Financial Statements Berkut Minerals Limited For the period ended from incorporation to 30 June 2016
Berkut Minerals Limited financial statements ii Contents Page Directors Report 1 Auditor s Independence Declaration 5 Corporate Governance Statement 6 Statement of Profit or Loss and Other Comprehensive Income 7 Statement of Cash Flows 10 Notes to the Financial Statements 11 1 Nature of operations 11 2 General information and statement of compliance 11 3 Changes in accounting policies 12 4 Summary of accounting policies 12 5 Cash and cash equivalents 18 6 Trade and other payables 18 7 Equity 18 8 Earnings per share 19 9 Reconciliation of cash flows from operating activities 19 10 Auditor remuneration 19 11 Related party transactions 19 12 Financial instrument risk 21 13 Contingent commitments 21 14 Deposits 22 15 Post-reporting date events 22 Directors Declaration 23 Independent Auditor s Report 24
Berkut Minerals Limited financial statements 1 Directors Report The Directors of Berkut Minerals Limited (Berkut or Company) present their Report together with the financial statements of the consolidated entity, being Berkut ( the Company ) and its Controlled Entities ( the Company ) for the period ended from incorporation to 30 June 2016. Director details The following persons were Directors of Berkut during or since the end of the financial year. Mr Michael Bohm B.AppSc, MAusIMM, MAICD Non-Executive Chairman (appointed 1 July 2016) Mr Bohm is a qualified mining professional with extensive Corporate, Project Development and Mine Operations experience. A graduate of the WA School of Mines, he has worked as a mining engineer, mine manager, study manager, project manager and project director. Other current Directorships: Perseus Mining Limited Ramelius Resources Limited Tawana Resources NL Previous Directorships in the last 3 years: Herencia Resources plc Interests in shares: None Interest in options: 1,000,000 comprising 500,000 Class A Options and 500,000 Class B Options Paul Payne B.AppSc, Grad Dip Min Ec, Grad Cert (Geostats), FAusIMM Non-Executive Director (Appointed 1 July 2016) Mr Payne is principal of PayneGeo and has over thirty years experience within the mining industry including over ten years of independent consulting across a range of commodities and jurisdictions. Mr Payne has extensive technical experience in the evaluation of mineral deposits from early stage exploration to definitive feasibility studies. Other current Directorships: None Previous Directorships: Dacian Gold Limited Brighton Resources Limited Interests in shares: None Interest in options: 500,000 comprising Class A Options
Berkut Minerals Limited financial statements 2 Mr Justin Tremain BCom Non-Executive Director (Appointed 19 February 2016) Mr Tremain cofounded ASX listed Renaissance Minerals Limited in June 2010 and has served as Renaissance s Managing Director since that time. Prior to founding Renaissance Minerals Limited, he had over ten years investment banking experience in the natural resources sector. Mr Michael Naylor Appointed 19 February 2016, Resigned 1 July 2016) Mr Michael Wilson Appointed 19 February 2016, Resigned 1 July 2016) Other current Directorships: Renaissance Minerals Limited Previous Directorships: None Interests in shares: 2,000,000 Interest in options: 500,000 Comprising Class A Options
Berkut Minerals Limited financial statements 3 Company Secretary Ms Melanie Li Ms Melanie Li is a Chartered Accountant and the Company Secretary. Melanie Li has over six years experience in the mining indaustry. She commenced her career at ASX-listed Tanami Gold NL where she qualified as a Chartered Accountant. She is currently the Financial Controller and Company Secretary of Tawana Resources NL and also the Financial Controller of Helix Resources Limited. Prior to this Mr Michael Naylor served as Company Secretary (appointed 19 February 2016, resigned 1 July 2016). Principal activities During the period, the principal activity of the Company was the exploration on the area of land the subject of the Cairn Hill Gold project. Both the Mt Clement Gold Project and Capricorn Lithium Project are in a tenement application stage and therefore the Company has not yet commenced its own exploration activities on these two projects. There have been no significant changes in the nature of these activities during the period. Review of operations and financial results Since incorporation, (19 February 2016) the Company has established itself as a Western Australian minerals exploration company, focussing on gold, base metals and lithium. The Company recently entered into an agreement to acquire an interest of up to 70% in a gold project located in the Ashburton region, WA (Cairn Hill Gold project). The Company has identified and secured an additional 218km 2 of ground as a gold target also located in the Ashburton region, Western Australia (Mt Clement Gold Project). The Company has also identified and secured 188km 2 of ground covering an area prospective for lithium in the Savory Basin in the Little Sandy Desert of Western Australia (Capricorn Lithium Project). The operating result of the Company is $117,582 loss; this is mainly due to generating no revenue for the period and Option expenses of $105,816 Earnings per share are a loss of 2.804 cents per share. Events arising since the end of the reporting period The entity is in the process of lodging a prospectus with an offer of 15,000,000 shares at an issue price of $0.20 per share to raise $3,000,000 (before costs). The offer is not underwritten. There are no other matters or circumstances that have arisen since the end of the year that have significantly affected or may significantly affect either: the entity s operations in future financial years the results of those operations in future financial years; or the entity s state of affairs in future financial years
Berkut Minerals Limited financial statements 4 Likely developments and expected results The Consolidated Entity is committed to realising value from its exploration assets and listing on the Australian Securities Exchange. Directors meetings The number of Directors meetings (including meetings of Committees of Directors) held during the year, and the number of meetings attended by each Director is as follows: Board Meetings Directors name A B Justin Tremain 1 1 Michael Naylor 1 1 Michael Wilson 1 1 Where: column A is the number of meetings the Director was entitled to attend column B is the number of meetings the Director attended Unissued shares under option Unissued ordinary shares of Berkut under option at the date of this report are: Date options granted Expiry date Exercise price of shares ($) Number under option 22 June 2016 31 December 2019 $0.25 3,000,000 22 June 2016 31 December 2019 $0.20 500,000 Total under option 3,500,000 These options do not entitle the holder to participate in any share issue of the Company. Shares issued during or since the end of the year as a result of exercise During or since the end of the financial year, the Company did not issue any ordinary shares as a result of the exercise of options. Auditor s independence declaration The lead auditor s independence declaration for the period ended from incorporation to 30 June 2016 has been received and is attached to this Directors Report. Signed in accordance with a resolution of the Board of Directors. Mr Justin Tremain Non-Executive Director Dated at Perth this 20 July 2016
Level 1 10 Kings Park Road West Perth WA 6005 Correspondence to: PO Box 570 West Perth WA 6872 Auditor s Independence Declaration To the Directors of Berkut Minerals Limited T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Berkut Minerals Limited for the period from 19 February 2016 (date of incorporation) to 30 June 2016, I declare that, to the best of my knowledge and belief, there have been: a b no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and no contraventions of any applicable code of professional conduct in relation to the audit. GRANT THORNTON AUDIT PTY LTD Chartered Accountants M A Petricevic Partner - Audit & Assurance Perth, 20 July 2016 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another s acts or omissions. In the Australian context only, the use of the term Grant Thornton may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.
Berkut Minerals Limited financial statements 6 Corporate Governance Statement Berkut reviews all of its corporate governance practices and policies on an annual basis to ensure they are appropriate for the Company s current stage of development. This year, the review was made against the new ASX Corporate Governance Council s Principles and Recommendations (third edition) which became effective for financial years beginning on or after 1 July 2014. The Company s Corporate Governance Statement for the from a July 2016 was approved by the Board on 16 July 2016 and is available on the Company s website at www.berkut.com.au The directors of Berkut Minerals Limited believe that effective corporate governance improves company performance, enhances corporate social responsibility and benefits all stakeholders. Changes and improvements are made in a substance over form manner, which appropriately reflect the changing circumstances of the company as it grows and evolves. Accordingly, the Board has established a number of practices and policies to ensure that these intentions are met and that all shareholders are fully informed about the affairs of the Company. The Company has a corporate governance section on the website at www.tawana.com.au. The section includes details on the company s governance arrangements and copies of relevant policies and charters.
Berkut Minerals Limited financial statements 7 Statement of Profit or Loss and Other Comprehensive Income Notes 2016 $ Revenues - Cost of sales - Gross profit - Exploration expense 2,211 Share based payments expense 105,816 Administration expense 9,555 Loss before income tax 117,582 Income tax expense - Loss for the period 117,582 Other comprehensive loss for the period, net of tax - Total comprehensive loss for the period 117,582 Loss per share Notes 2016 $ Loss per share (cents per share) 8 2.804 Total 2.804 Note: This statement should be read in conjunction with the notes to the financial statements.
Berkut Minerals Limited financial statements 8 Statement of Financial Position As at 30 June 2016 Assets Current Notes 2016 $ Cash and cash equivalents 5 344,840 Deposits 14 20,129 GST Recoverable 3,241 Current assets 368,210 Total assets 368,210 Liabilities Current Trade and other payables 6 60,830 Current liabilities 60,830 Total liabilities 60,830 Net assets 307,380 Equity Share Capital 7 319,146 Share Option Reserve 11.1 105,816 Accumulated losses (117,582) Total equity 307,380 Note: This statement should be read in conjunction with the notes to the financial statements.
Berkut Minerals Limited financial statements 9 Statement of Changes in Equity Notes Share capital Share option reserve Retained Losses Total equity $ 000 $ 000 $ 000 $ 000 Balance at 19 February 2016 - - - - Loss for the period - - (117,582) (117,582) Other comprehensive loss - - - - Total comprehensive loss - - (117,582) (117,582) Transactions with owners and options Share-based payment options 11.1-105,816-105,816 Issue of share capital 7 360,503 - - 360,503 Share issuance costs 7 (41,357) (41,357) Balance at 30 June 2016 319,146 105,816 (117,582) 307,380 Note: This statement should be read in conjunction with the notes to the financial statements.
Berkut Minerals Limited financial statements 10 Statement of Cash Flows Notes 2016 Operating activities Payments to suppliers for administration (3,872) Net cash used in operating activities (3,872) Investing activities Deposits paid for exploration tenements (11,791) Net cash used in investing activities (11,791) Financing activities Proceeds from share issuances 7 353,103 Proceeds from related party loan 11 100,000 Repayment of loans 11 (92,600) Net cash provided by financing activities 360,503 Net change in cash and cash equivalents 344,840 Cash and cash equivalents, beginning of period - Cash and cash equivalents, end of period 5 344,840 Note: This statement should be read in conjunction with the notes to the financial statements.
Berkut Minerals Limited financial statements 11 Notes to the Financial Statements 1 Nature of operations Berkut Minerals Limited ( the Company ) principal activities include the exploration for gold, lithium and other minerals in Western Australia. The Company s planned activities, after the successful listing of the ASX (Note 4.12), will include: (a) (b) (c) satisfying its expenditure commitments under the Cairn Hill Joint Venture Agreement; systematically exploring the Company s key projects being the Cairn Hill Gold Project, Mt Clement Gold Project and the Capricorn Lithium Project; and implementing a growth strategy to seek out further exploration, acquisition and joint venture opportunities in Australia. 2 General information and statement of compliance The general purpose financial statements of the Company have been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board ( AASB ). Compliance with Australian Accounting Standards results in full compliance with the International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board ( IASB ). Berkut Minerals Limited is a for-profit entity for the purpose of preparing the financial statements. Berkut Minerals Limited is a Company incorporated and domiciled in Australia on 19 th of February 2016. The address of its registered office and its principal place of business is 78 Churchill Avenue, Subiaco, Western Australia. The financial statements for the period ended 30 June 2016 were approved and authorised for issue by the Board of Directors on 20 July 2016.
Berkut Minerals Limited financial statements 12 3 Changes in accounting policies 3.1 New and revised standards that are effective for these financial statements A number of new and revised standards became effective for the first time to annual periods beginning on or after 1 July 2015. Information on the more significant standards are presented below. AASB 2015-4 Amendments to Australian Accounting Standards Financial Reporting Requirements for Australian Groups with a Foreign Parent AASB 2015-4 amends AASB 128 Investments in Associates and Joint Ventures to ensure that its reporting requirements on Australian companies with a foreign parent align with those currently available in AASB 10 Consolidated Financial Statements for such companies. AASB 128 will now only require the ultimate Australian entity to apply the equity method in accounting for interests in associates and joint ventures, if either the entity or the Company is a reporting entity, or both the entity and Company are reporting entities. AASB 2015-4 is applicable to annual reporting periods beginning on or after 1 July 2015. The adoption of this amendment has not had a material impact on the Company. 3.2 Accounting Standards issued but not yet effective and not being adopted early by the Company A number of Accounting Standards (and Interpretations) have been issued by the AASB and IASB as at the date of authorisation of the financial report that are not yet effective until future periods. None of these standards are expected to impact the financial statements. 4 Summary of accounting policies 4.1 Overall considerations The financial statements have been prepared using the significant accounting policies and measurement bases summarised below. 4.2 Operating expenses Operating expenses are recognised in profit or loss upon utilisation of the service or at the date of their origin. Expenditure for warranties is recognised and charged against the associated provision when the related revenue is recognised. 4.3 Financial instruments Recognition, Initial Measurement and Derecognition Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the financial instrument, and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss, which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below.
Berkut Minerals Limited financial statements 13 4.3 Financial instruments (continued) Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires. Classification and Subsequent Measurement of Financial Assets For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition: loans and receivables financial assets at Fair Value Through Profit or Loss ( FVTPL ) Held-To-Maturity ( HTM ) investments; or Available-For-Sale ( AFS ) financial assets The only category that is relevant to this set of financial statements are loans and receivables. All financial assets are subject to review for impairment at least at each reporting date to identify whether there is any objective evidence that a financial asset or a Company of financial assets is impaired. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these are measured at amortised cost using the effective interest method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Company s trade and most other receivables fall into this category of financial instruments. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in companies, which are determined by reference to the industry and region of a counterparty and other shared credit risk characteristics. The impairment loss estimate is then based on recent historical counterparty default rates for each identified Company. Classification and subsequent measurement of financial liabilities The Company s financial liabilities include trade and other payables. Financial liabilities are measured subsequently at amortised cost using the effective interest method. 4.4 Income taxes Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, the Australian Taxation Office ( ATO ) and other fiscal authorities relating to the current or prior reporting periods that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period.
Berkut Minerals Limited financial statements 14 4.4 Income taxes (continued) Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with investments in subsidiaries and joint ventures is not provided if reversal of these temporary differences can be controlled by the Company and it is probable that reversal will not occur in the foreseeable future. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realisation, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilised against future taxable income, based on the Company s forecast of future operating results which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. Deferred tax liabilities are always provided for in full. Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense in profit or loss, except where they relate to items that are recognised in other comprehensive income (such as the revaluation of land) or directly in equity, in which case the related deferred tax is also recognised in other comprehensive income or equity, respectively. 4.5 Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, together with other shortterm, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. 4.6 Equity and reserves Share capital represents the fair value of shares that have been issued. Any transaction costs associated with the issuing of shares are deducted from share capital, net of any related income tax benefits. Other components of equity include the following: Share option reserve comprises share option values, net of balances expired or exercised in the period.
Berkut Minerals Limited financial statements 15 4.6 Equity and reserves (continued) Retained earnings include all current and prior period retained profits. Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior to the reporting date. 4.7 Share-based employee remuneration The Company operates equity-settled share-based remuneration plans for its Directors. None of the Company s plans feature any options for a cash settlement. All goods and services received in exchange for the grant of any share-based payment are measured at their fair values. Where consultants are rewarded using share-based payments, the fair values of the services are determined indirectly by reference to the fair value of the equity instruments granted. This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and performance conditions). All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to share option reserve. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest. Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates. Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs are allocated to share capital. 4.8 Provisions, contingent liabilities and contingent assets Provisions for product warranties, legal disputes, onerous contracts or other claims are recognised when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required from the Company and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. Restructuring provisions are recognised only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan s main features to those affected by it. Provisions are not recognised for future operating losses. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material.
Berkut Minerals Limited financial statements 16 4.8 Provisions, contingent liabilities and contingent assets (continued) Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of the related provision. No liability is recognised if an outflow of economic resources as a result of present obligation is not probable. Such situations are disclosed as contingent liabilities, unless the outflow of resources is remote in which case no liability is recognised. 4.9 Exploration and Development Expenditure Exploration, evaluation and development expenditures incurred are capitalised in respect of each identifiable area of interest. These costs are only capitalised to the extent that they are expected to be recovered through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to capitalise costs in relation to that area of interest. Costs of site restoration are provided over the life of the project from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with local laws and regulations and clauses of permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site. 4.10 Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST components of investing and financing activities, which are disclosed as operating cash flows.
Berkut Minerals Limited financial statements 17 4.11 Significant management judgement in applying accounting policies When preparing the financial statements, management undertakes a number of judgements, estimates and assumptions about the recognition and measurement of assets, liabilities, income and expenses. Share-based payment transactions The Company measures the cost of equity-settled transactions by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by management review using the Black-Scholes model or an agreed fair value. The related assumptions are detailed in Note 11.1. The accounting estimates and assumptions relating to equity-settled sharebased payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact expenses and equity. 4.12 Going Concern The Company has incurred a net loss of $117,582 during the period ended 30 June 2016 and the cash outflows from operating activities equates to $3,872. The financial statements have been prepared on the basis of going concern which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The Directors consider this to be appropriate given the ability to vary the Company s cost structure and in turn the levels of cash outflow dependent on timing of its exploration activities. Taking into account the current cash reserves of the Company and the ability to vary its cash outflows taking into consideration the amounts disclosed in Note 13, the Directors are confident the Company has adequate resources to continue as a going concern for the foreseeable future. The Directors are in the process of instigating an initial public offering whereby additional capital will be raised. At the date of this financial report, the initial public offering has not been concluded and no guarantee can be given that a successful fund raising outcome will eventuate. Should the Company not achieve the capital raising, there is uncertainty as to whether the Company will be in a position to pursue its planned activities as described in Note 1.
Berkut Minerals Limited financial statements 18 5 Cash and cash equivalents Cash and cash equivalents include the following components: Cash at bank and in hand: 344,840 Cash and cash equivalents 344,840 2016 $ The amount of cash and cash equivalents accessible to the Company as at 30 June 2016 amounts to $344,840. 6 Trade and other payables Trade and other payables consist of the following: Trade and other payables 2016 $ Trade and other payables 60,830 Total trade and other payables 60,830 All amounts are short-term. The carrying values of trade and other payables are considered to be a reasonable approximation of fair value. 7 Equity 7.1 Share capital The share capital of Berkut consists only of fully paid ordinary shares; the shares do not have a par value. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders meeting of Berkut. Shares issued and fully paid: 2016 2016 Shares $ Shares issued on 19/2/2016 at $1.00 per share 3 3 Shares issued on 23/6/2016 at $0.001 per share 10,499,997 10,500 Shares issued on 30/6/2016 at $0.075 per share 4,666,666 350,000 Breakdown of share issuance: 360,503 Share received as forgiveness of debt 7,399,997 7,400 Shares received for cash capital contribution 7,766,669 353,103 360,503 Share issuance costs (41,357) Total contributed equity at 30 June 15,166,666 319,146 Each share has the same right to receive dividend and the repayment of capital and represents one vote at the shareholders meeting of Berkut.
Berkut Minerals Limited financial statements 19 8 Earnings per share 8.1 Earnings per share Both the basic and diluted earnings per share have been calculated using the profit attributable to shareholders of the Parent Company (Berkut) as the numerator (ie no adjustments to profit were necessary in 2016). The reconciliation of the weighted average number of shares for the purposes of diluted earnings per share to the weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows: Amounts in thousand shares: weighted average number of shares used in basic earnings per share 201,371 shares deemed to be issued for no consideration in respect of share based payments 0 Weighted average number of shares used in diluted earnings per share 201,371 2016 9 Reconciliation of cash flows from operating activities Reconciliation of cash flows from operating activities 2016 $ Cash flows from operating activities Loss for the period (117,582) Adjustments for: Option expense 105,816 Net changes in working capital: change in trade and other payables 7,894 Net cash from operating activities (3,872) 10 Auditor remuneration Audit and review of financial statements 2016 $ Auditors of Berkut - Grant Thornton Audit Pty Ltd 8,000 Remuneration for audit of financial statements Total auditor s remuneration 11 Related party transactions The Company's related parties include its associates and joint venture, key management, postemployment benefit plans for the Company s employees and others as described below. Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled in cash.
Berkut Minerals Limited financial statements 20 11.1 Transactions with key management personnel Key management of the Company are the executive members of Berkut s Board of Directors and members of the Executive Council. Key Management Personnel remuneration includes the following expenses: Share-based payments 105,816 Total remuneration 2016 $ Loans from Key Management Personnel 2016 $ Beginning of the year - Loans advanced 100,000 Loan repayment received (92,600) Issuance of shares in lieu of cash (7,400) End of year - The loans from Key Management Personnel were repayable on demand. These loans were unsecured and interest free. Share options and weighted average exercise prices are as follows for the reporting periods presented: Number of shares Outstanding at 19 February 2016 - Weighted average exercise price ($) Granted 3,500,000 0.24 Forfeited 0 0 Exercised 0 0 Outstanding at 30 June 2016 3,500,000 0.24 Exercisable at 30 June 2016 3,500,000 0.24 The fair values of options granted were determined using a variation of the Black-Scholes pricing model that takes into account factors specific to the share incentive plans, such as the vesting period.
Berkut Minerals Limited financial statements 21 11.1 Transactions with key management personnel (continued) The following principal assumptions were used in the valuation: Valuation assumptions Quantity 3,000,000 500,000 Grant date 22 June 2016 22 June 2016 Expiry date 31 December 2019 31 December 2019 Share price at date of grant $0.075 $0.075 Volatility 94.30% 94.30% Option life (days) 1,288 1,288 Dividend yield 0 0 Risk free investment rate 1.66% 1.66% Fair value at grant date 0.0298 0.0298 Exercise price at date of grant 0.25 0.25 Weighted average remaining contractual life 1,279 days 1,279 days No special features inherent to the options granted were incorporated into measurement of fair value. In total, $105,816 of remuneration expense (all of which related to equity-settled share-based payment transactions) has been included in profit or loss and credited to share option reserve. 12 Financial instrument risk The Company is not materially exposed to risks in relation to financial instruments. The Company s financial assets and liabilities by category are summarised as follows: Loans and receivables GST recoverable 3,241 Deposits paid for exploration tenements 20,129 Trade payables and accruals 60,831 2016 $ Risks associated with market risk, credit risk and liquidity risk are not considered material with respect to the above items. 13 Contingent commitments On 14 June 2016, the Company entered into an earn-in and joint venture agreement that will grant the Company the conditional right to earn up to a 70% interest in a joint exploration operation. The Company may earn a 51% joint venture interest in the operation by spending $2,000,000 by 31 December 2019, $1,000,000 of which must be committed by December 2018. The Company has the option to increase its joint venture interest to 70% by sole funding the project until completion of a pre-feasibility study. In addition to the matters disclosed in Note 4.12, to continue to participate in the joint venture, the Company will be required to fund $200,000 in expenditure by 31 December 2016, at which point the Company will either withdraw or pay $100,000 as consideration for the retention of its farm-in rights.
Berkut Minerals Limited financial statements 22 14 Deposits The entity has submitted applications for exploration tenements. These applications were submitted at a cost of $20,129, which are fully refundable should the applications not be accepted. 15 Operating segments The Company has identified its operating segments based on the internal reports that are reviewed and used by the Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The company operates in one segment being Exploration and Evaluation of Minerals in Australia. 16 Post-reporting date events The entity is in the process of lodging a prospectus with an offer of 15,000,000 shares at an issue price of $0.20 per share to raise $3,000,000 (before costs). The offer is not underwritten. After reporting date the directors and key management have entered contracts with the Company. Payment of fees will commence once the company is admitted to the ASX. Until such time no payments or liabilities for salary and other costs will be incurred Other than the paragraphs above, there have been no adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorisation.
Berkut Minerals Limited financial statements 23 Directors Declaration a In the opinion of the Directors of Berkut Minerals Limited: a b The financial statements and notes of Berkut Minerals Limited are in accordance with the Corporations Act 2001, including: i ii Giving a true and fair view of its financial position as at 30 June 2016 and of its performance for the period ended on that date; and Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and There are reasonable grounds to believe that Berkut Minerals Limited will be able to pay its debts as and when they become due and payable. b c The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the period ended 30 June 2016. Note 2 confirms that the financial statements also comply with International Financial Reporting Standards. Signed in accordance with a resolution of the Directors: Director Justin Tremain Dated the 20 th day of July 2016
Level 1 10 Kings Park Road West Perth WA 6005 Correspondence to: PO Box 570 West Perth WA 6872 Independent Auditor s Report To the Members of Berkut Minerals Limited T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au We have audited the accompanying financial report of Berkut Minerals Limited (the Company ), which comprises the statement of financial position as at 30 June 2016, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the period from 19 February 2016 (date of incorporation) to 30 June 2016 ( the period ), notes comprising a summary of significant accounting policies and other explanatory information and the directors declaration of the company. Directors responsibility for the financial report The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001. The Directors responsibility also includes such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the financial statements comply with International Financial Reporting Standards. Auditor s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require us to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 Grant Thornton refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another s acts or omissions. In the Australian context only, the use of the term Grant Thornton may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited. Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.
2 In making those risk assessments, the auditor considers internal control relevant to the Company s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. Auditor s opinion In our opinion: a the financial report of Berkut Minerals Limited is in accordance with the Corporations Act 2001, including: i ii giving a true and fair view of the Company s financial position as at 30 June 2016 and of its performance for the period ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001. b the financial report also complies with International Financial Reporting Standards as disclosed in Note 2 to the financial statements. GRANT THORNTON AUDIT PTY LTD Chartered Accountants M A Petricevic Partner - Audit & Assurance Perth, 20 July 2016