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CANNINDAH RESOURCES LIMITED Interim / Quarterly Report 2020

Mar 15, 2020

64600_rns_2020-03-15_76f9e7c8-3bdf-40f1-bba7-2a806d1dbe93.pdf

Interim / Quarterly Report

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CANNINDAH RESOURCES LIMITED ABN 35 108 146 694

HALF YEAR FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2019

CANNINDAH RESOURCES LIMITED

DIRECTORS’ REPORT

Your Directors submit their report for the half year ended 31 December 2019.

Directors

The names of the Company’s Directors in office during the half year and until the date of this report are set out below. All Directors held office for the whole of the period unless otherwise stated.

Thomas J Pickett – Executive Chairman Geoff Missen – Non- executive Director Simon Beams – Non- executive Director (appointed 2 September 2019) Laurie Johnson – Non- executive Director (resigned 2 September 2019)

Review of Operations

The loss for the consolidated entity for the half year ended 31 December 2019 was $807,322 (2018: $1,223,005). While cash on hand at the end of the period was $535 overdrawn (30 June 2019: $16,098), the Company announced on 31 January 2020 that it had access to a further $500,000 in loan funds from its financier Aquis Finance Pty Ltd.

Operating and Financial Activities

Key activities conducted during the period included:

  • Following the review of the Piccadilly project conducted during the latter part of the 2019 financial year, the Board received interest from larger companies in becoming involved with the Company in the project. These parties would only become involved if the Company had control of the project. Accordingly, negotiations were held with Piccadilly Gold Mines Holdings Limited to acquire a controlling stake in the project. At the time of writing these negotiations are continuing.

  • A site visit to the Mt Cannindah project was conducted by the Executive Chairman to review the project from the ground, to assess access tracks and to take some further rock chip samples. The result of this visit will form part of a larger on ground review to be conducted in the future.

  • The Company rationalised its landholdings during the period with the finalisation of the relinquishment of the non-core Borium project.

  • Detailed negotiations were held with the financier Aquis Finance in relation to the loan facility and the financier’s desire to convert the debt into equity in the Company at an appropriate time. These discussions culminated in the announcement on 31 January 2020 that the parties had agreed to extend the current loan facility to 30 June 2022. The loan extension will be subject to 5% p.a. interest (capitalised) and an immediate increase in the facility limit allowing a drawdown of $500,000 over the following 4 months. Aquis Finance Pty Ltd also asked that they be able to convert the whole or part of the loan balance to shares in the Company during the loan term at an issue price of 2c per share (subject to shareholder approval if required,

During the period, long standing Director Mr Laurie Johnson retired from the board and was replaced by Dr Simon Beams a geologist and Managing Director and Principal Geologist of Terra Search who has been directly involved in exploration programs and discoveries in Northern Australia.

Strategy

The Company’s goal, like most other small capital exploration companies, is to preserve shareholder wealth and grow the value of the flagship asset with prudent exploration methods.

The Company’s corporate activities include the review of opportunities for expansion through acquisitions and mergers and through potential diversification opportunities to take advantage of positive market sentiments. At the date of this report, no investments have been undertaken.

Going Concern

As disclosed in the financial statements, the Group incurred a net loss of $807,322 and had net cash outflows from operating and investment activities (exploration expenditure) of $199,935 for the six months ended 31 December 2019. As at this date, the Group’s current liabilities also exceeded its current assets by $5,309,625 including the secured loan of $4,425,675.

At 31 December 2019, the Group’s primary funding facility with Aquis Finance Pty Ltd (the Lender) had expired past its repayment date of 20 November 2019, and the Group was in discussions with the Lender to grant a further extension on the facility. In this regard, on 31 January 2020, the Company announced that it had agreed with its financier Aquis Finance Pty Ltd to extend the current loan facility to 30 June 2022 and to provide an additional $500,000 to be drawn down over the following 4 month period to assist funding current operations. The revised facility also allows the Group to capitalise interest to the extent that the total outstanding loan does not exceed the facility limit of $5.8m. Further, the Group’s other short-term loan of $157,500 was due for repayment in January 2020 and has been extended on a month by month basis at the option of the Group. had secured and unsecured loans with private investors (the Lenders) which have been used to fund the Group’s ongoing exploration and administration costs. The secured facility of $4,425,675 is due for repayment in June 2022. The short-term loan of $157,500 was due for repayment in January 2020 and has been extended on a month by month basis at the option of the company.

The Directors also expect that additional funds will be required for the Company to operate and conduct exploration activities over the next 12 months. It is expected that these funds will be obtained through additional capital raisings and loan funds as required. In this regard, on 31 January 2020, the Company announced that it had agreed with its financier Aquis Finance Pty Ltd to extend the current loan facility to 30 June 2022 and to provide an additional $500,000 to assist funding current operations. Based on their previous experience and success in raising capital and loan funds, the Directors are confident that the required additional funds can be obtained.

Accordingly, the Directors believe that the going concern basis is the appropriate basis for the preparation of the financial report. If for any reason the consolidated entity is unable to continue as a going concern, it would impact on the consolidated entity’s ability to realise assets at their recognised values and to extinguish liabilities in the normal course of business at the amounts stated in the consolidated financial statements. The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the consolidated entity does not continue as a going concern.

Subsequent Events

On 31 January 2020, the Company announced that the parties had agreed to extend the current loan facility to 30 June 2022. The loan extension will be subject to 5% p.a. interest (capitalised) and an immediate increase in the facility limit allowing a drawdown of $500,000 over the following 4 months. Aquis Finance Pty Ltd also asked that they be able to convert the whole or part of the loan balance to shares in the Company during the loan term at an issue price of 2c per share (subject to shareholder approval if required, along with the possible appointment of two directors to the Board to represent their interests.

Other than as disclosed in the going concern paragraph, no other matters or circumstances have arisen since 31 December 2019, which significantly affect or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in subsequent financial years.

Auditor Independence

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is attached.

Signed in accordance with a resolution of the Directors pursuant to section 306(3) (a) of the Corporations Act 2001.

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Thomas J. Pickett Executive Chairman Gold Coast 13 March 2020

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Level 18, 145 Ann Street Brisbane QLD 4000

Correspondence to: GPO Box 1008 King George Square Brisbane QLD 4001

T +61 7 3222 0200 F +61 7 3222 0444 E [email protected] W www.grantthornton.com.au

Auditor’s Independence Declaration

To the Directors of Cannindah Resources Limited

In accordance with the requirements of section 307C of the Corporations Act 2001 , as lead auditor for the review of Cannindah Resources Limited for the year ended 31 December 2019, I declare that, to the best of my knowledge and belief, there have been:

  • a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

  • b no contraventions of any applicable code of professional conduct in relation to the review.

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Grant Thornton Audit Pty Ltd Chartered Accountants

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M C Bragg Partner – Audit & Assurance

Brisbane, 13 March 2020

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

www.grantthornton.com.au

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

CANNINDAH RESOURCES LIMITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the half year ended 31 December 2019

Note Consolidated
Half year
ended 31
December
2019
Half year
ended 31
December
2018
$
$
Revenue
Revenue and other income
2
Expenses
Employee benefits expense
Exploration & evaluation expenditure w/off
Administrative expenses
Finance Expenses
Loss before income tax expense
Income tax expense
Profit / (Loss) attributable to members of the group
Other comprehensive income for the period, net of tax
Total comprehensive income / (loss) for the year attributable
to the members of the group
Basic earnings and diluted earnings per share
(cents per share)
10,665
12,122
(126,410)
(91,062)
(688)
(671,854)
(161,039)
(162,349)
(529,850)
(309,862)
(807,322)
(1,223,005)
-
-
(807,322)
(1,223,005)
-
-
(807,322)
(1,223,005)
(0.43)
(0.77)

The accompanying notes form part of this financial report

CANNINDAH RESOURCES LIMITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2019

as at 31 December 2019
Note Consolidated
31 December
2019
30 June
2019
$
$
CURRENT ASSETS
Cash and cash equivalents
3
Trade and other receivables
Total Current Assets
NON-CURRENT ASSETS
Financial assets
Exploration and evaluation expenditure
Total non-Current Assets
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Employee benefits
Borrowings
4
Total Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Share option reserve
Accumulated losses
TOTAL EQUITY
(535)
16,098
47,251
26,802
46,716
42,900
82,337
83,837
4,721,718
4,628,540
4,804,055
4,712,377
4,850,771
4,755,277
712,464
498,363
60,702
55,289
4,583,175
3,995,366
5,356,341
4,549,018
5,356,341
4,549,018
(505,570)
206,259
48,325,007
48,229,514
395,614
395,614
(49,226,191)
(48,418,869)
(505,570)
206,259

The accompanying notes form part of this financial report

CANNINDAH RESOURCES LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the half year ended 31 December 2019

Share
Capital
Share Option
Reserve
Accumulated
Losses
Total
$
$
$
$
2019
Balance at 1 July 2019
Shares issued during the period
(net of costs)
Loss attributable to members of the
company
Balance at 31 December 2019
2018
Balance at 1 July 2018
Shares issued during the period
(net of costs)
Loss attributable to members of the
company
Balance at 31 December 2018
48,229,514
395,614
(48,418,869)
206,259
95,493
-
-
95,493
-
-
(807,322)
(807,322)
48,325,007
395,614
(49,226,191)
(505,570)
47,649,420
395,614
(46,592,131)
1,452,903
382,516
-
- 382,516
-
- (1,223,005)
(1,223,005)
48,031,936
395,614
(47,815,136)
612,414

The accompanying notes form part of this financial report

CANNINDAH RESOURCES LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS for the half year ended 31 December 2019

Note Consolidated
Half year
ended 31
December
2019
Half year
ended 31
December
2018
$
$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Interest received
Payments to suppliers and employees
Net cash provided by (used in) operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration and evaluation expenditure
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issue of shares
Proceeds from borrowings
Repayments of borrowings
Net cash provided by (used in) financing activities
Net increase / (decrease) in cash and cash equivalents
during the period
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
3
-
6,632
10,665
5,490
(170,604)
(254,050)
(159,939)
(241,928)
(39,996)
(242,881)
(39,996)
(242,881)
95,493
382,516
255,309
123,550
(167,500)
-
183,302
506,066
(16,633)
21,257
16,098
10,461
(535)
31,718

The accompanying notes form part of this financial report

CANNINDAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2019

1. Basis of Preparation and Accounting Policies

This general-purpose financial report for the interim half-year reporting period ended 31 December 2019 has been prepared in accordance with Accounting Standard AASB 134 “Interim Financial Reporting ” and the Corporations Act 2001 . AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting.

The half year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

It is recommended that the half year financial report be read in conjunction with the annual report of Cannindah Resources Limited as at 30 June 2019, together with any public announcements made by Cannindah Resources Limited during the interim reporting period in accordance with the continuous disclosure obligations of the Corporations Act 2001 .

The accounting policies and methods of computation adopted are consistent with those of the previous financial period as disclosed in the 30 June 2019 annual report.

New or amended Accounting Standards and Interpretations adopted

AASB 16 Leases

The consolidated entity has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position.

AASB 16 was adopted using the modified retrospective approach and as such the comparatives have not been restated. The adoption of AASB 16 has had no impact on the group. The company has elected to account for short-term leases using the practical expedients. Instead of recognising a right of use asset and lease liability, the payments in relation to these leases are recognised as an expense in profit or loss on a straight-line basis or over the lease term.

Going Concern

The Group incurred a net loss of $807,322 and had net cash outflows from operating and investment activities (exploration expenditure) of $199,935 for the six months ended 31 December 2019. As at this date, the Group’s current liabilities also exceeded its current assets by $5,309,625 including the secured loan of $4,425,675.

At 31 December 2019, the Group’s primary funding facility with Aquis Finance Pty Ltd (the Lender) had expired past its repayment date of 20 November 2019, and the Group was in discussions with the Lender to grant a further extension on the facility. In this regard, on 31 January 2020, the Company announced that it had agreed with its financier Aquis Finance Pty Ltd to extend the current loan facility to 30 June 2022 and to provide an additional $500,000 to be drawn down over the following 4 month period to assist funding current operations. The revised facility also allows the Group to capitalise interest to the extent that the total outstanding loan does not exceed the facility limit of $5.8m. Further, the Group’s other shortterm loan of $157,500 was due for repayment in January 2020 and has been extended on a month by month basis at the option of the Group.

The Directors also expect that additional funds will be required for the Company to operate and conduct exploration activities over the next 12 months. It is expected that these funds will be obtained through additional capital raisings and loan funds as required. Based on their previous experience and success in raising capital and loan funds, the Directors are confident that, the required additional funds can be obtained.

CANNINDAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 31 December 2019

Going Concern (continued)

Accordingly, the Directors believe that the going concern basis is the appropriate basis for the preparation of the financial report. If for any reason the consolidated entity is unable to continue as a going concern, it would impact on the consolidated entity’s ability to realise assets at their recognised values and to extinguish liabilities in the normal course of business at the amounts stated in the consolidated financial statements.

The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the consolidated entity does not continue as a going concern.

Consolidated Consolidated
Half year Half year
ended 31 ended 31
December December
2019 2018
$ $

2. Revenue and Other Income

The following items are relevant in explaining the financial performance for the period:

Revenue and Other Income

Revenue and Other Income
Sales
Interest received from other persons
Total revenue and other income
3. Cash and Cash Equivalents
Cash at bank and on hand
4. Borrowings - current
Secured borrowings – Aquis Finance
Borrowings - other
Total Borrowings
-
6,632
10,665 5,490
10,665
12,122
Consolidated
31 December
2019
$
30 June
2019
$
(535)
16,098
4,425,675
3,835,970
157,500
159,396
4,583,175
3,995,366

The loan from Aquis Finance Pty Ltd had an initial facility limit of $2 million and a term of 12 months commencing 10 March 2015, which could be extended to up to 3 years at the election of the Company. Directors extended the facility for a further year in each of March 2016 and in March 2017. In May 2018 a new loan was entered into with Aquis Finance. The new loan increased the facility limit to $3.7 million to accommodate loan fees and interest payable until the end of the loan term on 20 May 2019. On 29 May 2019, the Company announced that the term of the loan had been further extended to 20 November 2019 with an increased facility limit of $3.85 million and was interest free for the extension period, The extension included a loan extension fee of $500,000 which was capitalised to the loan balance. The Company also announced that Aquis Finance had requested that a variation document be completed to allow

CANNINDAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS for the half year ended 31 December 2019

4. Borrowings – current (continued)

for them to convert the debt to equity in the Company. On 31 January 2020, the Company announced that the parties had agreed to extend the current loan facility to 30 June 2022. The loan extension will be subject to 5% p.a. interest (capitalised) and an immediate increase in the facility limit allowing a drawdown of $500,000 over the following 4 months. Aquis Finance Pty Ltd also asked that they be able to convert the whole or part of the loan balance to shares in the Company during the loan term at an issue price of 2c per share (subject to shareholder approval if required), along with the possible appointment of two directors to the Board to represent their interests.

The facility conditions require no repayments until the expiration of the facility. The loan is secured by the assets of the Company. Other terms and conditions remain the same as the previous facility.

The non-secured loan comprises a short-term facility from a sophisticated investor.

5. Contributed Equity

Movements in Contributed Equity during the six months ended 31 December 2019, were as follows:

Opening balance
Placements at 1.2 cents per share
Issue costs
Balance at 31 December 2019
No of Shares
$
181,185,946
48,229,514
12,086,736
145,041
-
(49,548)
193,272,682
48,325,007

6. Expenditure Commitments and Contingent Liabilities

There were no other significant changes to the commitments and contingencies disclosed in the most recent annual financial report.

7. Subsequent Events

On 31 January 2020, the Company announced that the parties had agreed to extend the current loan facility to 30 June 2022. The loan extension will be subject to 5% p.a. interest (capitalised) and an immediate increase in the facility limit allowing a drawdown of $500,000 over the following 4 months. Aquis Finance Pty Ltd also asked that they be able to convert the whole or part of the loan balance to shares in the Company during the loan term at an issue price of 2c per share (subject to shareholder approval if required, along with the possible appointment of two directors to the Board to represent their interests.

Other than as disclosed in these financial statements, no matters or circumstances have arisen since 31 December 2019, which significantly affect or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in subsequent financial years.

CANNINDAH RESOURCES LIMITED

DIRECTORS’ DECLARATION

The Directors of the Company declare that:

  1. The financial statements and notes:

  2. a). comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations; and

  3. b. give a true and fair view of the economic entity’s financial position as at 31 December 2019 and of its performance for the half-year ended on that date.

  4. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

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Thomas J. Pickett Executive Chairman Gold Coast 13 March 2020

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Level 18, 145 Ann Street Brisbane QLD 4000

Correspondence to: GPO Box 1008 King George Square Brisbane QLD 4001 T +61 7 3222 0200 F +61 7 3222 0444 E [email protected] W www.grantthornton.com.au

Independent Auditor’s Report

To the Members of Cannindah Resources Limited

Report on the review of the half year financial report

Conclusion

We have reviewed the accompanying half year financial report of Cannindah Resources Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2019, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half year ended on that date, a description of accounting policies, other selected explanatory notes, and the directors’ declaration.

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the half year financial report of Cannindah Resources Limited does not give a true and fair view of the financial position of the Group as at 31 December 2019, and of its financial performance and its cash flows for the half year ended on that date, in accordance with the Corporations Act 2001 , including complying with Accounting Standard AASB 134 Interim Financial Reporting .

Material uncertainty related to going concern

We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss of $807,322 during the half year ended 31 December 2019 and incurred cash outflows from operating and investing activities of $199,935 for the period to date. As of 31 December 2019, the Group's current liabilities exceeded its current assets by $5,309,625. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our conclusion is not modified in respect of this matter.

Directors’ responsibility for the half year financial report

The Directors of the Company are responsible for the preparation of the half year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the half year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2019 and its performance for the half year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of Cannindah Resources Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

www.grantthornton.com.au

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation.

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A review of a half year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

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Grant Thornton Audit Pty Ltd Chartered Accountants

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M C Bragg Partner – Audit & Assurance Brisbane, 13 March 2020