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Hi Sirs, I need your help. This assignment due date is next week thursday (30/03/2017). The instructions are as in the attached doc. and also
Hi Sirs,
I need your help. This assignment due date is next week thursday (30/03/2017). The instructions are as in the attached doc. and also the Companies which will be used for it are attached also. This is an auditing assignment.
Thanks and Regards
This assessment provides students an opportunity to accomplish a case study which reflects the real world practice of audit in a group of a maximum of four members. This assessment requires groups to find the 2015 annual reports containing the audit reports for two Australian ASX listed companies (2 companies, 2 financial statements and 2 audit reports). The two companies must operate in different industries (for example, you choose an airline company and a mining company). Please ensure groups obtain an approval from your lecturer/tutor by week 3 and get your name and companies recorded on the list. You are required to address the following issues (46 marks): 1. Briefly explain the background of the two companies: 2 x 2 =4 marks. 2. Compare and contrast the 2 financial statements: how did they perform compared to the industry? How were they presented compared to one another?: 2 x 6 = 12 marks 3. Find out key business and inherent risks for the two industries in which the two companies operate in: 2 x 3 = 6 marks 4. Explain what audit strategies and audit tests have been undertaken for both companies by their auditors: 2 x 4 = 8 marks 5. Compare and contrast the 2 audit reports: who were auditors? what do the audit opinions mean?: 2 x 3 = 6 marks. 6. Discuss the limitation of these 2 audit reports from the users perspectives: 2 x 3 = 6 marks 7. Discuss the responsibility of auditors for each company: 2 x 2 = 4 marks. Given the primary objective of this assignment is to critically analyse and review key issues and problems in audit, students are expected to read widely to assist in the development of their own ideas and concepts. You need to support your arguments all the way throughout the essay/report with the concepts, standards and rules associated with audit and assurance service. The marking scheme for this assessment focuses on the following criteria: 1. the quality of analysis; 2. ability to identify and relate the core issues of the questions to key audit concepts; 3. application of relevant audit standards; and 4. ability to communicate ideas succinctly and grammatically correct. Please use Harvard referencing system in your report. The word limit for this assignment is 2500 words. Dark Horse Resources Limited and Controlled Entities (Formerly Navaho Gold Ltd) ANNUAL REPORT 2016 Corporate Information DIRECTORS AUDITORS Nicholas Mather BDO Audit Pty Ltd Brian Moller Neil Stuart Level 10, 12 Creek Street Brisbane QLD 4000 David Mason Phone: +61 7 3237 5999 COMPANY SECRETARY COUNTRY OF INCORPORATION Karl Schlobohm Australia REGISTERED OFFICE AND PRINCIPAL BUSINESS OFFICE STOCK EXCHANGE LISTING Dark Horse Resources Ltd ASX Code: DHR Australian Securities Exchange Ltd Level 27, One One One 111 Eagle Street Brisbane QLD 4000 Phone: + 61 7 3303 0650 Fax: +61 7 3303 0681 SOLICITORS Hopgood Ganim Level 8, Waterfront Place 1 Eagle Street Brisbane QLD 4000 SHARE REGISTRY Computershare Investor Services Pty Ltd 117 Victoria Street West End QLD 4101 3 Annual Report 2016 INTERNET ADDRESS www.darkhorseresources.com.au AUSTRALIAN BUSINESS NUMBER ABN 79 068 958 752 Table of Contents Corporate Information 3 Chairman's Report 5 Review of Operations 6 Directors' Report 21 Auditors Independence Declaration 33 Shareholder Information 34 Interest in Tenements 35 Consolidated Statement of Profit or Loss and Other Comprehensive Income 37 Consolidated Statement of Financial Position 38 Consolidated Statement of Changes In Equity 39 Consolidated Statement of Cash Flows 40 Notes to the Financial Statements 41 Directors' Declaration 67 Independent Auditor's Report 68 Annual Report 2016 4 CHAIRMAN'S REPORT Dear Shareholder It has been another productive year for Dark Horse Resources since my last Chairman's Report. Following the Company's 2014-2015 diversification into Argentinean coal projects, further opportunities were presented to the Company's management and Board from various Argentinean parties. As a result, Dark Horse has secured an option to acquire two outstanding lithium projects - including two mines - in two separate provinces of Argentina. The lithium projects were acquired via an option over Oronegro SA, and the project package includes the Las Tapias Mine, the most important beryl and spodumene past producer in Argentina. This initiative has expanded the Company's interests in Argentina, and allows it to take advantage of Argentina's new dynamic business and investment climate. The new venture into lithium pegmatites also adds significant value to the Company project portfolio, and has the potential to lead to substantial wealth generation for shareholders. As Dark Horse has stated in various releases made during past year or so, Argentina is continues to suffer restricted access to cost-effective energy and power, for a variety of reasons. Accordingly, the Company's proposed development of a mine mouth coal fired power station at the Pico Quemado project in Rio Negro (the Pico Power Project) would help to address this issue and support the sustainable growth of the Rio Negro Province economy. During the year, a number of Company representatives travelled to Argentina, where conceptual support was gained for the 1000MW Pico Power Project during high level government meetings in Buenos Aires. Dark Horse continues to work on various aspects of the plans for the Pico Power Project, and is developing a number of key relationships to ultimately deliver detailed feasibility studies to the project's key stakeholders. The Company continues to hold its petroleum application licences over 53,000km2 of the Pirie Torrens Basin in South Australia via its 96.75% subsidiary company NavGas Pty Ltd. The applications cover an area of historic oil shows extending over 70km2 at Wilkatana, which has essentially remained unexplored for the past 50 years. Wilkatana was Santos' first oil discovery in 1957 and represents a breached super pool, which may have originally been comparable to giant oil fields of the same age in Oman and Siberia. NavGas also holds a granted petroleum prospecting licence in the Roma Shelf, Queensland, and desktop studies continue to identify drill prospects in 'brownfields' oil gas and condensate producing areas. The Company is considering a farm-in arrangement and continues to seek a suitable potential JV partner. I would like to thank my fellow Director David Mason for offering to take up the CEO role on a part-time basis earlier this year in order to steer the Company through the various aspects of its corporate and project development. It is noteworthy that during the year David was also appointed as the Non-Executive Chairman of the Australia-Argentine Business Council, headed by Mr Enrique Rodriguez as CEO, a progressive business council fostering strong business and public ties between the two countries. I would like to take this opportunity to thank our small but dedicated management team and our shareholders, many of whom joined us this year, for the ongoing support of Dark Horse and its projects. I look forward to updating you on the Company's ongoing developments in the course of the next 12 months. Yours sincerely Nick Mather Chairman 5 Annual Report 2016 REVIEW OF OPERATIONS Over the past 12 months Dark Horse Resources (Dark Horse, the Company) has continued to identify and capitalize on opportunities to diversify and build its project portfolio as foreshadowed in last year's annual report. The Company now boasts a range of projects in the USA, Argentina and Australia (refer Figure 1 below). During the year the Company primarily focused its efforts on the range of opportunities that were presented to it within Argentina, principally within the energy sector. Accordingly, the Company now has key strategic interests in coal and lithium projects within Argentina, as those commodities experience resurgence in demand and market attention. A detailed summary of the Company's corporate and project developments for the year is set out below. CORPORATE DEVELOPMENTS In December 2015, the Company changed its name from Navaho Gold Limited to Dark Horse Resources Limited, as approved by shareholders at the Company's 2015 AGM. In the last 12 months the Company has been well supported by its shareholders, having raised $845,866 in capital to continue the advancement of its suite of exploration projects. In addition, the Company issued $133,704 worth of shares to various parties as consideration for project acquisitions. In March 2016, Non-Executive Director David Mason agreed to act as Dark Horse's part-time CEO to oversee the Company's project portfolio, and foster strategic relationships with Argentina, together with Company Director Neil Stuart. In July 2016, the Company announced that it has entered into a Memorandum of Understanding (MOU) to acquire 100% of Oronegro SA, with exclusive rights to explore for lithium and other strategic minerals throughout the San Luis and Crdoba provinces of Argentina. These projects are discussed in detail further below. During the year Dark Horse has continued to expand its professional team to support the development of its business activities in Argentina, and was fortunate to have the following experienced industry personnel join the company: Enrique Topo Rodriguez - PR Executive Consultant Mr Enrique Rodriquez has been engaged as PR Executive Consultant to assist DHR in progressing their mining and energy interests in Argentina, particularly the Pico Power Plant, a large 1000MW power generation project in the Rio Negro province. Additionally, as Argentina enters a new phase of economic development boosted by its new forward looking, business oriented President, restrictive provincial mining and mineral processing legislature is likely to be lifted, and Mr Rodriguez will work with the various government bodies to promote and enhance this. Mr Rodriguez brings a wealth of expertise and experience in bi-mutual relations between Argentina and Australia and will be a valuable asset in supporting and promoting the Company's business plans at multiple levels throughout both countries to ensure success. Mr Rodriguez has recently formed the Australia-Argentina Business Council, an organization to foster business and trading ties between the two countries, which is strongly supported by DHR, including DHR's CEO David Mason holding the Non-Executive Chairman position. Marcelo Sanchez - Argentinean Project Manager Mr Marcelo Sanchez has been employed as the Argentinean Project Manager, specifically to drive the business operations of the Nirihuau Coal Project and the Pico Power Project. Mr Sanchez was formally the Business Development Manager of Orocobre Limited, an operating Lithium brine project producing high grade lithium carbonate in north western Argentina, and brings significant engineering and managerial skills to the Company. Mr Sanchez has quickly taken up his responsibilities and proactively engrossed himself in all facets of the Company's business activities and enabled DHR to successfully reach several key goals in a short period of time. Annual Report 2016 6 REVIEW OF OPERATIONS Continued DARK HORSE PROJECT PORTFOLIO The Company's current project portfolio consists of energy resource and mineral projects as follows: Figure 1: Dark Horse's international project structure. COAL PROJECTS, ARGENTINA Pico Power Station and the Nirihuau-Pico Quemado Coal Project - Rio Negro Province, Argentina Pico Power Project Development The new government of Argentina is implementing a large and progressive energy development scheme to support its significant economic growth plans. In excess of 20,000MW of new installed generating capacity is planned for completion by 2025 with half coming from renewable sources, 8,000MW from thermal fuels and the other mostly hydro with a small amount of nuclear. Dark Horse intends to take advantage of these plans with the development of an ultrasupercritical base load coal fired power station at the Nirihuau-Pico Quemado Coal Project in the Rio Negro province of western Argentina. The generating station will connect to the nearby existing 500kV transmission network serving the Argentinian national electricity network, which presently is reliant on imported LNG to meet a major portion of the country's base-load power demand (Figure 3). Dark Horse is co-developing this power station with a consortium of international power developers who will scope the size and design, obtain all development and environment approvals, and negotiate the necessary power purchase and funding agreements with a view to future construction and development. 7 Annual Report 2016 REVIEW OF OPERATIONS Continued COAL PROJECTS, ARGENTINA - CONTINUED The power generation project will help service the country's increasing power demands, help utilise the existing resources and help reduce the need for importing expensive hydrocarbon, fuels and electricity. Company Directors and Officers Nick Mather, Neil Stuart, David Mason and Pru Maclean participated in the Latin America Down Under Conference (LADU) in Perth during May 2016, which brought together high level government and private resource and mining executives from many countries to present and discuss the strong growth trends and growing economic clout of Latin America. The Argentine government had a strong presence at the conference with attendance from the Federal Secretary of Mining and Undersecretary of Mining Policies, in the Ministry of Energy and Mining, the Argentine Ambassador to Australia and the Australian Ambassador to Argentina, amongst many others. Dark Horse presented its 1000MW Pico Power Project, which was overwhelmingly received, particularly because of its strategic importance to the nation's development and growth plans, and its significant economic benefits. Figure 2: Dark Horse CEO David Mason presenting at LADU 2016. The Australian Government reiterated its commitment in working to enhance its relations with Argentina at LADU and a particularly strong partnership is emerging in the mining and energy sector. Strong relationships were made with government officers of both Australia and Argentina, and plans discussed and set for Dark Horse to advance the Pico Power Project this year. Following submission of the project concept to the Secretary of Energy and the Minister of Mines and Energy in early May 2016, Dark Horse will meet with Ministry officials in Buenos Aires in September to discuss the project in more detail with the primary objective of formalising a plan with the government for progression towards development. Dark Horse is finalising negotiations with a major Australian and international group to jointly develop the Pico Power Project, and the Company will make an announcement once agreement is reached. From there, Dark Horse intends for the consortium to commence a pre-feasibility study on the project to define the major components of the power station, a timeline and budget for development, and a comprehensive financial model. Annual Report 2016 8 REVIEW OF OPERATIONS Continued COAL PROJECTS, ARGENTINA - CONTINUED Exploration of the Nirihuau-Pic Quemado Coal Project The planned exploration program for the Nirihuau-Pico Quemado Coal Project, a joint venture option arrangement with successful Argentine mining company Trendix SA, was described in detail in the last quarterly report. The overriding objective is to define sufficient coal resources to support the 1000MW mine mouth Pico Power Project. Based on a comprehensive set of data from all previous exploration works, Dark Horse has an exploration target for the NirihuauPico Quemado Coal Project of approximately 75 million tonnes to 125 million tonnes of coal with an energy (calorific value) range of approximately 6,000 Kcals/kg to approximately 7,400 Kcals/kg. Dark Horse notes that the potential volume and quality of the exploration target is conceptual in nature and that there has been insufficient exploration undertaken to date to estimate a coal resource, and that further exploration may not necessarily result in the estimation of a coal resource. In summary, the program will focus on the three main Nirihuau Basin coal deposits Pico Quemado, Chenqueniyen and Las Bayas deposits and consist of the following phases: 1. \u0007Resource definition drilling in the Pico Quemado deposit to define the stratigraphy, geometry, coal seam sequence, quality and quantity. It is anticipated this work will facilitate the preparation of a JORC Resources Report. 2.\t\u0007 \u0007A combination of detailed geological mapping throughout the Chenqueniyen deposit, where several seams have been previously mapped over a 4kms strike length, to follow extensions of the known seams, and discover new seams, followed by several exploration and resource definition drilling stages to upgrade the deposit towards JORC standards. 3. \u0007Reconnaissance geological mapping in the Las Bayas area where minimal exploration work has been carried out to date. Depending on the results of this preliminary work, further exploration will be designed and implemented. Figure 3: Location of DHR's Argentine Projects - the San Juan Marayes Coal Project, Rio Negro Pico Coal and Power Project, and the San Luis and Cordoba Lithium Projects. 9 Annual Report 2016 REVIEW OF OPERATIONS Continued COAL PROJECTS, ARGENTINA - CONTINUED Figure 4: Section of the Pico Quemado coal deposit, showing the shallow dipping, thick coal seams within a syncline structure and some of the existing drill holes. The exploration program will be implemented once the Social Licence is obtained, which is the mandatory licence required under the Environment Impact Assessment Licence, to allow the commencement of field works. A work plan is being implemented for this task, which is managed and coordinated by the Rio Negro Government. Winter has interfered somewhat in this process however, a number of meetings and presentations have been made to the relevant local indigenous communities with positive outcomes. Securing the support of these communities and aligning them with the Company's project objectives and plans from the outset is a significant step in ensuring future social and public relations programs are successful. It is anticipated that the Social Licence will be obtained in the fourth quarter of 2016, which will allow the exploration program to commence. Dark Horse has provided its future joint venture partner Trendix SA notification that it intends to continue investment in the Nirihuau-Pico Quemado Coal Project, in line with the terms of the Exploration Agreement with Option-to-Purchase. This includes making various payments to Trendix and meeting minimal expenditure commitments on the project. Electricity Sector in Argentina and the Rio Negro Province Argentina is presently suffering restricted access to cost-effective energy and power. The development of a mine mouth thermal power station within Rio Negro would help to address the issue and support sustainable growth of the Rio Negro Province and the Argentine economy. The Province is more sparsely populated than other provinces, with the main industries being agriculture, fishing, oil and gas, and tourism. Cost-effective power would allow (and attract) other industries, including down-stream processing of agricultural and derivative products and create substantial employment for the region. Argentina has approximately 32,500MW of installed capacity of which only 80% is available, 1,500MW is considered peak power and 3,500MW is over 30 years old and nearing the end of its life. Demand is reaching 26,000MW in peak periods with limited to no spare capacity. This in turn has caused brown outs across the country. Annual Report 2016 10 REVIEW OF OPERATIONS Continued COAL PROJECTS, ARGENTINA - CONTINUED Following the 2001 financial crisis in Argentina, measures were implemented to shield the Argentine consumers from substantial increases in electricity and gas prices caused by the devalued Argentine peso. Today, the Government is still heavily subsidising the electricity sector and importing expensive hydrocarbons to generate electricity. Dark Horse believes there is an opportunity to generate cost-effective electricity through coal fired power without the need for government subsidies. Dark Horse is aiming to provide a reliable source of base load power, which is both environmentally conscious and economically prudent, within this planned thermal framework. Figure 5: Regional Geology and Structural Map - Pico Quemado and Chenqueniyen project areas within the Nirihuau Basin. 11 Annual Report 2016 REVIEW OF OPERATIONS Continued COAL PROJECTS, ARGENTINA - CONTINUED Figure 6: The current fuel mix in Argentina allows for further thermal generation both economically and environmentally. Marayes Coal Project - San Juan Province, Argentina The Marayes Project, located in San Juan Province, is a good quality thermal coal being developed to supply coal to identified industries in the region (market surveys have already been completed). However, with the overwhelming interest and Argentinean support for the Nirihuau-Pico Quemado Coal Project and the Pico Power Project, work on the Marayes Coal Project has had to be temporarily sidelined. However, basic exploration works and coal marketing efforts continue at Marayes to advance the project. The Company has recently conducted a review of the overall Marayes Project footprint, and has consolidated the project to its most prospective areas around the Rickard and Rodolfo mine shafts and associated inclines. Annual Report 2016 12 REVIEW OF OPERATIONS Continued LITHIUM PROJECTS - SAN LUIS AND CORDOBA PROVINCES, ARGENTINA On 26 July 2016, the Company announced that it had entered into a Memorandum of Understanding (MOU) to acquire 100% of Oronegro SA (\"Oronegro\"), with exclusive rights to explore for lithium and other strategic minerals throughout the San Luis and Crdoba provinces of Argentina (refer Figure 3). Oronegro has entered into an Exclusivity Agreement to acquire 100% of the Las Cuevas Mine in San Luis province, which is considered one of the most important spodumene mines in Argentina. Oronegro also holds 36,700Ha of exploration license applications over the most prospective lithium bearing pegmatite fields in San Luis and Crdoba (specifically outlined below). Oronegro management have been retained by Dark Horse to source and secure other opportunities. Oronegro holds a portfolio of lithium bearing pegmatite projects comprising: a)\t\u0007\u0007San Luis Province 1)\t\u0007Oronegro has entered into an \"Exclusivity Agreement with Option to Purchase\" (EAOP) with the Las Cuevas Mine vendor to acquire 100% of the mining properties of Las Cuevas Group, (Las Cuevas, Daniela Luciana II, Pequea Lulu and San Roque, totaling 49Ha). 2)\t\u0007 Oronegro has submitted applications for Exploration Permits (\"Cateos\") surrounding various lithium bearing pegmatite mines as follows: \u0007San Martn (6,400Ha) covering an area immediately surrounding the Las Cuevas group of properties in the northern part of the Conlara pegmatite field. \u0007El Totoral (10,000Ha) covering an area immediately surrounding inactive spodumene mines of the prolific El Totoral pegmatite field. 3)\t\u0007 Oronegro has submitted two new applications for Exploration Permits (\"Cateos\") covering various old spodumene mines in the Los Chaares pegmatite district named Novillo Negro (8,500 Ha) and Len Herido (9,400Ha). b) Crdoba Province 1)\t\u0007 Oronegro has entered into an \"Exclusivity Agreement with Option to Purchase\" (EAOP) with the Las Tapias Mine vendor to acquire 100% of six mining properties covering the historically significant Las Tapias Mine in the Altautina pegmatite field (Las Tapias, Rosita, San Telesforo, La Protectora, San Jose and San Jose II, totaling 84Ha). 2) Oronegro has submitted applications for Exploration Permits (\"Cateos\") as follows: \u0007Piedra Pintada claim (300Ha) in the southernmost part of the Altautina pegmatite field and immediately surrounding the Las Tapias Mine to the south and east. \u0007Retamillo and Los Mogotes claims (20,000Ha) which cover historically reported elevated lithium values obtained from stream sediment samples along the western boundary of the Achala batholith. 13 Annual Report 2016 REVIEW OF OPERATIONS Continued LITHIUM PROJECTS - SAN LUIS AND CORDOBA PROVINCES, ARGENTINA - CONTINUED Oronegro is a private Argentine company founded and managed by a team of experienced mining professionals. Its principals include Dr Gustavo Rodriguez, Mr Carlos Saravia Frias and Mr Alastair Morrison. Dr Rodriguez is a Cordoba-based geologist with extensive experience in South America working for international mining groups, including Gold Fields, Iamgold, Crystallex and Mariana Resources. Mr Saravia Frias is a renowned Argentine mining lawyer, a founding partner of the law firm of Saravia Frias Abogados, and a former Vice Minister of the Argentinean Mining and Energy Department. Mr Morrison is an Australian-based mining professional and a director of the ASXlisted OreCorp Limited. The Company's strategy is to acquire and explore for lithium and other strategic minerals in the geological environment of the Sierras Pampeanas. Figure 7: Old underground workings at the Las Cuevas lithium pegmatite mine. Annual Report 2016 14 REVIEW OF OPERATIONS Continued LITHIUM PROJECTS - SAN LUIS AND CORDOBA PROVINCES, ARGENTINA - CONTINUED Figure 8: Map of the San Luis and Crdoba Pampean ranges showing the main principal lithium bearing pegmatite districts and its principal historic mines in San Luis Province (modified from Gallisky and Mrquez-Zavala, 2011). On the completion of due diligence, Dark Horse will move quickly to evaluate the Las Cuevas / San Martin Group of properties and also El Totoral District in San Luis Province. Initial exploration is expected to focus on geological mapping and rock sampling of exposed pegmatites and historical extraction sites, the latter in particular to determine what work may be required to resurrect mining activities and allow the Company to move quickly into operations, production and ore sales. Full details are contained in the Company's ASX releases of 26 July and 15 August 2016. 15 Annual Report 2016 REVIEW OF OPERATIONS Continued LITHIUM PROJECTS - SAN LUIS AND CORDOBA PROVINCES, ARGENTINA - CONTINUED Figure 9: Coarse-grained euhedral spodumene crystals up to 2m in length within the lithium pegmatite zones at the Las Cuevas Mine. Figure 10: Intercalations of quartz-albite with large spodumene, lepidolite and lithium rich tourmaline zones at the Las Cuevas Mine. Annual Report 2016 16 REVIEW OF OPERATIONS Continued OIL & GAS PROJECTS, AUSTRALIA Pirie Torrens Basin Oil & Gas Project - South Australia The Pirie Torrens Basin oil & gas project incorporates six (6) PELA's (Petroleum Exploration Licence Applications) covering approximately 53,000km and is located as outlined in Figure 8. The project was originally generated by the Company on the basis of its potential prospectivity for unconventional shale gas. Figure 11: Pirie Torrens project area in South Australia held by NavGas. As part of the detailed review of historical data for the South Australian shale gas project applications, records of an area of historic oil shows extending over 70km at Wilkatana (within PELA 631) have been revealed, which may subsequently have remained unexplored for the past 50 years (refer Figure 9). 17 Annual Report 2016 REVIEW OF OPERATIONS Continued OIL & GAS PROJECTS, AUSTRALIA - CONTINUED The Wilkatana area appears to represent a super giant Cambrian aged oil field which has been breached by erosion. Oil and gas shows occur in Cambrian reef limestones and adjacent Protorezoic aged Pound Quatzite and overlying Tertiary sediments. The area to the north over the Torrens Hinge Zone covers an area of 2,200km east of the Torrens and plunges at a shallow angle to the north with potential for additional traps in Cambrian reef limestones and Protorezoic sandstone units in fold closures at the Torrens Hinge Zone and against Cambrian salt diapirs. Figure 12: Location Map - Wilkatana oil field, South Australia. The Pirie Torrens Basin project area is favourably located adjacent to gas pipeline infrastructure, and is positioned to take advantage of the expected current forecast increases in local demand for gas in the eastern and southern states of Australia in the next five (5) plus years, particularly given the current gas exploration bans imposed in the state of Victoria. Annual Report 2016 18 REVIEW OF OPERATIONS Continued OIL & GAS PROJECTS, AUSTRALIA - CONTINUED Roma Shelf Oil & Gas Project - Queensland In 2014, NavGas was successful in tendering for ATP1183 (Roma Shelf) which is considered prospective for oil, gas and condensate targets (refer Figure 10). The granted tenement area extends over a highly prospective area of the Roma Shelf, and surrounds the Riverslea Oil Field and Major Gas/Condensate Field, both of which are excluded from the permit under Petroleum Leases. The Boxleigh Gas Field adjoins the Roma Shelf Project area to the east. Figure 13: Location Map for the Roma Shelf project with existing gas pipeline infrastructure. Based on a reinterpretation of the existing seismic database and an analysis of petroleum wells drilled by previous explorers, NavGas believes that several promising conventional petroleum targets exist within the Roma Shelf Project. The Roma Shelf Project is situated in an area with established production facilities and infrastructure, and is well serviced by existing gas pipelines. In 2015, NavGas was successful in having the tenure period for the Roma Shelf automatically extended from four to six years, under amendments made to Queensland's Petroleum and Gas (Production and Safety) Act. 19 Annual Report 2016 REVIEW OF OPERATIONS Continued GOLD PROJECT, USA The Company maintains an interest in the following project located in the USA: New Mexico Project, New Mexico Via Alliance Agreement with Genesis Gold Corp. The Company currently holds a 51% equitable interest in the New Mexico Alliance with Genesis Gold Corp as a result of its prior expenditure in relation to securing the project areas. This provided Dark Horse Resources with a 51% interest in five separate projects within the New Mexico Alliance area. Each of these projects has the potential to yield world-class gold discoveries similar to the Carlin-style gold deposits in the prolific gold province of Nevada. Dark Horse Resources is currently in dispute with Genesis Gold over the extent and nature of the Company's equitable interest in the project. COMPETENT PERSONS STATEMENTS The information herein that relates to mineral Exploration Results and Exploration Targets is based on information compiled by Mr Neil Stuart, who is a Fellow of The Australasian Institute of Mining and Metallurgy. Mr Neil Stuart is a Director of Dark Horse Resources Ltd. Mr Stuart has more than five years' experience which is relevant to the style of mineralisation and type of deposit being reported and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves' (the JORC Code). This public report is issued with the prior written consent of the Competent Person(s) as to the form and context in which it appears. Annual Report 2016 20 DIRECTORS' REPORT Your Directors submit their report for the year ended 30 June 2016. DIRECTORS The names and details of the Company's Directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Nicholas Mather Brian Moller Neil Stuart (appointed 3 October 2014) David Mason (appointed Non-Executive Director 22 December 2014 and Executive Director 1 March 2016) Karl Schlobohm (resigned 3 October 2014) Nicholas Mather - Chairman Brian Moller - Non Executive Director BSc (Hons,Geol), MAusIMM LLB (Hons) Mr Nick Mather's special area of experience and expertise is the generation of and entry into undervalued or unrecognised resource exploration opportunities. He has been involved in the junior resource sector at all levels for more than 25 years. In that time he has been instrumental in the delivery of major resource projects that have delivered significant gains to shareholders. As an investor, securing projects and financiers, leading exploration campaigns and managing emerging resource companies, Mr Mather brings a wealth of valuable experience. Mr Brian Moller is a corporate partner in the Brisbane based law firm Hopgood Ganim. He was admitted as a solicitor in 1981 and has been a partner since 1983. He practices almost exclusively in the corporate area with an emphasis on capital raising, mergers and acquisitions. During the past three years Mr Mather has also served as a Director of the following listed companies: DGR Global Ltd Orbis Gold Ltd (resigned 16 February 2015) Aus Tin Mining Ltd Armour Energy Ltd Lakes Oil NL \u0007SolGold plc, which is listed on the London Stock Exchange (AIM) IronRidge Resources Ltd, which is listed on the London Stock Exchange (AIM) 21 Annual Report 2016 He holds an LLB Hons from the University of Queensland and is a member of the Australian Mining and Petroleum Law Association. Mr Moller acts for many public listed resource and industrial companies and brings a wealth of experience and expertise to the board particularly in the corporate regulatory and governance areas. During the past three years Mr Moller has also served as a Director of the following listed companies: DGR Global Ltd Aus Tin Mining Ltd Platina Resources Ltd SolGold plc, which listed on the London Stock Exchange (AIM) Buccaneer Energy Ltd (resigned 29 November 2013) Aguia Resources Ltd DIRECTORS' REPORT Continued DIRECTORS - CONTINUED Neil Stuart - Non Executive Director David Mason - Non Executive Director Mr Neil Stuart is a highly experienced exploration geologist with over 40 years of experience in the minerals industry. Earlier in his career, he worked with Utah Development Company (for uranium base metals and coal) with activity in all states of Australia, Kenya, Morocco, South Africa, Madagascar and Indonesia, and then managed a highly successful coal exploration program for Marathon Petroleum Australia Ltd. Mr David Mason has a broad business, corporate and mining background achieved through working in the exploration and mining industry for over 35 years throughout Australasia, Asia and Africa. Mr Mason is a Director of Intra Energy Corporation Limited (ASX:IEC), a coal producer in East Africa. Prior to this, Mr Mason had roles as Managing Director of Overseas & General Limited (ASX:OGL) an Indonesian mining company, and Operations Director of Haddington Resources (now Altura Mining, ASX:AJM) a diversified resource company, which took over the resource investment and mining service companies of Minvest International, a group he co-founded and managed. Mr Mason was formerly General Manager of the Swabara Group, which developed the Adaro Indonesia coal mine, the MHU coal mine, a suite of Indonesian exploration assets and mining service companies. In 1979, he established a geological consultancy based in Brisbane and has since undertaken assignments for numerous major and junior mining companies. Since 2000, he has been heavily involved in project delineation and acquisition in Australia and Argentina. As a founding Director of Oroplata Ltd, Mr Stuart was instrument in acquiring the highly prospective Cerro Negro Epithermal Gold Project from MIM Holdings Ltd and advancing the project until the company merged with Andean Resources Ltd, which was itself taken over by the large Canadian miner, Goldcorp in 2010 for $3.7 billion. Mr Stuart was also a co-founder of ASX and TSX listed Orocobre Limited, which developed the Salar Olaroz lithium project in North-West Argentina and which is now producing battery-grade lithium carbonate. During the last three years Mr Stuart has also served as a Director of the following listed companies: OGL Resources Ltd (resigned 12 June 2014) Mr Mason holds a BSc (Hons) and a PGradDipBA from UQ and an MBA from USQ. He is a Fellow of the AusIMM (CP Mgt) and a member of AICD. Karl Schlobohm - Company Secretary B.Comm, B.Econ, M.Tax, CA, AICD Mr Karl Schlobohm is a Chartered Accountant with over 20 years' experience across a wide range of industries and businesses. He has extensive experience with financial accounting, corporate governance, company secretarial duties and board reporting. He currently acts as the Company Secretary for ASX-listed DGR Global Ltd, Aus Tin Mining Ltd, Armour Energy Ltd and LSE(AIM)-listed SolGold Plc and IronRidge Resources Ltd. As at the date of this report, the interest of the Directors in the shares and options of Dark Horse Resources Ltd were: Number of ordinary shares Number of options over ordinary shares Nicholas Mather 28,447,897 3,000,000 Brian Moller 23,661,529 3,000,000 Neil Stuart 74,864,778 3,000,000 David Mason 26,071,903 3,000,000 Annual Report 2016 22 DIRECTORS' REPORT Continued CORPORATE STRUCTURE Dark Horse Resources Ltd is a company limited by shares that is incorporated and domiciled in Australia. It became an ASX listed public company on 11 April 2011. PRINCIPAL ACTIVITIES Since listing on the Australian Stock Exchange in 2011, Dark Horse Resources (formerly Navaho Gold) has slowly evolved into a diversified exploration company, with interests in gold projects in the USA, numerous mineral licences in Australia, oil and gas projects in Australia (held via NavGas Pty Ltd), and coal and lithium projects in Argentina. There was no significant change in the nature of the activities of the Group during the financial year. DIVIDENDS No dividends were declared or paid during the financial year or since the end of the financial year. REVIEW AND RESULTS OF OPERATIONS The loss after income tax for the Group for the year ended 30 June 2016 was $1,567,848 (2015: $828,763). The Directors confirm that the period since the Company's admission on the Australian Securities Exchange, the Company has used its cash (and assets in a form readily convertible to cash) in a way consistent with its business objectives. The review of operations for the year is discussed in the Annual Report under the heading \"Review of Operations\". SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS In the opinion of the Directors there were no significant changes in the state of affairs of the Group that occurred during the financial year under review not otherwise disclosed in this report or the financial statements of the Group for the financial year. 23 Annual Report 2016 FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES Planned developments in the operations of the Group and the expected results of those operations in subsequent financial years have been discussed where appropriate in the Annual Report under Review of Operations. There are no further developments of which the Directors are aware which could be expected to affect the results of the Group's operations and plans. ENVIRONMENTAL REGULATIONS AND PERFORMANCE The Directors have put in place strategies and procedures to ensure that the Group manages its compliance with environmental regulations. The Directors are not aware of any breaches of any applicable environmental regulations. PROCEEDINGS ON BEHALF OF COMPANY No person has applied to the Court under section 237 of Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behavior and accountability, the Directors of Dark Horse Resources Ltd support the principles of good corporate governance. The Company's Corporate Governance Statement has been released as a separate document and is located on our website at www.darkhorseresources.com.au. DIRECTORS' REPORT Continued REMUNERATION REPORT (AUDITED) This remuneration report for the year ended 30 June 2016 outlines the remuneration arrangements of the Company and the Group in accordance with the requirements of the Corporations Act 2001 (the \"Act\") and its regulations. This information has been audited as required by section 308(3C) of the Act. The remuneration report details the remuneration arrangements for key management personnel (\"KMP\") who are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company and the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Company, and includes the executive team. The remuneration report is presented under the following sections: 1. Individual key management personnel disclosures 2. Remuneration policy 3.\t\u0007 Non-executive Director (NED) remuneration arrangements 4. Executive remuneration arrangements 5. Company performance and the link to remuneration 6. Executive contractual arrangements 7. Equity instruments disclosures 8.\t\u0007 Additional disclosures relating to key management personnel 1.\t\u0007Individual key management personnel disclosures Key management personnel (i) Directors Nicholas Mather - Non-executive Chairman Brian Moller - Non-executive Director Neil Stuart - Non-executive Director \u0007David Mason - Non-executive Director and Executive Director (appointed 1 March 2016) \u0007There were no changes to KMP after reporting date and before the date the financial report was authorised for issue. 2. Remuneration policy \u0007 Dark Horse Resource Ltd's remuneration strategy is designed to attract, motivate and retain employees and NEDs by identifying and rewarding high performers and recognising the contribution of each employee to the continued growth and success of the Group. \u0007The Board of Directors is responsible for determining and reviewing compensation arrangements for the Directors and the Executive team. The Board assesses the appropriateness of the nature and amount of remuneration of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum shareholder benefit from the retention of a high quality Board and Executive team. Such officers are given the opportunity to receive their base remuneration in a variety of forms including cash and fringe benefits. It is intended that the manner of payments chosen will be optimal for the recipient without creating undue cost for the Company. Further details on the remuneration of Directors and Executives are set out in this Remuneration Report. \u0007The Company aims to reward the Executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company. The Board's policy is to align Executive objectives with shareholder and business objective by providing a fixed remuneration component and offering long-term incentives. \u0007In accordance with best practice corporate governance, the structure of NED and executive remuneration is separate and distinct. (ii)\t\u0007 Other key management personnel (including executives) Jason Babcock - \u0007Consulting Exploration Manager (USA) Karl Schlobohm - Company Secretary Priy Jayasuriya* - Chief Financial Officer *Priy Jayasuriya was remunerated by DGR Global Ltd. Annual Report 2016 24 DIRECTORS' REPORT Continued REMUNERATION REPORT (AUDITED) - CONTINUED 3.\t\u0007Non-executive Director (NED) remuneration arrangements \u0007The board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain Directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. The Company's specific policy for determining the nature and amount of remuneration of Board members of the Company is as follows: \u0007The Constitution of the Company provides that the NEDs are entitled to remuneration as determined by the Company in a general meeting to be apportioned among them in such manner as the Directors agree, and, in default of agreement, equally. The aggregate remuneration per annum has been set at $350,000. Additionally, NEDs are entitled to be reimbursed for properly incurred expenses. \u0007If a NED performs extra services, which in the opinion of the Directors are outside the scope of the ordinary duties of the Director, the Company may remunerate that Director by payment of a fixed sum determined by the Directors in addition to or instead of the remuneration referred to above. However, no payment can be made if the effect would be to exceed the maximum aggregate amount payable to NEDs. A NED is entitled to be paid travelling and other expenses properly incurred by them in attending Directors' or general meetings of the Company or otherwise in connection with the business of the Company. \u0007All Directors have the opportunity to qualify for participation in the Company's Employee Share Option Plan (\"ESOP\"), subject to the approval of shareholders. \u0007The remuneration of NEDs for the year ended 30 June 2016 is detailed in this Remuneration Report. 25 Annual Report 2016 4. Executive remuneration arrangements \u0007 T he Company aims to reward the Executives with a level and mix of remuneration commensurate with their position and responsibilities within the Company and so as to: \u0007align the interests of the Executives with those of shareholders; \u0007link reward with the strategic goals and performance of the Company; and \u0007ensure total remuneration is competitive by market standards. \u0007The remuneration of Executives may from time to time be fixed by the Board. The remuneration will comprise a fixed remuneration component and also may include offering specific short and long-term incentives, in the form of: \u0007performance based salary increases and/or bonuses; and/or the issue of options. \u0007On 1 March 2016, Mr David Mason agreed to act as the Company's interim CEO on a parttime basis to ensure the continued and focused development of the Company's coal and power generation project initiatives in Argentina. \u0007Mr Mason agreed to spend a minimum 50% of his time acting as the CEO of Dark Horse, for an annual salary of $150,000. This replaced Mr Mason's previous Non-Executive Director fee of $40,000 per annum. \u0007The remuneration of the Executives employed by the Group for the year ended 30 June 2016 is detailed in this Remuneration Report. DIRECTORS' REPORT Continued REMUNERATION REPORT (AUDITED) - CONTINUED 5.\t\u0007Company performance and the link to remuneration \u0007During the financial year, the Company has generated losses as its principal activity was mineral exploration. During the year ended 30 June 2016 the Company's ordinary shares were traded on the Australian Securities Exchange and there were no dividends paid during the year. \u0007As the Company is still in the exploration and development stage, the link between remuneration, Company performance and shareholder wealth is tenuous. Share prices are subject to the influence of metals prices and market sentiment toward the sector, and as such increases or decreases may occur quite independent of Executive performance or remuneration. The following table shows the share price at the end of the financial year for the Company for the last four (4) years, since it has been listed on the Australian Securities Exchange: Share price at year end 2013 2014 2015 2016 $0.017 $0.003 $0.002 $0.005 6. Executive contractual arrangements \u0007It is the Board's policy that employment agreements are entered into with all Executives. \u0007The terms of appointment for NEDs are set out in the letters of appointment. Other Executives \u0007Employment contracts entered into with Executives contain the following key terms: Event Company Policy Performance based salary increases and/or bonuses Board discretion Short and long-term incentives, such as options Board discretion Resignation/ notice period 3 months Serious misconduct Company may terminate at any time Payouts upon resignation or termination, outside industrial regulations (i.e. 'golden handshakes') None Annual Report 2016 26 DIRECTORS' REPORT Continued REMUNERATION REPORT (AUDITED) - CONTINUED Remuneration of Directors and Other Key Management Personnel Short term benefits Salary & fees Post-employment Superannuation $ $ Share based payments Equity settled Options Shares $ $ Total % Consisting of options $ Directors Nicholas Mather - 2016 40,000 - 1,500 - 41,500 4% - 2015 40,000 - - - 40,000 - - 2016 40,000 - 1,500 - 41,500 4% - 2015 40,000 - - - 40,000 - 96,800 - 1,500 - 98,300 2% 54,835 - - - 54,835 - - 2016 118,167 - 1,500 - 119,667 1% - 2015 57,075 - - - 57,075 - Brian Moller Neil Stuart1 - 2016 - 2015 David Mason 2 Other Key Management Personnel Jason Babcock -2016 - - - - - - -2015 2,243 - - - 2,243 - 40,500 - 900 - 41,400 2% 49,989 - - - 49,989 - Karl Schlobohm3 -2016 -2015 Priy Jayasuriya 4 -2016 - - 900 - 900 100% -2015 - - - - - - -2016 335,467 - 7,800 - 343,267 -2015 244,142 - - - 244,142 Total remuneration Neil Stuart was appointed Non-executive Director effective 3 October 2014. David Mason was appointed Non-executive Director effective 22 December 2014 and was appointed Executive Director 1 March 2016. 3 Karl Schlobohm resigned as Non-executive Director effective 3 October 2014, however continues his role as Company Secretary. 4 Priy Jayasuriya is remunerated by DGR Global Ltd, which provides services to the Company on commercial terms. 1 2 There were no other executives employed or remunerated by the Company or the Group during the years ended 30 June 2016 and 2015. 27 Annual Report 2016 DIRECTORS' REPORT Continued REMUNERATION REPORT (AUDITED) - CONTINUED Performance income as a proportion of total remuneration There was no performance based remuneration during the year. 7. Equity instruments disclosures Options granted as part of remuneration for the year ended 30 June 2016. \u0007Options may be granted to Directors and Executives as part of their remuneration. The options are not issued based on performance criteria, but are granted to the majority of Directors and Executives of the Company to align comparative shareholder return and reward for Directors and Executives. The terms and conditions of the grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Grant Date Vesting Date and Exercisable Date Expiry Date Exercise Price Fair Value Per Option at Grant Date Director Options 2/12/2015 2/12/2015 26/11/2017 $0.01 $0.0005 Other Key Management Personnel Options 7/10/2015 7/10/2015 7/10/2017 $0.01 $0.0003 Options granted carry no dividend or voting rights. There was no amount paid or payable by the recipients. \u0007The number of options over ordinary shares granted to and vested by directors and other key management personnel as part of compensation during the year ended 30 June 2016 are set out below: Number of options granted during the year Number of options vested during the year Nicholas Mather 3,000,000 3,000,000 Director Brian Moller 3,000,000 3,000,000 Neil Stuart 3,000,000 3,000,000 David Mason 3,000,000 3,000,000 - - 3,000,000 3,000,000 Other Key Management Personnel Jason Babcock Karl Schlobohm Priy Jayasuriya Total 3,000,000 3,000,000 18,000,000 18,000,000 Annual Report 2016 28 DIRECTORS' REPORT Continued REMUNERATION REPORT (AUDITED) - CONTINUED Value of options granted during the year Value of options exercised during the year Value of options lapsed during the year Remuneration consisting of Dark Horse Resources Ltd options for the year Vested options $ $ $ % % Director Nicholas Mather 1,500 - - 4% 100% Brian Moller 1,500 - - 4% 100% Neil Stuart 1,500 - - 2% 100% David Mason 1,500 - - 1% 100% - - - - - 900 - - 2% 100% 900 - - 100% 100% 7,800 - - Other Key Management Personnel Jason Babcock Karl Schlobohm Priy Jayasuriya Total All options will convert to one share in Dark Horse Resources Ltd on exercise. There were no options issued during the year ended 30 June 2015. Shares issued on exercise of remuneration options There were no options exercised during the year that were previously granted as remuneration (2015: nil). 8. Additional disclosures relating to key management personnel (a) Shareholdings Current Year Balance 1 July 2015 Granted as Compensation Options Exercised Net Change Other# Balance 30 June 2016 Directors Nicholas Mather 21,781,237 - - 6,666,660 28,447,897 Brian Moller 17,079,185 - - 6,582,344 23,661,529 Neil Stuart 53,166,667 - - 21,698,111 74,864,778 10,000,000 - - 16,071,903 26,071,903 - - - - - 22,787,500 - - 1,969,235 24,756,735 1 David Mason2 Other Key Management Personnel Jason Babcock Karl Schlobohm Priy Jayasuriya Total 3 - - - - - 124,814,589 - - 52,988,253 177,802,842 \"Net Change Other\" above includes the balance of shares held on appointment / resignation, and shares acquired for cash or in settlement of fees owing. Neil Stuart was appointed Non-executive Director effective 3 October 2014. David Mason was appointed Non-executive Director effective 22 December 2014 and appointed Executive Director 1 March 2016. 3 Karl Schlobohm resigned as Non-executive Director effective 3 October 2014, however continues his role as Company Secretary. # 1 2 29 Annual Report 2016 DIRECTORS' REPORT Continued REMUNERATION REPORT (AUDITED) - CONTINUED There were no shares held nominally at 30 June 2016. (b) Option holdings Current Year Balance 1 July 2015 Granted Exercised Other Balance 30 June 2016 Vested at the end of the year Vested and exercisable at the end of the year Vested and unexercisable at the end of the year Directors Nicholas Mather - 3,000,000 - - 3,000,000 3,000,000 3,000,000 - Brian Moller - 3,000,000 - - 3,000,000 3,000,000 3,000,000 - Neil Stuart - 3,000,000 - - 3,000,000 3,000,000 3,000,000 - David Mason - 3,000,000 - - 3,000,000 3,000,000 3,000,000 - Other Key Management Personnel Karl Schlobohm - 3,000,000 - - 3,000,000 3,000,000 3,000,000 - Priy Jayasuriya - 3,000,000 - - 3,000,000 3,000,000 3,000,000 - Total - 18,000,000 - - 18,000,000 18,000,000 18,000,000 - (c) Loans to Key Management Personnel There were no loans to Directors or other key management personnel during the year. (d) Other Transactions with Key Management Personnel Director Related party HopgoodGanim (i) Fairground Pty Ltd (ii) Sales to related parties Purchases from related parties Other transactions with related parties $ $ $ 2016 - 19,197 - 2015 - 40,433 - 2016 - - 51,757 2015 - - - (i)\t\u0007Mr Brian Moller (a Director), is a partner in the Australian firm HopgoodGanim lawyers. For the year ended 30 June 2016, $19,197 (2015: $40,433) was paid or payable to HopgoodGanim for the provision of legal services to the Group. The services were based on normal commercial terms and conditions. The total amount outstanding at year end was $9,568 (2015: $12,523). (ii)\t\u0007On 15 February 2016, Fairground Pty Ltd, an entity associated with Director Mr Neil Stuart, provided a loan of $50,000 for a period of three months on commercial terms to the Group (2015: Nil). Interest of $1,757 was paid or accrued during the year (2015: Nil). There were no other transactions or balances with key management personnel during the year. End of Remuneration Report (audited) Annual Report 2016 30 DIRECTORS' REPORT Continued DIRECTORS' MEETINGS The number of meetings of Directors held during the year and the number of meetings attended by each Director was as follows: Board Audit & Risk Management Committee Number of meetings held while in office Meetings attended Number of meetings held while in office Meetings attended Nicholas Mather 9 7 - - Brian Moller 9 8 2 2 Neil Stuart 9 9 2 0 David Mason 9 9 2 2 SIGNIFICANT EVENTS AFTER THE BALANCE DATE On 26 July 2016 the Company entered into a Memorandum of Understanding for an option to acquire 100% ownership of Argentine company Oronegro SA, which holds licenses to explore and develop lithium and other minerals covering prospective districts within the San Luis and Crdoba provinces in Argentina. The main commercial terms of the MOU with Oronegro SA are: -\t\u0007Stage #1 - completion of 45 days DD - U$50k payment to cover expenses, 10m DHR shares issued, earn 10% equity of Oronegro SA. -\t\u0007Stage #2 - 1 year from completion of DD, spend U$150k on properties, 15m DHR shares, earn a further 15% equity (25% cumulative). -\t\u0007Stage #3- 2 years from completion of DD, spend U$200k on properties, 20m DHR shares, earn a further 20% equity (45% cumulative). -\t\u0007Stage #4- 3 years from completion of DD, spend U$500k on properties, 55m DHR shares, earn a further 55% equity (100% total). On 15 August 2016, Oronegro, the company being acquired under an option arrangement by Dark Horse, entered into an Exclusivity Agreement to acquire 100% of the Las Tapias Mine in Crdoba province, the principal historic spodumene mine in Argentina. The main commercial terms are: -\t\u0007Exclusivity for 30 days to undertake legal DD by payment of U$20k on signing the agreement. This can be extended if there are any legal uncertainties not able to be adequately ascertained or access to the properties is delayed with no additional payment. -\t\u0007If inconsistencies are determined, Oronegro can terminate the agreement. The initial payment would be retained by the vendor. -\t\u0007Otherwise, the parties will enter into a \"Contract of Sale\" (CS) within the 30 day exclusivity period, by paying a total of U$4m over 4 years with terms as follows: Payment of U$30k on signing the CS. Payment of U$50k 6 months following signing of the CS. Payment of U$200k on first anniversary. Payment of U$700k on second anniversary. Payment of U$1,000k on third anniversary. Payment of U$2,000k on fourth anniversary. -\t\u0007There are no earn-in equity rights along the way. -\t\u0007Full payment may be made earlier to secure the properties at the discretion of Oronegro. 31 Annual Report 2016 DIRECTORS' REPORT Continued SIGNIFICANT EVENTS AFTER THE BALANCE DATE - CONTINUED On 23 August 2016, an entity associated with Company Director Neil Stuart, and Company Director David Mason both agreed to provide unsecured, short-term loans to the Company of $100,000 each on commercial terms for working capital purposes. Interest payable under the loans is to be on the same terms as the facility provided by DGR Global. On 14 September 2016, the Company completed a private placement to a small number of professional and sophisticated investors to raise a total of $330,500 at a price of $0.008 per share. A total of 41,312,500 shares were allotted as a result of the placement. On 16 September 2016 the United States District Court, District of Nevada handed its judgment in favour of Genesis Gold Corp (Genesis) in relation to the litigation (Proceedings) commenced by Genesis against the Company's US subsidiary CED Gold, LLC (CED). The Proceedings were in relation to an Option Agreement entered into on or about August 23, 2010 by Genesis and CED (Option Agreement) under which CED was entitled to earn various interests in the Carlin East mineral tenements in Nevada (Carlin East). Dark Horse had claimed that the Option Agreement had been varied via correspondence exchanged by the parties, resulting in a 20% interest being held by CED in Carlin East. Genesis commenced the Proceedings against CED alleging: (1) breach of contract; and (2) a declaration that the Option Agreement had been terminated by CED's alleged default. The Company, via CED, does not intend to appeal the decision and as a result, wrote off the carrying value of the Carlin East project in its 30 June 2016 financial statements. The Directors are not aware of any other significant changes in the state of affairs of the Group or events after the balance date that would have a material impact on the consolidated financial statements. INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITOR Each of the Directors and Secretary of the Company has entered into a Deed with the Company whereby the Company has provided certain contractual rights of access to books and records of the Company to those Directors. The Company has insured all of the Directors. The contract of insurance prohibits the disclosure of the nature of the liabilities covered and amount of the premium paid. The Corporations Act does not require disclosure of the information in these circumstances. The Company has not indemnified or insured its auditor. OPTIONS At the date of this report, there were 46,000,000 ordinary shares of Dark Horse Resources Ltd under option. NON-AUDIT SERVICES BDO Audit Pty Ltd did not provide any non-audit services during the year. AUDITOR'S INDEPENDENCE DECLARATION The Auditor's Independence Declaration forms part of the Directors' Report and can be found on page 33. Signed in accordance with a resolution of Directors: David Mason Director Brisbane Date: 23 September 2016 Annual Report 2016 32 Auditor's Independence Declaration Tel: +61 7 3237 5999 Fax: +61 7 3221 9227 www.bdo.com.au Level 10, 12 Creek St Brisbane QLD 4000 GPO Box 457 Brisbane QLD 4001 Australia DECLARATION OF INDEPENDENCE BY T J KENDALL TO THE DIRECTORS OF DARK HORSE RESOURCES LIMITED As lead auditor of Dark Horse Resources Limited for the year ended 30 June 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 audit; and 2. No contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Dark Horse Resources Limited and the entities it controlled during the period. T J Kendall Director BDO Audit Pty Ltd Brisbane, 23 September 2016 BDO Audit Pty Ltd ABN 33 134 022 870 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 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. 33 Annual Report 2016 SHAREHOLDER INFORMATION As at 16 September 2016 (a) Distribution Schedule Fully paid ordinary shares and unlisted options Ordinary shares Number of holders Number of shares 1 -1000 22 3,057 1001 - 10,000 86 768,239 333 17,378,202 10,001 - 100,000 100,001 + 400 761,423,049 Total 841 779,572,547 The number of shareholders holding less than a marketable parcel of shares is 318 (holding a total of 7,636,705 ordinary shares). (b) Twenty largest holders The names of the twenty largest holders of ordinary shares in Dark Horse Resources Ltd are: Ordinary shares: Rank Name Units % of Units 1. 2. DGR GLOBAL LIMITED 113,543,456 14.56% FAIRGROUND PTY LTD 41,500,000 5.32% 3. BRIAN MOLLER 23,531,529 3.02% 4. NEIL FRANCIS STUART 20,166,667 2.59% 5. MR DENIS GRENVILLE HINTON + MRS ROSLYN SUSANNA HINTON Step by Step Solution
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Managerial Accounting For Managers
Authors: Eric Noreen
1st Edition
73526975, 978-0073526973
