Interim Financial Report For personal use only - · PDF fileInterim Financial Report ... 5751 during the initial reconnaissance inspection and ... mining occurred with a trial open

ACN 148 966 545

Interim Financial Report for the Period Ended 31 December 2016

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AUROCH MINERALS LIMITED

CONTENTS

Page

Directors’ Report 2

Auditor’s Independence Declaration 11

Consolidated Statement of Profit or Loss and Other Comprehensive Income 12

Consolidated Statement of Financial Position 13

Consolidated Statement of Changes in Equity 14

Consolidated Statement of Cash Flows 15

Notes to the Consolidated Financial Statements 16

Directors’ Declaration 23

Independent Auditor’s Review Report to the Members 24

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CORPORATE DIRECTORY

ABN 91 148 966 545

Directors Mr Glenn Whiddon (Executive Chairman)

Mr Ryan Gaffney (Non‐Executive Director) Mr David Lenigas (Non‐Executive Director) Mr Matthew Foy (Non‐Executive Director)

Chief Executive Officer Andrew Tunks Company Secretary Mr Matthew Foy

Registered office Unit 5, Ground Floor

1 Centro Avenue Subiaco WA 6008 Telephone +61 8 9486 4699 Facsimile +61 8 9486 4799

Website www.aurochminerals.com

Share Registry Security Transfer Registrars Pty Ltd

770 Canning Highway Applecross WA 6153 Telephone 1300 992 916 Facsimile +61 8 9315 2233

Solicitors GTP Legal

Level 1, 28 Ord St West Perth WA 6005

Bankers National Australia Bank

7 Sandridge Road Bunbury WA 6230

Auditors BDO Audit (WA) Pty Ltd

38 Station Street Subiaco, WA 6008

Stock Exchange Australian Securities Exchange Limited

ASX Code: AOU

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DIRECTORS’ REPORT

Your Directors present their report on Auroch Minerals Limited (Auroch, the Company or the Group) for the half‐year ended 31 December 2016 (the Period).

1. DIRECTORS

The names of Directors who held office during or since the end of the half‐year:

Mr Glenn Whiddon (Executive Chairman) Mr Ryan Gaffney (Non‐Executive Director) Mr David Lenigas (Non‐Executive Director) – appointed 7 November 2016 Mr Matthew Foy (Non‐Executive Director)

All Directors were in office for the entire duration unless otherwise stated.

2. OPERATING RESULTS

The net loss after providing for income tax amounted to $491,036 (2015: $848,601).

3. PRINCIPAL ACTIVITY

The principal activity of the Group is mineral exploration and development.

4. REVIEW OF OPERATIONS

Namibian Exploration Prospecting Licence Applications

During the Period the Company applied for five new Exclusive Prospecting Licences (EPLs) in the Erongo Region of Namibia.

The Karibib Lithium Project

The application of these licence occurs after a lengthy global search by the Auroch technical team that focused on the following key criteria:

1. Presence of significant historic lithium production within the geological terrain. 2. Identification of untested pegmatites with strongly fractionated geochemistry indicative of potential lithium

tantalum mineralisation. 3. Documented lithium occurrences in or adjacent to the licence areas 4. A low risk political environment with stable government including a well‐developed mineral law and social

licence to explore. Importantly these five tenements meet all these criteria and occur in the same geological terrain that hosts the Rubikon and the Helikon mines, Namibia’s two historical lithium producing mines.

Historic Lithium Production from the Karibib Area

The Rubikon and Helikon mines operated from 1980 to 1984 producing lithium, beryl and ultra pure “optical” quartz. Production records are incomplete but the main lithium production was from petalite, amblygonite and lepidolite. At both the Rubikon and Helikon operations the ore zones formed within a zoned pegmatite bodies up to 50m in width and over several hundred metres along strike. The pegmatites are intruded into the metamorphosed Karibib Formation and Pan‐African aged granites that also intruded the surrounding metamorphic rocks. The location of the Rubikon and Helikon deposits and the five new licence applications are shown on Figure 1.

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DIRECTORS’ REPORT

Figure 1: Location map of all five EPLs in reference to the Rubicon and Helikon Lithium and Navachab Gold mines

Regional Prospectivity of Erongo area

Although the five new licences are currently in the application phase, Auroch has already completed significant desktop research on mineral occurrences throughout the area. This work has been supported by reconnaissance mapping aimed at locating pegmatite swarms in the areas. No sampling has yet been undertaken, however now that the applications are submitted, Namibian mining and exploration laws will allow preliminary mapping and non‐intrusive sampling prior to granting of the full licence. This reconnaissance work will commence in early November 2016.

Interestingly, the two northern most licences‐ Okatjiho EPL6484 and Orutjiva EPL6482 also overlie extensions of the Karibib Marble formation, that is the host to the gold orebodies at the Navachab Gold Mine. Navachab produces between 65,000 to 80,000oz of gold per annum and is operated by QKR who purchased the mine from AngloGold Ashanti in 2014. At that time Navachab had gold Mineral Resources of 3.9 million ounces and gold Ore Reserves of 1.92 million ounces. Auroch desktop studies indicate considerable gold exploration upside on these two licences and the exploration team will couple its lithium exploration with an evaluation of the gold potential for these areas.

New Licence Application Details

Namibian law allows applications to overlap current granted licences provided there is no conflict in target mineral groups. These mineral groups are; Base and Rare Metals, Dimension Stone, Industrial Minerals (includes Lithium), Non‐nuclear Fuels, Nuclear Fuel (there is a current moratorium on this class) Precious Metals, Precious Stones, Semi‐Precious Stones. The details of the new applications are shown in Table 1 below and in Figure 1.

Helikon Li Mine

Rubikon Li Mine

KaribibNavachab Au mine

Current Gold mine

Historical Lithium mine

Township

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DIRECTORS’ REPORT

Licence Licence # Base & Rare Metals

Precious Metals

Industrial Metals

Area (Km2)

Garums EPL6840 X X X 486

Okattjiho EPL6484 X X X 300

Orutjiva EPL6482 X X X 200

Moria EPL6841 X X X 793

Narubis EPL6483 X 297 Table 1: Details of Licence Applications Note: The Narubis licence overlies an pre‐existing EPL for Base and Precious metals, correspondingly only industrial minerals (including lithium) could be applied for.

Initial Work Plan

Prior to the granting of the licences (expected within 3‐6 months) the initial work plan will involve field traverse to locate all pegmatites within the licences, this will be followed by non‐intrusive rock chip sampling and broad spaced sampling to examine the geochemistry of the pegmatites and confirm they have the right signatures for Li, Ce Ta mineralisation.

EPL 5751 Option and Joint Venture Agreement

Subsequent to the Period on 12 January 2017, Auroch announced an Option and Joint Venture Agreement over EPL 5751 to continue the growth of its Karibib Lithium Project in Namibia, complementing and building upon the (five) 5 EPL applications that were announced on 14 November 2016.

The Option and JV agreement covers granted EPL 5751 which lies south west of the well‐known historic Rubikon and Helikon Lithium deposits (Figure 3).

Figure 3: Location of EPL 5751 (outlined in red) as well as the five EPL applications in relation to the Rubikon and Helikon Lithium mines as well as the Navachab Gold mine

Geology and Reconnaissance visit to EPL 5751

KaribibNavachab Au mine

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DIRECTORS’ REPORT

Initial inspection by the Company of EPL 5751 confirmed the existence of pegmatites outcropping at surface, with the largest observed to‐date exceeding 300m in length. A rock chip sample (B2674) was collected from this pegmatite and assayed 2.73% Li2O. Little is known of this pegmatite in Namibia and further detailed investigation is planned, with the intent of identifying mineral species and clarifying the nature of the pegmatite.

A further three pegmatites were identified within EPL 5751 during the initial reconnaissance inspection and these will also be examined in detail during follow‐up fieldwork.

Lithium mineralisation was noted in most pegmatites visited and this has been supported by first pass rock‐chip sampling that returned a single significant Li2O grade of 2.73%. (All samples are reported in Table 2 below).

Sample # Li % Li2O % East North B2671 0.001 0.002 550,801 7524720

B2672 0.002 0.004 551,440 7524135

B2673 0.002 0.004 551,440 7524135

B2674 1.27 2.731 575,922 7511951

B2675 0.005 0.011 575,890 7511984

B2676 0.045 0.097 575,890 7511984

S00060 0.016 0.034 562085 7523119

S00061 0.007 0.015 548101 7521917

S00062 0.001 0.002 560946 7522680 Table 2: Assays for Lithium from initial sampling

All assay results for lithium are received from the laboratory as Lithium parts per million (ppm). For reporting purposes this is converted to lithium oxide Li2O which is the industry standard for reporting exploration results and resources.

Norseman Gold Projects, Western Australia

During the Period the Company provided an update on exploration at its Norseman Gold Projects, Western Australia. Reconnaissance mapping, rock chip sampling, and soil sampling programs were completed at the Beete Gold Project (P63/1646) and Peninsula Gold Project (P63/1694) early in September 2016. A total of 25 Hectares was mapped with 44 soil samples, and 22 rock chip samples collected. The Beete Gold Project (Figure 3) is located approximately 55 kilometres south of Norseman, with the Peninsula Gold Project (Figure 4) located approximately 27 kilometres north of Norseman. A program of mapping and infill surface sampling is aimed at assessing the potential of known gold mineralisation within a narrow quartz vein, and the adjacent hanging and/or footwall shear. Recorded production post 1974 was 2,816 tonnes of ore at an average grade of 24.8g/t Au [2,300 ounces]. Best results from a total of 22 rock chip samples collected from the projects included: 13.30g/t Au, 13.00g/t Au, 8.76g/t Au and 8.59g/t Au. Additionally, 44 soil samples analysed for multi‐elements by portable XRF (45 elements). F

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DIRECTORS’ REPORT

Figure 3: P63/1646 ‐ Beete Gold Project location map.

At the Peninsula Gold Project, a preliminary review of current data shows possible extensions of mineralised north‐south trending quartz veins both along strike and at depth. A major quartz reef with five (5) historic mine shafts extends for the length of the tenement and was worked in the late 1800s and intermittently throughout the 1900s. Small scale open cut and underground mining occurred with a trial open pit mining operation yielding 424t of ore at 2.14 g/t Au, and a decline producing 495t of ore at 1.62 g/t Au. A program of surface mapping, rock chip sampling, and sol sampling was completed in September 2016 to assess the strike potential.

Figure 4: P63/1694 ‐ Peninsula Gold Project location map

Rock chip sampling

A total of 22 rock chip samples were collected from P63/1646 and P63/1694. Rock chips were selected by identifying

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DIRECTORS’ REPORT

quartz rich and/or altered material from outcrops, around old shafts/workings, or from historic trenches. Samples were submitted to ALS Laboratories in Kalgoorlie (WA) for gold determination by 50g fire assay. The samples were also analysed for an additional 45 elements by portable XRF (Niton XL3t Analyzer) using "Test All Geo" mode which is suitable for rapid analysis of major, minor, and trace elements in geologic samples. Beete Gold Project (P63/1646)

The historic workings on the Beete Gold Project were visited and hand specimens collected for assay. Gold mineralisation is hosted within a narrow quartz vein, and sometimes in the adjacent hanging and/or footwall shear. Best results were: 13.00g/t Au, 3.79 g/t Au, 3.31 g/t Au, and 2.00 g/t Au. The vein where observed in open stopes is only narrow, but results confirm it can host considerable grade. There is obvious potential to the northeast which warrants follow up with possible trenching and reconnaissance AC/RC drilling. Peninsula gold Project (P63/1694)

At the Peninsula Gold Project, mineralisation is observed to be associated with north‐south trending quartz veins which dip at angles of 60‐80 degrees to the east. Best results were: 13.30g/t Au, 8.76 g/t and 8.39 g/t Au. Again, the vein where observed in open stopes/shafts is only narrow, but results confirm it hosts considerable grade. Work will now focus on previous studies around the 1‐2m wide milky quartz vein which is the target of the sizeable N‐S slot historically excavated, and the area of significant mineralisation in rock chip sampling.

Reconnaissance mapping

An area of 25 Hectares was mapped during the field program. East‐West traverses were conducted across the tenements recording: historical workings, historic drill hole locations, outcropping lithology, alteration, and mineralisation. Beete Gold Project (P63/1646)

The historic workings on the Beete Gold Project were visited and hand specimens collected for assay. Gold mineralisation is hosted within a narrow quartz vein, and sometimes in the adjacent hanging and/or footwall shear. The vein conforms closely to the attitude of the host lithology quartz‐rich arenites and quartz‐feldspar‐amphibole schists. Peninsula Gold Project (P63/1694)

On the Peninsula Gold Project, mineralisation was observed to be associated with north‐south trending quartz veins which dip at angles of 60‐80 degrees to the east. A major quartz reef extends for the length of the tenement. At the north end of the tenement the main reef appears to have been faulted, and the geology is complicated by drag folding associated with faulting. Soil sampling

A total of 44 soils samples were collected and analysed by portable XRF (Niton XL3t Analyzer) from P63/1646 and P63/1694. Currently 'Z' score plots for all elements are being prepared and analysed by the exploration team and will be released to the ASX once the evaluation is completed. The sampling grid was 150m x 50m across the tenements and holes were excavated to 30 cm depth, with the top 10 cm discarded. The sample was then sieved and the fine fraction (<2.80mm) collected. Finally, the fine fraction was analysed using "Test All Geo" mode which is suitable for rapid analysis of major, minor, and trace elements in geologic samples. The samples were analysed for 45 elements.

CORPORATE

Board Appointment

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DIRECTORS’ REPORT

On 7 November 2016 the Company announced the appointment of Mr David Lenigas as Non‐Executive Director. Mr Lenigas is an experienced mining engineer with significant natural resources and corporate experience, having served as executive chairman, chairman, and non‐executive director of many public listed companies in London, Canada, Johannesburg, and Australia. In recent years, Mr Lenigas was the Executive Chairman of London listed lithium investment company Rare Earth Minerals Plc, which provided significant funding for the development of the large Sonora Lithium Project in Mexico and the Cinovec Lithium Project in the Czech Republic. He is currently a non‐executive director of Canadian listed Australian company Macarthur Minerals, whose major shareholder is Rare Earth Minerals Plc. Mr Lenigas was also, until recently, the Executive Chairman of London listed UK Oil & Gas Investments Plc, which was responsible for the new Horse Hill oil discovery near London’s Gatwick International Airport that flowed on test production rates of up to 1,688 barrels of oil per day (a UK onshore record). He is now the Executive Chairman of London listed Doriemus Plc, which owns an interest in the Horse Hill oil discovery and is working with its JV partners towards moving Horse Hill in to production. Mr Lenigas has a Bachelor of Applied Science (Mining Engineering) (Distinction) from Curtin University’s Kalgoorlie School of Mines and holds a Western Australian First Class Mine Manager's Certificate of Competency. London‐Listed Rare Earth Minerals Plc becomes Significant Shareholder

During the Period the Company advised that Rare Earth Minerals Plc (AIM: REM, OTC: REMMY) ("Rare Earth Minerals") had agreed to subscribe for 6.5 million shares in Auroch for a total consideration of AUD$650,000. Rare Earth Minerals has agreed to voluntarily escrow these shares for 6 months. These funds, along with Auroch’s existing cash will be used in part to fund an aggressive exploration and development programme, targeting high‐grade lithium in pegmatites, similar to those that have been successfully commercialised in Western Australia over the last three years. About Rare Earth Minerals

Rare Earth Minerals invests in lithium projects and companies across the globe, and are major shareholders of the Sonora Lithium Project in northern Mexico and the Cinovec Lithium and Tin Project in the Czech Republic. Rare Earth Minerals portfolio also includes significant lithium‐based investments the USA and Australia. The Mexican and Czech deposits have published Indicated and Inferred Mineral Resources of 11.3 million tonnes of Lithium Carbonate Equivalent. The board of Rare Earth Minerals has a blend of mining, commodity investing, fund management and deal structuring knowledge and experience, which is supported by access to key marketing, political and industry contacts. These resources are leveraged not only in REM’s investment decision but also in continuing support of their investments. REM’s stated goal is to assist management to rapidly develop the project up the value curve.

Capital Raising

On the 16th December 2016, the Company completed the placement to Rare Earth Minerals and other investors raising a total of $750,000 by way of issuing 7,500,000 ordinary shares together with a 1:2 option at an exercise price of AS$0.20 valid until 28 October 2018. In addition the Company issued 675,000 fully paid ordinary shares to employees and consultants in respect of work undertaken over the past 12 months. Settlement with Xtract Resources Plc

During the Period the Company advised it had entered into a deed of settlement with Xtract Resources Plc (Xtract) with respect to the US$2.5 million deferred consideration payable by Xtract to the Company (Settlement Deed).

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DIRECTORS’ REPORT

Pursuant to the Sale Agreement (refer ASX Announcement 2 March 2016), three months following Completion Xtract was obliged to pay the Company Deferred Consideration totalling US$2.5 million comprising US$1.3 million cash and the remaining US$1.2 million payable in cash or XTR Shares at the Company’s election. The Company elected to receive the Deferred Consideration in cash. The Company received certain payments however the balance of US$1,685,671.86 remained outstanding and was in default under the agreements. Subsequent to the Period on 13 February 2017 the Company advised it had agreed settlement arrangements with Xtract with respect to the outstanding debt owed to Auroch totalling US$1,748,136 (inclusive of accrued interest and fees) (the Xtract Receivable). Repayment of the Xtract Receivable has been structured as a convertible note agreement to the total value of US$748,136 (Convertible Note), a loan agreement for the balance of the Xtract Receivable equal to US$1 million (Loan Agreement), a 3% royalty agreement over production at the Manica Gold Project, Mozambique (Royalty Agreement) and the issue of 500,000,000 warrants in Xtract (Warrants). On 2 March 2017 the Company advised that 1,589,623,629 new ordinary shares in Xtract have been issued to Auroch following conversion of US$200,000 of the Convertible Note, establishment fee of US$50,000 and interest payable in advance of US$13,722. In addition, a cash payment of approximately US$120,000 will be received following completion Xtract’s Tranche 1 placement. Xtract also announced a second tranche placement to raise gross proceeds of £1,232,000, subject to shareholder approval (Tranche 2). Following shareholder approval, the Company will receive a second tranche payment representing 15% of the Tranche 2 placement gross proceeds of approximately US$229,000 (£184,800). Upon receipt of the payments above, a principal amount of approximately US$1,199,137 will remain outstanding pursuant to the Convertible Note and Loan Agreements (refer ASX announcement 13 February 2017) and will be repaid via a combination of share and cash payments in accordance with the Settlement Agreement.

Convertible Note

Xtract agreed to issue unsecured Convertible Notes to the total value of US$748,136 to the Company. The Convertible Notes accrue interest at 10% per annum payable quarterly in advance and are to be repaid no later than 31 December 2017. Auroch may elect to convert the Convertible Notes at any time at a price equal to a 15% discount to 10‐day VWAP prior to a conversion notice and subject to a floor price of 0.012p (Conversion Discount). In the event of a material breach of the terms of the Convertible Note by Xtract which is not remedied, the Conversion Discount will increase to 30%. In the event of a fundraising by Xtract, Auroch may require Xtract to allocate 15% of the aggregate net proceeds to redeeming part of the Convertible Notes. In the event of completion of a change of control, asset sale of the Manica Gold Project or completion of a joint venture, the Convertible Notes shall be redeemed in full. In addition, an establishment fee equal to US$50,000 will be paid to Auroch satisfied by the allotment of Xtract shares equal to a 15% discount to the ten‐day VWAP prior to the date of execution of the Convertible Note. Loan Agreement

Xtract has entered into an unsecured Loan Agreement with Auroch for the balance of the Xtract Receivable totalling US$1 million. Pursuant to the terms of the Loan Agreement, Xtract will repay the Loan Agreement on or before 31 December 2017 together with interest that will accrue at a rate of 10% per annum. In addition, Xtract intends to seek shareholder approval prior to 30 June 2017 to authorise Xtract to replace the Loan Agreement with a convertible loan

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DIRECTORS’ REPORT

note on substantially the same terms as the Convertible Note. In the event Xtract does not obtain the necessary shareholder approvals by 31 December 2017, an accelerated interest rate of 30% per annum will accrue going forward on any outstanding loan amount. Royalty Agreement

Xtract has granted security to Auroch by way of a Royalty Agreement over the Manica Gold Project whereby Auroch will receive a royalty payment equal to 3% of gross revenue from commercial operations (including any alluvial gold production) (the Royalty). The Royalty is subject to a maximum payment of US$1,748,136 being the Xtract Receivable. Any payments made under the Royalty Agreement shall reduce the amounts due to Auroch under the Convertible Note and Loan Agreements. The Royalty Agreement will terminate upon full settlement by Xtract of the Xtract Receivable. Xtract has agreed not to create any security over or dispose of its interest in the Manica Gold Project and, on or following any change of control to Xtract, at Auroch’s request Xtract will buyout the balance of any payments due under the Royalty Agreement at the then market value. Warrants

In addition, Xtract has agreed to issue the Company 500,000,000 warrants exercisable at 0.02p per on or before 21 December 2017. Expiry of Options

On 19 July 2016 the Company advised that 3,785,000 unlisted options exercisable at $0.15 on or before 18 July 2016 lapsed unexercised.

5. AUDITOR’S DECLARATION

A copy of the independence declaration by the lead auditor under section 307C of the Corporations Act 2001 is included on page 5 of this half‐year financial report.

This report is signed in accordance with a resolution of the Board of Directors.

Matthew Foy

DIRECTOR

Dated this 15th Day of March 2017 F

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Stamp

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF AUROCH MINERALS LIMITED

As lead auditor for the review of Auroch Minerals Limited for the half-year ended 31 December 2016, I

declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the review; and

2. No contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Auroch Minerals Limited and the entities it controlled during the

period.

Dean Just

Partner

BDO Audit (WA) Pty Ltd

Perth, 15 March 2017

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2016

31 December

2016

$

31 December

2015

$

Revenue 5,737 716

Foreign exchange gain/(loss) 117,706 -

Less Expenses:

Employee benefits expenses (145,810) ‐

Accounting and professional fees (20,500) (86,568)

Audit fees (5,782) (16,548)

Consulting fees (108,873) (148,200)

Corporate advisory (15,500) (15,000)

Directors expense (45,600) (30,000)

Corporate and regulatory fees (33,524) (14,901)

Interest ‐ (52,002)

Project Evaluation (54,615) ‐

Travel & accommodation (42,401) (38,702)

Borrowing costs ‐ (12,500)

Finance Expense ‐ (118,131)

Share based payment expense ‐ (149,250)

Other expenses (141,874) (167,515)

Loss before income tax (491,036) (848,601)

Loss after income tax for the period (491,036) (848,601)

Other comprehensive income

Items that may be reclassified to the profit or loss

Exchange difference on translation of foreign operations ‐ (319,682)

Other comprehensive income for the period net of tax ‐ (319,682)

Total comprehensive loss for the period attributable to the owners of Auroch Minerals Limited

(491,036)

(1,168,283) Loss per share for the period attributable to the members of Auroch

Minerals Limited

Basic loss per share (cents per share) (0.63) (1.40)

Diluted loss per share (cents per share) (0.63) (1.40) The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016

13

Note

31 December

2016

$

30 June

2016

$

ASSETS

Current Assets

Cash and cash equivalents 6,406,350 5,223,618

Trade and other receivables 2 2,318,820 3,392,763

Total Current Assets 8,725,170 8,616,381

Non‐current Assets

Property, Plant and Equipment 1,320 ‐

Prepaid exploration 166,266 ‐

Mineral exploration and evaluation expenditure 3 209,291 171,507

Total Non‐current Assets 376,877 171,507

TOTAL ASSETS

9,102,047

8,787,888

LIABILITIES

Current

Trade and other payables 4 123,535 132,090

Total Current Liabilities 123,535 132,090

TOTAL LIABILITIES

123,535

132,090

NET ASSETS

8,978,512

8,655,798

EQUITY

Contributed equity 5 10,332,452 9,518,702

Reserves 389,175 389,175

Accumulated losses (1,743,115) (1,252,079)

TOTAL EQUITY

8,978,512

8,655,798

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


14

Contributed Equity

Accumulated Losses

Option Reserve

Share Based Payments Reserve

Foreign Translation Reserve

Total Equity

$ $ $ $ $ $

Balance at 1 July 2015 7,961,958 (3,762,620) ‐ 115,533 (191,382) 4,123,489

Loss for period ‐ (848,601) ‐ ‐ ‐ (848,601)

Exchange difference on foreign operations ‐ ‐ ‐ ‐ (319,682) (319,682)Total comprehensive income/(loss) for period

‐

(848,601) ‐

‐ (319,682) (1,168,283)

Transactions with owners in their capacity as owners:

Issue of shares 435,182 ‐ ‐ ‐ ‐ 435,182

Issue of Options ‐ ‐ ‐ 150,455 ‐ 150,455

Share buy‐back ‐ ‐ ‐ ‐ ‐ ‐

Share capital raising costs (7,964) ‐ ‐ ‐ ‐ (7,964)

Balance at 31 December 2015 8,389,176 (4,611,221) ‐ 265,988 (511,064) 3,532,879

Contributed

Equity

Accumulated

Losses

Option

Reserve

Share Based

Payments

Reserve

Foreign

Translation

Reserve

Total Equity

Balance at 1 July 2016 9,518,702 (1,252,079) 194,828 194,347 ‐ 8,655,798

Loss for period ‐ (491,036) ‐ ‐ ‐ (491,036)

Exchange difference on foreign operations ‐ ‐ ‐ ‐ ‐ ‐ Total comprehensive income/(loss) for period ‐ (491,036) ‐ ‐ ‐ (491,036) Transactions with owners in

their capacity as owners: ‐

Issue of shares 851,250 ‐ ‐ ‐ ‐ 851,250

Issue of Options ‐ ‐ ‐ ‐ ‐ ‐

Share buy‐back ‐ ‐ ‐ ‐ ‐ ‐

Share capital raising costs (37,500) ‐ ‐ ‐ ‐ (37,500)

Balance at 31 December 2016 10,332,452 (1,743,115) 194,828 194,347 ‐ 8,978,512

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

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CONSOLIDATED STATEMENT OF CASH FLOWS


December 2016 $

December 2015 $

CASH FLOWS FROM OPERATING ACTIVITIES

Payments to suppliers and employees

(541,351)

(795,085) Interest received

Interest paid

Other Payments GST

5,737

‐

‐

716

(143,006)

(28,769)

Net cash outflow from operating activities (535,614) (966,144)

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for purchase of plant and equipment

‐

‐

Payments for acquisitions of tenements ‐ ‐ Payments for exploration expenditure

Proceeds from sale of prospects

Loans to related entity

(192,561)

1,131,680

‐

(518,039)

702,721

‐

Net cash inflow/(outflow) from investing activities 939,119 184,682

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from the issue of shares

750,000

‐

Proceeds from borrowings

Capital raising costs ‐

(32,500)

829,673

‐

Net cash inflow from financing activities 717,500 829,673

Net increase/(decrease) in cash and cash equivalents 1,121,005 48,211 Foreign exchange movement on cash and cash equivalents 61,727 (12,434) Cash and cash equivalents at the beginning of the period 5,223,618 86,667

NET CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 6,406,350 122,444

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES In order to assist in the understanding of the accounts, the following summary explains the material accounting policies that have been adopted in the preparation of the accounts.

Basis of Preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This report should be read in conjunction with any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The accounting policies have been consistently applied by the Company and are consistent with those applied in the previous financial year and those of the corresponding interim reporting period.

The half‐year report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non‐current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

The half‐year report does not include full disclosures of the type normally included in an annual financial report. For the purposes of preparing the half‐year financial statements, the half‐year has been treated as a discrete reporting period.

Adoption of new and revised accounting standards

In the half year ended 31 December 2016, the Company has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2016 It has been determined by the Company that, there is no impact, material or otherwise, of the new and revised standards and interpretations on its business and therefore no change is necessary to Company accounting policies. No retrospective change in accounting policy or material reclassification has occurred requiring the inclusion of a third Statement of Financial Position as at the beginning of the comparative financial period, as required under AASB 101. Impact of accountant standards not yet issued At the date of authorisation of the financial report, a number of Standards and Interpretations including those Standards and Interpretations issued by the IASB/IFRIC, where an Australian equivalent has not been made by the AASB, were in issue but not yet effective for which the Entity has considered it unlikely for there to be a material impact on the financial statements. Compliance with IFRS The financial statements of the company also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Going Concern The financial report has been prepared on a going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

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2. TRADE AND OTHER RECEIVABLES December

2016 $

June 2016 $

Deferred consideration on sale of Manica asset 2,283,390 3,359,075Prepayments 8,143 578Other receivables 27,287 33,110

2,318,820 3,392,763

3. EXPLORATION AND EVALUATION EXPENDITURE December

2016 $

June 2016 $

Balance at beginning of the period Exploration expenditure incurred Exploration expenditure written off

171,507 37,785

‐

206,866 521,175

(556,534)

Balance at the end of the period 209,292 171,507

The balance carried forward represents projects in the exploration and evaluation phase. Ultimate recoupment of exploration expenditure carried forward is dependent on successful development and commercial exploitation, or alternatively, sale of respective areas.

4. TRADE AND OTHER PAYABLES December 2016 $

June 2016 $

Trade Payables 87,705 88,565 Accruals 35,830 43,525

Balance at the end of the period 123,535 132,090 All current liabilities are expected to be settled within 12 months

5. CONTRIBUTED EQUITY

(a) Share Capital December 2016 Shares

June 2016 Shares

December 2016 $

June 2016 $

Fully paid 84,985,865 76,810,865 11,043,996 10,192,746

Equity raising costs ‐ ‐ (711,544) (674,044)

84,985,865 76,810,865 10,332,452 9,518,702

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(b) Movements in ordinary shares December 2016

Note Number of shares

Issue Price

2016 $

Date Details

01/07/16 Balance at 01 July 76,810,865 9,518,702

16/12/16 Placement to Investor 6,500,000 $0.10 650,000

Placement to Investor 1,000,000 $0.10 100,000

Shares issued in lieu of consultant fees 675,000 ‐ 101,250

Less: Equity raising costs (37,500)

31/12/16 Balance at 31 December 84,985,865 10,332,452 June 2016 Note Number of

sharesIssue Price

2016 $

Date Details

01/07/15 Balance at 01 July 58,591,397 7,743,958

03/07/15 Shares issued in lieu of corporate advisory services 102,564 $0.11 11,282

23/10/15 Issue of shares on conversion of debt and shares issued to employees and unrelated contractors in satisfaction of remuneration, fees and employee entitlement forgone

1,850,000 $0.09 173,900

23/10/15 Share issued upon conversion of Convertible Note

3,350,723 $0.08 250,000

18/03/16 Share issued upon conversion of Convertible Note 8,702,461 $0.09 750,000

18/03/16 Share issued to former employees and unrelated contractors 1,660,000 $0.11 182,600

29/04/16 Shares issued upon exercise of options1,090,000 $0.20 218,000

23/05/16 Shares issued upon exercise of options 125,000 $0.15 18,750 25/05/16 Shares issued pursuant to share sale

agreement to acquire project 950,000 $0.15 142,500

14/06/16 Shares issued in settlement of former employee entitlements 250,000 $0.14 35,000

Shares issued upon exercise of options 138,720 $0.08 11,098

Equity raising costs (18,386)

30/06/16 Balance at 30 June 76,810,865 9,518,702

6. SEGMENT INFORMATION

Management has determined that the Group has two reportable segments, being mineral exploration in Namibia and Western Australia, which is based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. As the Group is focused on mineral exploration, the Board monitors the Group based on actual versus budgeted exploration expenditure incurred by area of interest.

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This internal reporting framework is the most relevant to assist the Board with making decisions regarding the Group and its ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed to date.

Segment information relating to the reportable segment being mineral exploration in Namibia and Western Australia is outlined below.

December 2016 Mozambique

$

Namibia

$

Western Australia

$

Total $

Revenue from external sources ‐ ‐ ‐ ‐Reportable segment profit / (loss) ‐ ‐ ‐ ‐Reportable segment assets ‐ 166,266 209,292 375,558Reportable segment liabilities ‐ ‐ ‐ ‐ Reconciliation of reportable segment profit or loss Reportable segment profit /(loss) ‐Other income ‐ ‐ ‐ ‐Unallocated: Other income 5,737Depreciation expense ‐Director benefits (45,600)Share based payments ‐Employee benefits (145,810)Other expenses (305,363)

Profit before tax (491,036)

December 2015

Revenue from external sources ‐ ‐ ‐ ‐ Reportable segment profit / (loss) ‐ ‐ ‐ ‐ June 2016 Reportable segment assets ‐ ‐ 169,502 169,502 Reportable segment liabilities ‐ ‐ ‐ ‐ December 2015 Reconciliation of reportable segment profit or loss Reportable segment profit /(loss) ‐ Other income 716 Unallocated: Depreciation expense ‐ Director benefits (30,000) Share based payments (149,250) Employee benefits ‐ Other expenses (670,067)

Loss before tax (848,601)

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Other Segment Information

Dec 2016 $

Dec 2015 $

Total segment revenue ‐ ‐Interest revenue ‐ 716

Total revenue from continuing operations ‐ 716

Dec 2016 $

June 2016 $

Segment assets are reconciled to total assets as follows: Segment assets 375,558 169,505Unallocated:

Cash and cash equivalents 6,406,350 5,223,618Trade and other receivables 2,318,819 3,392,763Other mineral exploration and evaluation expenditure ‐ 2,001Property, plant and equipment 1,320 ‐

Total assets as per the statement of financial position 9,102,047 8,787,887

Segment liabilities are reconciled to total liabilities as follows: Segment Liabilities ‐ ‐Unallocated: Trade and other payables 123,535 132,090Total liabilities as per the statement of financial position 123,535 132,090

7. EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD

Deed of Settlement with Xtract Resources Plc

Subsequent to the Period on 13 February 2017 the Company advised it had agreed settlement arrangements with Xtract with respect to the outstanding debt owed to Auroch totalling US$1,748,136 (inclusive of accrued interest) (the Xtract Receivable). Repayment of the Xtract Receivable has been structured as a convertible note agreement to the total value of US$748,136 (Convertible Note), a loan agreement for the balance of the Xtract Receivable equal to US$1 million (Loan Agreement), a 3% royalty agreement over production at the Manica Gold Project, Mozambique (Royalty Agreement) and the issue of 500,000,000 warrants in Xtract (Warrants). Further detail regarding this Xtract Receivable is outlined within the Director’s Report above.

Convertible Note

Xtract has agreed to issue unsecured Convertible Notes to the total value of US$748,136 to the Company. The Convertible Notes accrue interest at 10% per annum payable quarterly in advance and are to be repaid no later than 31 December 2017. Auroch may elect to convert the Convertible Notes at any time at a price equal to a 15% discount to 10‐day VWAP prior to a conversion notice and subject to a floor price of 0.012p (Conversion Discount). In the event of a material breach of the terms of the Convertible Note by Xtract which is not remedied, the Conversion Discount will increase to 30%.

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In the event of a fundraising by Xtract, Auroch may require Xtract to allocate 15% of the aggregate net proceeds to redeeming part of the Convertible Notes. In the event of completion of a change of control, asset sale of the Manica Gold Project or completion of a joint venture, the Convertible Notes shall be redeemed in full. In addition, an establishment fee equal to US$50,000 will be paid to Auroch satisfied by the allotment of Xtract shares equal to a 15% discount to the ten‐day VWAP prior to the date of execution of the Convertible Note. Loan Agreement

Xtract has entered into an unsecured Loan Agreement with Auroch for the balance of the Xtract Receivable totalling US$1 million. Pursuant to the terms of the Loan Agreement, Xtract will repay the Loan Agreement on or before 31 December 2017 together with interest that will accrue at a rate of 10% per annum. In addition, Xtract intends to seek shareholder approval prior to 30 June 2017 to authorise Xtract to replace the Loan Agreement with a convertible loan note on substantially the same terms as the Convertible Note. In the event Xtract does not obtain the necessary shareholder approvals by 31 December 2017, an accelerated interest rate of 30% per annum will accrue going forward on any outstanding loan amount. Royalty Agreement

Xtract has granted security to Auroch by way of a Royalty Agreement over the Manica Gold Project whereby Auroch will receive a royalty payment equal to 3% of gross revenue from commercial operations (including any alluvial gold production) (the Royalty). The Royalty is subject to a maximum payment of US$1,748,136 being the Xtract Receivable. Any payments made under the Royalty Agreement shall reduce the amounts due to Auroch under the Convertible Note and Loan Agreements. The Royalty Agreement will terminate upon full settlement by Xtract of the Xtract Receivable. Xtract has agreed not to create any security over or dispose of its interest in the Manica Gold Project and, on or following any change of control to Xtract, at Auroch’s request Xtract will buyout the balance of any payments due under the Royalty Agreement at the then market value. Warrants

In addition, Xtract has agreed to issue the Company 500,000,000 warrants exercisable at 0.02p per on or before 21 December 2017.

Option and Joint Venture Agreement

Subsequent to the Period on 12 January 2017, Auroch announced an Option and Joint Venture Agreement over EPL 5751 with Dynamic Geo‐Consulting Services CC (DGS) to continue the growth of its Karibib Lithium Project in Namibia, complementing and building upon the (five) 5 EPL applications that were announced on 14 November 2016. The terms of the Option and Joint Venture Agreement (Agreement) are summarised as follows:

For a non‐refundable fee of USD$7,500, DGS grants to Auroch the option to enter into a joint venture with DGS to explore and develop the project on the following basis:

Auroch may exercise the option at any time within 60 days after Auroch’s authorised representatives first visit the area covered by EPL 5751. An Option exercise fee of USD$10,000 is payable to DGS.

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The Option term may be extended by mutual agreement.

Once the Option is exercised, EPL 5751 will be transferred to a joint venture company (JV Company) effectively owned 90% by Auroch (or its nominee entity) and 10% by DGS or a 100% directly or indirectly owned Namibian subsidiary of the JV Company.

Until the transfer is completed and registered, DGS will hold a 90% ownership interest in EPL 5751 as bare trustee for the benefit of Auroch (or its nominee entity).

When the transfer of EPL 5751 is completed and registered, Auroch will pay DGS USD$20,000 and issue to DGS 100,000 fully paid ordinary shares in Auroch.

The joint venture will commence when Auroch exercises the Option.

Auroch will sole fund all expenditure on the project until (i) a positive bankable feasibility study or definitive feasibility study is completed that supports a decision to mine, and (ii) a mining licence for the project is granted; after which both parties will share project expenditure pro rata to their respective shareholdings in the JV Company (but Auroch will loan fund DGS’s share of expenditure, to be repaid out of 60% of DGS’s share of dividends subject to any necessary third party project financier approvals).

Auroch will be the Manager of the joint venture and shall determine in its absolute discretion the joint venture programmes and budgets for work to be carried out on the project.

Auroch will expend at least USD$50,000 per annum during the term of the joint venture.

Auroch will issue to DGS:

200,000 fully paid ordinary shares in Auroch after the first anniversary of the successful renewal of EPL 5751 for a further 2 year term.

500,000 fully paid ordinary shares in Auroch when (i) a positive bankable feasibility study or definitive feasibility study is completed that supports a decision to mine, and (ii) a mining licence for the project is granted.

Auroch may elect at any time to withdraw from the joint venture, upon which the project will be returned to DGS and Auroch will have no further liability, other than remedial obligations relating to activities carried out under the Agreement.

Auroch is entitled to a right of first and last offer to acquire DGS’s shares in the JV Company should DGS propose to sell any or all of its shares in the JV Company.

DGS grants to Auroch a call option to buy up to 50% of DGS’s shareholding in the JV Company (so that DGS will be left with not less than a 5% shareholding in the JV Company) subject to various conditions.

8. CONTINGENCIES

There has been no material change to commitments or contingencies since 30 June 2016

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DECLARATION BY DIRECTORS

The Directors of the Group declare that:

1. The financial statements, comprising the Consolidated Statement of Profit or Loss and Other

Comprehensive Income, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity and accompanying notes, are in accordance with the Corporations Act 2001 and:

a) comply with AASB 134 Interim Financial Reporting and 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 as represented by the results of its operations, changes in equity and its cash flows, for the half‐year ended on that date.

2. In the Directors’ opinion, there are reasonable grounds to believe that the Group will be able to pay

its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by:

Dated this 15th day of March 2017

Matthew Foy Director

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Stamp

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.

INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Auroch Minerals Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Auroch Minerals Limited, which

comprises the consolidated statement of financial position as at 31 December 2016, the consolidated

statement of profit or loss and other comprehensive income, the consolidated statement of changes in

equity and the consolidated statement of cash flows for the half-year ended on that date, notes

comprising a statement of accounting policies and other explanatory information, and the directors’

declaration of the consolidated entity comprising the company and the entities it controlled at the

half-year’s end or from time to time 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 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, we have become aware of any matter that makes us 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 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 Auroch Minerals

Limited, 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.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations

Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which

has been given to the directors of Auroch Minerals Limited, would be in the same terms if given to the

directors as at the time of this auditor’s review report.

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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 Auroch Minerals Limited is not in accordance with the

Corporations Act 2001 including:

(i) 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

(ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations

Regulations 2001.

BDO Audit (WA) Pty Ltd

Dean Just

Partner

Perth, 15 March 2017

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Documents

Interim Financial Report For personal use only - · PDF fileInterim Financial Report ... 5751 during the initial reconnaissance inspection and ... mining occurred with a trial open