Announcement PDF Impact Minerals Limited (and Controlled Entities) (ABN 52 119 062 261) Half-Year Financial Report 31 December 2016 Contents Page Directors’ Report 1 Auditor’s Independence Declaration 3 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 4 Condensed Consolidated Statement of Financial Position 5 Condensed Consolidated Statement of Changes in Equity 6 Condensed Consolidated Statement of Cash Flows 7 Notes to the Condensed Consolidated Financial Statements 8 – 12 Directors’ Declaration 13 Independent Auditor’s Review Report 14 Impact Minerals Limited ABN 52 119 062 261 Directors’ Report For the half-year ended 31 December 2016 Your directors submit the financial report of the consolidated entity for the half-year ended 31 December 2016. Directors The names of directors who held office during or since the end of the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated. Peter Unsworth Non-Executive Chairman Michael Jones Managing Director Paul Ingram Non-Executive Director Markus Elsasser Non-Executive Director Felicity Gooding Non-Executive Director Principal Activities The principal activity of the Group during the financial year was exploration for deposits of uranium, nickel, gold, copper and platinum group elements. Review of Operations Commonwealth Gold-Silver-Base Metal Project, N.S.W (Impact 100%) The Commonwealth Project comprises three 100% owned exploration licences that cover about 315 sq km of the highly prospective Lachlan Fold Belt about 100 km north of Orange in NSW. The belt is host to many major gold-silver-copper mines including the Cadia-Ridgeway deposits that contain at least 25 million ounces of gold and 5 million tonnes of copper. There have been significant discoveries of gold and silver mineralisation in four drill holes at the Silica Hill Prospect. Mineralisation has been intersected over an area of 200 metres by 100 metres down to 100 metres below surface and with an average true thickness of about 50 metres. Grade is increasing at depth and the mineralisation is open in all directions. The mineralisation comprises disseminated sulphide, veins and semi-massive sulphide veins and is zoned with an upper silver-rich part containing extensive visible silver minerals and a lower gold-rich part with lesser variable amounts of zinc, lead, copper and pathfinder sulphide minerals throughout. The veins commonly contain high to very high grades of gold and in particular silver. For example Hole CMIPT046 has returned 30 individual assays of varying widths of between 2 g/t and 24 g/t gold and 12 individual assays with more than 500 g/t silver. Hole CMIPT011 has returned two veins with 3,146 g/t silver (0.9 metres thick) and 3,600 g/t silver (0.15 m thick). There has been further success with recent follow up drilling at Silica Hill with mineralisation extended by up to 50 metres down dip/plunge. Disseminated and narrow veins and stockworks of sulphide with silver and base metal mineralisation variably developed over 60 metres to 70 metres true thickness. Deeper extensions to the mineralisation are to be tested in 2017. Broken Hill Project, N.S.W. (Impact 100%) The Broken Hill project comprises two granted exploration licences (EL7390 and EL8234) and two exploration licence applications (ELA5793 and ELA5265) that cover 517 square kilometres of rocks prospective for two distinct styles of mineralisation:  Nickel-copper-PGE associated with ultramafic rocks; and  Zinc-lead-silver in “Broken Hill-style” deposits hosted mostly by metasedimentary rocks and amphibolites. A petrographic study was completed in late 2016 on rock chip samples from new tenements and work confirms the prospectivity for base and precious metals. Mulga Tank Project, W.A. (Impact 100%) Impact owns 100% of 13 exploration licences that cover 425 sq km of the highly prospective Minigwal greenstone belt, 200 km east of Kalgoorlie in the emerging mineral province of the south east Yilgarn Block, Western Australia. High tenor nickel and copper sulphides at the Mulga Tank Dunite were discovered by Impact in its maiden drill programme in 2013. In 2015 Impact completed an airborne magnetic and radiometric survey over the entire project area, 1 Impact Minerals Limited ABN 52 119 062 261 Directors’ Report For the half-year ended 31 December 2016 an innovative combined airborne and ground electrical survey as well as a large soil geochemistry survey over key target areas. Interpretation is currently in progress of 2,500 soil sample results received. All of this data will be used to identify specific targets for drilling. Impact was recently awarded a second grant of $150,000 to drill its targets at the Mulga Tank Dunite as part of the WA State Governments Exploration Incentive Scheme. Impact now has $300,000 of Government funding for a drill programme which is scheduled to start in mid-2017. Financial Performance and Financial Position During the half-year the Group reported an operating profit after tax of $115,782 (half-year to 31 December 2015: $64,517). As at 31 December 2016 the Group had net assets of $12,004,488 (30 June 2016: $11,689,939) including $1,489,119 of cash and cash equivalents (30 June 2016: $3,929,972). Auditor’s Declaration Section 307C of the Corporations Act 2001 requires our auditors, Bentleys, to provide the directors of the company with an Independence Declaration in relation to the review of the half-year financial report. This Independence Declaration is set out on page 3 and forms part of this directors’ report for the half-year ended 31 December 2015. This report is signed in accordance with a resolution of the Board of Directors. Peter Unsworth Chairman Perth, 24 February 2017 2 To the Board of Directors Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 As lead audit director for the review of the financial statements of Impact Minerals Limited for the half year ended 31 December 2016, I declare that to the best of my knowledge and belief, there have been no contraventions of: the auditor independence requirements of the Corporations Act 2001 in relation to the review; and any applicable code of professional conduct in relation to the review. Yours faithfully BENTLEYS MARK DELAURENTIS CA Chartered Accountants Director Dated at Perth this 24th day of February 2017 Impact Minerals Limited ABN 52 119 062 261 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the half-year ended 31 December 2016 Consolidated Note 31 Dec 2016 31 Dec 2015 $ $ 13,643 31,201 1,076,238 1,205,222 1,089,881 1,236,423 Employee benefits expenses (414,001) (330,693) Corporate and administration expenditure (367,718) (624,777) (591) (972) Occupancy (22,636) (37,886) Impairment of exploration expenditure (67,597) (96,995) Financing costs (101,556) (80,583) Profit / (Loss) before income tax expense 115,782 64,517 - - 115,782 64,517 1,213 16,062 - - 116,995 80,579 116,995 80,579 - - 116,995 80,579 116,995 80,579 Interest and other income Research and Development rebate Depreciation and amortisation expense 3 Income tax expense Net Profit / (Loss) for the period Other comprehensive income Items that may be reclassified subsequently to profit or loss Exchange differences on translating foreign operations Other comprehensive income (net of tax) Total comprehensive income for the period Profit / (Loss) for the period attributable to Members of the parent entity Non-controlling interest Total comprehensive income attributable to: Members of the parent entity Non-controlling interest Basic profit / (loss) per share (Cents) - - 116,995 80,579 0.01 0.01 The Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. 4 Impact Minerals Limited ABN 52 119 062 261 Condensed Consolidated Statement of Financial Position As at 31 December 2016 Consolidated Note 31 Dec 2016 30 June 2016 $ $ Cash and cash equivalents 1,489,119 3,929,972 Trade and other receivables Current Assets 1,137,463 70,279 Other current assets 201,457 201,457 Total Current Assets 2,828,039 4,201,708 3,432 2,435 Non-Current Assets Property and equipment 11,542,191 9,749,914 Other non-current assets 176,883 277,349 Total Non-Current Assets 11,722,506 10,029,698 Total Assets 14,550,545 14,231,406 Exploration expenditure 3 Current Liabilities Trade and other payables Financial Liabilities 7 446,591 463,122 2,000,000 2,000,000 99,466 78,345 Total Current Liabilities 2,546,057 2,541,467 Total Liabilities 2,546,057 2,541,467 Net Assets 12,004,488 11,689,939 35,950,384 35,950,384 Option reserve 1,199,068 1,222,765 Foreign currency translation reserve (503,389) (504,602) Transactions with non-controlling interest (1,161,069) (1,161,069) Accumulated losses (23,480,506) (23,817,539) Total Equity 12,004,488 11,689,939 Provisions Equity Issued capital 4 The Condensed Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. 5 Impact Minerals Limited ABN 52 119 062 261 Condensed Consolidated Statement of Changes in Equity For the half-year ended 31 December 2016 Consolidated Issued Capital Option Reserve Foreign currency translation reserve $ $ $ 31,245,003 736,506 (520,836) - - - - 64,517 64,517 Exchange differences on translation of foreign operations - - 16,062 - - 16,062 Total comprehensive income for the half-year - - 16,062 - 64,517 80,579 Shares issued 2,974,842 - - - - 2,974,842 Share issue costs (109,750) - - - - (109,750) Fair value of options expired - (404,565) - - 404,565 - Fair value of options issued - 747,343 - - - 747,343 Balance at 31 December 2015 34,110,095 1,079,284 (504,774) (1,161,069) (22,897,704) 10,625,832 Balance at 1 July 2016 35,950,384 1,222,765 (504,602) (1,161,069) (23,817,539) 11,689,939 - - - - 115,782 115,782 Exchange differences on translation of foreign operations - - 1,213 - - 1,213 Total comprehensive income for the half-year - - 1,213 - 115,782 116,995 Fair value of options expired - (221,251) - - 221,251 - Fair value of options issued - 197,554 - - - 197,554 35,950,384 1,199,068 (503,389) (1,161,069) (23,480,506) 12,004,488 Balance at 1 July 2015 Profit for the period Transactions with Non- Accumulated Controlling Losses Interest $ $ Total Equity $ (1,161,069) (23,366,786) 6,932,818 Other Comprehensive Income Profit for the period Other Comprehensive Income Balance at 31 December 2016 The Condensed Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. 6 Impact Minerals Limited ABN 52 119 062 261 Condensed Consolidated Statement of Cash Flows For the half-year ended 31 December 2016 Consolidated Note 31 Dec 2016 $ 31 Dec 2015 $ (641,132) (895,072) 13,643 31,201 - 1,205,222 (627,489) 341,351 (1,588) - Payments for exploration activities (1,811,776) (1,698,750) Net cash flows from/(used in) investing activities (1,813,364) (1,698,750) Proceeds from issue of shares - 2,968,592 Share issue costs - (109,750) Proceeds from borrowing - 2,000,000 Net cash flows from/(used in) financing activities - 4,858,842 Net increase/(decrease) in cash and cash equivalents (2,440,853) 3,501,443 Cash and cash equivalents at the beginning of the period 3,929,972 571,981 Cash and cash equivalents at the end of the period 1,489,119 4,073,424 Cash flows from operating activities Payments to suppliers and employees Interest received R&D Tax Concession Net cash flows from/(used in) operating activities Cash flows from investing activities Payments for property, plant and equipment Cash flows from financing activities The Condensed Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. 7 Impact Minerals Limited ABN 52 119 062 261 Notes to Condensed Consolidated Financial Statements For the half-year ended 31 December 2016 NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation These general purpose financial statements for the interim half-year reporting period ended 31 December 2016 have been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards including AASB 134: interim financial reporting. This interim report is intended to provide users with an update on the latest annual financial statements of Impact Minerals Limited and its controlled entities (the consolidated entity). As such, it does not contain information that represents relatively insignificant changes occurring during the half-year within the consolidated entity. It is therefore recommended that this financial report be read in conjunction with the annual financial statements of the consolidated entity for the year ended 30 June 2016, together with any public announcements made during the half-year. The same accounting policies and methods of computation have been followed in this interim financial report as were applied in the most recent annual financial statements. The relevant amendments and their effects on the current period or prior periods are described below. The accounting policies have been applied consistently throughout the consolidated entity for the purposes of preparation of these interim financial statements. Going Concern The interim financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Consolidated Group generated a profit for the period of $115,782 (2015: $64,517) and net cash outflows from operating activities of $627,489 (2015: Cash inflows of $341,351). As at 31 December 2016 the consolidated group had a cash balance of $1,489,119 (2015: $4,073,424). The Group has a working capital surplus position of $2,080,525 which excludes the convertible notes of $1,798,543 (net of current transaction costs) on the basis the convertible notes are required to be settled in the Group’s equity instruments as detailed in note 7. The directors have prepared a cash flow forecast which indicates that the Consolidated Group will have sufficient cash flows to meet all commitments and working capital requirements for the 12 month period from the date of signing this financial report. New or revised standards and interpretations that are first effective in the current reporting period The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half-year. The adoption of the new and revised Standards and Interpretations have not had a material impact on this half-year financial report. NOTE 2: SEGMENT REPORTING Segment Information Identification of reportable segments The Company has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources. The Company is managed primarily on the basis of its exploration and corporate activities. Operating segments are therefore determined on the same basis. The results of Impact Group are reviewed as a separate operating segment by the Board of Directors. 8 Impact Minerals Limited ABN 52 119 062 261 Notes to Condensed Consolidated Financial Statements For the half-year ended 31 December 2016 NOTE 2: SEGMENT REPORTING (Continued) Australia Projects $ Africa Projects $ Corporate / Treasury $ Total $ SEGMENT PERFORMANCE For the half-year ended 31 December 2016 Segment income - - 1,089,881 1,089,881 Segment expenses (67,597) (38,538) (867,964) (974,099) Net Profit /(loss) before tax (67,597) (38,538) 221,917 115,782 Segment Assets 11,542,191 40,783 2,967,571 14,550,545 Segment Liabilities 303,582 9,389 2,233,086 2,546,057 11,238,609 31,394 734,485 12,004,488 Segment income - 7,923 1,228,500 1,236,423 Segment expenses - (89,774) (1,082,132) (1,171,906) Net Profit /(loss) before tax - (81,851) 146,368 64,517 Segment Assets 9,749,914 30,964 4,450,528 14,231,406 Segment Liabilities 255,589 9,283 2,276,595 2,541,467 9,494,325 21,681 2,173,933 11,689,939 SEGMENT ASSETS AND LIABILITIES As at 31 December 2016 Net assets SEGMENT PERFORMANCE For the half-year ended 31 December 2015 SEGMENT ASSETS AND LIABILITIES As at 30 June 2016 Net assets 9 Impact Minerals Limited ABN 52 119 062 261 Notes to Condensed Consolidated Financial Statements For the half-year ended 31 December 2016 NOTE 3: EXPLORATION EXPENDITURE Capitalised cost at the beginning of the period 31 December 30 June 2016 2016 $ $ 9,749,914 6,526,545 Impairment of exploration expenditure (67,597) (186,489) Exploration expenditure for the period 1,859,874 3,409,858 Cost carried forward 11,542,191 9,749,914 Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped 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. NOTE 4: ISSUED CAPITAL 31 December 2016 30 June $ $ 788,771,085 fully paid ordinary shares with no par value 37,039,952 37,039,952 Share issue costs (1,089,568) (1,089,568) 35,950,384 35,950,384 2016 Half-year ended Year ended 31 Dec 2016 30 Jun 2016 No. $ No. $ 788,771,085 35,950,384 566,339,070 31,245,003 - - 284,090 6,250 - - 94,437,193 1,983,181 - - 47,619,048 1,000,000 - - 45,166,683 1,084,000 - - 34,925,001 838,200 - - - (206,250) 788,771,085 35,950,384 788,771,085 35,950,384 a. Movements in ordinary shares on issue At the beginning of the reporting period Shares issued during the period - Shares issued to Directors in lieu of fees Rights issue and shortfall issue (b) Issue of shares to Squadron Resources Share Purchase Plan (a) (d) (e) - Placements - Transaction costs - At the end of the reporting period (c) (a) Shares issued to Directors in lieu of fees for the year ended 30 June 2015 in accordance with resolutions th passed at the Annual General meeting held on 27 November 2014. (b) In October 2015 the Company successfully completed a one for six renounceable rights issue to existing shareholders at an issue price of 2.1 cents for each new share raising $1,983,181 before costs. (c) In October 2015 the Company issued 47,619,048 shares to Squadron Resources Pty Ltd, at an issue price of 2.1 cents per share. (d) In May 2016 the Company successfully completed a Share Purchase Plan (“SPP”) raising $1,084,000. Under the SPP eligible shareholders were entitled to subscribe for up to $15,000 of new fully paid ordinary shares at an issue price of 2.4 cents per share. (e) During May 2016, the Company raised $838,200 (before costs) via a placement of 34,925,001 shares at 2.4 cents per share to a number of professional and sophisticated investors. 10 Impact Minerals Limited ABN 52 119 062 261 Notes to Condensed Consolidated Financial Statements For the half-year ended 31 December 2016 NOTE 4: ISSUED CAPITAL (Continued) Half-year ended Year ended 31 Dec 2016 30 Jun 2016 No. $ No. $ 141,828,572 1,222,765 42,150,000 736,506 - 197,554 134,428,572 1,013,241 (12,400,000) (221,251) (26,700,000) (404,565) b. Movements in options on issue At the beginning of the reporting period (a) - Options granted - Options expired - Options cancelled / lapsed - - (8,050,000) (122,417) At the end of the reporting period 129,428,572 1,199,068 141,828,572 1,222,765 (a) No options were issued during the reporting period. The fair value of options is determined at grant date and is expensed over the vesting period for those options. NOTE 5: CONTINGENCIES There has been no change in contingent liabilities or assets since the annual reporting date. NOTE 6: FINANCIAL INSTRUMENTS The Group’s financial instruments consist of trade and other receivables and trade and other payables. These financial instruments are measured at amortised costs, less any provision for non-recovery. The carrying amounts of the financial assets and liabilities approximate their fair value. NOTE 7: FINANCIAL LIABILITIES Convertible notes 31 December 30 June 2016 2016 $ $ 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 convertible notes were issued to Squadron Resources Pty Ltd on 7 August 2015 at an issue price of $1 per note. Each note entitles the holder to convert to one ordinary share. The notes are convertible in to ordinary shares of the Company at the lower of: • 2.1 cents per share; and • 80% of the volume weighted average sale price of shares sold on the ASX during the 30 consecutive business days prior to the date of the conversion notice. Conversion may occur at any time between 7 August 2015 and 7 August 2018. The convertible notes do not carry interest and can only be redeemed through the issue of shares, except in remote circumstances that are not at the discretion of the note holder. Included in other assets are transaction costs relating to the convertible notes and represent the fair value of the attaching 45,000,000 options issued which are convertible at 3.25 cents per option and deemed to have a fair value of 1.34 cents per option. These transaction costs are amortised over the life of the convertible notes. 11 Impact Minerals Limited ABN 52 119 062 261 Notes to Condensed Consolidated Financial Statements For the half-year ended 31 December 2016 NOTE 7: FINANCIAL LIABILITIES (Continued) 31 December 30 June 2016 2016 $ $ Transaction costs Opening balance 423,887 - Share based payment - options granted - 604,922 Option cost unwound during the period (101,556) (181,035) Total remaining transactions costs to be amortised over the life of the convertible note 322,331 423,887 Other current assets 201,457 201,457 Other non-current assets 120,874 222,430 322,331 423,887 This balance has been classified as follows: 12 Impact Minerals Limited ABN 52 119 062 261 Director’s Declaration For the half-year ended 31 December 2016 The directors of the company declare that: 1. 2. The financial statements and notes, as set out on pages 4 to 12 are in accordance with the Corporations Act 2001; including: a. Complying with the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and b. give a true and fair view of the consolidated entity’s financial position as at 31 December 2016 and of its performance for the half-year then ended; and In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. This declaration is signed in accordance with a resolution of the Board of Directors. Peter Unsworth Chairman th Dated this 24 day of February 2017 13 Independent Auditor’s Review Report To the Members of Impact Minerals Limited We have reviewed the accompanying half-year financial report of Impact Minerals Limited (“the Company”) and Controlled Entities (“the Consolidated Entity”) which comprises the condensed consolidated statement of financial position as at 31 December 2016, the condensed consolidated statement of profit or loss and other comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, a statement of accounting policies, other selected explanatory notes and the directors’ declaration of the Consolidated Entity, comprising the Company and the entities it controlled during the half-year. 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 control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and 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, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2016 and 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. As the auditor of the Consolidated Entity, 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. Independent Auditor’s Review Report To the Members of Impact Minerals Limited (Continued) Independence In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Impact Minerals Limited and Controlled Entities is not in accordance with the Corporations Act 2001 including: a. Giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and b. Complying with Accounting Standard AASB 134: Interim Financial Reporting and Corporations Regulations 2001. BENTLEYS MARK DELAURENTIS CA Chartered Accountants Director Dated at Perth this 24th day of February 2017