilities and Contingent Assets There are no contingent liabilities or contingent assets at 31 December DGR Global Limited financial report for the halfyear ended 31 December

24 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Segment Reporting The Group reports information to the Board of Directors along company lines. That is, the financial position of DGR Global Limited and each of its subsidiary companies is reported discreetly, together with an aggregated group total. Accordingly, each company within the Group that meets or exceeds the relevant threshold tests is separately disclosed below. The financial information of the subsidiaries that do not exceed the thresholds and are therefore not reported separately, are aggregated as Others. Auburn DGR Global Others Total 31 December 2018 Resources (i) Segment performance Revenue External revenue 798, ,000 Intersegment revenue Total segment revenue 798, ,000 Reconciliation of segment revenue to group revenue Other income 2,473,380 2,473,380 Total group revenue 3,271,380 Segment net profit (loss) before tax (1,544,219) (10,437) (24,150) (1,578,806) Reconciliation of segment result to group net profit / loss before tax Share of losses of associates (1,709,989) Reversal of impairment of investment in associate 1,663,500 Net profit before tax (1,625,295) DGR Global Limited financial report for the halfyear ended 31 December

25 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Segment Reporting (continued) Auburn DGR Global Others Total 31 December 2017 Resources (i) Segment performance Revenue External revenue 798, ,000 Intersegment revenue Total segment revenue 798, ,000 Reconciliation of segment revenue to group revenue Other income 7,602,136 7,602,136 Total group revenue 8,400,136 Segment net profit (loss) before tax (570,177) 19,675 (150,511) (701,013) Reconciliation of segment result to group net profit / loss before tax Share of losses of associates (3,212,416) Reversal of impairment of investment in associate 5,617,282 Net profit before tax 1,703,853 DGR Global Limited financial report for the halfyear ended 31 December

26 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Segment Reporting (continued) (ii) Segment assets 31 December 2018 DGR Global Auburn Resources Others Total Segment assets 189,032,023 2,813,520 1,049, ,895,335 Reconciliation of segment assets to group assets Intersegment receivables and investments eliminations (6,265,951) Total group assets 186,629, June 2018 DGR Global Auburn Resources Others Total Segment assets 141,174,358 2,225, , ,902,436 Reconciliation of segment assets to group assets Intersegment receivables and investments eliminations (5,729,638) Total group assets 138,172,798 All segment asset additions occur in Australia. DGR Global Limited financial report for the halfyear ended 31 December

27 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Cash flow information 31 December December 2017 Profit/(loss) after tax (603,449) 575,301 Depreciation 13,800 15,102 Exploration and evaluation assets written off 18, ,561 Share based payments expense 46, ,806 Share of associates losses 1,709,989 3,212,416 Reversal of impairment of investment in associate (1,663,500) (5,617,282) Movement in fair value of convertible note liability 290, ,764 Movement in fair value of convertible note receivable Changes in operating assets and liabilities, net of the effects of purchase and disposal of subsidiaries: (Increase)/decrease in trade and other receivables 224,313 9,475 (1,109,190) (441,143) (Increase)/decrease in other assets 39,710 (53,911) Increase/(decrease) in tax payable (399,159) Increase/(decrease) in deferred tax liabilities (1,010,463) 981,597 Increase/(decrease) in trade and other payables 389,162 (532,041) (535,625) (2,282,179) Noncash investing and financing activities Conversion of loans with related parties for convertible notes Conversion of interest with related parties for convertible notes 733,407 Conversion of loans with related parties for shares in subsidiaries 140,000 Conversion of debtors for shares in subsidiaries 322, Fair Value Fair value hierarchy The following table details the consolidated entity s assets and liabilities, measured or disclosed at fair value, using a three level hierarchy, based on the lowest level of input that is significant to the entire fair value measurement being: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: Unobservable inputs for the asset or liability. (a) The following table presents the Group s assets and liabilities measured and recognised at fair value at 31 December 2018 and 30 June 2018: Level 1 Level 2 Level 3 Total 31 December 2018 Financial assets at fair value through OCI 142,587, ,587,267 Convertible note receivable 10,951,055 10,951,055 Convertible note payable 10,090,553 10,090, June 2018 Financial assets at fair value through OCI 96,115,003 96,115,003 Convertible note receivable 11,175,368 11,175,368 Convertible note payable 7,799,904 7,799,904 The financial assets at fair value through other comprehensive income are measured based on the quoted market prices at 31 December 2018 and 30 June Convertible note receivables are determined using discounted cash flow analysis. Convertible note payables are based on the binomial tree valuation model. There are no transfers between the fair value hierarchy levels during the period ended 31 December DGR Global Limited financial report for the halfyear ended 31 December

28 Notes to the Consolidated Financial Statements for the halfyear ended 31 December Fair Value (continued) (b) The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value measurements: Description Fair value at reporting date Unobservable Inputs* Range of inputs Relationship of unobservable inputs to fair value 31 December 2018 Convertible note receivable 10,951,055 Share price 54% Lower volatility (10 bps) volatility would increase FV by 288,337; higher volatility (+10 bps) would decrease FV by 294,861. Risk 22% Lower discount rate (100 adjusted bps) would increase FV by discount rate 73,251; higher discount rate (+100 bps) would decrease FV by 72,700. Convertible note payable 10,090,553 Share price 62% Higher volatility (+10 bps) volatility would increase FV by 154,147; lower volatility (+10 bps) would decrease FV by 152,232. Riskfree 1.86% Lower discount rate (25 bps) interest rate would increase FV by 29,770; higher discount rate (+25 bps) would decrease FV by 28, June 2018 Convertible note receivable 11,175,368 Share price 55% Lower volatility (10 bps) volatility would increase FV by 427,273; higher volatility (+10 bps) would decrease FV by 341,818. Risk 7% Lower discount rate (100 adjusted bps) would increase FV by discount rate 149,264; higher discount rate (+100 bps) would decrease FV by 145,795. Convertible note payable 7,799,904 Share price 60% Higher volatility (+10 bps) volatility would increase FV by 103,257; lower volatility (+10 bps) would decrease FV by 78,915. Riskfree 1.96% Lower discount rate (25 bps) interest rate would increase FV by 23,820; higher discount rate (+25 bps) would decrease FV by 20,224. * There were no significant interrelationships between unobservable inputs that materially affect fair values. (c) The following table presents the Group s assets and liabilities which are not carried at fair value at 31 December 2018 and 30 June 2018 wherein their carrying values do not approximate their fair value at 31 December 2018 and 30 June 2018: Level 1 Level 2 Level 3 Carrying value 31 December 2018 Investments accounted for using the equity method 29,668,592 20,000, June 2018 Investments accounted for using the equity method 41,731,267 17,991,832 The investments accounted for using the equity method displayed above are measured based on the quoted market prices at 31 December 2018 and 30 June DGR Global Limited financial report for the halfyear ended 31 December