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1 Intrepid Mines Limited ABN Interim financial report for the six months ended 30 June 2017

2 Table of Contents DIRECTORS REPORT 3 LEAD AUDITOR S INDEPENDENCE DECLARATION 5 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 6 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 7 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 8 CONSOLIDATED STATEMENT OF CASH FLOWS 9 CONDENSED NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS 10 DIRECTORS' DECLARATION 14 INDEPENDENT AUDITOR S REVIEW REPORT 15 About this report This report is a summary of Intrepid Mines Limited s operations, activities and financial position for the six months ended 30 June It complies with Australian reporting requirements. An electronic version of this report is available at Printed reports are also available from Intrepid on request. About Intrepid Mines Limited Intrepid Mines Limited is an Australian-based minerals exploration and development company which is listed on the ASX (ASX code: IAU). Additional information is available on Intrepid s website: Page 2

3 DIRECTORS REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2017 The Directors present their report together with the consolidated financial statements of Intrepid Mines Limited ( the Company or Intrepid ) and of the Group, being the Company and the entities it controlled at the end of, or during, the six months ended 30 June 2017 and the auditor s review report thereon. DIRECTORS The following persons were directors of Intrepid Mines Limited during the whole of the half-year and up to the date of this report: Peter Love Richard Baumfield Peter Evans Tony Wolfe PRESENTATION CURRENCY Items included in the directors report and financial statements of the Group are presented in Australian dollars unless otherwise stated. REVIEW AND RESULTS OF OPERATIONS The directors provide the following comments on the operations of the Group for the half-year ended 30 June Exploration and evaluation activities Kitumba Project, Zambia (100%) and Mumbwa Exploration, Zambia (100%) On 23 May 2017, the Company announced the appointment of PCF Capital Group as a corporate adviser to undertake a process to determine alternative options with respect to Intrepid s Mumbwa and Kitumba Copper Projects, located in Zambia. Refer to the ASX announcement on 23 May 2017 for further detail. Financial results During the half-year the Group delivered a loss before income tax of $18,063,000 (1H 2016: $2,493,000). Net assets of the Group as at 30 June 2017 were $37,942,000 (31 Dec 2016: $55,844,000). Corporate The Company s Annual General Meeting was held on 30 May 2017 with all resolutions being passed. ROUNDING The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors Reports) Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to the rounding off of amounts in the financial statements. Amounts in the financial statements have been rounded off in accordance with that Instrument to the nearest thousand dollars. DIVIDENDS No dividends have been declared, provided or paid in respect of the half-year period. Page 3

4 LEAD AUDITOR S INDEPENDENCE DECLARATION The Lead Auditor s independence declaration under section 307C of the Corporations Act is set out on page 5 and forms part of the Directors Report for the six months ended 30 June This report is made in accordance with a resolution of directors. Peter Love Chairman Brisbane, Queensland 13 September 2017 Page 4

5 Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: Fax: ey.com/au Auditor s Independence Declaration to the Directors of Intrepid Mines Limited As lead auditor for the review of Intrepid Mines Limited for the half-year ended 30 June 2017, I declare to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and b) no contraventions of any applicable code of professional conduct in relation to the review. This declaration is in respect of Intrepid Mines Limited and the entities it controlled during the financial period. Ernst & Young Yvonne Barnikel Partner 13 September 2017 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Page 5

6 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2017 Six months ended 30 Jun 2017 Six months ended 30 Jun 2016 Note $ 000 $ 000 Income Other income Expenses Exploration and evaluation expenditure (614) (1,541) General and administrative expenses (465) (847) Integration and restructuring costs - (147) Impairment of mining properties 4 (16,093) - Foreign exchange gain / (loss) (990) (352) Profit / (loss) before income tax (18,063) (2,493) Income tax benefit - 42 Profit / (loss) for the period (18,063) (2,451) Other comprehensive income Foreign exchange translation differences 278 1,009 Total comprehensive income / (loss) attributable to owners of the company (17,785) (1,442) $ $ Basic and diluted loss per share (1.05) (0.14) The condensed notes on pages 11 to 13 are an integral part of these consolidated interim financial statements. Page 6

7 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 Current assets Note 30 Jun Dec 2016 $ 000 $ 000 Cash and cash equivalents 21,853 23,864 Trade and other receivables 1,369 1,489 Total current assets 23,222 25,353 Non-current assets Property, plant and equipment Mining properties 4 15,000 30,833 Total non-current assets 15,019 30,865 TOTAL ASSETS 38,241 56,218 Current liabilities Trade and other payables Provisions Total current liabilities Non-current liabilities Provisions Total non-current liabilities TOTAL LIABILITIES NET ASSETS 37,942 55,844 Equity Contributed equity 5 241, ,248 Reserves 42,133 41,855 Accumulated losses (245,322) (227,259) TOTAL EQUITY 37,942 55,844 The condensed notes on pages 11 to 13 are an integral part of these consolidated interim financial statements. Page 7

8 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2017 Consolidated Note Foreign currency Sharebased Profit Share translation payments appropriation Accumulated Total capital reserve reserve reserve losses equity $ 000 $ 000 $ 000 $ 000 $ 000 $ 000 Balance at 1 January ,248 (11,685) 7,784 45,756 (227,259) 55,844 Total comprehensive loss for the period Profit / (loss) for the period (18,063) (18,063) Other comprehensive loss Foreign currency translation differences Total comprehensive income for the period 241,248 (11,407) 7,784 45,756 (245,322) 38,059 Transactions with owners, recorded directly in equity Share buyback, net of transaction costs 5 (117) (117) Balance at 30 June ,131 (11,407) 7,784 45,756 (245,322) 37,942 Balance at 1 January ,499 (14,742) 7,784 45,756 (222,912) 84,385 Total comprehensive loss for the period Profit / (loss) for the period (2,451) (2,451) Other comprehensive loss Foreign currency translation differences - 1, ,009 Total comprehensive income for the period 268,499 (13,733) 7,784 45,756 (225,363) 82,943 Transactions with owners, recorded directly in equity Share buyback, net of transaction costs 5 (2,752) (2,752) Balance at 30 June ,747 (13,733) 7,784 45,756 (225,363) 80,191 Amounts are stated net of tax. The condensed notes on pages 11 to 13 are an integral part of these consolidated interim financial statements. Page 8

9 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 30 JUNE 2017 Cash flows used in operating activities Six months ended 30 Jun 2017 Six months ended 30 Jun 2016 $ $ Payment for exploration activities (673) (1,747) Payments to suppliers and employees (417) (1,434) Interest received Income taxes (paid) / refund Release of funds previously held in trust Net cash used in operating activities (926) (1,986) Cash flows used in investing activities Proceeds from sale of exploration assets - - Net cash used in investing activities - - Cash flows from financing activities Purchase of own shares through on market buyback (net of 5 (111) (2,752) transaction costs) Net cash from financing activities (111) (2,752) Net increase/(decrease) in cash and cash equivalents (1,037) (4,738) Cash and cash equivalents at 1 January 23,864 55,932 Effect of exchange rate fluctuations on cash held (974) (553) Cash and cash equivalents at 30 June 21,853 50,641 The condensed notes on pages 11 to 13 are an integral part of these consolidated interim financial statements. Page 9

10 CONDENSED NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS Note Reporting entity Basis of preparation and changes to the Group s accounting policies Segment reporting Mining properties Share capital Events occurring after the reporting period Page 10

11 CONDENSED NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1. REPORTING ENTITY Intrepid Mines Limited (the Company or Intrepid ) is a company domiciled in Australia whose shares are publicly listed on the ASX (ASX code: IAU). The condensed consolidated interim financial report of the Company as at and for the six months ended 30 June 2017 comprises the Company and its subsidiaries (collectively, the Group ). The consolidated annual financial report of the Group as at and for the period ended 31 December 2016 is available upon request from the Company s registered office at Suite 2, 24 Bolton Street, Newcastle NSW 2300 or at 2. BASIS OF PREPARATION AND CHANGES TO THE GROUP S POLICIES a. Basis of preparation The condensed consolidated interim financial report for the half-year reporting period ended 30 June 2017 which has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act This condensed consolidated interim financial report does not include all of the information and disclosures required in the annual financial report, and should be read in conjunction with the consolidated financial report of the Group as at and for the period ended 31 December b. Changes in accounting policies, accounting standards and interpretations The accounting policies applied by the Group in this condensed consolidated interim financial report are the same as those applied by the Group in its consolidated financial report as at and for the period ended 31 December c. Estimates The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing this condensed consolidated interim financial report, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report as at and for the period ended 31 December 2016, except for the impairment of mining properties as discussed in note SEGMENT REPORTING Consistent with the year ended 31 December 2016, the Group manages its operations as a single business operation and there are no parts of the business that qualify as separate operating segments under AASB 8 Operating Segments. The board assesses the financial performance of the Group on an integrated basis only and accordingly, the Group is managed on the basis of a single segment. Geographical information The geographical locations of the Group s non-current assets are Africa $15,019,000 and Australia $nil (31 December 2016: Africa $30,865,000 and Australia $nil). Page 11

12 CONDENSED NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS (continued) 4. MINING PROPERTIES 30 Jun Dec 16 $ 000 $ 000 Balance at 1 January 30,833 27,707 Foreign exchange translation 260 3,126 Impairment expense (16,093) - Balance at end of period 15,000 30,833 Exploration and evaluation assets consist of the following: Exploration properties (Zambia Mumbwa) 15,000 30,833 Impairment At each reporting period, the Company assesses whether there are indicators of impairment with respect to its mining properties in accordance with AASB 6 - Exploration for and Evaluation of Mineral Resources. When indicators of impairment are identified, impairment testing is performed to determine their recoverable amount in accordance with the requirements of AASB 136 Impairment of Assets. If the carrying value of the assets exceeds this recoverable amount, an impairment loss is charged to the Statement of Comprehensive Income with a corresponding reduction in the asset value. Exploration properties in Zambia, including both the Kitumba Project and other surrounding exploration licences, are considered one cash generating unit (CGU) for the purposes of impairment testing. During the period, the Directors made the decision to determine alternative options with respect to these properties (refer ASX announcement dated 23 May 2017). This was deemed to be an indicator of impairment as at 30 June Recoverable amount has been determined based on an independent fair market valuation performed by Grant Thornton. The valuation was determined on both a market multiple and on a discounted cash flow basis, at a discount rate the Company would expect a market participant to apply to such cash flows. The key assumptions used in this valuation are an average copper price of $US3.04/lb over the life of mine and a post-tax discount rate of 12.1%. An exchange rate of US$0.77/$A has been used to convert the net present value of US-dollar denominated cash flows to Australian dollars. A non-cash impairment expense of $16,093,000 was recognised at 30 June The recoverable amount of the mining properties is their fair value less costs of disposal, being $15,000,000. Asset valuations based on cash flow projections, rely on a range of assumptions, such as price, production costs, yield and production volumes that are subject to change. Accordingly, assets values are sensitive to changes in key assumptions. As all mining properties have been written down to their recoverable amounts at 30 June 2017, any future unfavourable changes in the key assumptions will result in further impairment. Likewise, any future favourable change in the key assumptions will result in a reversal of prior impairment. The following changes in key assumptions will result in the following changes to the impairment figures - A decrease in the copper price assumption to US$2.99/lb will result in a $15,000,000 increase in impairment, whereas an increase in the copper price assumption to US$3.09/lb will result in an impairment reversal of $16,093,000 - An increase in the discount rate assumption of 0.5% will result in a $11,570,000 increase in impairment, whereas a decrease in the discount rate assumption of 0.5% will result in an impairment reversal of $12,328,000 Page 12

13 - An increase in operating cost of 1% will result in a $6,131,000 increase in impairment, whereas a decrease in operating cost of 1% will result in an impairment reversal of $6,077,000 - An increase in capital expenditure of 1% will result in a $3,946,000 increase in impairment, whereas a decrease in capital expenditure of 1% will result in an impairment reversal of $3,934,000 - A long-term exchange rate of US$0.85/$A will result in a $1,412,000 increase in impairment, whereas a long-term exchange rate of US$0.70/$A will result in an impairment reversal of $1,500, SHARE CAPITAL Movements in shares on issue during the period were as follows: 30 Jun Dec 16 Number of ordinary shares Number of ordinary shares On issue at 1 January 17,224, ,038,296 Share buyback pre share consolidation - (22,761,447) Share consolidation 1 - (329,913,814) Share buyback post share consolidation (100,295) (138,500) On issue at end of period fully paid 17,124,240 17,224,535 1 The Company implemented a share consolidation on 31 August 2016 whereby shareholders received one post-consolidation share for every twenty pre-consolidation shares held. 6. EVENTS OCCURRING AFTER THE REPORTING PERIOD Other than the continuing process in relation to the Company s Zambian Assets being conducted by PCF Capital (refer ASX announcement dated 23 May 2017), no events have arisen subsequent to 30 June 2017 that have significantly affected, or may significantly affect the operations of the Group. Page 13

14 DIRECTORS' DECLARATION In accordance with a resolution of the directors of Intrepid Mines Limited, I state that: In the opinion of the directors: (a) The financial statements and notes of Intrepid Mines Limited for the half-year ended 30 June 2017 are in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the Group s financial position as at 30 June 2017 and of its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. On behalf of the board Peter Love Chairman Brisbane, Queensland 13 September 2017 Page 14

15 Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: Fax: ey.com/au Independent Auditor's Review Report to the Members of Intrepid Mines Limited Report on the Half-Year Financial Report Conclusion We have reviewed the accompanying half-year financial report of Intrepid Mines Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2017, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors declaration. Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the half-year financial report of the Group is not in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2017 and of its consolidated financial performance for the half-year ended on that date; and b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations Directors Responsibility for the Half-Year Financial Report The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, anything has come to our attention that causes us to believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group s consolidated financial position as at 30 June 2017 and its consolidated financial performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations As the auditor of the Group, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation Page 15

16 Independence In conducting our review, we have complied with the independence requirements of the Corporations Act Ernst & Young Yvonne Barnikel Partner Sydney 13 September 2017 Page 16

For personal use only

For personal use only Intrepid Mines Limited ABN 11 060 156 452 Interim financial report for the six months ended 30 June 2016 Table of Contents DIRECTORS REPORT 3 LEAD AUDITOR S INDEPENDENCE DECLARATION 5 CONSOLIDATED STATEMENT