GBM RESOURCES LIMITED. — Annual Report 2016

Sep 13, 2016

==> picture [294 x 146] intentionally omitted <==

ACN 124 752 745

ANNUAL FINANCIAL STATEMENTS

For the year ended 30 June 2016

GBM Resources Limited

ABN 91 124 752 745

Contents

	**Page **
Corporate Directory	2
Directors’ Report	3-10
Auditor’s Independence Declaration	11
Consolidated Statement of Profit or Loss and Other
Comprehensive Income	12
Consolidated Statement of Financial Position	13
Consolidated Statement of Changes in Equity	14
Consolidated Statement of Cash Flows	15
Notes to the Financial Statements	16-45
Directors’ Declaration	46
Independent Auditor’s Report	47-48

GBM Resources Limited

ABN 91 124 752 745

Corporate Directory

Directors

Peter Thompson Executive Chairman

Hun Seng Tan Non-Executive Director

Neil Norris Executive Director – Exploration Director

Company Secretary

Kevin Hart

Auditors

HLB Mann Judd Level 4, 130 Stirling Street Perth WA 6000 AUSTRALIA

Share Registry

Advanced Share Registry Services 110 Stirling Highway Nedlands WA 6009 AUSTRALIA Telephone: +61 8 9389 8033 Facsimile: +61 8 9262 3723

Registered Office

Suite 8, 7 The Esplanade Mt Pleasant WA 6153 AUSTRALIA Telephone: +61 8 9316 9100 Facsimile: +61 8 9315 5475

Securities Exchange Listing

GBM Resources Limited - shares are listed on the Australian Securities Exchange (ASX Code: GBZ)

Solicitors

Principal Place of Business

Suite 8, 7 The Esplanade Mt Pleasant WA 6153 AUSTRALIA Telephone: +61 8 9316 9100 Facsimile: +61 8 9315 5475

Steinepreis Paganin Lawyers and Consultants Level 4, Next Building 16 Milligan Street Perth WA 6000 AUSTRALIA

Website and e-mail address

Exploration Office

10 Parker Street PO Box 658 Castlemaine VIC 3450 AUSTRALIA Telephone: +61 3 5470 5033

www.gbmr.com.au

Email: admin@gbmr.com.au

2

GBM Resources Limited

ABN 91 124 752 745

Directors’ Report

The Directors present their report together with the consolidated financial statements for the Company and its controlled entities (‘Group’) for the financial year ended 30 June 2016.

DIRECTORS

The names of Directors in office at any time during or since the end of the year are:

Peter Thompson – B.Bus, CPA, FCIS

Executive Chairman

Experience

Mr Thompson is a CPA qualified accountant and Fellow of Governance Institute of Australia. He has over 35 years experience in the mining industry in Australia, UK and South America. He has held senior roles with several major companies including Xstrata Plc, MIM Holdings Ltd and Mt Edon Gold Mines.

Since 2000, Mr Thompson has been involved in the development of various infrastructure projects, including mine and refinery expansions and establishment of infrastructure including roads, rail, port and power utilities. Mr Thompson has held no other directorships of listed companies in the last 3 years.

Neil Norris – BSc(Hons), MAIMM, MAIG

Exploration Director - Executive

Experience

Mr. Norris is a geologist with over 25 years’ experience gained in Australia and overseas. Recently he was Group Exploration Manager for Perseverance Corporation Limited and spent over ten years with Newmont Australia Limited holding senior positions in both mining and exploration areas. A key achievement was his development of the geological models which contributed to the discovery of the Phoenix ore body at Fosterville. Mr. Norris was also involved in the discovery of the world class Cadia and Ridgeway deposits. Mr. Norris has a track record in the successful identification of mineral deposits and his experience will greatly advance GBM’s exploration efforts.

Mr Norris has held no other directorships of listed companies in the last 3 years.

Hun Seng Tan - MBA

Non-Executive Director

Mr Tan has over 30 years’ experience in the process engineering sector both in China and Singapore. He was founder of BMS Technology PL, a manufacturer for the hard disk industry in Singapore and China. Mr Tan led BMS Technology in a successful merger and later 100% acquisition of that company by Nidec Corporation of Japan which is listed on both the New York and Tokyo stock exchanges.

Mr Tan holds a Master of Business Administration from University of Hull, United Kingdom and obtained his Advanced Diploma in Management Study and Production Engineering. Mr Tan has a proven track record in business development and extensive business relations in China and the Asia capital markets.

Mr Tan has held no other directorships of listed companies in the last 3 years.

COMPANY SECRETARY

Mr Kevin Hart – B.Comm FCA

Mr Hart is a Chartered Accountant and was appointed to the position of Company Secretary on 3 February 2010. He has over 30 years’ experience in accounting and the management and administration of public listed entities in the mining and exploration industry.

He is currently a partner in an advisory firm which specialises in the provision of company secretarial services to ASX listed entities.

3

GBM Resources Limited

ABN 91 124 752 745

Directors’ Report

Former Directors

Frank Cannavo

Non-Executive Director (Resigned 25 November 2015)

Experience

Mr Cannavo is an experienced public company director with significant business and investment experience working with exploration companies in the mining industry, and has been instrumental in assisting several listed and unlisted companies achieve their growth strategies through the raising of investment capital and the acquisition of assets.

Previously, Mr Cannavo was a founding director of Fortis Mining Ltd (resigned 23 December 2011) Following completion of the acquisition of the Kazakhstan potash projects, Fortis Mining Ltd was renamed to Kazakhstan Potash Corporation Ltd (ASX: KPC). He was also previously a director of a Great Western Exploration Ltd (resigned 11 October 2013), a public listed company on the ASX with mining interests in Western Australia. In addition, he has been a director of several other ASX - listed companies including Hannans Reward Ltd (resigned 24 March 2009), Motopia Ltd (resigned 8 August 2011) and ATOS Wellness Ltd (resigned 14 January 2011).

Mr Cannavo has held no other directorships of listed companies in the last 3 years.

MEETINGS OF DIRECTORS

During the financial year, the following meetings of Directors (including committees) were held:

	DIRECTORS’ MEETINGS	DIRECTORS’ MEETINGS
	Number Eligible to Attend	Number Attended
P Thompson	10	10
N Norris	10	10
H Tan	10	10
F Cannavo(resigned 25 November 2015)	5	3

PRINCIPAL ACTIVITIES

The principal activity of the Group during the financial year was gold and IOCG (iron ore copper-gold) exploration in Australia.

OPERATING AND FINANCIAL REVIEW

During the financial year the Group’s activities were focussed on exploration and resource estimation at its wholly owned Mt Coolon Gold Project and at its Queensland IOCG prospects under the farm-in agreement with Mitsui and Pan Pacific.

Operating Results

The net profit after income tax attributable to members of the Group for the financial year to 30 June 2016 amounted to $3,180,395 (2015: loss $4,545,251). Including in the profit for the financial year is gain of $5,299,614 on the recognition of a financial asset in respect of shares of Anchor Resources Pte Ltd and an associated impairment charge of $1,163,840 in respect of the change in value of that investment to 30 June 2016, $271,237 in respect of exploration costs written off and expensed (2015: $2,996,328), and the Company’s share of the net loss of its equity accounted investments amounting to $nil (2015: $630,691).

Financial Position

At the end of the financial year, the Group had $355,106 (2015: $1,107,721) in cash on hand and on deposit. Carried forward exploration and evaluation expenditure was $11,350,307 (2015: $10,355,613).

As at 30 June 2016 the Group recognised an asset amounting to $4,135,774 in respect of its investment in Anchor Resources Pte Ltd (Anchor Resources), a Company holding the Lubuk Mandi mining concession which is quoted on the Catalist Board of the Singapore Stock Exchange (SGX). Prior to quotation of Anchor Resources the Group accounted for its interest in the Lubuk Mandi project via an equity accounted investment in Angka Alamjaya Sdn Bhd (AASB), the entity which was subsequently vended into the Anchor Resources Initial Public Offer. The carrying value of the Group’s equity accounted investment in AASB as at 30 June 2015 was $nil.

4

GBM Resources Limited

ABN 91 124 752 745

Directors’ Report

EQUITY SECURITIES ON ISSUE

EQUITY SECURITIES ON ISSUE
	30 June 2016	30 June 2015
Ordinaryfully paid shares	653,063,975	557,894,121
Options over unissued shares	Nil	177,746,562

Ordinary Fully Paid Shares

During the year ended 30 June 2016 the Company issued the following ordinary fully paid shares:

• 92,982,354 ordinary fully paid shares pursuant to a non-renounceable entitlement issue at 1.5 cents per share; and

• 2,187,500 ordinary fully paid shares in consideration for the acquisition of Moonmera copper-gold prospect from Rio Tinto at a deemed price of 1.6 cents per share.

No shares have been issued between the end of the financial year and the date of this report, other than the following:

• 160,500,000 ordinary fully paid shares to professional and sophisticated investors pursuant to a share placement at 1.6 cents per share; and

• 3,000 ordinary fully paid shares issued on the exercise of GBZO options at 3.5 cents per share.

Options over Ordinary Shares

During the year ended 30 June 2016, no options were issued by the Company, and no shares were issued on the exercise of options.

During the year ended 30 June 2016 the Company cancelled 177,743,562 listed options exercisable at 3.5 cents each and expiring 30 June 2016 on expiry of the exercise period.

No options have been issued, vested, exercised or cancelled between the end of the financial year and the date of this report.

• An application for the exercise of 3,000 options exercisable at 3.5 cents each and expiring 30 June 2016 (GBZO) was received prior to 30 June 2016. The shares were issued subsequent to the end of the financial period.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

There were no significant changes in the state of affairs of the Group during the financial year, not otherwise disclosed in this Directors’ Report or in the Review of Operations.

EVENTS SUBSEQUENT TO BALANCE DATE

Other than the following, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect substantially the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years:

• On 26 July 2016 the Company completed the issue of 160,500,000 ordinary fully paid shares at 1.6 cents per share pursuant to a share placement raising $2,568,000 before costs.

• On 23 August 2016 the Company issued a scoping study in respect of the heap leach production opportunity at the Eugenia deposit at the Mt Coolon Gold Project.

• On 5 September 2016 the Company lodged a prospectus in relation to a non-renounceable entitlement offer of options to raise up to $610,175.

5

GBM Resources Limited

ABN 91 124 752 745

Directors’ Report

DIVIDENDS

No dividends were paid during the year and the Directors recommend that no dividends be paid or declared for the financial year ended 30 June 2016.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

Comments on expected results of the operations of the Company are included in this report under the Review of Operations.

Disclosure of other information regarding likely developments in the operations of the Company in future financial years and the expected results of those operations is likely to result in unreasonable prejudice to the Company. Accordingly, this information has not been disclosed in this report.

ENVIRONMENTAL ISSUES

The Group holds participating interests in a number of exploration tenements. The various authorities granting such tenements require the tenement holder to comply with the terms of the grant of the tenement and all directions given to it under those terms of the tenement. There have been no known breaches of the tenement conditions, and no such breaches have been notified by any government agencies during the year ended 30 June 2016.

REMUNERATION REPORT (AUDITED)

The remuneration report is set out in the following manner:

• Policies used to determine the nature and amount of remuneration

• Details of remuneration

• Service agreements

• Share based compensation

Remuneration Policy

The Board of Directors is responsible for remuneration policies and the packages applicable to the Directors of the Company. Whilst the broad remuneration policy is to ensure that packages offered properly reflect a person’s duties and responsibilities and that remuneration is competitive and attracts, retains, and motivates people of the highest quality, the Board has consciously been focused on conserving the Company’s funds to ensure the maximum amount is spent on exploration, and this is reflected in the modest level of Director fees.

The policy of the Group is to offer competitive salary packages which provide incentive to Directors and executives and are designed to reward and motivate. Total remuneration for all Non-Executive Directors was voted on by shareholders, whereby it is not to exceed in aggregate $200,000 per annum. Non-Executive Directors receive fees agreed on an annual basis by the Board.

At the date of this report, the Company had not entered into any remuneration packages with Directors or senior executives which include performance-based components.

Details of Remuneration for Directors and Executive Officers

The remuneration of each Director of the Company and relevant executive officers (together known as Key Management Personnel or KMP) are set out in the attached Table.

Remuneration levels are competitively set to attract and retain appropriately qualified and experienced Directors and senior executives. The Board of Directors obtains independent advice when appropriate in reviewing remuneration packages.

During the year, there were no senior executives who were employed by the Company for whom disclosure is required.

6

GBM Resources Limited

ABN 91 124 752 745

Directors’ Report

REMUNERATION REPORT (AUDITED) (CONTINUED)

Details of Remuneration for Directors and Executive Officers (Continued)

	2016		Short term	Short term		Post Employment		Share Based Payments
	Directors P Thompson N Norris H Tan F Cannavo	Salary and fees $ 215,000 200,000 104,000 15,000		Other $ - 8,436 - -		Super - annuation $ 20,425 19,000 - 1,710		Options / shares $ - - - -	Total $ 235,425 227,436 104,000 16,710	Share Based Payments as % of remuneration % - - - -
	Total Directors	534,000		8,436		41,135		-	583,571

	2015		Short term	Short term		Post Employment		Share Based Payments
	Directors P Thompson1 C Switzer N Norris1 G Loh C Lim F Cannavo H Tan	Salary and fees $ 207,500 3,000 193,700 3,000 - 119,917 16,000		Other $ - - 11,124 - - - -		Super - annuation $ 19,712 - 18,401 - - 10,252 -		Options / shares $ - - - - - - -	Total $ 227,212 3,000 223,225 3,000 - 130,169 16,000	Share Based Payments as % of remuneration % - - - - - - -
	Total Directors	543,117		11,124		48,365		-	602,606

1During the 2015 and 2016 financial years, total remuneration payable to the Executive Directors Peter Thompson and Neil Norris continued to be paid on a temporarily reduced basis. This is a temporary measure to ensure that the current strategies in place are achieved by the Company.

Included in director remuneration for 2016 are amounts of $96,635 that have been accrued for payment as at 30 June 2016.

See disclosure relating to service agreements for further details of remuneration of executive directors.

7

GBM Resources Limited

ABN 91 124 752 745

Directors’ Report

REMUNERATION REPORT (AUDITED) (CONTINUED)

Details of Remuneration for Directors and Executive Officers (Continued)

Options Provided as Remuneration

During the years ended 30 June 2016 and 30 June 2015 no options have been granted and issued to KMP of the Company.

No shares were issued to KMP of the Company in respect of the exercise of options previously granted as remuneration.

Service Agreements

Remuneration and other terms of employment for the Executive Directors are set out in Service Agreements:

Peter Thompson – Executive Chairman

The service agreement has a term of 12 months from 1 September 2015. Total remuneration under the contract of $300,000 per annum inclusive of superannuation has been temporarily reduced to $235,425 per annum as part of the Company’s cost reduction program. This reduced remuneration level will remain in place until otherwise decided by the Board.

The Service agreement contains certain provisions typically found in contracts of this nature. The Company may terminate the Service Agreement without cause by providing nine months written notice to the individual or by making a payment in lieu of notice. The Service Agreement may be terminated immediately in the case of serious misconduct.

The Service Agreement is subject to annual review.

There is no specific cash bonus or other performance based compensation contemplated in the agreement. Long term and short term incentives, may be awarded subject to Board discretion.

Neil Norris - Exploration Director

The service agreement has a term of 12 months from 1 September 2015. Total remuneration under the contract of $300,000 per annum inclusive of superannuation has been temporarily reduced to $217,000 per annum as part of the Company’s cost reduction program. This reduced remuneration level will remain in place until otherwise decided by the Board.

The Service agreement contains certain provisions typically found in contracts of this nature. The Company may terminate the Service Agreement without cause by providing nine months written notice to the individual or by making a payment in lieu of notice. The Service Agreement may be terminated immediately in the case of serious misconduct.

The Service Agreement is subject to annual review.

There is no specific cash bonus or other performance based compensation contemplated in the agreement. Long term and short term incentives, may be awarded subject to Board discretion.

Share Based Compensation

At the date of this report the Company has not entered into any agreements with KMP which include performance based components. Options issued to Directors are approved by shareholders and were not the subject of an agreement or issued subject to the satisfaction of a performance condition.

Options may be issued to provide an appropriate level of incentive using a cost effective means given the Company’s size and stage of development.

8

GBM Resources Limited

ABN 91 124 752 745

Directors’ Report

REMUNERATION REPORT (AUDITED) (CONTINUED)

DIRECTORS’ INTERESTS

The relevant interest of each Director in the ordinary shares and options issued by the Company as notified by the Directors to the Australian Securities Exchange at the date of this report, is set out in the table below.

Ordinary shares

				Ordinary shares
	Ordinary shares		Ordinary Shares	held at the date of
	held at 1 July	Movement during	held at 30 June	the Directors’
Director	2015	the financialyear	2016	Report
P Thompson	9,862,582	1,337,418	11,200,000	11,200,000
N Norris	9,550,000	1,591,667	11,141,667	11,141,667
H Tan	16,000,000	2,666,667	18,666,667	18,666,667
F Cannavo(resigned 25/11/15)	-	-	-	-

Options

				Options held at the
	Options held at 1	Movement during	Options held at 30	date of the
Director	July2015	the financialyear1	June 2016	Directors’ Report
P Thompson	2,468,763	(2,468,763)	-	-
N Norris	1,546,818	(1,546,818)	-	-
H Tan	-	-	-	-
F Cannavo(resigned 25/11/15)	-	-	-	-

1 Options cancelled on expiry of exercise period.

LOANS TO DIRECTORS AND EXECUTIVES

There were no loans entered into with Directors or executives during the financial year ended 30 June 2016.

OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL

During the 2015 financial year an amount of $296,963 was incurred by the Company on behalf of Angka Alamjaya Sdn Bhd (AASB) a Company associated with Mr Chiau Woei Lim then a director of the Company. In the 2015 financial year a total of $700,020 was reimbursed to the Company by AASB.

At 30 June 2016 an amount of $nil (2015: $101,856) was outstanding and payable to the Group by AASB.

Other than the above, there are no transactions with Directors, or Director related entities or associates.

End of Remuneration Report

9

GBM Resources Limited

ABN 91 124 752 745

Directors’ Report

INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS

During the year, the Company paid an insurance premium to insure certain officers of the Company. The officers of the Company covered by the insurance policy include the Directors named in this report.

The Directors and Officers Liability insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the officers in their capacity as officers of the Company. The insurance policy does not contain details of the premium paid in respect of individual officers of the Company. Disclosure of the nature of the liability cover and the amount of the premium is subject to a confidentiality clause under the insurance policy.

Other than the above, the Group has not, during or since the end of the financial year, given an indemnity or entered an agreement to indemnify, or paid or agreed to pay insurance premiums for the Directors, officers or auditors of the Company or the controlled entity.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the 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 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.

NON-AUDIT SERVICES

No non-audit services were provided by the external auditors in respect of the current or preceding financial year.

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001, is set out on the following page.

Signed in accordance with a resolution of the Board of Directors.

Dated this 14[th] day of September 2016

==> picture [114 x 58] intentionally omitted <==

PETER THOMPSON

Executive Chairman

10

==> picture [168 x 71] intentionally omitted <==

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the consolidated financial report of GBM Resources Limited for the year ended 30 June 2016, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• b) any applicable code of professional conduct in relation to the audit.

Perth, Western Australia D I Buckley 14 September 2016 Partner

HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

==> picture [16 x 15] intentionally omitted <==

HLB Mann Judd (WA Partnership) is a member of

International, a worldwide organisation of accounting firms and business advisers.

11

GBM Resources Limited

ABN 91 124 752 745

Consolidated Statement of Profit or Loss and Other Comprehensive Income

For the Year Ended 30 June 2016

Note	Consolidated
	2016 2015 $ $
Revenue 3 Other gains and losses 11 Consulting and professional services Corporate and project assessment costs Share of net loss of associate 12 Depreciation 4 Employee benefits expense 4 Impairment expense 11/8 Exploration expenditure written off and expensed 4 Travel expenses Administration and other expenses Profit/(loss) before income tax Income tax benefit 5 Profit/(loss) for the year Other comprehensive income Total comprehensive profit/(loss) for the year Basic earnings/(loss) per share 6 Diluted earnings/(loss) per share 6	266,167 287,393 5,299,614 - (128,425) (254,656) (21,050) (84,963) - (630,691) (48,565) (38,192) (388,206) (410,865) (1,163,840) (58,499) (271,237) (2,996,328) (112,999) (156,020) (251,064) (202,430)
	3,180,395 (4,545,251) - -
	3,180,395 (4,545,251) - -
	3,180,395 (4,545,251)
	Cents Cents 0.5 (0.9) 0.5 (0.9)

The accompanying notes form part of these financial statements

12

GBM Resources Limited

ABN 91 124 752 745

Consolidated Statement of Financial Position

As at 30 June 2016

Note	Consolidated
	2016 2015 $ $
Current assets Cash and cash equivalents 22 Trade and other receivables 7 Total Current Assets Non-current assets Trade and other receivables 7 Exploration and evaluation expenditure 9 Property, plant and equipment 10 Investments – available for sale financial assets 11 Total Non-current Assets TOTAL ASSETS Current liabilities Trade and other payables 13 Total Current Liabilities Non-current liabilities Provision for rehabilitation 14 Total Non-current Liabilities TOTAL LIABILITIES NET ASSETS Equity Issued capital 15 Option reserve 17 Share based payments reserve 17 Accumulated losses 17 TOTAL EQUITY	355,106 1,107,721 95,309 123,655
	450,415 1,231,376
	412,121 411,857 11,350,307 10,355,613 156,605 205,171 4,135,774 -
	16,054,807 10,972,641
	16,505,222 12,204,017
	323,851 616,596
	323,851 616,596
	396,054 396,054
	396,054 396,054
	719,905 1,012,650
	15,785,317 11,191,367
	28,785,654 27,372,099 - 323,733 - 400,000 (13,000,337) (16,904,465)
	15,785,317 11,191,367

The accompanying notes form part of these financial statements

13

GBM Resources Limited

ABN 91 124 752 745

Consolidated Statement of Changes in Equity

For the Year Ended 30 June 2016

Consolidated	Note	Issued capital	Option reserve	Share based payments reserve	Accumulated losses	Total
		$	$	$	$	$
Balance at 1 July2014		23,927,441	323,733	400,000	(12,359,214)	12,291,960
Shares issued (net of costs) Loss attributable to members of the Company	15 17	3,444,658 -	- -	- -	- (4,545,251)	3,444,658 (4,545,251)
Balance at 30 June 2015		27,372,099	323,733	400,000	(16,904,465)	11,191,367
Balance at 1 July 2015		27,372,099	323,733	400,000	(16,904,465)	11,191,367
Shares issued (net of costs) Transfer to accumulated losses on expiry of options Profit attributable to members of the Company	15 17 17	1,413,555 - -	- (323,733) -	- (400,000) -	- 723,733 3,180,395	1,413,555 - 3,180,395
Balance at 30 June 2016		28,785,654	-	-	(13,000,337)	15,785,317

The accompanying notes form part of these financial statements

14

ABN 91 124 752 745

GBM Resources Limited

Consolidated Statement of Cash Flows

For the Year Ended 30 June 2016

Note	Consolidated
	2016 2015 $ $
Cash flows from operating activities Interest received Other income Exclusivity fee income JV management fee income Payments to suppliers and employees Net cash flows (used in) operating activities 22(c) Cash flows from investing activities Payments for bonds and security deposits Proceeds on redemption of bonds and security deposits Payments on acquisition of equity investments 30 Funds provided by JV partner under Farm-in agreement Payments for exploration and evaluation, including JV Farm-in spend Proceeds on sale of property, plant and equipment Payments to acquire property, plant and equipment Payments made on behalf of associate Proceeds received on reimbursement by associate Net cash flows (used in) investing activities Cash flows from financing activities Proceeds from the issue of shares and options Share issue costs Net cash flows from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year 22(a) Cash and cash equivalents at the end of the financial year 22(a)	10,685 20,502 73,361 100,000 - 131,858 250,375 (776,390) (1,188,788)
	(460,486) (917,911)
	- (23,640) - 14,595 (37,500) (800,000) 1,103,770 2,086,461 (2,794,839) (2,740,369) - 264,452 - (954) - (296,963) 57,779 700,020
	(1,670,790) (796,398)
	1,394,841 2,567,500 (16,180) (272,842)
	1,378,661 2,294,658
	(752,615) 580,349 1,107,721 527,372
	355,106 1,107,721

The accompanying notes form part of these financial statements

15

GBM Resources Limited

ABN 91 124 752 745

Notes to the Financial Statements

For the Year Ended 30 June 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

GBM Resources Limited (‘the Company’) is a listed public company domiciled in Australia. The consolidated financial report of the Company for the financial year ended 30 June 2016 comprises the Company and its subsidiaries (together referred to as the ‘Group’).

The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

a) Basis of Preparation

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, and Australian Accounting Standards and Interpretations. The financial report has also been prepared on an historical cost basis, unless otherwise stated. The financial report is presented in Australian dollars. For the purpose of preparation of the consolidated financial statements the Company is a for-profit entity.

Adoption of New and Revised Standards - Changes in accounting policies on initial application of accounting standards

In the year ended 30 June 2016, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Group’s operations and effective for the current annual reporting period. It has been determined by the Directors that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Group’s business and, therefore, no change is necessary to Group accounting policies.

The Directors have also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2016. As a result of this review the Directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Group’s business and, therefore, no change necessary to Group accounting policies.

b) Statement of Compliance

The financial report was authorised for issue on 14[th] September 2016.

The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).

c) Principles of Consolidation

The consolidated financial statements comprise the financial statements of GBM Resources Limited and its subsidiaries as at 30 June each year (the Group). The financial statements for the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which the control is transferred out of the Group.

The acquisition of subsidiaries has been accounted for using the purchase method of accounting. The purchase method of accounting involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent liabilities assumed at the date of acquisition. Accordingly, the consolidated financial statements include the results of subsidiaries for the period from their acquisition. Non-controlling interests represent the portion of profit and loss and net assets in subsidiaries not held by the Group and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position.

16

GBM Resources Limited

ABN 91 124 752 745

Notes to the Financial Statements

For the Year Ended 30 June 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

d) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Interest Revenue

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

Management Fees

Revenue from farm-in management fees is recognised at the time the fees are invoiced.

e) Income Tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from, or paid to, the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date.

Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are re-assessed at each balance date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

17

GBM Resources Limited

ABN 91 124 752 745

Notes to the Financial Statements

For the Year Ended 30 June 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

f) Other Taxes

• Revenues, expenses and assets are recognised net of the amount of GST except:

• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated statement of financial position.

g) Financing Costs

Net financing costs comprise interest payable on borrowings calculated using the effective interest method. Borrowing costs are expensed as incurred and included in net financing costs.

h) Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognised at their fair value or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the consolidated statement of financial position as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the general policy on borrowing costs – refer Note 1(g).

Finance leased assets are depreciated on a straight line basis over the estimated useful life of the asset.

Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

i) Cash and Cash Equivalents

Cash and short-term deposits in the consolidated statement of financial position comprise cash at bank and in hand. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

j) Trade and Other Receivables

Trade receivables, which generally have 30–90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

18

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

k) Plant and Equipment

Plant and equipment is stated at cost, less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:

Property and improvements 10 – 40 years Office furniture and equipment 2.5 - 20 years Plant and equipment 0 - 40 years Motor Vehicles 8 years

The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

(i) Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value.

An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount.

- (ii) De recognition and Disposal

An item of property, plant and equipment is de-recognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

l) Investments and Other Financial Assets

Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transactions costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial yearend.

All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace.

(i) Financial Assets at Fair Value through Profit or Loss

Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss.

19

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

l) Investments and Other Financial Assets (Continued)

(ii) Held-to-Maturity Investments

Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold to maturity.

Investments intended to be held for an undefined period are not included in this classification. Investments that are intended to be held-to-maturity, such as bonds, are subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in profit or loss when the investments are de-recognised or impaired, as well as through the amortisation process.

(iii) Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

(iv) Available-for-Sale Investments

Available-for-sale investments are those non-derivative financial assets that are designated as available-forsale or are not classified as any of the three preceding categories. After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss.

The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models.

(v) Investment in Associated Entities

The Group’s investment in its associate is accounted for using the equity method of accounting in the consolidated financial statements, after initially being recognised at cost. The associate is an entity in which the Group has significant influence and which is neither a subsidiary nor a joint venture. Significant influence is the power to participate in the financial and operating decisions of the investee but is not control or joint control over those policies.

Under the equity method, the investment in the associate is carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Group's share of net assets of the associate. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate.

Goodwill included in the carrying amount of the investment in an associate is not tested separately; rather the entire carrying amount of the investment is tested for impairment as a single asset. If an impairment is recognised, the amount is not allocated to the goodwill of the associate.

The consolidated statement of comprehensive income reflects the Group's share of the results of operations of the associate, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivable and loans, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

20

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

l) Investments and Other Financial Assets (Continued)

Upon disposal of an associate that results in the Group losing significant influence over that associate, any retained investment is measured at fair value at that date and the fair value is regarded as its fair value on initial recognition as a financial asset in accordance with AASB 139. The difference between the previous carrying amount of the associate attributable to the retained interest and its fair value is included in the determination of the gain or loss on disposal of the associate. In addition, the Group accounts for all amounts previously recognised in other comprehensive income in relation to that associate on the same basis as would be required if that associate had directly disposed of the related assets or liabilities. Therefore, if a gain or loss previously recognised in other comprehensive income by that associate would be reclassified to profit or loss on disposal of the related assets or liabilities, the Group reclassifies the gain or loss from equity to profit or loss (as a reclassification adjustment) when it loses significant influence over that associate.

When a Group entity transacts with its associate, profits and losses resulting from those transactions with the associate are recognised in the Group’s consolidated financial statements only to the extent of interests in the associate that are not related to the Group.

m) Exploration and Evaluation Expenditure

Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: (i) the rights to tenure of the area of interest are current; and (ii) at least one of the following conditions is also met:

• (a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or

• (b) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.

21

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

n) Impairment of Assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cashgenerating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at re-valued amount (in which case the impairment loss is treated as a re-valuation decrease).

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at re-valued amount, in which case the reversal is treated as a re-valuation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

o) Trade and Other Payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services.

p) Interest Bearing Liabilities

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are de-recognised.

q) Employee Benefits

(i) Wages, Salaries, Annual Leave and Sick Leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and non-accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long Service Leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

22

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

r) Share Based Payments

Equity Settled Transactions:

The Group provides benefits to employees (including senior executives) of the Group in the form of share based payments, whereby employees render services in exchange for shares or rights over shares (equitysettled transactions).

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of options is determined by using a Black and Scholes model. Share rights are valued at the underlying market value of the ordinary shares over which they are granted.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of GBM Resources Limited (market conditions) if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The charge or credit to the consolidated statement of comprehensive income for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, the cumulative expense recognised in respect of that award is transferred from its respective reserve to accumulated losses. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

s) Share Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

t) Earnings Per Share

Basic earnings per share ("EPS") is calculated by dividing the net profit or loss attributable to members of the Company for the reporting period, after excluding any costs of servicing equity (other than ordinary shares and converting preference shares classified as ordinary shares for EPS calculation purposes), by the weighted average number of ordinary shares of the Company, adjusted for any bonus element.

Diluted EPS is calculated by dividing the basic EPS earnings, adjusted by the after tax effect of financing costs associated with dilutive potential ordinary shares and the effect on revenues and expenses of conversion, by the weighted average number of ordinary shares and potential dilutive ordinary shares, adjusted for any bonus element.

23

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

u) Business combinations

The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities or business under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.

Where a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group attains control) and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. These provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date.

The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is remeasured at subsequent reporting dates in accordance with AASB 139, or AASB 137 ‘Provisions, Contingent Liabilities and Contingent Assets’, as appropriate, with the corresponding gain or loss being recognised in profit or loss.

24

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

v) Provision for restoration and rehabilitation

A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of development activities undertaken, it is probable that an outflow of economic benefits will be required to settle the obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the costs of abandoning sites, removing facilities and restoring the affected areas.

The provision for future restoration costs is the best estimate of the present value of the expenditure required to settle the restoration obligation at the balance date. Future restoration costs are reviewed annually and any changes in the estimate are reflected in the present value of the restoration provision at each balance date.

The initial estimate of the restoration and rehabilitation provision is capitalised into the cost of the related asset and amortised on the same basis as the related asset, unless the present obligation arises from the production of inventory in the period, in which case the amount is included in the cost of production for the period. Changes in the estimate of the provision for restoration and rehabilitation are treated in the same manner, except that the unwinding of the effect of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related asset.

w) Parent entity financial information

The financial information for the parent entity, GBM Resources Limited, disclosed in Note 31 has been prepared on the same basis as the consolidated financial statements, except as set out below.

Investments in subsidiaries, associates and joint venture entities

Investments in subsidiaries, associates and joint venture entities are accounted for at cost in the parent entity’s financial statements. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments.

x) Critical Accounting Estimates and Judgements

Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.

Accounting for capitalised mineral exploration and evaluation expenditure

The Group’s accounting policy is stated at 1(m). A regular review is undertaken of each area of interest to determine the reasonableness of continuing to carry forward costs in relation to that area of interest.

Share based payments

The Group uses independent advisors to assist in valuing share based payments.

Estimates and assumptions used in these valuations are disclosed in the notes in periods when these share based payments are made.

25

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

2. FINANCIAL RISK MANAGEMENT

The Group has exposure to a variety of risks arising from its use of financial instruments. This note presents information about the Group’s exposure to the specific risks, and the policies and processes for measuring and managing those risks. Further quantitative disclosures are included throughout this financial report. The Board of Directors has overall responsibility for the risk management framework.

(a) Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from transactions with customers and investments.

Trade and other receivables

The Group has no investments and the current nature of the business activity does not result in trading receivables. The receivables that the Group recognises through its normal course of business are short term in nature and the most significant (in quantity) is the receivable from the Australian Taxation Office and interest receivable. The risk of non recovery of receivables from this source is considered to be negligible.

Cash deposits

The Group’s primary banker is Commonwealth Bank. At balance date all operating accounts and funds held on deposit are with this bank. The Directors believe any risk associated with the use of only one bank is mitigated by its size and reputation. Except for this matter the Group currently has no significant concentrations of credit risk.

(b) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.

The Group manages its liquidity risk by monitoring its cash reserves and forecast spending. Management is cognisant of the future demands for liquid finance resources to finance the Group’s current and future operations, and consideration is given to the liquid assets available to the Group before commitment is made to future expenditure or investment.

(c) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising any return.

Currency risk

The Group is not exposed to any currency risk other than the respective functional currencies of each Company within the Group, the Australian dollar (AUD).

Interest rate risk

As the Group has significant interest bearing assets, the Group’s income and operating cash flows are materially exposed to changes in market interest rates. The assets are short term interest bearing deposits, and no financial instruments are employed to mitigate risk (Note 20 – Financial Instruments).

• (d) Capital management

The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. The Board of Directors monitors capital expenditure and cash flows as mentioned in (b).

26

GBM Resources Limited

ABN 91 124 752 745

Notes to the Financial Statements

For the Year Ended 30 June 2016

Note	Consolidated
	2016 2015 $ $
3. REVENUE Gain on disposal of assets Interest income Joint venture management fee Other income Exclusivity fee income1	- 14,452 10,949 21,194 131,857 250,375 23,361 1,372 100,000 -
	266,167 287,393

1During the financial year the Company granted a third party a period of exclusivity in respect of a potential corporate transaction. The exclusivity period had lapsed prior to 30 June 2016.

4. EXPENSES Employee expenses Gross employee benefit expense: Wages and salaries Directors’ fees Superannuation expense Other employee costs Less amount allocated to exploration Net consolidated statement of profit or loss and other comprehensive income employee benefit expense	1,162,984 1,267,405 119,000 4,000 110,782 120,515 65,585 70,530
	1,458,351 1,462,450 (1,070,145) (1,051,585)
	388,206 410,865

1As at 30 June 2016 amounts have been accrued for $72,635 for executive director remuneration and $24,000 accrued in respect of non-executive director fees. The accrued amounts are included in the above employee costs.

Depreciation expense: Property and improvements 10 Office equipment and software 10 Site equipment 10 Motor vehicles 10 Exploration costs: Unallocated exploration costs Exploration costs written off 9	14,180 3,667 2,535 11,834 15,448 5,239 16,402 17,452
	48,565 38,192
	139,371 120,977 131,866 2,875,351
	271,237 2,996,328

27

ABN 91 124 752 745 Notes to the Financial Statements

GBM Resources Limited

For the Year Ended 30 June 2016

Consolidated 2016 2015 $ $

5. INCOME TAX

a) Income tax recognised in

profit and loss

The prima facie tax benefit on the operating result is reconciled to the income tax provided in the financial statements as follows:

Accounting profit/(loss) before income tax from continuing operations Income tax benefit calculated at 30% Gain on recognition of available for sale financial asset Impairment expense Share of net loss of equity accounted associate Capital raising costs claimed Exploration costs written off Unused tax losses and temporary differences not recognised as deferred tax assets Income tax (benefit) reported in the consolidated statement of comprehensive income	3,180,395 (4,545,251)
	954,119 (1,363,575) (1,589,884) - 349,152 - - 189,207 (33,729) (63,578) 39,560 862,605 280,782 375,341
	- -

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. There has been no change in the small business company tax rate when compared with the previous reporting period.

b) Unrecognised deferred tax assets and liabilities

b) Unrecognised deferred tax assets and liabilities
The following deferred tax assets and liabilities have not been brought to account: Unrecognised deferred tax assets relate to: Losses available for offset against future taxable income Capital raising costs Accrued expenses and leave liabilities Rehabilitation provisions Unrecognised deferred tax liabilities relate to: Exploration expenditure Net unrecognised deferred tax asset	6,866,950 6,348,935 64,737 96,473 63,465 23,054 118,816 118,816
	7,113,968 6,587,278
	(3,405,092) (3,106,684)
	3,708,876 3,480,594

28

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

5. INCOME TAX (CONTINUED)

The deductible temporary differences and tax losses do not expire under current tax legislation. Potential deferred tax assets attributable to tax losses carried forward have not been brought to account because the Directors do not believe it is appropriate to regard realisation of the future tax benefit as probable.

The potential future income tax benefit will only be obtained if:

• (i) the Group derives future assessable income of a nature and an amount sufficient to enable the benefit to be realised in accordance with Division 170 of the Income Tax Assessment Act 1997;

• (ii) the Group companies continue to comply with the conditions for deductibility imposed by the law; and

• (iii) no changes in tax legislation adversely affect the Group in realising the benefits.

	Consolidated
	2016 2015 $ $
6. EARNINGS/(LOSS) PER SHARE Profit/(loss) used in calculation of earnings/(loss) per share Basic and diluted loss per share Weighted average number of shares used in the calculation of earnings per share	3,180,395 (4,545,251)
	Cents Cents 0.5 (0.9)
	# # 606,173,641 487,748,368

Options and performance share rights

Options and share rights to acquire ordinary shares granted by the Company and not exercised at the reporting date have been included in the determination of diluted earnings per share to the extent to which they are dilutive. There are no options on issue at 30 June 2016 that are considered to be dilutive.

Note	Consolidated
	2016 2015 $ $
7. TRADE AND OTHER RECEIVABLES Current Amounts due from farm-in partner Amounts due from associate 26 GST recoverable Other debtors Non-current Security and environmental bonds1	75,397 - - 101,816 14,380 20,882 5,532 957
	95,309 123,655
	412,121 411,857
	412,121 411,857

1 Included in non-current assets at 30 June 2016 is an amount of $371,183 (2015: $371,183) in respect of security deposits paid to the Queensland State Government in respect of the exploration licences and mining leases recognised on acquisition of Mt Coolon Gold Mines Pty Ltd (note 30).

29

ABN 91 124 752 745

GBM Resources Limited

Notes to the Financial Statements

For the Year Ended 30 June 2016

Note	Consolidated
	2016 2015 $ $
8. ASSETS HELD FOR SALE Land reclassified as held for sale Reconciliation: Balance at the start of the financial year Impairment charge Sale of asset Balance at the end of the financial year	- -
	- 308,499 - (58,499) - (250,000)
	- -

During the 2015 financial year the Company recognised an impairment charge of $58,499 in respect of the reclassified asset to its estimated recoverable value of $250,000 at the time of this assessment. The sale of the property was completed prior to 30 June 2015. The total proceeds received upon settlement were $264,452, the profit on sale recognised was $14,452, after taking into account the previous impairment charge of $58,499.

9. EXPLORATION AND EVALUATION EXPENDITURE

Exploration and evaluation phase: Capitalised costs at the start of the financial year Fair value of exploration costs recognised on acquisition of Mt Coolon Gold Mines Pty Ltd 30 Costs capitalised during the financial year Capitalised costs written off during the financial year 4 Capitalised costs at the end of the financial year	10,355,613 10,569,552 - 1,880,984 1,126,560 780,428 (131,866) (2,875,351)
	11,350,307 10,355,613

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

30

GBM Resources Limited

ABN 91 124 752 745

Notes to the Financial Statements

For the Year Ended 30 June 2016

Note	Consolidated
	2016 2015 $ $
10. PROPERTY, PLANT AND EQUIPMENT Carrying values at 30 June: Property and improvements: Cost Depreciation Office equipment and software: Cost Depreciation Site equipment and plant: Cost Depreciation Motor vehicles: Cost Depreciation Total Reconciliation of movements: Property and improvements: Opening net book value Net book value of assets recognised on acquisition of Mt Coolon Gold Mines Pty Ltd 30 Depreciation 4 Closing net book value Office equipment and software: Opening net book value Net book value of assets recognised on acquisition of Mt Coolon Gold Mines Pty Ltd 30 Cost of additions Depreciation 4 Closing net book value	193,117 193,117 (119,169) (104,989)
	73,948 88,128 172,211 172,211 (166,566) (164,031)
	5,645 8,180 221,124 221,124 (185,463) (170,015)
	35,661 51,109 161,638 161,638 (120,287) (103,884)
	41,351 57,754
	156,605 205,171
	88,128 - - 91,795 (14,180) (3,667)
	73,948 88,128 8,180 12,288 - 6,772 - 954 (2,535) (11,834)
	5,645 8,180

31

GBM Resources Limited

ABN 91 124 752 745

Notes to the Financial Statements

For the Year Ended 30 June 2016

Note	Consolidated
	2016 2015 $ $
10. PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Reconciliation of movements (Continued): Site equipment and plant: Opening net book value Net book value of assets recognised on acquisition of Mt Coolon Gold Mines Pty Ltd 30 Depreciation 4 Closing net book value Motor vehicles: Opening net book value Net book value of assets recognised on acquisition of Mt Coolon Gold Mines Pty Ltd 30 Depreciation 4 Closing net book value Total	51,109 13,662 - 42,686 (15,448) (5,239)
	35,661 51,109 57,754 74,083 - 1,123 (16,403) (17,452)
	41,351 57,754
	156,605 205,171

11. AVAILABLE FOR SALE FINANCIAL ASSETS

Investment – Anchor Resources Pte Ltd 4,135,774 -

The investment relates to a holding of 35,221,236 ordinary shares in Anchor Resources Pte Ltd (Anchor), a Company quoted on the Catalist Board of the Singapore Stock Exchange (SGX). The shares are subject to a restriction of trading as follows:

estriction of trading as follows:
Shares subject to tradingrestriction until 17 March 2017	17,610,618
Shares subject to tradingrestriction until 17 September 2017	17,610,618

The Group received the Anchor shares pursuant to a share swap agreement relating to its original shareholding in Angka Alamjaya Sdn Bhd (AASB), which were vended into the Initial Public Offer of Anchor.

Prior to the completion of the share swap agreement, the Group accounted for its investment in AASB as an associate using the equity method (Note 12).

Balance at the start of the financial year Gain on recognition of available for sale financial assets1 Impairment expense2 Carrying amount at the end of the financial year	- - 5,299,614 - (1,163,840)
	4,135,744 -

1 The fair value gain on recognition of the available for sale financial assets has been recognised as other income in the Statement of Profit or Loss and Other Comprehensive Income (Note 12).

2 The directors have reviewed the decline in value of the investment and have considered it to be significant and as such it has been reclassified from equity to profit or loss.

32

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

12. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

a) Details of associated companies

					Carrying amount of investment	Carrying amount of investment
			Ownership interest
			30 Jun 2016 %	30 Jun 2015 %	30 Jun 2016 $	30 Jun 2015 $
	Country of Incorporation
Name		Shares
Angka Alamjaya Sdn Bhd (AASB)	Malaysia	Ord	-	26.7%	-	-

In the prior year the Group held a 26.7% interest in Angka Alamjaya Sdn Bhd (AASB). In March 2016 the Company entered into a share swap agreement with Anchor Resources Pte Ltd (Anchor). The Group has accounted for its interest in Anchor shares as an available for sale financial asset (note 11). This transaction has resulted in the recognition of a gain in profit or loss using the market value of Anchor shares at the time of listing on the Singapore Exchange.

b) Movements during the period in equity accounted investments in associated companies

Note	Consolidated
	2016 2015 $ $
Balance at the beginning of the financial period Share of AASB loss after tax for the financial period Balance at the end of the financial period 13. TRADE AND OTHER PAYABLES Current Acquisition costs payable1 30 Unspent farm-in contribution liability2 Trade creditors Sundry creditors and accruals Employee leave liabilities	- 630,691 - (630,691)
	- -
	12,500 50,000 - 216,129 81,490 232,093 114,946 41,527 114,915 76,847
	323,851 616,596

1 Acquisition costs payable to Drummond Gold Limited pursuant to the acquisition of Mt Coolon Gold Mines Pty Ltd (Note 30).

2 Liability recognised for farm-in contributions received by the Company prior to the end of the financial year for which corresponding project costs had not yet been incurred at that date (note 22(b)).

33

GBM Resources Limited

ABN 91 124 752 745

Notes to the Financial Statements

For the Year Ended 30 June 2016

		Consolidated
		2016	2015
	Note	$	$
14. PROVISIONS
Non-current
Rehabilitation provision1	30	396,054	396,054

1 A provision for rehabilitation was recognised during the 2015 financial year on acquisition of Mt Coolon Gold Mines Pty Ltd (note 30).

Issue price	2016 No. 2015 No. 2016 $ 2015 $
15. ISSUED CAPITAL Issued capital at the balance date Movements in issued capital: On issue at the start of the year Share placement $0.02 Share placement $0.025 Shares issued to acquire interest in Mt Coolon Gold Mines Pty Ltd (Note 30) $0.023 Entitlement Issue $0.015 Shares issued to acquire the Moonmera Prospect $0.016 Share issue costs On issue at the end of the reporting year	653,063,975 557,894,121 28,785,654 27,372,099
	557,894,121 385,194,121 27,372,099 23,927,441 - 100,000,000 - 2,000,000 - 22,700,000 - 567,500 - 50,000,000 - 1,150,000 92,982,354 - 1,394,735 - 2,187,500 - 35,000 - - - (16,180) (272,842)
	653,063,975 557,894,121 28,785,654 27,372,099

Shares Subject to Restriction Agreement

At balance date there were no ordinary shares subject to any restrictions.

34

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

2016	2015
No.	No.

16. OPTIONS

Details of the Company’s Incentive Option Scheme are provided at Note 18.

(a) Options over unissued shares

Options on issue at the balance date Movements in options: Options on issue at the start of the year Options issued attaching to share placement1 Options exercised2 Options cancelled on expiry of exercise period Options on issue at the end of the reporting year	- 177,746,562
	177,746,562 134,746,562 - 43,000,000 (3,000) - (177,743,562) -
	- 177,746,562

1 Options exercisable at 3.5 cents each and expiring 30 June 2016 issued as attaching securities to share placements.

2Election to exercise options made prior to the expiry of options on 30 June 2016. The resulting shares were issued subsequent to the end of the financial year.

Note	Consolidated
	2016 2015 $ $
17. RESERVES AND ACCUMULATED LOSSES Share based payments reservei Opening balance Transfer to accumulated losses on expiry of exercise period Closing balance Option reserveii Opening balance Transfer to accumulated losses on expiry of exercise period Closing balance Accumulated losses Opening balance Transfer from share based payments reserve on expiry of options Transfer from option reserve on expiry of options Net profit/(loss) attributable to the members of the Company Closing balance	400,000 400,000 (400,000) -
	- 400,000
	323,733 323,733 (323,733) -
	- 323,733
	(16,904,465) (12,359,214) 400,000 - 323,733 - 3,180,395 (4,545,251)
	(13,000,337) (16,904,465)

35

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

17. RESERVES AND ACCUMULATED LOSSES (CONTINUED)

i Share based payments reserve

The share based payments reserve represents the fair value of performance share rights and options, issued as consideration for services to employees or consultants as remuneration, or to third parties for the acquisition of assets, goods or services.

• ii Option reserve

The option reserve represents the proceeds received on the issue of options.

18. EMPLOYEE BENEFITS

Details of the Company’s performance right and share option plans, under which performance rights and options are issuable to employees, directors and consultants are summarised below. Details of share rights and options issued to Directors and executives are set out in the Remuneration Report that forms part of the Directors’ Report.

Incentive Option Plan

The Company has a formal option plan for the issue of options to employees, directors and consultants, which was last approved by shareholders at the Company’s Annual General Meeting on 21 November 2013. Options are granted free of charge and are exercisable at a fixed price in accordance with the terms of the grant. Options over unissued shares are issued under the terms of the Plan at the discretion of the Board.

There are no options on issue under the Incentive Option Plan at 30 June 2016 (2015: nil) – (note 16(a)).

Performance Rights Plan

The Company has a formal plan for the issue of performance share rights to employees, which was approved by shareholders at the Company’s Annual General Meeting on 21 November 2013. Share rights are granted free of charge and are exercisable into ordinary fully paid shares in accordance with the terms of the grant. Share rights are issued to employees under the terms of the Plan at the discretion of the Board.

There are no share rights on issue under the Performance Rights Plan at 30 June 2016 (2015: nil).

19. SEGMENT REPORTING

Operating segments are identified and segment information disclosed, where appropriate, on the basis of internal reports reviewed by the Company’s Board of Directors, being the Group’s Chief Operating Decision Maker, as defined by AASB 8.

The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance and determining the allocation of resources. Reportable segments disclosed are based on aggregating operating segments, where the segments have similar characteristics.

The Group’s core activity is mineral exploration and resource development within Australia. During the 2015 and 2016 financial years the Group has recognised investments in companies in Malaysia and Singapore (notes 11 and 12). During the 2016 financial year the Group has not recognised an asset or liability, or income/expense in relation to its investment in Malaysia.

36

ABN 91 124 752 745 Notes to the Financial Statements

GBM Resources Limited

For the Year Ended 30 June 2016

19. SEGMENT REPORTING (CONTINUED)

The reportable segments are represented as follows:

30 June 2016 Revenue Joint venture management fee Gain on recognition of available for sale financial asset Total segment revenue Segment net operating profit/(loss) after tax Other revenue - unallocated Depreciation Exploration expenditure written off and expensed Segment assets Capital expenditure during period Segment liabilities Segment non-current assets 30 June 2015 Revenue Joint venture management fee Total segment revenue Segment net operating loss after tax Other revenue - unallocated Share of loss of associates and joint ventures Depreciation Exploration expenditure written off and expensed Segment assets Capital expenditure during period Investment in acquisition of subsidiary Segment liabilities Segment non-current assets	Australia Singapore Consolidated $ $ $
	131,858 - 131,858 - 5,299,614 5,299,614
	131,858 5,299,614 5,431,472
	(955,379) 4,135,774 (3,180,395)
	134,309 - 134,309 (48,565) - (48,565) (271,237) - (271,237) 12,369,448 4,135,774 16,505,222
	- - - (719,905) - (719,905)
	11,919,033 4,135,774 16,054,807
	Australia Malaysia Consolidated $ $ $
	250,375 - 250,375
	250,375 - 250,375
	(3,914,560) (630,691) (4,545,251)
	- - 37,018 - (630,691) (630,691) (38,192) - (38,192) (2,996,328) - (2,996,328) 12,204,017 - 12,204,017
	954 - 954 2,000,000 - 2,000,000 (1,012,650) - (1,012,650)
	10,972,641 - 10,972,641

37

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

20. FINANCIAL INSTRUMENTS

Credit risk

The Directors do not consider that the Group’s financial assets are subject to anything more than a negligible level of credit risk, and as such no disclosures are made (note 2(a)).

Impairment losses

The Directors do not consider that any of the Group’s financial assets are subject to impairment at the reporting date. No impairment expense or reversal of impairment charge has occurred during the reporting period.

Currency risk

The Group does not have any direct exposure to foreign currency risk, other than in respect of its impact on the economy and commodity prices generally (note 2 (c)).

Liquidity risk

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements (note 2(b)):

Consolidated	Carrying amount Contractual cash flows 6 months or less 6-12 months 1-2 years 2-5years More than 5 years $ $ $ $ $ $ $
30 June 2016 Trade and other payables 30 June 2015 Trade and other payables	99,800 99,800 99,800 - - - -
	99,800 99,800 99,800 - - - -
	616,596 616,596 616,596 - - - -
	616,596 616,596 616,596 - - - -

The Group does not have any interest bearing liabilities to report a weighted average interest rate.

Interest rate risk

At the reporting date the interest profile of the Group’s interest-bearing financial instruments were:

	Consolidated
	2016 2015 $ $
Fixed rate instruments: Financial liabilities Variable rate instruments: Financial assets	- -
	- -
	355,106 1,107,721
	355,106 1,107,721

Fair value sensitivity analysis for fixed rate investments

The Group does not account for any fixed rate financial assets and liabilities at fair value through profit or loss, and the Group does not designate derivatives as hedging instruments under a fair value hedge accounting model. Therefore a change in interest rates at the reporting date would not affect profit or loss.

38

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

20. FINANCIAL INSTRUMENTS (CONTINUED)

Equity risk

The Group is exposed to equity price risk, which arises through its holding of an available for sale financial asset, being the investment in shares in Anchor Resources Limited (see note 11 for details).

Sensitivity analysis – Equity Price Risk

The Group’s equity investment is listed on the Catalist Board of the Singapore Securities Exchange (SGX). A 10% change in the equity price of the Group’s investment at the reporting date would have the following impact on the financial statements:

10% change in the equity price of the Group’s impact on the financial statements:	investment at the reporting date would have the following
	Profit or Loss Equity
	10% 10% 10% 10% increase decrease increase decrease $ $ $ $
30 June 2016 Available for sale financial assets 30 June 2015 Available for sale financial assets	413,577 (413,577) 413,577 (413,577)
	- - - -

Fair values

Fair values versus carrying amounts

The carrying amounts of financial assets and liabilities not measured at fair value on a recurring basis, as described in the consolidated statement of financial position represent their estimated net fair value.

21. COMMITMENTS

(a) Exploration

The Group has certain obligations to perform minimum exploration work on mineral leases held. These obligations may vary over time, depending on the Group’s exploration programmes and priorities. As at balance date, total exploration expenditure commitments on tenements held by the Group have not been provided for in the financial statements. These obligations are also subject to variations by farm-out arrangements or sale of the relevant tenements.

Minimum expenditure requirements for the following 12 months on the Group’s exploration licences as at 30 June 2016, including licences subject to farm-in arrangements are approximately $2,985,900 (2015:$2,886,800).

(b) Operating Lease Commitments

The Group has no operating lease commitments.

(c) Contractual Commitment

The Group has no contractual commitments.

39

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

Consolidated
2016	2015
$	$

22. NOTES TO THE STATEMENT OF CASH FLOWS

a) Cash and cash equivalents Cash at bank and on hand Bank at call cash account Total cash and cash equivalents	251,806 1,007,721 103,300 100,000
	355,106 1,107,721

The Bank at call account holds funds at call subject to certain restrictions (note 21(b)) and pays interest at an average of 2.45% (2015:3.30%), and matures on 24 September 2016.

b) Cash balances not available for use

Included in cash and cash equivalents are amounts pledged as guarantees for the following:

Corporate credit card facility 103,300 100,000

Also included in cash and cash equivalents as at 30 June 2016 are amounts of $Nil (2015: 216,129) in respect of funds received from the Company’s farm-in partner and for which costs had not been incurred at that date. This amounts has been recognised as a liability as at 30 June 2015 (note 13).

c) Reconciliation of Loss from Ordinary

Reconciliation of Loss from Ordinary
Activities after Income Tax to Net Cash Used In Operating Activities Profit/(Loss) after income tax Add (less) non-cash items: Gain on recognition of financial asset Gain on sale of assets Impairment charge Depreciation Exploration expenditure written off and expensed Share of net loss of equity accounted associate Changes in assets and liabilities: Increase/(decrease) in trade creditors and accruals (Increase)/decrease in sundry receivables Net cash flow from operations	3,180,395 (4,545,251) (5,299,614) - - (14,452) 1,163,840 58,499 48,565 38,192 271,238 2,996,328 - 630,691 130,018 (84,338) 45,072 2,420
	(460,486) (917,911)

40

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

22. NOTES TO THE STATEMENT OF CASH FLOWS (CONTINUED)

Material non-cash transactions

2016

During the 2016 financial year the Group issued 2,187,500 ordinary fully paid shares at a fair value of 1.6 cents per share to Rio Tinto Exploration Pty Ltd in consideration for the acquisition of the Moonmera copper-gold prospect adjacent to the Group’s existing Mt Morgans copper-gold project, in eastern Queensland.

2015

During the 2015 financial year the Group issued 50,000,000 ordinary fully paid shares at a fair value of 2.3 cents per share to Drummond Gold Limited as part consideration for the acquisition of a 100% interest in the issued capital of Mt Coolon Gold Mines Pty Ltd (note 30).

	Consolidated
	2016 2015 $ $
23. AUDITOR’S REMUNERATION Amounts received or receivable by HLB Mann Judd for: - Audit and review of financial reports	29,500 29,000

	2016	2015
	%	%
24. CONTROLLED ENTITIES
a) Particulars in Relation to Ownership of Controlled Entities
Belltopper Hill Pty Ltd	100	100
Syndicated Resources Pty Ltd	100	100
Willaura Minerals Pty Ltd	100	100
Isa Brightlands Pty Ltd	100	100
Isa Tenements Pty Ltd	100	100
Bungalien Phosphate Pty Ltd	100	100
Mt Coolon Gold Mines Pty Ltd	100	100

Balances and transactions between the Company and its subsidiaries, which are realted parties of the Company, have been eliminated on consolidation and not disclosed in the note. Details of transactions between the Group and other related parties are disclosed in note 25.

41

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

25. KEY MANAGEMENT PERSONNEL DISCLOSURES

a) Details of Key Management Personnel

The following were key management personnel of the Group at any time during the year and unless otherwise stated were key management personnel for the entire year.

Non-Executive Directors

Hun Seng Tan – Non-Executive Director

Frank Cannavo – Non-Executive Director (resigned 25 November 2015)

Executive Directors

Peter Thompson – Managing Director/Executive Chairman Neil Norris – Exploration Director

Total remuneration paid to key management personnel during the year:

	Consolidated
	2016 2015 $ $
Short-term benefits Post-employment benefits	542,436 554,241 41,135 48,365
	583,571 602,606

b) Other Transactions and Balances with Key Management Personnel

There are no other transactions with Directors, or Director related entities or associates, other than those reported in note 26. As at 30 June 2016 an amount of $96,635 has been accrued for payment to Key Management Personnel in respect of remuneration.

26. RELATED PARTY TRANSACTIONS

Total amounts receivable and payable from entities in the wholly-owned group (see Note 24 for details

of controlled entities) at balance date:

Non-Current Receivables

Loans to controlled entities Non-Current Payables Loans from controlled entities	12,669,799 11,724,203
	- -

Transactions with Associate – Angka Alamjaya Sdn Bhd (AASB)

During the financial year the Company incurred costs of $nil (2015: $296,963) in respect of AASB’s operations on a reimbursable basis. As at 30 June 2016 an amount of $57,779 (2015: $700,020) has been reimbursed to the Company with an amount receivable of $44,037 written off as unrecoverable, and an amount of $nil (2015: $101,816) is outstanding as at 30 June 2016 (note 7).

42

GBM Resources Limited

ABN 91 124 752 745

Notes to the Financial Statements

For the Year Ended 30 June 2016

27. EVENTS SUBSEQUENT TO BALANCE DATE

Other than the following, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect substantially the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years:

• On 26 July 2016 the Company completed the issue of 160,500,000 ordinary fully paid shares at 1.6 cents per share pursuant to a share placement raising $2,568,000 before costs.

• On 23 August 2016 the Company issued a scoping study in respect of the heap leach production opportunity at the Eugenia deposit at the Mt Coolon Gold Project.

• On 5 September 2016 the Company lodged a prospectus in relation to a non-renounceable entitlement offer of options to raise up to $610,175.

28. DIVIDENDS

There are no dividends paid or payable during the year ended 30 June 2016 or the 30 June 2015 comparative year.

29. CONTINGENCIES

(i) Contingent liabilities

There were no material contingent liabilities not provided for in the financial statements of the Group as at 30 June 2015 or 30 June 2016.

(i) Native Title and Aboriginal Heritage

Native title claims have been made with respect to areas which include tenements in which the Group has an interest. The Group is unable to determine the prospects for success or otherwise of the claims and, in any event, whether or not and to what extent the claims may significantly affect the Group or its projects. Agreement is being or has been reached with various native title claimants in relation to Aboriginal Heritage issues regarding certain areas in which the Group has an interest.

(iii) Contingent assets

There were no material contingent assets as at 30 June 2015 or 30 June 2016.

30. ACQUISITION OF SUBSIDIARY - MT COOLON GOLD MINES PTY LTD

During the 2015 financial year the Company completed the acquisition of the issued capital of Mt Coolon Gold Mines Pty Ltd from Drummond Gold (now DGO Gold Limited) for the total consideration of $850,000 plus 50,000,000 ordinary fully paid shares. The acquisition has been accounted for as an asset acquisition rather than a business combination.

Consideration

The fair value of consideration provided for the acquisition was:

than a business combination. Consideration The fair value of consideration provided for the acquisition	than a business combination. Consideration The fair value of consideration provided for the acquisition	was:
Details		Fair Value ($)
Cash payable	$850,000	$850,000
Shares transferred	50 million shares at fair value of 2.3 cents per share1	$1,150,000
Total Consideration Payable		$2,000,000

1 The fair value of the shares was determined as the listed share price of the Company’s shares as at 10 April 2015, being the trading day prior to completion of the transaction.

43

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

30. ACQUISITION OF SUBSIDIARY - MT COOLON GOLD MINES PTY LTD (CONTINUED)

Upon settlement an amount of $50,000 was payable to Drummond Gold Limited (now DGO Gold Limited) pursuant to the transaction pending completion of administrative matters relating to existing royalties (note 12). Subsequently $37,500 was paid to re-purchase a royalty over the project area. A minor royalty remains over certain prospects at the project and the Group has retained the remaining $12,500 payable to DGO to settle this outstanding royalty.

Acquisition related costs

Costs incurred by the Company in relation to the acquisition of Mt Coolong Gold Mines Pty Ltd amounting to $84,963 have been included as an expense in the Statement of Profit or Loss and Other Comprehensive Income. As the acquisition is being reinstated for as an asset acquisition, the Company was entitled to capitalise these costs, however has resolved to expense them.

Identifiable assets acquired and liabilities assumed

The following table sets out the recognised amounts of assets acquired and liabilities assumed at the acquisition date:

date:	date:
	$
SecurityDeposits(note 7)	371,183
Other receivables	1,511
Property, plant and equipment(i)	142,376
Capitalised exploration costs(note 9)	1,880,984
Rehabilitationprovision(note 14)	(396,054)
Total net assets acquired	2,000,000

• (i) Included in the identifiable property, plant and equipment assets are the following specific net book values (note 10):

(note 10):	(note 10):
	$
Property and improvements	91,795
Office equipment and software	6,772
Site equipment andplant	42,686
Motor vehicles	1,123
Totalproperty, plant and equipment	142,376

Statement of Cash Flows

Statement of Cash Flows
Total cash consideration	850,000
Less: amountpayable(note 13)	(50,000)
Total cashpaid	800,000

44

GBM Resources Limited

ABN 91 124 752 745 Notes to the Financial Statements

For the Year Ended 30 June 2016

	2016 2015 $ $
31. PARENT ENTITY INFORMATION Financial position Assets Current assets Non-current assets Total Assets Liabilities Current liabilities Non-current liabilities Total Liabilities NET ASSETS Equity Issued capital Option reserve Share based payments reserve Accumulated losses TOTAL EQUITY Financial performance Profit/(loss) for the year Other comprehensive income Total comprehensive profit/(loss)	489,218 1,230,271 15,620,201 10,577,944
	16,109,419 11,808,215
	(324,102) (616,848) - -
	(324,102) (616,848)
	15,785,317 11,191,367
	28,785,654 27,372,099 - 323,733 - 400,000 (13,000,337) (16,904,465)
	15,785,317 11,191,367
	3,180,395 (4,545,251) - -
	3,180,395 (4,545,251)

Contingent liabilities

For full details of contingent liabilities see Note 29.

Commitments

For full details of commitments see Note 21.

45

GBM Resources Limited

ABN 91 124 752 745

Directors’ Declaration

For the Year Ended 30 June 2016

1. In the opinion of the Directors:

2. a) the accompanying financial statements and notes are in accordance with the Corporations Act 2001 including:

   • i. giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance for the year then ended; and

   • ii. complying with Accounting Standards and Corporations Regulations 2001.

3. b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

4. c) the financial statements and notes are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board.

5. This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2016.

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

==> picture [115 x 58] intentionally omitted <==

PETER THOMPSON

Executive Chairman

Dated this 14[th] day of September 2016

46

==> picture [174 x 74] intentionally omitted <==

INDEPENDENT AUDITOR’S REPORT

To the members of GBM Resources Limited

Report on the Financial Report

We have audited the accompanying financial report of GBM Resources Limited (“the company”), which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of profit and loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration for the Group. The Group comprises the company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of the 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 financial report that is free from material misstatement, whether due to fraud or error.

In Note 1(b), the directors also state, in accordance with Accounting Standard AASB 101: Presentation of Financial Statements , that the financial report complies with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Our audit did not involve an analysis of the prudence of business decisions made by directors or management.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

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

HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of International, a worldwide organisation of accounting firms and business advisers.

47

==> picture [174 x 74] intentionally omitted <==

Auditor’s opinion

In our opinion:

• (a) the financial report of GBM Resources Limited is in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance for the year ended on that date; and

• (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and

• (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1(b).

Report on the Remuneration Report

We have audited the remuneration report included in the directors’ report for the year ended 30 June 2016. The directors of the company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion

In our opinion the remuneration report of GBM Resources Limited for the year ended 30 June 2016 complies with section 300A of the Corporations Act 2001 .

HLB Mann Judd Chartered Accountants

D I Buckley Partner

Perth, Western Australia 14 September 2016

48