REG - SolGold PLC - Final Results <Origin Href="QuoteRef">SOLG.L</Origin> - Part 5
14/09/2017 07:58
- Part 5: For the preceding part double click ID:nRSN7272Qd
203,169 780,168 168,353
Other receivables represent funds receivable from the exercise of share options, Australian Goods and Services Tax
receivable and an advance made to a landowner in Ecuador.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 16 CASH AND CASH EQUIVALENTS
Group2017A$ Group2016A$ Company2017A$ Company2016A$
Cash at bank 89,312,743 94,933 88,669,626 17,199
Cash and cash equivalents in the statement of cash flows 89,312,743 94,933 88,669,626 17,199
NOTE 17 CAPITAL AND RESERVES
(a) Authorised Share Capital
2016No. of Shares 2016Nominal Value £
At 1 July 2015 - Ordinary shares 1,020,000,000 10,200,000
Increase in authorised share capital of £0.01 each on 27 November 2015 400,000,000 4,000,000
At 30 June 2016 - Ordinary shares 1,420,000,000 14,200,000
2017No. of Shares 2017Nominal Value £
At 1 July 2016 - Ordinary shares 1,420,000,000 14,200,000
Increase in authorised share capital of £0.01 each on 13 October 2016 600,000,000 6,000,000
At 30 June 2017 - Ordinary shares 2,020,000,000 20,200,000
(b) Changes in Issued Share Capital and Share Premium
No. of Shares Nominal ValueA$ Share PremiumA$ Total A$
Ordinary shares of 1p each at 1 July 2015 760,453,071 13,184,721 82,212,310 95,397,031
Shares issued at £0.015 - Placement 19 November 2015 62,263,534 1,331,612 665,807 1,997,419
Share issue costs charged to share premium account - - (16,161) (16,161)
Shares issued at £0.023 - Placement 7 March 2016 80,909,257 1,541,129 2,003,467 3,544,596
Shares issued at £0.023 - Convertible notes conversion 7 March 2016 50,271,739 957,557 2,623,084 3,580,641
Ordinary shares of 1p at 30 June 2016 953,897,601 17,015,019 87,488,507 104,503,526
No. of Shares Nominal ValueA$ Share PremiumA$ Total A$
Ordinary shares of 1p each at 30 June 16 953,897,601 17,015,019 87,488,507 104,503,526
Shares issued at £0.06 - Placement 28 August 20161 268,819,004 4,654,961 23,274,286 27,929,248
Share issue costs charged to share premium account - - (4,696,253) (4,696,253)
Shares issued at £0.13 - Placement 17 October 20162 206,250,000 3,298,144 40,426,856 43,725,000
Share issue costs charged to share premium account - - (1,706,552) (1,706,552)
Shares issued at £0.14 - Exercise of options 17 January 2017 900,000 14,499 178,820 193,319
Shares issued at £0.30 - Newcrest share issue 31 January 2017 100,000 1,660 47,949 49,609
Shares issued at £0.14 - Exercise of options 3 February 2017 1,200,000 19,804 257,457 277,261
Shares issued at £0.14 - Exercise of options 21 February 2017 900,000 14,582 189,646 204,228
Shares issued at £0.38 - Newcrest share issue 1 March 2017 240,000 3,885 145,201 149,086
Shares issued at £0.41 - Placement 16 June 2017 78,889,080 1,324,161 53,197,804 54,521,966
Share issue costs charged to share premium account - - (72,269) (72,269)
Shares issued at £0.14 - Exercise of options 26 June 2017 880,000 14,775 192,070 206,844
Shares issued at £0.28 - Exercise of options 26 June 2017 880,000 14,775 398,914 413,688
Ordinary shares of 1p at 30 June 2017 1,512,955,685 26,376,265 199,322,436 225,698,701
1 Includes the conversion of the DGR Global Ltd loan of A$5,700,000, conversion of capital raising costs of A$1,221,614,
other debt conversions of A$86,359 and bonus shares issued to certain staff of A$519,481 as part of the share placement.
2 Includes conversion of capital raising costs of A$1,660,751 as part of the share placement.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 17 CAPITAL AND RESERVES (continued)
Capital Management
Management controls the capital of the Group in order to generate long-term shareholder value and ensure that the Group can
fund operations and continue as a going concern. Management effectively manages the Group's capital by assessing the
Group's financial risks and adjusting its capital structure in response to changes in these risks and in the market. These
responses include share issues and debt considerations. Given the nature of the Group's current activities the entity will
remain dependant on equity funding in the short to medium term until such time as the Group becomes self-financing from the
commercial production of mineral resources.
NOTE 18 TRADE AND OTHER CURRENT PAYABLES
Group2017A$ Group2016A$ Company2017A$ Company2016A$
Current
Trade payables 569,569 1,348,875 437,409 847,413
Other payables 1,950,716 351,145 228,603 56,958
Accrued expenses 220,890 2,042,341 94,362 312,473
2,741,175 3,742,361 760,374 1,216,844
NOTE 19 SHARE OPTIONS
At 30 June 2017 the Company had 44,191,768 options outstanding for the issue of ordinary shares (2016: 21,380,000).
Options
Share options are granted to employees under the company's Employee Share Option Plan ("ESOP"). The employee share option
plan is designed to align participants' interests with those of shareholders.
Unless otherwise documented with the Company, when a participant ceases employment prior to the vesting of their share
options, the share options are forfeited after 90 days unless cessation of employment is due to termination for cause,
whereupon they are forfeited immediately. The Company prohibits key management personnel from entering into arrangements to
protect the value of unvested ESOP awards.
The contractual life of each option granted is generally two (2) to three (3) years. There are no cash settlement
alternatives.
Each option can be exercised from vesting date to expiry date for one share with the exercise price payable in cash.
Share options issued
There were 41,591,768 options granted during the year ended 30 June 2017 (2016: nil).
On 17 October 2016, the Company issued an additional 19,591,768 unlisted options to Maxit Capital LP. The options consist
of two tranches of 9,795,884 options each exercisable at £0.14 and £0.28.
On 28 October 2016, the Company issued a total of 22,000,000 unlisted options to employees and contractors. The options
have a strike price of £0.28 each and are exercisable through to 28 October 2018.
On 8 July 2014, the Company entered into an agreement to grant 4,360,000 unlisted options to the Board of Directors. The
options have a life of 3 years. The terms of the share options are as follows:
· 2.18 million Options exercisable at £0.14, vesting once the Company's share price has traded at a minimum of £0.20
on a 30 day VWAP basis;
· 2.18 million Options exercisable at £0.28, vesting once the Company's share price has traded at a minimum of £0.40
on a 30 day VWAP basis; and
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 19 SHARE OPTIONS (continued)
Date of grant Exercisable from Exercisable to Exercise prices Number granted Number at 30 June 2017
10 May 2013* When the Company's share price has traded at a minimum of £0.20 on a 30 day VWAP basis 6 September 2017 £0.14 3,000,000 -
8 July 2014 When the Company's share price has traded at a minimum of £0.20 on a 30 day VWAP basis 8 July 2017 £0.14 2,180,000 1,300,000
8 July 2014 When the Company's share price has traded at a minimum of £0.40 on a 30 day VWAP basis 8 July 2017 £0.28 2,180,000 1,300,000
17 October 2016 The options vested immediately, through to 17 October 2018 17 October 2018 £0.14£0.28 9,795,8849,795,884 9,795,8849,795,884
17 November 2016 The options vest on the earlier of:(a) the expiry of 75% of the Term, or (b) a Change of Control Transaction, as defined under the Company's ESOP Rules 28 October 2018 £0.28 22,000,000 22,000,000
48,951,688 44,191,768
Date of grant Exercisable from Exercisable to Exercise prices Number granted Number at 30 June 2016
10 May 2013* When the Company's share price has traded at a minimum of £0.20 on a 30 day VWAP basis 6 September 2017 £0.14 3,000,000 3,000,000
15 July 2013 When the Company's share price has traded at a minimum of £0.20 on a 30 day VWAP basis 15 July 2016 £0.14 1,250,000 1,250,000
15 July 2013 When the Company's share price has traded at a minimum of £0.40 on a 30 day VWAP basis 15 July 2016 £0.28 2,250,000 2,250,000
15 July 2013 When the Company's share price has traded at a minimum of £0.80 on a 30 day VWAP basis 15 July 2016 £0.50 4,000,000 4,000,000
24 September 2013 When the Company's share price has traded at a minimum of £0.20 on a 30 day VWAP basis 24 September 2016 £0.14 3,250,000 2,850,000
24 September 2013 When the Company's share price has traded at a minimum of £0.40 on a 30 day VWAP basis 24 September 2016 £0.28 3,250,000 2,850,000
24 September 2013 When the Company's share price has traded at a minimum of £0.80 on a 30 day VWAP basis 24 September 2016 £0.50 820,000 820,000
8 July 2014 When the Company's share price has traded at a minimum of £0.20 on a 30 day VWAP basis 8 July 2017 £0.14 2,180,000 2,180,000
8 July 2014 When the Company's share price has traded at a minimum of £0.40 on a 30 day VWAP basis 8 July 2017 £0.28 2,180,000 2,180,000
22,180,000 21,380,000
*The options were granted for accounting purposes on 10 May 2013, approved at the Annual General Meeting held on 19 August
2013 and formally allotted on 6 September 2013.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 19 SHARE OPTIONS (continued)
Share-based payments
The number and weighted average exercise price of share options are as follows:
Weighted average exercise price2017 Number of options2017 Weighted average exercise price2016 Number of options2016
Outstanding at the beginning of the year £0.27 21,380,000 £0.27 21,380,000
Exercised during the year £0.17 (4,760,000)
Lapsed during the year £0.31 (14,020,000) -
Granted during the year £0.25 41,591,768 -
Outstanding at the end of the year £0.25 44,191,768 £0.27 21,380,000
Exercisable at the end of the year £0.21 22,191,768 - -
The options outstanding at 30 June 2017 have an exercise price of £0.14 and £0.28 (2016: £0.14 - £0.50) and a weighted
average contractual life of 1.24 years (2016: 0.46 years).
Share options held by Directors are as follows:
Nicholas Mather 750,000 750,000 14p 08/07/14 - 08/07/17
750,000 750,000 28p 08/07/14 - 08/07/17
Brian Moller 550,000 550,000 14p 08/07/14 - 08/07/17
550,000 550,000 28p 08/07/14 - 08/07/17
Robert Weinberg - 440,000 14p 08/07/14 - 08/07/17
- 440,000 28p 08/07/14 - 08/07/17
John Bovard - 440,000 14p 08/07/14 - 08/07/17
- 440,000 28p 08/07/14 - 08/07/17
08/07/14 - 08/07/17
-
440,000
28p
08/07/14 - 08/07/17
The total number of options outstanding at year end is as follows:
Share options heldat 30 June 2017 Share options heldat 30 June 2016 Option price Exercise periods
- 3,000,000 £0.14 Vesting from 30 day VWAP of 20p to 06/09/2017
- 1,250,000 £0.14 Vesting from 30 day VWAP of 20p to 15/07/2016
- 2,250,000 £0.28 Vesting from 30 Day VWAP of 40p to 15/07/2016
- 4,000,000 £0.50 Vesting from 30 Day VWAP of 80p to 15/07/2016
- 2,850,000 £0.14 Vesting from 30 Day VWAP of 20p to 24/09/2016
- 2,850,000 £0.28 Vesting from 30 Day VWAP of 40p to 24/09/2016
- 820,000 £0.50 Vesting from 30 Day VWAP of 80p to 24/09/2016
1,300,000 2,180,000 £0.14 Vesting from 30 Day VWAP of 20p to 08/07/2017
1,300,000 2,180,000 £0.28 Vesting from 30 Day VWAP of 40p to 08/07/2017
9,795,884 - £0.14 Exercisable through to 17/10/2018
9,795,884 - £0.28 Exercisable through to 17/10/2018
22,000,000 - £0.28 Vests on the earlier of the expiry of 75% of the term of the option or a Change of Control Transaction, as defined under the Company's ESOP Rules
44,191,768 21,380,000
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 19 SHARE OPTIONS (continued)
Share-based payments (continued)
The fair value of services received in return for share options granted is measured by reference to the fair value of share
options granted. This estimate is based on either a Black-Scholes model or Monte Carlo Simulation considering the effects
of the vesting conditions, expected exercise period and the dividend policy of the Company.
2017
Fair value of share options and assumptions £0.14 Options17 October 2016 £0.28 Options17 October 2016 £0.28 Options28 October 2016
Number of options 9,795,884 9,795,884 22,000,000
Fair value at issue date £0.12 £0.09 £0.14
Exercise price £0.14 £0.28 £0.28
Expected volatility 99.744% 99.744% 99.744%
Option life 2.00 years 2.00 years 2.00 years
Expected dividends 0.00% 0.00% 0.00%
Risk-free interest rate (short-term) 0.53% 0.53% 0.66%
Valuation methodology Black-Scholes Black-Scholes Black-Scholes
A$ A$ A$
Share based payments expense recognised in statement of comprehensive income - - 2,158,840
Share based payments expense recognised as share issue costs 1,912,810 1,393,000 -
Share based payments expense to be recognised in future periods - - 2,062,000
Fair value of share options and assumptions Prior year grants
£0.14 Options8 July 2014 £0.28 Options8 July 2014
Number of options 2,180,000 2,180,000
Fair value at issue date £0.010 £0.003
Exercise price £0.140 £0.280
Expected volatility 115.31% 115.31%
Option life 3.00 years 3.00 years
Expected dividends 0.00% 0.00%
Risk-free interest rate (short-term) 2.48% 2.48%
Valuation methodology Monte Carlo Monte Carlo
The calculation of the volatility of the share price was based on the Company's daily closing share price over the two-year
period prior to the date the options were issued.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 20 FINANCIAL INSTRUMENTS (GROUP AND COMPANY)
Financial instruments by category (Group)
Financial assets Loans and receivables Available-for-sale
2017 2016 2017 2016
Cash and cash equivalents 89,312,743 94,933 - -
Trade and other receivables 1,086,331 123,974 - -
Loans receivable and other non-current assets 226,175 123,974 - -
Equity investments - - 14,366,304 1,622,712
Total financial assets 90,625,249 342,881 14,366,304 1,622,712
Financial liabilities Financial liabilities at amortised cost
2017 2016
Trade and other payables 2,741,175 3,742,361
Borrowings - 4,776,404
Total financial liabilities 2,741,175 8,518,765
Financial instruments by category (Company)
Financial assets Loans and receivables Available-for-sale
2017 2016 2017 2016
Cash and cash equivalents 88,669,626 17,199 - -
Trade and other receivables 689,248 168,353 - -
Loans receivable and other non-current assets 90,137 - - -
Equity investments - - 14,360,725 1,617,132
Total financial assets 89,449,011 185,552 14,360,725 1,617,132
Financial liabilities Financial liabilities at amortised cost
2017 2016
Trade and other payables 760,374 1,216,844
Borrowings - 4,776,404
Total financial liabilities 760,374 5,993,248
If required, the Board of Directors determines the degree to which it is appropriate to use financial instruments,
commodity contracts or other hedging contracts or techniques to mitigate risks. The main risks for which such instruments
may be appropriate are foreign currency risk and liquidity risk, each of which is discussed below. The main credit risk is
the non-collection of loans and other receivables which include refunds and tenement security deposits. There were no
overdue receivables at year end.
For the Company, the main credit risk is the non-collection of loans made to its subsidiaries. The Directors expect to
collect the loans through the successful exploration and subsequent exploitation of the subsidiaries' tenements.
There have been no changes in financial risks from the previous year.
During the year ended 30 June 2017 and 2016 no trading in commodity contracts was undertaken.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 20 FINANCIAL INSTRUMENTS (GROUP AND COMPANY) (continued)
Market risk
Interest rate risks
The Group's and Company's policy is to retain its surplus funds on the most advantageous term of deposit available up to
twelve month's maximum duration. The increase/decrease of 2% in interest rates will impact the Group's income statement by
a gain/loss of A$1,786,268 and the company's income statement by A$1,773,406. The group considers that a 2% +/- movement
interest rates represent reasonable possible changes.
Foreign currency risk
The Group has potential currency exposures in respect of items denominated in foreign currencies comprising:
§ Transactional exposure in respect of operating costs, capital expenditures and, to a lesser extent, sales incurred in
currencies other than the functional currency of operations which require funds to be maintained in currencies other than
the functional currency of operation; and
§ Translation exposures in respect of investments in overseas operations which have functional currencies other than
Australian dollars.
Currency risk in respect of non-functional currency expenditure is reviewed by the Board.
The table below shows the extent to which Group companies have monetary assets and liabilities in different currencies.
Foreign exchange differences on retranslation of such assets and liabilities are taken to the statement of comprehensive
income.
Functional currency of entity
Net Financial Assets (Liabilities) AUD USD SBD TOTAL
2017
Australian dollar - - - -
United States dollar (USD) 86,554,253 - - 86,554,253
Solomon Island dollar (SBD) 14,746 - - 14,746
Great British Pound (GBP) 173,926 - - 173,926
86,742,925 - - 86,742,925
Functional currency of entity
Net Financial Assets (Liabilities) AUD USD SBD TOTAL
2016
Australian dollar - - - -
United States dollar (USD) (33,499) - - (33,499)
Solomon Island dollar (SBD) - - - -
Great British Pound (GBP) (136,999) - - (136,999)
(170,498) - - (170,498)
The main currency exposure relates to the effect of re-translation of the Group's assets and liabilities in Solomon Island
dollar (SBD), United States dollar (USD) and the Great British Pound (GBP). A 10% increase in the SBD/A$, USD/A$ and
GBP/A$ exchange rates would give rise to a change of approximately A$9,638,103 (2016: A$18,781) in the Group net assets and
reported earnings. A 10% decrease in the SBD/A$, USD/A$ and GBP/A$ exchange rates would give rise to a change of
approximately A$7,885,720 (2016: A$15,366), The Group does not hedge foreign currency exposures and manages net exposures
by buying and selling foreign currencies at spot rates where necessary. In respect of other monetary assets and liabilities
held in currencies other than Australian dollars, the Group ensures that the net exposure is kept to an acceptable level,
by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 20 FINANCIAL INSTRUMENTS (GROUP AND COMPANY) (continued)
Credit Risk
The Group is exposed to credit risk primarily from the financial institutions with which it holds cash and cash deposits.
The banks and their credit ratings the Group had cash accounts with at 30 June 2017 were A$1,653,814 in cash accounts with
Macquarie Bank Limited (BBB) in Australia, A$22,611 in cash accounts with the ANZ Bank (AA-) in Australia, A$86,952,457 in
cash accounts with Westpac Bank (AA-) in Australia, A$14,749 in cash accounts with the ANZ Bank (AA-) in Honiara, Solomon
Islands, A$463,312 in cash accounts with Banco Guayaquil (AAA-) in Ecuador, A$372 in cash accounts with Banco Pichincha (B)
in Ecuador, A$129,866 in cash accounts with Produbanco (B) in Ecuador and A$75,571 in petty cash. Including other
receivables, the maximum exposure to credit risk at the reporting date was A$90,388,769 (2016: A$298,102).
The company is also exposed to credit risk due to the cash balances it holds directly. It is also exposed to credit risk
on the loan balances it holds with its subsidiaries. At 30 June 2017, the company had A$88,669,626 in cash and cash
equivalents and A$55,302,853 of intercompany loan balances receivable. The maximum exposure to credit risk at the
reporting date was A$143,973,144.
Credit risk is managed by dealing with banks with high credit ratings assigned by international credit rating agencies.
Furthermore, funds are deposited with banks of high standing in order to obtain market interest rates.
Liquidity risks
The Group and Company raises funds as required on the basis of budgeted expenditure for the next 12 to 24 months, dependent
on a number of prevailing factors. Funds are generally raised in capital markets from a variety of eligible private,
corporate and fund investors, or from interested third parties (including other exploration and mining companies) which may
be interested in earning an interest in the project. The success or otherwise of such capital raisings is dependent upon a
variety of factors including general equities and metals market sentiment, macro-economic outlook, project prospectivity,
operational risks and other factors from time to time. When funds are sought, the Group balances the costs and benefits of
equity financing. Funds are provided to local sites bi-monthly, based on the sites' forecast expenditure.
All liabilities held by the Group are contractually due and payable within 1 year.
Fair values
In the Directors' opinion, with the exception of available for sale assets, there is no material difference between the
book value and fair value of any of the Group's and Company's financial instruments. The classes of financial instruments
are the same as the line items included on the face of the statement of financial position and have been analysed in more
detail in notes to the accounts.
All the Group's financial assets, with the exception of available for sale assets are categorised as loans and receivables
and all financial liabilities are measured at amortised cost.
NOTE 21 COMMITMENTS
The Group also has certain obligations to expend minimum amounts on exploration in tenement areas. These obligations may
be varied from time to time and are expected to be fulfilled in the normal course of operations of the Group.
The combined commitments of the Group related to its granted tenement interests are as follows:
Location Up to 12 Months 13 Months to 5 Years Later than 5 Years
Ecuador 1,019,748 5,098,739 -
Solomon Islands - - -
Queensland 556,000 40,000 -
1,575,748 5,138,739 -
To keep tenements in good standing, work programs should meet certain minimum expenditure requirements. If the minimum
expenditure requirements are not met, the Group has the option to negotiate new terms or relinquish the tenements. The
Group also has the ability to meet expenditure requirements by joint venture or farm in agreements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 22 RELATED PARTIES
(a) Group
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available
to other parties unless otherwise stated.
a) Transactions with Directors and Director-Related Entities
(i) The Company had a commercial agreement with Samuel Capital Ltd ("Samuel") for the engagement of
Nicholas Mather as director of the Company. For the year ended 30 June 2017 A$416,667 was paid or payable to Samuel (2016:
A$150,000). These amounts are included in Note 5 (Remuneration of Key Management Personnel). The total amount outstanding
at year end is A$26,725 (2016: A$62,500).
(ii) The Company has a long-standing commercial arrangement with DGR Global Ltd, an entity associated
with Nicholas Mather (Director) and Brian Moller (Director), for the provision of various services, whereby DGR Global
provides resources and services including the provision of its administration and exploration staff, its premises (for the
purposes of conducting the Company's business operations), use of existing office furniture, equipment and certain
stationery, together with general telephone, reception and other office facilities (''Services''). In consideration for
the provision of the Services, the Company shall reimburse DGR Global for any expenses incurred by it in providing the
Services. For the year ended 30 June 2017 A$360,000 was paid or payable to DGR Global (2016: A$360,000) for the provision
of administration, management and office facilities to the Company during the year. The total amount outstanding at year
end was A$22,011 (2016: A$120,000).
(iii) Mr Brian Moller (a Director), is a partner in the Australian firm HopgoodGanim lawyers. For the
year ended 30 June 2017, HopgoodGanim were paid A$459,325 (2016: A$66,263) for the provision of legal services to the
Company. The services were based on normal commercial terms and conditions. The total amount outstanding at year end was
A$92,350 (2016: A$66,263).
(iv) On 20 November 2015, DGR Global Ltd agreed to provide short term funding to SolGold plc to provide
working capital. Interest on the facility was charged at the rate of 9.5% per annum. The loan was repayable by SolGold plc
on the earlier of any capital raising event, or 31 December 2016. DGR Global Ltd could, at its sole election, convert all
or part of the loan, including accrued interest, into further equity as part of a SolGold plc capital raising, and at the
same price as third party participants, subject to DGR Global Ltd and SolGold plc obtaining all necessary regulatory
approvals. A new loan agreement was signed on 30 June 2016 revising the limit on the facility to A$7 million, all other
conditions remained the same. On 29 August 2016, DGR Global Ltd converted A$5,700,000 of the debt funding provided to
SolGold into SolGold shares in accordance with the terms of the loan arrangements announced to the market on 1 July 2016.
(v) On 2 October 2015, DGR Global Ltd and Tenstar Trading Ltd agreed to provide short term funding to
SolGold PLC to provide working capital. Interest on the facility was charged at 9.5% per annum. The loans were repayable by
SolGold 12 months from the date of issue. DGR Global Ltd and Tenstar Trading Ltd could, at their sole election, convert all
or part of the loan, including accrued interest, into further equity at either 1.75 pence (GBP) or a price equal to 80% of
the VWAP of the shares' five days trading before the conversion notice. On 7 March 2016 DGR Global Ltd and Tenstar Trading
Ltd converted A$2,295,218 of the debt funding derivative provided to SolGold. The conversion was at 3.67 pence (GBP) per
share and generated a movement in fair value on derivative financial liabilities of A$1,378,260 which was expensed to the
income statement in the prior year.
Share and Option transactions of Directors are shown under Notes 5 and 19.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 22 RELATED PARTIES (continued)
(b) Company
The Company has related party relationships with its subsidiaries (see Note 9), Directors and other key personnel (see
Notes 5 and 19).
All related party transactions are conducted at arm's length.
Subsidiaries
The Company has an investment in subsidiaries balance of A$64,289,892 (2016: A$40,132,827). The transactions during the
year have been included in note 9. As the Company does not expect repayment of this amount and will not call payment until
the subsidiary can adequately pay it out of working capital, this amount has been included in the carrying amount of the
investment in the Parent Entity's statement of financial position.
(c) Controlling party
In the Directors' opinion there is no ultimate controlling party.
NOTE 23 ACCOUNTING ESTIMATES AND JUDGEMENTS
Key sources of estimation uncertainty
The Directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge
and best available current information. Estimates assume a reasonable expectation of future events and are based on
current trends and economic data, obtained both externally and within the Group.
Exploration and evaluation expenditure
The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or
where the activities have not reached a stage that permits a reasonable assessment of the existence of reserves. While
there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief
that such expenditure should not be written off since feasibility studies in such areas have not yet concluded. The
Directors have carried out an assessment of the carrying values of deferred exploration and evaluation expenditure and any
required impairment and is included in note 12.
Taxes
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be
available against which the losses can be utilised. Significant management judgement is required to determine the amount
of deferred tax that can be recognised, based upon the likely timing and the level of future taxable profits, together with
future tax planning strategies.
The Group has A$86,232,512 (2016: A$65,673,576) of tax losses carried forward. These losses relate to subsidiaries that
have a history of losses and may not be used to offset taxable income elsewhere in the Group. The subsidiaries neither
have any taxable temporary difference nor any tax planning opportunities available that could partly support the
recognition of these losses as deferred tax assets. On this basis, the Group has determined that it cannot recognise
deferred tax assets on the tax losses carried forward. Further details on taxes are disclosed in note 7.
NOTE 24 CONTINGENT ASSETS AND LIABILITIES
A 2% net smelter royalty is payable to Santa Barbara Resources Limited, who were the previous owners of the Cascabel
tenements. These royalties can be bought out by paying a total of US$4 million. Fifty percent (50%) of the royalty can be
purchased for US$1 million 90 days following the completion of a feasibility study and the remaining 50% of the royalty can
be purchased for US$3 million 90 days following a production decision.
In the event Cornerstone Capital Resources Inc.'s (Cornerstone) equity interest in ENSA is diluted below 10%, Cornerstone's
equity interest will be converted to a half of one percent (0.5%) interest in a Net Smelter Return and SolGold will have
right to purchase the Net Smelter Return for US$3.5 million at any time.
There are no other contingent assets and liabilities at 30 June 2017 (2016: nil).
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 30 June 2017
NOTE 25 SUBSEQUENT EVENTS
On 7 July 2017, the Company issued an additional 1,300,000 shares at £0.14 to raise A$0.31 million (£0.18 million) in cash
as a result of the exercise of employment options.
On 7 July 2017, the Company issued an additional 1,300,000 shares at £0.28 to raise A$0.62 million (£0.36 million) in cash
as a result of the exercise of employment options.
On 9 August 2017, the Company issued a total of 46,762,000 unlisted options to Directors, employees and contractors. The
options have a strike price of £0.60 each and are exercisable through to 8 August 2020.
On 11 August 2017, the Company issued an additional 690,000 shares at £0.38 to raise A$0.43 million (£0.26 million) to
Newcrest International pursuant to "top-up rights" held by Newcrest International pursuant to the Newcrest Subscription
Agreement. The allotment was price was based on a 10 day VWAP, in accordance with the terms of the Newcrest Subscription
Agreement.
On 29 August 2017, the Company announced that it had been granted an additional 21 new concessions in Ecuador taking the
total number of tenements in Ecuador to 59 tenements in addition to Cascabel.
The Directors are not aware of any other significant changes in the state of affairs of the Group or events after the
reporting date that would have a material impact on the consolidated or Company financial statements.
This information is provided by RNS
The company news service from the London Stock ExchangeRecent news on SolGold
See all newsREG - SolGold PLC - Director/PDMR Shareholding
AnnouncementREG - SolGold PLC - Multiple High-Grade Intervals at Tandayama-América
AnnouncementREG - SolGold PLC - $33.3M Received from Franco-Nevada & OR Royalties
AnnouncementREG - SolGold PLC - Project Execution Plan
AnnouncementREG - SolGold PLC - US$33.3M Second Advance Under Stream Financing
Announcement