For personal use only MINING CORPORATION LIMITED

Transcription

1 MINING CORPORATION LIMITED Annual Report 2016

2 CORPORATE DIRECTORY BOARD OF DIRECTORS SHARE REGISTRY Alex Bajada Executive Chairman Advanced Share Registry Services 110 Stirling Highway, NEDLANDS Roland Berzins Non Executive Director Western Australia 6009 Telephone: Angus Middleton Non Executive Director Facsimile: COMPANY SECRETARIES Mark MJ Smith Roland Berzins BANKERS National Australia Bank 1/1238 Hay Street, WEST PERTH Western Australia 6005 REGISTERED OFFICE AUDITORS Unit 19, 2nd Floor Greenwich & Co Audit Pty Ltd 100 Railway Road Level 2 Subiaco WA Outram Street, WEST PERTH Western Australia 6005 BUSINESS OFFICE STOCK EXCHANGE LISTING Ground Floor Excalibur Mining Corporation Limited 16 Ord Street, WEST PERTH are quoted on Australian Stock Western Australia 6005 Exchange Limited Telephone: Facsimile: WEBSITE ASX Code: EXM MINING CORPORATION LIMITED

3 CONTENTS DIRECTORS REPORT I CHAIRMAN S LETTER 2 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 12 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 13 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 14 CONSOLIDATED STATEMENT OF CASH FLOWS 15 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 16 DIRECTOR S DECLARATION 42 AUDITOR S INDEPENDENCE DECLARATION 43 INDEPENDENT AUDITOR S REPORT 44 CORPORATE GOVERNANCE STATEMENT 46 ASX ADDITIONAL INFORMATION 56 SHAREHOLDER INFORMATION 57 SUMMARY OF TENEMENT HOLDINGS 58 MINING CORPORATION LIMITED

4 1 DIRECTOR S REPORT Directors Report For the year ended 30 June 2016 The Directors present their report together with the financial report of Excalibur Mining Corporation Limited ( the Company or Excalibur ), and its controlled entities (together the Consolidated Entity ), for the financial year ended 30 June 2016 and the auditor s report thereon. Contents 1. Directors 3 2. Remuneration report audited 4 3. Directors meetings 7 4. Share Options 7 5. Options 7 6. Insurance and Indemnity of officers 7 7. Proceedings on behalf of the company 8 8. NonAudit services 8 9. Principal activities Operating and financial review Significant changes to state of affairs Dividends Company Secretary Events subsequent to reporting date Likely Developments Lead Auditor s independence declaration Environmental issues Corporate governance 10

5 DIRECTOR S REPORT 2 Chairman s Letter Dear Shareholders On behalf of the board of Directors of Excalibur Mining Corporation Limited ( Company ), I am pleased to present you the annual report for the Company. The Company is proposing to change its activities from a mineral exploration company to a technology company by the acquisition of the entire issued capital of Dropmysite Pte Ltd ( Dropsuite ) via the acquisition of Greenbase Corporation Pty Ltd ( Greenbase ). Dropsuite is a Singapore based company providing online Cloudbased backup software that enables small and medium sized enterprises ( SMEs ) worldwide to backup, recover and protect their digital assets. The Proposed Acquisition will allow the company to own Dropsuite s commercialised Cloudbased suite of backup software, encompassing website and database, , server and mobile data. Dropsuite was founded in 2011 and is headquartered in Singapore, with a sales presence in the United States, Europe, Japan, Ireland and Australia. It has developed the software using its inhouse engineering team. Dropsuite distributes its backup software by integrating them into the platforms of some of the world s largest IT Service Providers, who in turn, sell Dropsuite s software to their end users (mostly, SMEs). Partners include Ingram Micro (USA), Go Daddy (USA), GMO Pepabo (Japan), HostPapa (Canada), Singtel (Southeast Asia), Blacknight (Europe) and OzHosting (Australia). Upon completion of the Proposed Acquisition, the Company will also change its name to Dropsuite Limited. The Company is seeking to raise up to 8,000,000 before costs under the Public Offer, through the offer of up to 80,000,000 shares at an issue price of 0.10 each. The Public Offer is subject to the Minimum Subscription. Funds raised from the Public Offer will be applied towards expanding the Dropsuite business. The Company s aim is to bolster its product, sales and partnerships footprint globally, including in Australia. We thank you for your past support and look forward to a successful future for the Company. Yours faithfully Mr Alex Bajada Executive Chairman

6 3 Excalibur Mining Corporation Limited and its controlled entities Directors Report DIRECTOR S REPORT 1. Directors The Directors present the following report for the year ended 30 June 2016 of Excalibur Mining Corporation Limited ( the Company ) and its controlled entities ( the Group or the Consolidated Entity ). The Directors of the Company at any time during or since the end of the financial year were: Name, qualifications and independence status Age Experience, special responsibilities and other directorships Alex S Bajada Executive Chairman (Appointed 8 June 2009) Non Independent Director 65 Mr Bajada has been a Director of Excalibur since He was Managing Director from 30 June 2006 until 8 June 2009, at which time he became the Non Executive Chairman. Mr Bajada holds a Bachelor of Economics and is a corporate consultant providing advice to listed and unlisted public companies. Mr Bajada is chairman of Odin Energy Limited. Mr Bajada is a member of the Audit Committee. 21,371,991ordinary shares (1,444,735 post consolidation) and no options to acquire further ordinary shares. Terrence Jones NonExecutive Director (Appointed 3 July 2013) (Resigned 20 May 2016) Independent Director 51 Mr Jones brings over 21 years extensive international experience at a senior level in Resource Consulting and Licensing, together with significant experience and working knowledge of US, Africa, Middle Eastern and European business environments. Mr Jones was a member of the Audit Committee. 14,250,000 ordinary shares (950,000 post consolidation) and no options to acquire further ordinary shares. Angus Middleton NonExecutive Director (Appointed 6 May 2014) Independent Director Roland Berzins NonExecutive Director (Appointed 20 May 2016) Mr Middleton has extensive experience in fund raising, financial management and the mining industry. He has been involved in stock broking for nearly 25 years and was a member of the Adelaide and then the Australian Stock Exchange. Mr Middleton is also a director of Aphrodite Gold Ltd and Hillcrest Litigation Services Limited. He has been primarily active in the mining sector and holds a number of directorships in public companies and professional associations. 13,500,000 ordinary shares (900,000 post consolidation) and no options to acquire further ordinary shares. Mr Berzins graduated from the University of Western Australia with a Bachelor of Commerce degree majoring in accounting and finance. He has over 25 years experience in the mining industry and was previously Chief Accountant for 6 years at Kalgoorlie Consolidated Gold Mines Pty Ltd ( Kalgoorlie Super Pit ). Since 1996 Mr Berzins has been a Director and Company Secretary for a variety of ASX listed companies, and has also had experience in retail, merchant banking, venture capital and SME business advisory. He is also a Director of Odin Energy Limited and Tikforce Limited. 1,428,667 ordinary shares (95,246 post consolidation) and no options to acquire further ordinary shares.

7 DIRECTOR S REPORT 4 Excalibur Mining Corporation Limited and its controlled entities Directors Report (continued) 2. Remuneration report audited 2.1 Principles of remuneration The Board s remuneration policy is to ensure that remuneration properly reflects the relevant persons duties and responsibilities, and that the remuneration is competitive in attracting, retaining and motivating people of the highest quality. The Board believes that the best way to achieve this objective is to provide Directors with a remuneration package consisting of a fixed component and a variable component that together reflect the person s responsibilities, duties and personal performance. The remuneration of NonExecutive Directors is determined by the Board as a whole having regard to the level of fees paid to NonExecutive Directors by other companies of similar size in the industry. The Board currently fills the roles of the remuneration and nomination committee Fixed remuneration Fixed remuneration consists of base remuneration being a flat per month director s fee Performance linked remuneration Performance linked remuneration includes long term incentives, designed to reward key management personnel for reaching or exceeding specific objectives or as recognition for strong individual performance. The long term incentives are provided as options over the shares of the company and performance shares under the rules of the Employee Incentive Scheme Shortterm incentive bonus There was no shortterm incentive bonuses offered or paid during the year ended 30 June 2015 or 30 June Longterm incentive Long term incentives are comprised of share options and performance shares, which are granted from time to time to encourage exceptional performance in the realisation of strategic outcomes and growth in shareholder s wealth. Options and performance shares are granted for no consideration and do not carry voting or dividend entitlements Directors and Chairman Total compensation for all nonexecutive directors, last voted upon by shareholders at the 2004 AGM is not to exceed 300,000 per annum. The nonexecutive directors are paid directors fees of 40,000 per annum. The Executive Chairman is paid 140,000 per annum Service Agreements The Consolidated Entity has not entered into contracts with directors Consequences of performance on shareholder wealth In considering the Consolidated Entity s performance and benefit for shareholder wealth, the Board believes that at this stage of the Consolidated Entity s development there is a not a relevant direct link between revenue and profitability and the advancement of shareholder wealth. For this reason, the Consolidated Entity does not currently link revenue, share price and profitability against shareholder wealth. The share price at 30 June 2016 was (2015: 0.004) Remuneration Consultants The Consolidated Entity did not use remuneration consultants during the year to 30 June 2016.

8 5 DIRECTOR S REPORT Excalibur Mining Corporation Limited and its controlled entities 5 Directors Report (continued) 2. Remuneration report audited (continued) 2.2 Directors and Executive Officers remuneration Details of the nature and amount of each major element of remuneration of each key management personnel of the Consolidated Entity are: Nature and amount of remuneration for the year ended 30 June 2016 Executive Directors Salary & fees Shortterm Nonmonetary benefits Total Post employment Superannuation benefits Termination Benefits Sharebased Payments Options and Rights Total S300A(1)(e)(i) proportion of remuneration performance related % S300A(1)(3)(vi) Value of options as proportion of remuneration % Alex S Bajada , , , , , ,000 Non Executive Directors Angus Middleton ,000 40,000 40,000 40,000 40,000 40,000 Roland Berzins ,602 4,602 4,602 (Appointed 20 May 2016) 2015 Terrence Jones (Resigned 20 May 2016) ,525 40,000 35,525 40,000 35,525 40,000 Total compensation , , , , , ,000 For personal use only

9 DIRECTOR S REPORT 6 Excalibur Mining Corporation Limited and its controlled entities Directors Report (continued) 2. Remuneration report audited (continued) 2.3 Equity instruments All options refer to options over ordinary shares of Excalibur Mining Corporation Limited, which are exercisable on a oneforone basis. 2.4 Options and rights over equity instruments granted as compensation No options or rights were granted as compensation during the year or prior year. 2.5 Modification of terms of equitysettled sharebased payment transactions No terms of equitysettled sharebased payment transaction (including options and rights granted as compensation to a key management person) have been altered or modified by the issuing entity during the reporting period or the prior period. 2.6 Director s interests in shares and options Ordinary Shares. Held at 1 July 2015 Shares Granted ** Issued/ Received on exercise of options Purchases Sales/ Other Held at 30 June 2016 Directors A Bajada 7,289,490 6,000,000 8,082,501 21,371,991 T Jones 5,000,000 4,000,000 5,750,000 (14,750,000) 1 A Middleton 1,000,000 7,000,000 5,500,000 13,500,000 R Berzins 1,428, ,428,667 1 Shareholding at date of resignation on 20 May 2016: 14,250,000 2 Shareholding at date of appointment on 20 May 2016 ** On 10 December 2015 ordinary shares were issued to directors to settle amounts owed to them for director and chairman services. Nil options issued to directors during the year ended 30 June Securities Received that Are Not Performancerelated No members of KMP are entitled to receive securities that are not performancebased as part of their remuneration package. 2.8 Other Equityrelated KMP Transactions There were no other transactions conducted between the Group and KMP or their related parties apart from those disclosed above relating to equity, compensation and loans, that were conducted other than in accordance with normal employee, customer or supplier relationships on terms no more favourable than those reasonably expected under arm s length dealings with unrelated persons. END OF AUDITED SECTION

10 7 Excalibur Mining Corporation Limited and its controlled entities Directors Report (continued) DIRECTOR S REPORT 3. Directors meetings The number of Directors meetings (including meetings of committees of Directors) and number of meetings attended by each of the Directors of the Company during the financial year are: Director Board Meetings Audit Committee A B A B Alex S Bajada Terrence Jones (resigned 20/5/16) Angus Middleton Roland Berzins (appointed 20/5/16) 1 1 A Number of meetings attended B Number of meetings held during the time the Director held office during the year 4. Share Options Options and performance shares granted to directors and executives of the Company No options or performance shares have been granted to directors and executives during the financial year and since the end of the financial year (2015: nil). 5. Options At the date of this report, the unissued ordinary shares of Excalibur Mining Corporation Limited under option are as follows: Grant Date Date of Expiry Exercise Price Number under Option 10 December April ,334,173 The grant date is various and includes the 16 August The number of options are post August consolidation. Option holders do not have any rights to participate in any issues of shares or other interests of the company or any other entity. There have been no options granted over unissued shares or interests of any controlled entity within the Group during or since the end of the reporting period. For details of options issued to directors and executives as remuneration, refer to the remuneration report. No person entitled to exercise the option had or has any right by virtue of the option to participate in any share issue of any other body corporate. 6. Insurance and Indemnity of Officers The Company has entered into an agreement to indemnify all Directors and the Company Secretary against any liability arising from a claim brought by a third party against the Company. The agreement provides for the Company to pay all damages and costs which may be awarded against the officer or Director.

11 DIRECTOR S REPORT 8 Excalibur Mining Corporation Limited and its controlled entities Directors Report (continued) During the period the Company has paid an insurance premium in respect of a Directors and Officers Liability Insurance Contract. The insurance premium relates to liabilities that may arise from an Officer s position, with the exception of conduct involving a wilful breach of duty or improper use of information or position to gain personal advantage. The officers covered by the insurance policies are the Directors and the Company Secretary. The contract of insurance prohibits the disclosure of the nature of the liabilities and the amount of premium. 7. Proceedings on Behalf of Company No person has applied for leave of court to bring proceedings on behalf of the company or intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings. The company was not a party to any such proceedings during the year. 8. Nonaudit Services During the year ended 30 June 2016, Greenwich & Co Audit Pty Ltd, the Company s auditor, did not perform any services other than their audit services. In the event that nonaudit services are provided by Greenwich & Co Audit Pty Ltd, the Board has established certain procedures to ensure that the provision of nonaudit services are compatible with, and do not compromise, the auditor independence requirements of the Corporations Act These procedures include: Nonaudit services will be subject to the corporate governance procedures adopted by the Group and will be reviewed by the Group to ensure they do not impact the integrity and objectivity of the auditor; and Ensuring nonaudit services do not involve reviewing or auditing the auditor s own work, acting in a management or decision making capacity for the Group, acting as an advocate for the Group or jointly sharing risks and rewards. 9. Principal activities The principal continuing activities of the consolidated entity during the year consisted of minerals exploration and investment in companies that own and manage producing or near producing mining operations. The Company announced on 27 January 2016 its intention to change its activities from mineral exploration to technology by the acquisition of Dropmysite Pte Ltd. The Company s shareholders approved the acquisition on the 15 August The Company s key strategic activities for 2017 calendar year are to develop the business of Dropmysite Pte Ltd. 10. Operating and financial review Review of Results and Operations of the Consolidated Entity The consolidated loss after income tax for the year was 11,640,950 (2015 loss 677,427). Cash and cash equivalents at 30 June 2016 totalled 26,007 (2015: 3,152). The net assets of the consolidated group have decreased by 10,504,603 from 30 June 2015 to a net liability position of 539,244. This decrease was as a result of the impairment to the Tennant Creek project based on an independent valuation obtained by the company.

12 9 Excalibur Mining Corporation Limited and its controlled entities Directors Report (continued) DIRECTOR S REPORT Resource Review The Company announced on 27 January 2016 its intention to change from a mineral exploration company to a technology company. The Company intends to dispose of the Tennant Creek project and property, transferring the assets in satisfaction of debts owed by the company. This transaction was approved by shareholders on 15 August The tenement at Tanami during the year were relinquished. The Company intends to relinquish its position in the Zambian project. 11. Significant changes in the state of affairs In the opinion of the directors other than the change of activity outlined in Section 9 and Section 15 events subsequent to reporting date, there were no significant changes in the state of affairs of the Consolidated Entity that occurred during the year ended 30 June Dividends No dividends have been paid or declared by the Company to members since the end of the previous financial year. 13. Company Secretary Mark J Smith Company Secretary (Appointed 3 May 1996) Mr Smith has been Company Secretary of Excalibur since Mr Smith is a Certified Practising Accountant with many years experience providing accounting and taxation advice to the mining industry. Mr Smith was a member on the International Executive Committee of the International Accountancy Association JHI. Roland Berzins Company Secretary (Appointed 20 May 2016) Mr Berzins graduated from the University of Western Australia with a Bachelor of Commerce degree majoring in accounting and finance. He has over 25 years experience in the mining industry and was previously Chief Accountant for 6 years at Kalgoorlie Consolidated Gold Mines Pty Ltd ( Kalgoorlie Super Pit ). Since 1996 Mr Berzins has been a Director and Company Secretary for a variety of ASX listed companies, and has also had experience in retail, merchant banking, venture capital and SME business advisory. 14. Events subsequent to reporting date On the 15 August 2016 shareholders approved the following resolutions: The consolidation of share capital on a 1 for 15 basis. The acquisition of Dropmysite Pte Ltd by the purchase of shares in Greenbase Corporation Pty Ltd. Disposal of the mining assets of the Company and property in Tennant Creek used to repay creditors.

13 DIRECTOR S REPORT 10 Directors Report (continued) The Company lodged a prospectus to raise 8,000,000 by the issue of 80,000,000 fully paid shares at 0.10 each. Change the name of the Company to Dropsuite Limited. The prospectus is also used for the purpose of recomplying with the admission requirements under Chapters 1 and 2 of the ASX listing rules following a change to the nature and scale of the company s activities. Various other resolutions. The offers under the prospectus are subject to a number of conditions being: a) Completion of the consolidation; b) The minimum subscription being achieved, 5,000,000 by the issue of 50,000,000 fully paid shares with an asking price 0.10; c) Completion of the proposed acquisition; and d) The Company receiving conditional approval from the ASX to reinstate the listing of the company shares on the ASX, on terms acceptable to the Company. The fully paid ordinary shares and the unlisted options were consolidated by the Company on the 16 August 2016 on a 1:15 basis. The total number of fully paid shares on a post consolidation basis is 23,374,286. The total number of options on a post consolidation basis, with an exercise price of 0.12 and an expiry date of 30 April 2017 is 2,334, Likely developments The Company disposes of the mining assets and completes the acquisition of Dropmysite Pte Ltd and remains as a technology company. 16. Lead Auditor s Independence Declaration The Lead auditor s independence declaration is set out on page 43 and forms part of the Directors Report for financial year ended 30 June Environmental Issues As a holding company, which derives its values largely through the operation of its subsidiaries and related companies, the Company does not conduct significant activities, and as such has minimal environmental impact. Prudent policies and procedures have been enacted with respect to commonly accepted practice on energy conversation, recycling, and other initiatives to reduce environmental impact of ongoing operations. The related companies follow similar ethical, environmental and clinical standards. 18. Corporate Governance In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Excalibur Mining Corporation Limited support and have adhered to the principles of sound corporate governance. The Board recognises the recommendations of the Australian Securities Exchange Corporate Governance Council, and considers that the Company is in compliance with those guidelines to the extent possible, which are of importance to the commercial operation of a junior listed resources company. During the financial period ended 30 June 2016, shareholders continued to receive the benefit of an efficient and costeffective corporate governance policy for the Company. The Company s Corporate Governance Statement and disclosures are contained elsewhere in the annual report.

14 11 DIRECTOR S REPORT

15 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 12 Consolidated Statement of Profit or Loss and other Comprehensive Income For the year ended 30 June 2016 Consolidated Note Other income 4 105,784 Depreciation expense 14 (2,782) (10,241) Consulting fees (169,204) (2,273) Legal fees (73,806) (845) Travelling expenses (38,832) (12,781) Other operating expenses 5(i) (829,482) (756,407) Impairment losses 5(ii) (10,513,604) Loss from operating activities (11,627,710) (676,763) Finance income 6 12,700 1,048 Finance expense 6 (25,940) (1,712) Net finance expense (13,240) (664) Loss before income tax (11,640,950) (677,427) Income tax expense 7 Loss for the year (11,640,950) (677,427) Other comprehensive income net of income tax Total comprehensive income for the year (11,640,950) (677,427) Loss per share: Basic Loss per share cents 8 (4.88) (0.59) Diluted Loss per share cents 8 (4.88) (0.59) The notes on pages 16 to 41 are an integral part of these consolidated financial statements.

16 13 CONSOLIDATED STATEMENT OF FINANCIAL POSITION Consolidated Statement of Profit or Loss and other Comprehensive Income For the year ended 30 June 2016 Consolidated Note Other income 4 105,784 Depreciation expense 14 (2,782) (10,241) Consulting fees (169,204) (2,273) Legal fees (73,806) (845) Travelling expenses (38,832) (12,781) Other operating expenses 5(i) (829,482) (756,407) Impairment losses 5(ii) (10,513,604) Loss from operating activities (11,627,710) (676,763) Finance income 6 12,700 1,048 Finance expense 6 (25,940) (1,712) Net finance expense (13,240) (664) Loss before income tax (11,640,950) (677,427) Income tax expense 7 Loss for the year (11,640,950) (677,427) Other comprehensive income net of income tax Total comprehensive income for the year (11,640,950) (677,427) Loss per share: Basic Loss per share cents 8 (4.88) (0.59) Diluted Loss per share cents 8 (4.88) (0.59) The notes on pages 16 to 41 are an integral part of these consolidated financial statements.

17 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 14 Consolidated Statement of changes in Equity For the year ended 30 June 2015 Consolidated Note Issued Capital Accumulated Losses Fair Value Reserve Total Opening balance 1 July ,816,164 (44,581,408) (66,970) 10,167,788 Other comprehensive income Loss for the year (677,427) (677,427) Total comprehensive income for the (677,427) (677,427) period Transactions with owners, recorded directly in equity Shares issued during the year , ,000 Transfer to Retained Earnings (66,970) 66,970 Total transactions with owners and other transfers 475,000 (66,970) 66, ,000 Closing balance 30 June ,291,164 (45,325,805) 9,965,359 Opening balance 1 July ,291,164 (45,325,805) 9,965,359 Other comprehensive income Loss for the year (11,640,950) (11,640,950) Total comprehensive income for the (11,640,950) (11,640,950) period Transactions with owners, recorded directly in equity Shares isued during the year 19 1,136,347 1,136,347 Total transactions with owners and other transfers 1,136,347 1,136,347 Closing balance 30 June ,427,511 (56,966,755) (539,244) The notes on pages 16 to 41 are an integral part of these consolidated financial statements.

18 15 CONSOLIDATED STATEMENT OF CASH FLOWS Consolidated Statement of cash flows For the year ended 30 June 2016 Consolidated Note Cash Flows from operating activities Cash receipts in the course of operations Cash paid to suppliers and employees (776,605) (107,459) R & D cash refund 106,389 Interest paid (24,000) (20,564) Interest received 1,061 1,439 Net cash used in operating activities 24 (693,155) (126,584) Cash Flows from investing activities Payments for exploration expenditure (108,082) (89,707) Deposits returned (15,000) 64,620 Net cash used in investing activities (123,082) (25,087) Cash Flows from financing activities Proceeds from the issue of share capital 864,927 92,000 Other financing (30,035) Borrowings 4,200 40,000 Net cash provided by financing activities 839, ,000 Net increase/(decrease) from cash and cash equivalents 22,855 (19,671) Cash and cash equivalents at 1 July 3,152 22,823 Cash and cash equivalents at 30 June 9 26,007 3,152 The notes on pages 16 to 41 are an integral part of these consolidated financial statements.

19 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 16 Notes to the consolidated financial statements 1. Reporting Entity Excalibur Mining Corporation Limited (the Company ) is a company domiciled in Australia. The consolidated entity is a forprofit entity. The consolidated financial statements of the Company for the financial year ended 30 June 2016 comprises the Company and its subsidiaries (together referred to as the Consolidated Entity or the Group ). The principal place of business is 16 Ord St, West Perth. 2. Basis of preparation (a) Statement of compliance The consolidated financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards ( AASBs ) adopted by the Australian Accounting Standards Board ( AASB ) and the Corporations Act The consolidated financial report also complies with the International Financial Reporting Standards ( IFRSs ) and interpretations adopted by the International Accounting Standards Board. The financial report was authorised for issue by the Directors on 30 September (b) (c) (d) Basis of measurement The consolidated financial statements have been prepared on the historical cost basis except that the following assets and liabilities which are stated at their fair value: Financial instruments at fair value through profit or loss Share based payments Functional and presentation currency note These consolidated financial statements are presented in Australian dollars which is the Company s functional currency and the functional currency of the majority of the Consolidated Entity. Uses of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and underlying assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. (i) Impairment of exploration and evaluation assets During the year ended 30 June 2016, the Board has made an impairment to the carrying value of the mineral tenements due to the Company s inability to raise adequate capital to develop the projects. The Board obtained a market valuation from a qualified independent consulting geologist for the Tenant Creek project. The carrying value of deferred exploration costs reflected at Note 13 is at that market valuation. The valuation was derived using various estimates and assumptions. (ii) Taxation Disclosed in the financial statements and the notes related to taxation, are based on the best estimates of directors and take into account the financial performance and position of the Group as they pertain to current income tax legislation, and the directors understanding thereof. No adjustment has been made for pending or future taxation legislation. The current tax position represents the best estimate, pending assessment by the Australian Tax Office

20 17 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements (e) Going Concern The financial statements for the year ended 30 June 2016 have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The Consolidated Entity incurred a loss after tax for the year of 11,640,950 (2015: loss of 677,427). During the year, the Consolidated Entity used cash of 693,155 (2015: 126,584) in its operations and used cash of 123,082 in investing activities (2015: 25,087). The Consolidated Entity has continued to have net cash outflows from its operations since 30 June The Consolidated Entity will require further funding in order to meet its actual working capital requirements, and planned administration expenses and exploration activities. The Directors of the Consolidated Entity acknowledge the future funding requirements and believe the going concern basis of preparation remains appropriate for the following reasons: Creditors owed 766,571 have agreed to not seek repayment of the debts owed to them for at least one year from the date of this report until the Consolidated Entity is able to meet all other financial obligations; As outlined at Note 25, the Company has issued a Prospectus on the ASX to raise up to 8,000,000 (minimum subscription of 5,000,000) in combination with the acquisition of Dropmysite Pte Ltd and other associated transactions Nevertheless, the going concern basis is dependent on the continual financial support of director and related party creditors and the Company raising additional capital required to pay its debts as and when they fall due. Should the Consolidated Entity be unable to achieve this, there is a material uncertainty which may cast significant doubt as to whether the Consolidated Entity will continue as a going concern and therefore the company may be unable to realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that may be necessary should the Group be unable to continue as a going concern.

21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 18 Notes to the consolidated financial statements 3. Significant Accounting Policies The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements, and have been applied consistently by the Consolidated Entity. (a) (i) Basis of consolidation Subsidiaries Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Investments in subsidiaries are carried at their cost of acquisition less impaired losses in the Company s financial statements. (ii) Transactions eliminated on consolidation IntraGroup balances and any unrealised gains and losses or income and expenses arising from intra Group transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of the consolidated entity s interest in the entity. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment. Gains and losses are recognised as the contributed assets are consumed or sold by the associates and jointly controlled entities or, if not consumed or sold by the associate or jointly controlled entity, when the consolidated entity s interest in such entities is disposed of. (iii) Interests in Joint Arrangements Joint arrangements represent the contractual sharing of control between parties in a business venture where unanimous decisions about relevant activities are required. Separate joint venture entities providing joint venturers with an interest to net assets are classified as a joint venture and accounted for using the equity method. Joint venture operations represent arrangements whereby joint operators maintain direct interests in each asset and exposure to each liability of the arrangement. The Consolidated Entity s interests in the assets, liabilities, revenue and expenses of joint operations are included in the respective line items of the consolidated financial statements. Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties interests. When the Consolidated Entity makes purchases from a joint operation, it does not recognise its share of the gains and losses from the joint arrangement until it resells those goods/assets to a third party.

22 19 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 3. Significant Accounting Policies (continued) (b) Foreign currency (i) Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the statement of financial position date are translated to Australian dollars at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in profit or loss. Nonmonetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Nonmonetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to Australian dollars at foreign exchange rates ruling at the dates the fair value was determined. (ii) (c) (i) Financial statements of foreign operations The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to Australian dollars at foreign exchange rates ruling at the statement of financial position date. The revenues and expenses of foreign operations are translated to Australian dollars at rates approximating to the foreign exchange rates ruling at the dates of transactions. Foreign exchange differences arising on retranslation are recognised directly in a separate component of equity. Property, plant and equipment Recognition and measurement Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see accounting policy (3e)). Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of selfconstructed assets includes the cost of materials, direct labour, the initial estimate, where relevant, of the costs of dismantling and removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within other income in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings. (ii) Subsequent costs The Consolidated Entity recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied within the item will flow to the Consolidated Entity and the cost of the item can be measured reliably. All other costs are recognised in the profit or loss as an expense as incurred. (iii) Depreciation With the exception of freehold land, depreciation is charged to the profit or loss on a straightline basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. Plant and equipment are depreciated over estimated useful lives of between 2 and 7 years. The residual value, the useful life and the depreciation method applied to an asset are reassessed at least annually.

23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 20 Notes to the consolidated financial statements 3. Significant Accounting Policies (continued) (d) Exploration and evaluation assets Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as exploration and evaluation assets on an area of interest basis. Costs incurred before the consolidated entity has obtained the legal rights to explore an area are expensed in the profit or loss. Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either: (i) the expenditures are expected to be recouped through successful development and exploitation of the area of interest; or (ii) activities in the area of interest have not at the reporting date, reached a stage which permits a reasonable assessment of the existence or other wise of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing. Exploration and evaluation costs that do not meet the above criteria are expensed as incurred. Exploration and evaluation assets are assessed for impairment if (i) sufficient evidence exists to determine technical feasibility and commercial viability, or (ii) facts and circumstances suggest that the carrying amount exceeds the recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cashgenerating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of interest. (e) (i) Impairment Financial assets A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. An impairment loss in respect of an availableforsale financial asset is calculated by reference to its current fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in Groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. Any cumulative loss in respect of an availableforsale financial asset recognised previously in equity is transferred to profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss. For availableforsale financial assets that are equity securities, the reversal is recognised directly in equity.

24 21 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 3. Significant Accounting Policies (continued) (ii) Nonfinancial assets The carrying amounts of the Consolidated Entity s nonfinancial assets, other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, recoverable amount is estimated at each reporting date. An impairment loss is recognised if the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. A cashgenerating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cashgenerating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. The recoverable amount of an asset or cashgenerating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. (f) (i) (ii) Employee benefits Defined contribution superannuation funds A defined contribution plan is a postemployment benefit plan under which an entity pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognised in profit or loss in the period during which the services are rendered by employees. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Short term benefits Liabilities for employee benefits for wages, salaries, annual leave and sick leave that are expected to be settled within 12 months of the reporting date represent present obligations resulting from employees services provided to reporting date. These are calculated at undiscounted amounts based on remuneration wage and salary rates that the Consolidated Entity expects to pay as at reporting date including related oncosts, such as workers compensation insurance and payroll tax. Nonaccumulating nonmonetary benefits, such as medical care, housing, cars and free or subsidised goods and services, are expensed based on the net marginal cost to the consolidated entity as the benefits are taken by the employees.

25 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 22 Notes to the consolidated financial statements 3. Significant Accounting Policies (continued) (f) Employee benefits (continued) (iii) Long term service benefits The Consolidated Entity s net obligation in respect of longterm service benefits, other than defined benefit superannuation funds, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using expected future increases in wage and salary rates including related oncosts and expected settlement dates, and is discounted using the rates attached to the Commonwealth Government bonds at the statement of financial position date which have maturity dates approximating to the terms of the consolidated entity s obligations. (g) (h) (i) (j) Provisions A provision is recognised in the statement of financial position when the Consolidated Entity has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pretax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The unwinding of the discount is recognised as a finance cost. Trade and other payables Trade and other payables are stated at their amortised cost. Finance income and expenses Net financing costs comprise interest payable on borrowings calculated using the effective interest method, interest receivable on funds invested and foreign exchange gains and losses that are recognised in the profit or loss. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit and loss using the effective interest method. Interest income is recognised in the profit or loss as it accrues, using the effective interest method. Income tax Income tax on the profit or loss for the year comprises current and deferred tax and is calculated using the balance sheet method. Income tax expense is recognised in the profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that they probably will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

26 23 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 3. Significant Accounting Policies (continued) (k) Segment reporting The Consolidated Entity determines and presents operating segments based on the information that internally is provided to the Board of Directors, who is the Consolidated Entity s chief operating decision maker. An operating segment is a component of the Consolidated Entity that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Consolidated Entity s other components. All operating segments operating results are regularly reviewed by the Consolidated Entity s Managing Director to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. (l) Goods and services tax Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows. (m) Financial instruments (i) Nonderivative financial instruments Nonderivative financial instruments comprise investments in equity shares, trade and other receivables, cash and cash equivalents, and trade and other payables. Nonderivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition nonderivative financial instruments are measured as described below. A financial instrument is recognised if the Consolidated Entity becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Consolidated Entity s contractual rights to the cash flows from the financial assets expire or if the Consolidated Entity transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular way purchases and sales of financial assets are accounted for at trade date, i.e., the date that the Consolidated Entity commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Consolidated Entity s obligations specified in the contract expire or are discharged or cancelled. Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Consolidated Entity s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Accounting for finance income and expense is discussed in note 3(i).

27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 24 Notes to the consolidated financial statements 3. Significant Accounting Policies (continued) (m) Financial instruments (continued) (i) Nonderivative financial instruments (continued) Investments at fair value through profit or loss An instrument is classified as at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the Consolidated Entity manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Consolidated Entity s documented risk management or investment strategy. Upon initial recognition, attributable transaction costs are recognised in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss. Other Other nonderivative financial instruments are measured at amortised cost using the effective interest method, less any impairment losses. (ii) Share Capital Ordinary Shares Ordinary Shares are classified as equity. Transaction costs of an equity transaction are accounted for as a deduction from equity, net of any related income tax benefit. (n) Other income Other income is recognised in the profit or loss as it accrues. The Research and Development refundable tax offset is recognised as income when it is determined that it is probable that it will be received and the amount can be estimated reliably. Within the income tax expense reconciliation, the income is nonassessable and R&D expenditure is nondeductible. (o) Determination of fair values A number of the Consolidated Entity s accounting policies and disclosures require the determination of fair value, for both financial and nonfinancial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

28 25 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 3. Significant Accounting Policies (continued) (o) Determination of fair values (continued) (i) Investments in equity and debt securities The fair value of financial assets at fair value through profit or loss is determined by reference to their quoted closing bid price at the reporting date, and for unquoted assets determined by using the share price of a previous capital raising. (ii) Sharebased payment transactions The fair value of the share options are measured using either the binomial formula or Black Scholes. Measurement inputs include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the riskfree interest rate (based on government bonds). Service and nonmarket performance conditions attached to the transactions are not taken into account in determining fair value. (p) New Accounting Standards for Application in Future Periods There are a number of new Accounting standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group and have not been applied in preparing these consolidated financial statements. The Group does not plan to adopt these standards early. These standards are not expected to have a material impact on the Group in the current or future reporting periods. 4. Other income In AUD Consolidated Other income (i) 105,784 (i) Relates to research and development tax incentive 105,784

29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 26 Notes to the consolidated financial statements 5. (i) Other operating expenses In AUD 2016 Consolidated 2015 Accounting expense 77,500 72,000 Auditing expense 26,000 26,000 ASX listing fees 24,895 21,796 Administrative & management costs 120, ,358 Company secretary fees 55,500 48,000 Directors fees (Note 25) 220, ,000 Rent and outgoings expense 5,650 8,764 Share registry expense 87,164 41,974 Exploration expense 94,712 90,508 Other expenses 117,934 87, , ,407 (ii) Impairment losses In AUD 2016 Consolidated 2015 Exploration Expenditure 10,513,604 10,513,604 During the prior year the Consolidated Entity impaired capitalised exploration costs to the estimated recoverable amount resulting in an expense of 10,513,604 (2015:Nil). For further explanation refer to note Net finance (expense) income In AUD Consolidated Interest income 1,137 1,048 Change in fair value of assets held for trading 11,563 Finance income 12,700 1,048 Change in fair value of assets held for trading (25,490) (1,712) Finance expense (25,490) (1,712) Net finance (expense) income (13,240) (664)

30 27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 7. Income tax expense In AUD Consolidated Current tax expense Current period In AUD 2016 Consolidated Prima facie income tax benefit calculated at 28.5% (30%) on loss from ordinary activities (3,317,670) (203,228) Impairment losses 2,996,377 R & D tax offset 31,735 NonDeductible Expenses Other Income tax benefit not brought to account (3,469) 324, ,768 Income tax benefit As at 30 June 2016, the Consolidated Entity had future income tax benefits attributable to tax losses calculated at 30% (2015: 30%) of approximately 8,912,143 (2015: 4,291,823). A deferred tax asset of 126,638 (2015: 3,277,250) has been recognised to offset the deferred tax liabilities. The net deferred tax asset of 4,493,682 (2015: 1,014,573) has not been recognised as an asset because realisation of the benefit is not probable. The potential future income tax benefit will only be obtained if: i) the relevant Company derives future assessable income of a nature and amount sufficient to enable the benefit to be realised; ii) the relevant Company complies with the conditions for deductibility imposed by the law; and iii) no changes in tax legislation adversely affect the relevant Company in realising the benefit Recognised deferred tax assets and tax liabilities In AUD 2016 Consolidated 2015 Tax losses 126,638 3,277,250 Deferred tax asset 126,638 3,277,250 Financial assets (6,638) (3,169) Exploration (120,000) (3,274,081) Deferred tax liability (126,638) 3,277,250

31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 28 Notes to the consolidated financial statements 7. Income tax expense (continued) Unrecognised deferred tax assets and tax liabilities In AUD 2016 Consolidated 2015 Tax losses 4,493,682 1,014,573 Deferred tax asset 4,493,682 1,014, Loss per share Basic loss per share The calculation of basic loss per share for the year to 30 June 2016 was based on the loss attributable to ordinary shareholders 11,640,950 (2014: 677,427) and a weighted average number of ordinary shares as set out below. In AUD 2016 Consolidated 2015 Loss attributable to ordinary shareholders 11,640, ,427 Weighted average number or ordinary shares Weighted average number of shares Weighted average number of shares Issued ordinary shares at beginning of the year 145,302,851 91,302,851 Effect of shares issued during the year 93,404,457 23,673,973 Weighted average number of shares 238,707, ,976,824 Basic and diluted loss per share (cents) (4.88) (0.59) 9. Cash and cash equivalents In AUD 2016 Consolidated 2015 Bank balances 26,007 3,152 Cash and cash equivalents in the statement of cash flows 26,007 3,152

32 29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 10. Trade and other receivables In AUD 2016 Consolidated Current Accounts Receivable 65,078 Prepayments 8,844 25,423 R & D tax offset receivable 105,784 Other receivables 1,414 6, , , Other financial assets In AUD Current 2016 Consolidated Term Deposits 30,203 15, NonCurrent Security Deposits 42,338 72, Investments In AUD Consolidated Investments held for trading at fair value 22,125 10,563 22,125 10, Exploration expenditure In AUD Consolidated Cost brought forward 10,913,604 10,913,604 Exploration expenditure impaired (10,513,604) Exploration expenditure carried forward 400,000 10,913,604 The Board has made an impairment to the carrying value of the mineral tenements due to the Company s inability to raise adequate capital to develop the projects. The Board obtained a market valuation from a qualified independent consulting geologist of the Tenant Creek project. The carrying value of 400,000 at 30 June 2016 is at that valuation.

33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 30 Notes to the consolidated financial statements 14. Property, plant and equipment In AUD Land and buildings Consolidated Plant and equipment Cost Total Balance at 1 July , , ,591 Noncurrent assets purchased Balance at 30 June , , ,591 Balance at 1 July , , ,591 Noncurrent assets purchased Balance at 30 June , , ,591 Depreciation Balance at 1 July 2014 (322,636) (322,636) Depreciation charged for the year (10,241) (10,241) Balance at 30 June 2015 (332,877) (332,877) Balance at 1 July 2015 (332,877) (332,877) Depreciation charged for the year (2,782) (2,782) Balance at 30 June 2016 (335,659) (335,659) Carrying amounts At 1 July ,706 21, ,955 At 30 June ,706 11, ,714 At 1 July ,706 11, ,714 At 30 June ,706 8, , Trade and other payables In AUD Consolidated Trade payables (i) 947, ,448 Other payables 24,038 77,580 Accrued expenses(i) 59, ,266 1,031,083 1,074,294 (i) Refer to Note 25 for total amounts owing to directors and their related parties.

34 31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 16. Borrowings In AUD Consolidated Mortgage (i) 200, ,000 Loan from related parties 97,102 89, , ,402 (i) Secured by land and buildings (Note 14). 17. Other Liabilities In AUD Consolidated Share monies received in advance 35,000 49,978 35,000 49, Employee benefits In AUD Consolidated Accrued superannuation 3,821 3, Capital and reserves (a) Share capital Ordinary shares Yr to 30 June 2016 # Yr to 30 June 2016 Yr to 30 June 2015 # Yr to 30 June 2015 On issue at 1 July 145,302,851 55,291,164 91,302,851 54,816,164 Entitlement issue for cash 147,305, ,527 13,000,000 65,000 Shares issued to settle amounts owing to creditors (Note 24) 36,000, ,920 41,000, ,000 Conversion of options 21,987, ,900 Share issue costs On issue at 30 June 350,595,738 56,427, ,302,851 55,291,164 Terms and conditions of share capital Holders of ordinary shares are entitled to receive dividends that may be declared from time to time and are entitled to one vote per share at shareholders meetings. In the event of winding up of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any proceeds from liquidation. Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.

35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 32 Notes to the consolidated financial statements (b) Options There were no options outstanding over unissued ordinary shares at 30 June On 10 December 2015, the Company issued 26 million options as free attaching options to 13 million shares previously issued on 5 May At the time of issue, the options were exercisable before 30 April 2017 at a price of On 5 February ,987,500 of these options were converted into ordinary shares (Note 19). At 30 June 2016, 4,012,500 options remained unexercised. (c) (d) Terms of ordinary shares The holders of ordinary shares are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company s residual assets. Fair Value Reserve The fair value reserve comprises the cumulative net change in the fair value of availableforsale assets until the investments are derecognised or impaired. 20. Consolidated entities Parent entity Excalibur Mining Corporation Limited Subsidiaries 100% 100% Tennant Resources Pty Ltd 100% 100% Tennant Gold Pty Ltd 100% 100% Elara Mining Pty Ltd 100% 100% Clement Resources Pty Ltd 100% 100% Crestline Enterprises Pty Ltd 100% 100% Australian Uranium Energy Pty Ltd 100% 100% 21. Parent Entity Disclosures As at, and throughout, the financial year ended 30 June 2016 the parent company of the Consolidated Entity was Excalibur Mining Corporation Limited. Company Results of the parent entity Loss for the year (11,077,928) (677,427) Other comprehensive income Total comprehensive loss for the year (11,077,928) (677,427) Financial position of parent entity at year end Current assets 131, ,432 Total assets 823,439 10,819,331 Current liabilities 1,363,184 1,417,495 Total liabilities 1,363,184 1,417,495 Total equity of the parent entity comprising of: Share capital 56,427,511 55,291,164 Accumulated losses (56,967,256) (45,889,328) Total equity (539,745) 9,401,835

36 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements Parent entity contingencies The directors are of the opinion that there are no material contingencies at 30 June Commitments and contingent liabilities In order to maintain current rights of tenure to exploration tenements, the Consolidated Entity is required to perform minimum exploration work to meet the minimum expenditure requirements specified by various State Governments. These obligations are not provided for in the financial report and are payable: In AUD 2016 Consolidated 2015 Within one year 134,750 The Company has received several letters relating to a contractual claim for and behalf of Mr Paul Carroll, for alleged unpaid fees up to 312,759. The Company has denied the claim and up to date of this report no further action has been undertaken. 23. Reconciliation of cash flows from operating activities Consolidated In AUD Cash flows from operating activities Loss for the period (11,640,950) (677,427) Adjustments for: Depreciation expense 2,782 10,241 Impairment losses 10,513,604 Share based payments 180, ,000 Bond held based payments 30,000 Loss on settlement of creditors (i) 43,920 Change in fair value of assets held for trading (11,563) Operating profit before changes in working capital (882,207) (257,186) Change in operating trade and other receivables 63,087 (83,068) Change in trade and other payables relating to operating activities (125,964) 213,670 Net cash used in operating activities (693,156) (126,584) (i) Noncash investing and financing activities: During the year to 30 June 2016, creditors of 120,000 and remuneration expenses incurred during the year to 30 June 2016 of 60,000 were settled through the issue of ordinary shares in the Company (Note 19), resulting in a loss of 43,920.

37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 34 Notes to the consolidated financial statements 24. Key management personnel disclosures The following were key management personnel of the Consolidated Entity at any time during the reporting period and unless otherwise indicated were key management personnel for the entire period: Terrence Jones NonExecutive Director (Appointed 3 July 2013) (Resigned 20 May 2016) Executives Alex S Bajada Executive Chairman (Appointed 30 June 2006) Angus Middleton NonExecutive Director (Appointed 6 May 2014) Roland Berzins NonExecutive Director (Appointed 20 May 2016) Refer to the remuneration report contained in the director s report for details of the remuneration paid or payable to each member of the Group s key management personnel for the year ended 30 June Key personnel compensation was as follows: Short term employee benefits 220, ,000 NonMonetary benefits Post employment benefits Termination Payments 220, ,000 Apart from the details disclosed in this note, no Director has entered into a material contract with the Company or the Consolidated Entity since the end of the previous financial year and there were no material contracts involving Directors interests existing at yearend. Amounts owing to related parties In AUD Spartan Nominees Pty Ltd 410, ,800 EKS Solutions Pty Ltd 67, ,853 NKH Pty Ltd 66,000 Terence Jones 11,775 30,000 SA Capital Pty Ltd 34,102 36,667 Roland H Berzins & Associates Sealblue Investments Pty Ltd 8,250 6,562 Angus Middleton 29,167 36,666

38 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 25. Subsequent Events Events subsequent to reporting date On 15 August 2016 shareholders approved the following resolutions: The consolidation of share capital on a 15 for 1 basis. The acquisition of Dropmysite Pte Ltd (Dropsuite) via the purchase of shares in Greenbase Corporation Pty Ltd (Greenbase), with consideration being 282,600,004 post consolidation shares and 49,500,000 performance shares Disposal of the mining assets of the Company and property in Tennant Creek in exchange for the forgiveness of debts owed by the Company The issue of 20,000,000 post consolidation options to advisors and brokers The issue of up to 27,000,000 post consolidation shares as consideration for the acquisition of all Greenbase Convertible Notes To raise 5,000,000 to 8,000,000 by the issue of 50,000,000 to 80,000,000 post consolidation fully paid shares at 0.10 each To change the name of the Company to Dropsuite Limited Various other resolutions. On 6 September 2016 the Company released a Prospectus on the ASX. The offers under the Prospectus are subject to a number of conditions, including: a) The minimum subscription being achieved 5,000,000 by the issue of 50,000,000 fully paid shares at 0.10 per share; b) Completion of the proposed acquisitions, as outlined above and in the Prospectus; and c) The Company receiving conditional approval from the ASX to reinstate the listing of the company shares on the ASX, on terms acceptable to the Company. The fully paid ordinary shares and the unlisted options were consolidated by the Company on the 16 August 2016 on a 15 for 1 basis. The total number of fully paid shares on a post consolidation basis is 23,374,286. The total number of options on a post consolidation basis, with an exercise price of 0.12 and an expiry date of 30 April 2017 is 2,334,173 (Refer also to Section 2.11 of the Prospectus). As outlined in Section 5.3 of the Prospectus (and in connection with the above listed transactions), on 8 July 2016, the Company and Greenbase Vendors who are holders of performance shares in Greenbase executed an agreement pursuant to which the Company will acquire 49,500,000 performance shares in Greenbase, with consideration payable by the Company being 49,500,000 performance shares in the Company. As outlined in Section 5.6 of the Prospectus (and in connection with the above listed transactions), on 5 July 2016, the Company executed an agreement with Greenbase and the existing holders of Greenbase convertible notes, whereby the Company will purchase all the Greenbase convertible notes, with consideration payable by the Company being the issue of 27,000,000 shares in the Company at a deemed issue price of 0.05 per share.

39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 36 Notes to the consolidated financial statements 26. Auditors remuneration Consolidated In AUD Audit services: Auditors of the Company Greenwich & Co Audit Pty Ltd: Audit and review of financial reports Somes Cooke Audit and review of financial reports 19,000 7,000 26,000 Total 26,000 26, Segment Reporting The Board has determined that the Consolidated Entity has one reportable segment, being mineral exploration in Australia. As the Consolidated Entity is focused on mineral exploration, the Board monitors the Consolidated Entity based on actual versus budgeted consolidated results. This internal reporting framework is the most relevant to assist the Board in making decisions regarding the Consolidated Entity and its ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed to date. Accordingly, all significant operating decisions are based upon analysis of the Group as one segment. The financial results from this segment are equivalent to the financial statement of the Group as a whole. 28. Financial Risk Management Overview This note presents information about the Consolidated Entity s exposure to credit, liquidity and market risks, its objectives, policies and processes for measuring and managing risk, and the management of capital. The Consolidated Entity does not use any form of derivatives as it is not at a level of exposure that requires the use of derivatives to hedge its exposure. Exposure limits are reviewed by management on a continuous basis. The Consolidated Entity does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the financial risks relating to the operations of the Consolidated Entity through regular reviews of the risks. Credit risk Credit risk is the risk of financial loss to the Consolidated Entity if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Consolidated Entity s receivables from customers and investment securities. Presently, the Consolidated Entity undertakes exploration and evaluation activities exclusively in Australia. At the statement of financial position date there were no significant concentrations of credit risk. Cash and cash equivalents The Consolidated Entity limits its exposure to credit risk by currently only investing in liquid counterparties that have an acceptable credit rating.

40 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 28. Financial Risk Management (continued) Credit risk (continued) Trade and other receivables As the Consolidated Entity operates primarily in exploration activities, it does not have significant trade receivables and therefore is not exposed to credit risk in relation to trade receivables. Exposure to credit risk The carrying amount of the Consolidated Entity s financial assets represents the maximum credit exposure. The Consolidated Entity s maximum exposure to credit risk at the reporting date was: Consolidated Carrying amount In AUD Held for trading financial assets 22,125 10,563 Availableforsale financial assets Trade and other receivables 75, ,281 Cash and cash equivalents 26,007 3,152 Other financial assets term deposits 30,203 15,202 security deposits 42,338 72,338 Impairment losses None of the Consolidated Entity s other receivables are past due or impaired (2015: nil). Liquidity risk Liquidity risk is the risk that the Consolidated Entity will not be able to meet its financial obligations as they fall due. The Consolidated Entity s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Consolidated Entity s reputation. The Consolidated Entity manages liquidity risk by maintaining adequate cash reserves from funds raised in the market and by continuously monitoring forecast and actual cash flows. The Consolidated Entity has mortgage of 200,000 secured by a property. The Consolidated Entity anticipates that liquidity risk will change upon completion of the proposed transactions outlined at Note 26. The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 38 Notes to the consolidated financial statements 28. Financial Risk Management (continued) Liquidity risk (continued) Consolidated 30 June 2016 In AUD Trade and other payables Borrowings Carrying amount 1,031, ,102 Contractual cash flows 6 months or less 612 months 12 years 25 years 1,031,083 97, ,000 Consolidated 30 June 2015 In AUD Carrying amount Contractual cash flows 6 months or less 612 months 12 years 25 years Trade and other payables 1,074,294 1,074,294 Borrowings 289,402 89, ,000 Interest Rate Risk The Consolidated Entity is exposed to interest rate risk (primarily on its cash and cash equivalents), which is the risk that a financial instrument s value will fluctuate as a result of changes in the market interest rates on interestbearing financial instruments. The Consolidated Entity does not use derivatives to mitigate these exposures. The Consolidated Entity adopts a policy of ensuring that as far as possible it maintains excess cash and cash equivalents in short terms deposit at interest rates maturing over 90 day rolling periods. Profile At the reporting date the interest rate profile of the Consolidated Entity s interestbearing financial instruments was: Consolidated Carrying amount In AUD Fixed rate instruments Financial assets Term Deposits 30,203 15,202 Variable rate instruments 30,203 15,202 Financial assets Cash and cash Equivalents 26,007 3,152 26,007 3,152 Fair value sensitivity analysis for fixed rate instruments The Consolidated Entity does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, therefore a change in interest rates at the reporting date would not affect profit or loss.

42 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 28. Financial Risk Management (continued) Cash flow sensitivity analysis for variable instruments A change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant. The analysis performed on the same basis for Consolidated Profit or loss Effect In AUD 100bp increase 100bp decrease 30 June 2016 Variable rate instruments 562 (562) 30 June 2015 Variable rate instruments 184 (184) Other Market Price Risk Other Equity price risk is the risk that the value of the instrument will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. Investments are managed on an individual basis and material buy and sell decisions are approved by the Board of Directors. The primary goal of the Consolidated Entity s investment strategy is to maximise investment returns. The Consolidated Entity s investments are solely in equity instruments. The following table details the breakdown of the investment assets and liabilities held by the Consolidated Entity: Consolidated Carrying amount In AUD Listed equities 22,125 10,563 Unlisted equities Total equity instruments 22,125 10,563 Sensitivity analysis The Consolidated Entity s listed equity investments are on the Australian Stock Exchange. A 10% increase in stock prices at 30 June 2016 would have resulted in an increase in profit or loss of 2,212 (2015: 1,056) and no increase in equity (2015: nil); an equal change in the opposite direction would have resulted in a decrease in the profit or loss by an equal but opposite amount. Commodity Price Risk The Consolidated Entity operates primarily in the exploration and evaluation phase and accordingly the Consolidated Entity s financial assets and liabilities are subject to minimal commodity price risk.

43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 40 Notes to the consolidated financial statements 28. Financial Risk Management (continued) Capital Management During the year to 30 June 2016 the Consolidated Entity s objectives when managing capital were to safeguard the Consolidated Entity s ability to continue as a going concern, so as to maintain a strong capital base sufficient to maintain future exploration and development of its projects. In order to maintain or adjust the capital structure, the Consolidated Entity may return capital to shareholders, issue new shares or sell assets to reduce debt. The Consolidated Entity s focus has been to raise sufficient funds through equity to fund exploration and evaluation activities. The Consolidated Entity monitors capital on the basis of the gearing ratio. There were no changes in the Consolidated Entity s approach to capital management during the year. Risk management policies and procedures are established with regular monitoring and reporting. Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements. Fair Values The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows: in AUD 30 June June 2015 Carrying Fair Value Carrying Fair Value amount amount Assets carried at fair value Availableforsale financial assets Financial assets held for trading 22,125 22,125 10,563 10,563 22,125 22,125 10,563 10,563 Assets carried at amortised cost Trade and other receivables 75,336 75, , ,281 Other financial assets Security Deposits 42,338 42,338 72,338 72,338 Term Deposit 30,203 30,203 15,202 15,202 Cash and cash equivalents 26,007 26,007 3,152 3,152 Liabilities carried at amortised cost 173, , , ,973 Financial liabilities 1,328,185 1,328,185 1,363,696 1,363,696 1,328,185 1,328,185 1,363,696 1,363,696

44 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements 28. Financial Risk Management (continued) Fair value hierarchy The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). in AUD Level 1 Level 2 Level 3 Total Availableforsale financial assets Financial assets held for trading 22,125 22,125 22,125 22,125

45 DIRECTOR S DECLARATION 42

46 43 AUDITOR S INDEPENDENCE DECLARATION

47 INDEPENDENDENT AUDITOR S REPORT 44 44a

48 45 INDEPENDENDENT AUDITOR S REPORT

49 CORPORATE GOVERNANCE STATEMENT Corporate Governance Statement The Board is responsible for establishing the Company s corporate governance framework, the key features of which are set out below. In establishing its corporate governance framework, the Board has referred to the 3rd edition of the ASX Corporate Governance Councils Corporate Governance Principles and Recommendations. In accordance with ASX Listing Rule 1.1 Condition 13, the corporate governance statement discloses the extent to which the Company follows the recommendations. The Company will follow each recommendation where the Board has considered the recommendation to be an appropriate benchmark for its corporate governance practices. Where the Company s corporate governance practices will follow a recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. In compliance with the if not, why not reporting regime, where, after due consideration, the Company s corporate governance practices will not follow a recommendation, the Board has explained its reasons for not following the recommendation and disclosed what, if any, alternative practices the Company will adopt instead of those in the recommendation. Principle 1: Lay solid foundations for management and oversight Recommendation 1.1 The Company has established the respective roles and responsibilities of its Board and management, and those matters expressly reserved to the Board and those delegated to management, and has documented this in its Board Charter. The responsibilities of the Board include but are not limited to: (a) setting and reviewing strategic direction and planning; (b) reviewing financial and operational performance; (c) identifying principal risks and reviewing risk management strategies; and (d) considering and reviewing significant capital investments and material transactions. In exercising its responsibilities, the Board recognises that there are many stakeholders in the operations of the Company, including employees, shareholders, coventures, the government and the community. The Board has delegated responsibility for the business operations of the Company to the Chairman and the management team. The management team, led by the Chairman is accountable to the Board. Recommendation 1.2 The Company undertakes appropriate checks before appointing a person, or putting forward to shareholders a candidate for election as a director and provides shareholders with all material information in its possession relevant to a decision on whether or not to elect a director. The checks which are undertaken, and the information provided to shareholders, are set out in the Company s Remuneration and Nomination Committee Charter. Recommendation 1.3 The Company has a written agreement with each of the Directors and the Incoming Directors and senior executives setting out the terms of their appointment. The material terms of any employment, service or consultancy agreement the Company, or any of its child entities, has entered into with its Chairman, any of its directors, and any other person or entity who is a related party of the Chairman or any of its directors will be disclosed in accordance with ASX Listing Rule (taking into consideration the exclusions from disclosure outlined in that rule). Recommendation 1.4 The Company Secretary is accountable directly to the Board, through the Chair, on all matters to do with the proper functioning of the Board. The Company Secretary is responsible for the application of best practice in corporate governance and also supports the effectiveness of the Board by: (a) ensuring a good flow of information between the Board, its committees, and Directors; (b) monitoring policies and procedures of the Board; (c) advising the Board through the Chairman of corporate governance policies; and

50 47 CORPORATE GOVERNANCE STATEMENT 18. Corporate Governance Statement (continued) Recommendation 1.4 (continued) (d) conducting and reporting matters of the Board, including the despatch of Board agendas, briefing papers and minutes. Recommendation 1.5 The Company has a Diversity Policy, the purpose of which is: (a) to outline the Company s commitment to creating a corporate culture that embraces diversity and, in particular, focuses on the composition of its Board and senior management; and (b) to provide a process for the Board to determine measurable objectives and procedures which the Company will implement and report against to achieve its diversity goals. The Board intends to set measurable objectives for achieving diversity, specifically including gender diversity and will review and report on the effectiveness and relevance of these measurable objectives. However, due to the current size of the Board and management, these measurable objectives have not yet been set. Recommendation 1.6 The Chairman will be responsible for evaluating the performance of the Company s senior executives in accordance with the process disclosed in the Company s Process for Performance Evaluations, which is currently being developed by the Board. The Board will be responsible for evaluating the performance of the Company s Chairman in accordance with the process disclosed in the Company s Process for Performance Evaluations, which is currently being developed by the Board. Recommendation 1.7 The Chair will be responsible for evaluating the performance of the Board, Board committees and individual directors in accordance with the process disclosed in the Company s Board performance evaluation policy. This policy is to ensure: (a) individual Directors and the Board as a whole work efficiently and effectively in achieving their functions; (b) the executive Directors and key executives execute the Company s strategy through the efficient and effective implementation of the business objectives; and (c) committees to which the Board has delegated responsibilities are performing efficiently and effectively in accordance with the duties and responsibilities set out in the board charter. This policy will be reviewed annually. During the reporting period, an evaluation of the Board, its committees and individual directors has taken place in accordance with the Company s policy. Principle 2: Structure the board to add value Recommendation 2.1 Due to the size of the Board, the Company does not have a separate nomination committee. The roles and responsibilities of a nomination committee are currently undertaken by the Board. The duties of the full Board in its capacity as a nomination committee are set out in the Company s Remuneration and Nomination Committee Charter which will be available on the Company s website. When the Board meets as a remuneration and nomination committee is carries out those functions which are delegated to it in the Company s Remuneration and Nomination Committee Charter. Items that are usually required to be discussed by a Remuneration and Nomination Committee are marked as separate agenda items at Board meetings when required. The Board has adopted a Remuneration and Nomination Committee Charter which describes the role, composition, functions and responsibilities of a Nomination Committee and will be disclosed on the Company s website.

51 CORPORATE GOVERNANCE STATEMENT Corporate Governance Statement (continued) Recommendation 2.2 The mix of skills and diversity which the Board is looking to achieve in its composition is: (a) A broad range of business experience; and (b) Technical expertise and skills required to discharge duties. Recommendation 2.3 The Board considers the independence of directors having regard to the relationships listed in Box 2.3 of the Principles and Recommendations. Currently the Board is structured as follows: (a) Mr Alex Bajada (Chairman) (b) Mr Angus Middleton (Director) (c) Mr Roland Berzins (Director) Recommendation 2.4 Currently, the Board considers that membership weighted towards technical expertise is appropriate at this stage of the Company s operations. The Board does have a majority of independent directors. Recommendation 2.5 Mr. Alex Bajada is not an independent Chairman of the Board as he is the Executive Chairman. Recommendation 2.6 It is a policy of the Company, that new Directors undergo an induction process in which they are given a full briefing on the Company. Where possible this includes meetings with key executives, tours of the premises, an induction package and presentations. In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo continual professional development. Specifically, Directors are provided with the resources and training to address skills gaps where they are identified. Principle 3: Act ethically and responsibly Recommendation 3.1 The Company is committed to promoting good corporate conduct grounded by strong ethics and responsibility. The Company has established a Code of Conduct (Code), which addresses matters relevant to the Company s legal and ethical obligations to its stakeholders. It may be amended from time to time by the Board, and is disclosed on the Company s website. The Code applies to all Directors, employees, contractors and officers of the Company. The Code will be formally reviewed by the Board each year. Principle 4: Safeguard integrity in corporate reporting Recommendation 4.1 The Company does not have a separate Audit Committee. The members of the committee are Mr. Alex Bajada, Mr. Terence Jones & Mr. Mark Smith. The audit committee is responsible for reviewing the integrity of the Company s financial reporting and overseeing the independence of the external auditors. The duties of the Audit Committee are set out in the Company s Audit Committee Charter which will be available on the Company s website. The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises. Candidates for the position of external auditor must demonstrate complete independence from the Company through the engagement period. The Board may otherwise select an external auditor based on criteria relevant to the Company's business and circumstances. The performance of the external auditor is reviewed on an annual basis by the Board.

52 49 CORPORATE GOVERNANCE STATEMENT 18. Corporate Governance Statement (continued) The Board has adopted an Audit Committee Charter which describes the role, composition, functions and responsibilities of the Audit Committee and will be disclosed on the Company s website. Recommendation 4.2 Before the Board approves the Company financial statements for each financial period it will receive from the Chairman a declaration that, in their opinion, the financial records of the Company for the relevant financial period have been properly maintained and that the financial statements for the relevant financial period comply with the appropriate accounting standards and give a true and fair view of the financial position and performance of the Company and the consolidated entity and that the opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. Recommendation 4.3 Under section 250RA of the Corporations Act, the Company s auditor is required to attend the Company s annual general meeting at which the audit report is considered, and does not arrange to be represented by a person who is a suitably qualified member of the audit team that conducted the audit and is in a position to answer questions about the audit. Each year, the Company will write to the Company s auditor to inform them of the date of the Company s annual general meeting. In accordance with section 250S of the Corporations Act, at the Company s annual general meeting where the Company s auditor or their representative is at the meeting, the Chair will allow a reasonable opportunity for the members as a whole at the meeting to ask the auditor (or its representative) questions relevant to the conduct of the audit; the preparation and content of the auditor s report; the accounting policies adopted by the Company in relation to the preparation of the financial statements; and the independence of the auditor in relation to the conduct of the audit. The Chair will also allow a reasonable opportunity for the auditor (or their representative) to answer written questions submitted to the auditor under section 250PA of the Corporations Act. Principle 5: Make timely and balanced disclosure Recommendation 5.1 The Company is committed to: (a) ensuring that shareholders and the market are provided with full and timely information about its activities; (b) complying with the continuous disclosure obligations contained in the Listing Rules and the applicable sections of the Corporations Act; and (c) providing equal opportunity for all stakeholders to receive externally available information issued by the Company in a timely manner. The Company has adopted a Disclosure Policy, which is disclosed on the Company s website. The Disclosure Policy sets out policies and procedures for the Company s compliance with its continuous disclosure obligations under the ASX Listing Rules, and addresses financial markets communication, media contact and continuous disclosure issues. It forms part of the Company s corporate policies and procedures and is available to all staff. The Company Secretary manages the policy. The policy will develop over time as best practice and regulations change and the Company Secretary will be responsible for communicating any amendments. This policy will be reviewed by the Board annually. Principle 6: Respect the rights of security holders Recommendation 6.1 The Company will provide information about itself and its governance to investors via its website. The Company is committed to maintaining a Company website with general information about the Company and its operations and information specifically targeted at keeping the Company s shareholders informed about the Company. In particular, where appropriate, after confirmation of receipt by ASX, the following will be posted to the Company website: (a) relevant announcements made to the market via ASX; (b) media releases; (c) investment updates; (d) Company presentations and media briefings;

53 CORPORATE GOVERNANCE STATEMENT Corporate Governance Statement (continued) (e) copies of press releases and announcements for the preceding three years; and (f) copies of annual and half yearly reports including financial statements for the preceding three years. Recommendation 6.2 The Company has a Shareholder Communication and Investor Relations Policy which aims to ensure that Shareholders are informed of all major developments of the Company. The policy is disclosed on the Company s website. Information is communicated to Shareholders via: (a) reports to Shareholders; (b) ASX announcements; (c) annual general meetings; and (d) the Company website. This Shareholder Communication and Investor Relations policy will be formally reviewed by the Board each year. While the Company aims to provide sufficient information to Shareholders about the Company and its activities, it understands that Shareholders may have specific questions and require additional information. To ensure that Shareholders can obtain all relevant information to assist them in exercising their rights as Shareholders, the Company has made available a telephone number and relevant contact details (via the website) for Shareholders to make their enquiries. Recommendation 6.3 The Board encourages full participation of Shareholders at meetings to ensure a high level of accountability and identification with the Company s strategies and goals. However, due to the size and nature of the Company, the Board does not consider a policy outlining the policies and processes that it has in place to facilitate and encourage participating at meetings of shareholders to be appropriate at this stage. Recommendation 6.4 Shareholders are given the option to receive communications from, and send communication to, the Company and its share registry electronically. To ensure that shareholders can obtain all relevant information to assist them in exercising their rights as shareholders, the Company has made available a telephone number and relevant contact details (via the website) for shareholders to make their enquiries. Principle 7: Recognise and manage risk Recommendation 7.1 Due to the size of the Board, the Company does not have a separate Risk Committee. The Board is responsible for the oversight of the Company s risk management and control framework. When the Board meets as a risk committee is carries out those functions which are delegated to it in the Company s Risk Committee Charter. Items that are usually required to be discussed by a Risk Committee are marked as separate agenda items at Board meetings when required. The Board has adopted a Risk Committee Charter which describes the role, composition, functions and responsibilities of the Risk Committee and is disclosed on the Company s website. The Board has adopted a Risk Management Policy, which is disclosed on the Company s website. Under the policy, responsibility and control of risk management is delegated to the appropriate level of management within the Company with the Chairman having ultimate responsibility to the Board for the risk management and control framework. The risk management system covers: (a) operational risk; (b) financial reporting; (c) compliance / regulations; and (d) system / IT process risk.

54 51 CORPORATE GOVERNANCE STATEMENT 18. Corporate Governance Statement (continued) A risk management model is to be developed and will provide a framework for systematically understanding and identifying the types of business risks threatening the Company as a whole, or specific business activities within the Company. Recommendation 7.2 The Board will review the Company s risk management framework annually to satisfy itself that it continues to be sound, to determine whether there have been any changes in the material business risks the Company faces and to ensure that the Company is operating within the risk appetite set by the Board. Arrangements put in place by the Board to monitor risk management include, but are not limited to: (a) monthly reporting to the Board in respect of operations and the financial position of the Company; and (b) quarterly rolling forecasts prepared; Recommendation 7.3 The Company does not have, and does not intend to establish, an internal audit function. To evaluate and continually improve the effectiveness of the Company s risk management and internal control processes, the Board relies on ongoing reporting and discussion of the management of material business risks as outlined in the Company s Risk Management Policy. Recommendation 7.4 Given the speculative nature of the Company s business, it is subject to general risks and certain specific risks as outlined in the Company s Prospectus. The Company has identified those economic, environmental and/or social sustainability risks to which it has a material exposure, and disclosed how it intends to manage those risks. Principle 8: Remunerate fairly and responsibly Recommendation 8.1 Due to the size of the Board, the Company does not have a separate remuneration committee. The roles and responsibilities of a remuneration committee are currently undertaken by the Board. The duties of the full board in its capacity as a remuneration committee are set out in the Company s Remuneration and Nomination Committee Charter which is available on the Company s website. When the Board meets as a remuneration committee is carries out those functions which are delegated to it in the Company s Remuneration and Nomination Committee Charter. Items that are usually required to be discussed by a Remuneration Committee are marked as separate agenda items at Board meetings when required. The Board has adopted a Remuneration and Nomination Committee Charter which describes the role, composition, functions and responsibilities of the Remuneration Committee and is disclosed on the Company s website. Recommendation 8.2 Details of the Company s policies on remuneration will be set out in the Company s Remuneration Report in each Annual Report published by the Company. This disclosure will include a summary of the Company s policies regarding the deferral of performancebased remuneration and the reduction, cancellation or clawback of the performancebased remuneration in the event of serious misconduct or a material misstatement in the Company s financial statements. Recommendation 8.3 The Company s Security Trading Policy includes a statement on the Company s policy on prohibiting participants in the Company s Employee Incentive Plan entering into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the Employee Incentive Plan. Security Trading Policy

55 CORPORATE GOVERNANCE STATEMENT Corporate Governance Statement (continued) In accordance with ASX Listing Rule 12.9, the Company has adopted a trading policy which sets out the following information: (a) closed periods in which directors, employees and contractors of the Company must not deal in the Company s securities; (b) trading in the Company s securities which is not subject to the Company s trading policy; and (c) the procedures for obtaining written clearance for trading in exceptional circumstances. The Company s Security Trading Policy will be available on the Company s website. Administration The Company s share registry is maintained at Advanced Share Registry, 110 Stirling Highway, Nedlands Western Australia Telephone: Role of the Board The Board's primary role is the protection and enhancement of longterm shareholder value. To fulfil this role, the Board is responsible for the overall corporate governance of the Company including formulating its strategic direction, approving and monitoring capital expenditure, setting remuneration, appointing, removing and creating succession policies for Directors and senior executives, establishing and monitoring the achievement of management's goals and ensuring the integrity of internal control and management information systems. It is also responsible for approving and monitoring financial and other reporting. The Board has adopted a Board Charter and this is held at the Company s registered office and is available upon request. The full Board currently holds regular meetings plus strategy meetings and any extraordinary meetings at such other times as may be necessary to address any specific significant matters that may arise. The agenda for meetings is prepared in conjunction with members of the Board and the Company Secretary. Submissions are circulated in advance. Directors' education Directors have the opportunity to visit the Company facilities to gain a better understanding of business operations. Directors are given access to continuing education opportunities to update and enhance their skills and knowledge. Gender Diversity There are no women in senior executive positions or on the Board. Independent professional advice and access to Company information Each Director has the right of access to all relevant Company information and, subject to prior consultation, may seek independent professional advice from a suitably qualified adviser at the Company's expense. The Director must consult with an adviser suitably qualified in the relevant field, and obtain approval of the fee payable for the advice before proceeding with the consultation. A copy of the advice received by the Director is made available to all other members of the Board.

56 53 CORPORATE GOVERNANCE STATEMENT 18. Corporate Governance Statement (continued) Composition of the Board The composition of the Board is determined using the following principles: A minimum of three Directors, with a broad range of expertise both nationally and internationally. A majority of Directors having extensive knowledge of the Company's industries, and those who do not, have extensive expertise in significant aspects of auditing and financial reporting, or risk management of large companies. The Directors stand for reelection by Shareholders in accordance with the requirements of the Constitution (i.e. on a three year rotational basis). Audit Committee The Company established an Audit Committee in August The current members of the Audit Committee are Mr Alex Bajada and Mr Terrence Jones. The Audit Committee will provide a review and/or advisory capacity to assist the Board in fulfilling its responsibilities relating to: accounting and reporting practices. compliance with relevant laws. external audit. The Company auditor has been given a standing invitation to attend meetings of the Audit Committee. The Audit Committee will meet whenever necessary. The minutes of the Audit Committee will be provided to the Board. Remuneration and Nomination Committee Due to restructuring during the year ended 30 June 2011, the Board took over the roles of the remuneration and nomination committee. Risk Management Major risks arise from such matters as: government policy changes; the impact of exchange rate movements on the price of raw materials; difficulties in sourcing exploration materials; environment, occupational health and safety, property; financial reporting; reliance on historical data and the purchase, development, management and use of information systems. The Company has adopted a risk management policy. The Board acknowledges that it is responsible for overall internal control but recognises that no cost effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility the Board instigates the following: Financial reporting there is a budgeting system with an annual budget approved by the Directors. Actual results are regularly compared to budget and revised forecasts adopted as required. Continuous disclosure the Company has a policy that all investors have equal access to the Company s information with all price sensitive information disclosed to the ASX in accordance with the continuous disclosure requirements of the Corporations Act and ASX Listing Rules. Investment appraisal the Company undertakes careful due diligence when considering any major investment or new venture.

57 CORPORATE GOVERNANCE STATEMENT Corporate Governance Statement (continued) Risk Management (continued) Comprehensive practices have been established to ensure: Capital expenditure and revenue commitments above a certain size obtain prior board approval. Financial exposures are controlled, including the use of derivatives. Occupational health and safety standards and management systems are monitored and reviewed to achieve high standards of performance and compliance with regulations. Business transactions are properly authorised and executed. The quality and integrity of personnel (see below). Financial reporting accuracy and compliance with financial reporting regulatory framework (see below). Environmental Regulation The Consolidated Entity is committed to achieving a high standard of environmental performance. The board is responsible for the monitoring of environmental exposures and compliance with environmental regulations. Based on the results of enquiries made, the board is not aware of any significant breaches during the period covered by this report. Ethical Standards All Directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Consolidated Entity. Conflict of Interest Directors must keep the Board advised, on an ongoing basis, of any interest that could potentially conflict with those of the Consolidated Entity. The Board has developed procedures to assist Directors to disclose potential conflicts of interest. Where the Board believes that a significant conflict exists for a Director on a board matter, the Director concerned does not receive the relevant board papers and is not present at the meeting whilst the item is considered. Communications with Shareholders The Board has established a communications policy which provides shareholders with information using a continuous disclosure policy which includes identifying matters that may have a material effect on the price of the Company's securities, notifying them to the ASX, and issuing media releases. Information is communicated to Shareholders through: annual and halfyearly financial reports and quarterly reports; annual and other general meetings convened for Shareholder review and approval of Board proposals; continuous disclosure of material changes to ASX for open access to the public, in accordance with the Company's continuous disclosure obligations; the Company s website. The Board encourages full participation of shareholders at annual general meetings, to ensure a high level of accountability and identification with the Company s strategy and goals. Important issues are presented to Shareholders as single resolutions.

58 55 CORPORATE GOVERNANCE STATEMENT 18. Corporate Governance Statement (continued) Communications with Shareholders (continued) Shareholders are requested to vote on the appointment and aggregate remuneration of Directors, the granting of Options and Shares to Directors and changes to the Constitution. Copies of the Constitution are available to any shareholder who requests it. The Company's auditor is required to attend the Company's annual general meetings. The Chairman will permit Shareholders to submit questions about the conduct of the audit and the preparation and content of the audit report. All Company information is relayed via the Company website including recent ASX announcements and comprehensive explanations and disclosures of current projects. The annual, half annual and quarterly reports are also available along with alerts to subscribing shareholders. Shareholders with internet access will also be encouraged to provide their addresses to receive electronic copies of information distributed by the Company. Hard copies of information distributed by the Company are currently available on request. Code of Conduct The Company has a code of conduct which is available on request and will shortly be available on the Company s website. Audit Committee Charter The Company s audit charter is available on request and will shortly be available on the Company s website.

59 ASX ADDITIONAL INFORMATION 56 ASX ADDITIONAL INFORMATION Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below. Distribution of equity security holders NUMBER OF EQUITY SECURITY HOLDERS Shareholdings (as at 3 October 2016) Ordinary shares Category EXM Substantial shareholders 1 1,000 3,045 Hot Chilli Investments Pty Ltd 5.13% 1,001 5, Spartan Nominees Pty Ltd 6.06% 5,001 10, , , ,001 and over 48 3,709 The number of shareholders holding less than a marketable parcel of ordinary shares is 3,387. Voting rights Ordinary Shares All ordinary shares issued by the Company carry one vote per share without restriction. Options Options for ordinary shares do not carry any voting rights. Unlisted Securities The Company has 2,334,173 Unlisted Options on issue with an expiry date of 30 April 2017 and an exercise price of 12 cents.

60 57 SHAREHOLDER INFORMATION The 20 largest shareholders are set out below: EXM Name Number of shares held Percentage of capital held Hot Chilli Investments Pty Ltd <Hot Chilli Invest S/F A/C> 1,200, GPI Management Services Pty Ltd 847, Fay Holdings Pty Ltd 791, SA Capital Pty Ltd 700, Montreux Pty Ltd <E J Berry Super Fund A/C> 653, Citicorp Nominees Pty Limited 627, Spartan Nominees Pty Ltd <Spartan Super Fund A/C> 604, Hallcrest Investments Pty Ltd <Short Super Fund A/C> 570, Smart Investments Limited 563, Iris Sydney Holdings Pty Ltd 500, Futurity Private Pty Ltd 489, NGST Pty Ltd <Miandre A/C> 416, Spartan Nominees Pty Ltd 397, Mr Emery Feyzeny & Mrs Judy Feyzeny <Pluvial Super Fund Account> 366, Clouday Pty Ltd <Smith Super Fund A/C> 360, AAG Management Pty Ltd 353, Clouday Pty Ltd ^Smith Super Fund A/C> 333, Jane Catherine Kilderry Jones <Third Stone A/C> 314, Spartan Nominees Pty Ltd <Super fund A/C> 302, Ms Yanping Zhou 248, Total 10,641, The 20 largest option holders are set out below: EXM Expiry date 30 April 2017 at an exercise price 0.12 Number of options Percentage of Name held capital held AAG Management Pty Ltd 133, AFB Dominion Invesments 40, Mr Michael Richard Dwyer Carrellos Investments Pty Ltd 66, Chaleyer Holdings Pty Ltd 133, Clouday Pty Ltd 200, Allan Lock DrakeBrockman 133, Filmrim Pty Ltd 133, Futurity Private Pty Ltd 400, Hillcrest Investments Pty Ltd 266, Mr Gerrard John Hunter 266, Kenan Geoffrey Jagger 266, Ruth Ann Metcalf 66, Suzie Short 133, Walter Marcus 93, Total 2,334,

61 ASX ADDITIONAL INFORMATION 58 Summary of Tenement Holdings Interest Western Australia Mt Monger M26/325 Royalty Interest Northern Territory Juno MCC % Juno MLC154 & MLC % Juno MLC45 TO MLC47 100% Juno MLC578 & MLC % Juno MLC68 100% Nobles Nob MLC512 TO MLC % Nobles Nob MLC % Nobles Nob MLC525 & MLC % Nobles Nob MLC531 TO MLC % Nobles Nob MLC537 TO MLC % Nobles Nob MLC548 TO MLC % Nobles Nob MLC % Nobles Nob MLC589 & MLC % Nobles Nob MLC688 TO MLC % Zambia 18362HQLPL 80% Zambia 17853HQLPL 80% Zambia 17854HQLPL 80% Zambia 17855HQLPL 80% Zambia 17782HQLPL 80%

62 59 BLANK INTENTIONALLY MINING CORPORATION LIMITED

63

64 MINING CORPORATION LIMITED