Announcement PDF Viking Mines Limited ABN 38 126 200 280 Interim Report - 31 December 2017 Viking Mines Limited Corporate directory 31 December 2017 Directors Raymond Whitten Michael Andrew Cox Charles William Thomas Company secretary Dean Jagger Registered office and principal place of business Level 29, 201 Elizabeth Street Sydney NSW 2000 Telephone: (02) 8072 1400 Facsimile: (02) 8072 1440 Website: www.vikingmines.com Share register Computershare Investor Services Pty Ltd Level 11, 172 St George's Terrace Perth, Western Australia 6000 Auditor Rothsay Chartered Accountants Level 1, 4 Ventnor Street West Perth, WA, 6005 Solicitors Whittens & McKeough Level 29, 201 Elizabeth Street Sydney NSW 2000 Stock exchange listing Viking Mines Limited is listed on the Australian Securities Exchange (ASX: VKA) 1 Viking Mines Limited Contents Directors’ report Auditor’s independence declaration Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Directors' declaration Independent auditor's review report to the members of Viking Mines Limited 3 8 9 10 11 12 13 16 17 General information The financial statements cover Viking Mines Limited as a consolidated entity consisting of Viking Mines Limited and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Australian dollars, which is Viking Mines Limited's functional and presentation currency. Viking Mines Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Level 29, 201 Elizabeth Street Sydney NSW 2000 A description of the nature of the consolidated entity's operations and its principal activities are included in the notes to the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 14 March 2018. 2 Viking Mines Limited Directors' report 31 December 2017 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Viking Mines Limited (referred to hereafter as ‘Viking’, the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 31 December 2017. Directors The following persons were directors of Viking Mines Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated: Raymond Whitten – Acting Chairman Michael Andrew Cox (appointed 29 November 2017) Charles William Thomas (appointed 29 November 2017) John (Jack) Gardner (resigned 29 November 2017) Peter McMickan (ceased 29 November 2017) Review of results The profit for the consolidated entity after providing for income tax and non-controlling interest amounted to $2,241,423 (31 December 2016: loss of $688,853). Review of operations During the half-year ended 31 December 2017, Viking was focused on reviewing mineral project farm-in/acquisition opportunities with the objective of acquiring mature exploration assets with the potential to deliver long term sustainable cash flow. Ghana Projects The Viking mineral licences are located in southern Ghana, West Africa (Figure 2) in one of the most strongly gold endowed and tightly held geological provinces in the world, the Ashanti Gold Belt. Numerous multi-million ounce gold deposits are located within and on the margins of the Ashanti Gold Belt, including two of the largest gold deposits in the world, Obuasi and Tarkwa. Figure 1: Viking Project Locations 3 Viking Mines Limited Directors' report 31 December 2017 Figure 2: Viking Gold Project Locations, Southern Ghana Akoase Gold Project (Viking 100% - reducing to 0% upon completion of sale) In June 2015 the Company executed a sale contract for the Akoase Gold Project for an overall transaction value of US$10 million, of which US$8 million was to be paid in cash and a further US$2 million via royalties from production. At the date of this report Viking has been paid US$5 million in sales proceeds. The additional US$3 million remaining cash proceeds is due but has not yet been received by the Company. The Company expects full receipt of the funds. Once the Company has received confirmation in relation to the payment of the US$3 million, the market will be informed accordingly. Tumentu Gold Project (Viking 100%) Viking previously held the hard rock rights to the West Star gold project, which is located approximately 185km west of Accra (Figure 2), with sealed road access within 5km and grid power within 10km of the project area. The tenement holder and Joint Venture partner held the alluvial rights on the project. As a result of alleged non-compliance with the Mining Act by the Joint Venture partner the original joint venture tenements have been rescinded/or will not be renewed. Notwithstanding the above, Viking’s Ghanaian subsidiary has lodged a prospecting licence application (the Tumentu licence application) over the majority of the area of the previous West Star prospecting licence with the Minerals Commission. Viking is of the view that the new Tumentu prospecting licence application contains the most prospective area from the previous joint venture. 4 Viking Mines Limited Directors' report 31 December 2017 Mongolia Projects Mongolia is a nation rich in mineral resources situated between two of the world’s largest economies. It has the advantage of prospective geology and proximity to markets and, as a result, has attracted significant investment to the country in recent years. Viking holds two advanced coal projects in Mongolia (Figure 3). Berkh Uul Ulaanbaatar Khonkhor Zag Figure 3: Viking Coal Project Locations, Mongolia Berkh Uul Coal Project (Viking 100%) Berkh Uul is located 400 km north of Ulaanbaatar in northern Mongolia within the Orkhon-Selege coal district and within 20km of the Russian border (Figure 3). The project is within 40km of rail access into Russian off-take markets, in close proximity to water, infrastructure and transport. The deposit consists of shallow, consistent coal seams of high quality bituminous coal amenable to open pit mining. Discussions had confirmed a local industrial demand for unwashed Berkh Uul coal, due to its low ash and relatively high calorific value. Four MOU’s have been signed with government entities in the Darkhan region. The MOU’s, signed with Viking’s Mongolian subsidiary BRX LLC state the government entities intent to enter into future purchase agreements for Berkh Uul project coal, and establishes testing of a bulk sample as a basis for technical evaluation of the coal. In 2015 a Mongolian Government review of the Law on Prohibiting Mineral Exploration and Extraction near Water Sources, Protected Areas and Forests (commonly referred to as the “Long Name Law”) resulted in Viking being advised that approximately 53% of the Berkh Uul prospecting licence falls within a headwaters of rivers zone and is subject to a determination of an exclusion zone under the Long Name Law. This government determination impacts upon the Company’s current coal resource. During the year Viking continued its efforts to reverse/amend this ruling. A site visit with various federal and local government officials was conducted and numerous submissions were made to the government on this matter. Viking continues to seek a resolution relating to changes to boundaries of protected areas affecting the Berkh Uul prospecting license. However, with no guidance currently forthcoming from either the Ministry for Mines and Heavy Industry or Environmental Ministry, the Company is considering its legal options in relation to this matter. 5 Viking Mines Limited Directors' report 31 December 2017 Khonkhor Zag Coal Project (Viking 100%) Khonkhor Zag is an anthracitic coal project located 1,400km southwest of Ulaanbaatar in Western Mongolia (Figure 3). It is strategically located within 40km of China’s Burgastai border port with an existing haul road adjoining the tenement. The current mining licence was granted in April 2013, for a period of 30 years. Government approvals have already been received for the Khonkhor Zag Environmental Impact Assessment, and the Feasibility Study Report, which provides a clear pathway for any future mining and coal production at Khonkhor Zag. Excellent scope exists to develop Khonkhor Zag as a low cost, high margin premium coal project close to Chinese markets. No on-ground work was undertaken on the project during the half-year. Discussions are in progress with potential Joint venture partners to assist with development of the project. Operations summary It remains your Company’s policy to give priority to more mature exploration opportunities over greenfields exploration due to the inherent lower risk, and shorter lead time to production. Australia presents a very competitive market today for gold, base metals, lithium and other specialty mineral projects; to date your Company has not found an advanced project out of many presented, to which it can add significant value. We continue to seek a suitable Australian project. Of the preferred overseas destinations, Ghana in particular presents advanced gold properties to the Company. This is partly a consequence of Viking’s long association there. The Company will carefully asses all projects presented to it with a view to exploiting its strong cash position for the maximum benefit of all shareholders. Significant changes in the state of affairs There were no significant changes in the state of affairs of the consolidated entity during the financial half-year. Matters subsequent to the end of the financial half-year On 1 March 2018, the Company changed its Company Secretary to Mr Dean Jagger. The Company also changed its registered office and principal administrative office to Level 29, 201 Elizabeth Street Sydney NSW 2000 No other matter or circumstance has arisen since 31 December 2017 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 (Cth) is set out immediately after this directors' report. 6 Viking Mines Limited Directors' report 31 December 2017 This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001 (Cth). On behalf of the directors ___________________________ Raymond Whitten Acting Chairman 14 March 2018 7 Viking Mines Limited Statement of profit or loss and other comprehensive income For the half-year ended 31 December 2017 Consolidated 31 December 31 December Note 2017 2016 $ $ Revenue 3 2,787,672 7,175 Expenses Consulting fees Exploration and evaluation expenditure Employee benefits expense Foreign exchange losses Asset sale expenses Project generation Other expenses (171,203) (12,941) (190,197) (10,458) (161,450) (92,707) (24,662) (138,838) (45,802) (159,252) (122,506) (112,261) Profit/(loss) before income tax expense 2,241,423 (688,853) - - 2,241,423 (688,853) Items that may be reclassified subsequently to profit or loss Other comprehensive income / (expense) for the period, net of tax (368,533) 56,106 Other comprehensive income for the half-year, net of tax (368,533) 56,106 Total comprehensive income for the half-year 1,872,890 (632,747) Profit/(loss) for the half-year is attributable to: Non-controlling interest Owners of Viking Mines Limited 2,241,423 (688,853) 2,241,423 (688,853) 1,872,890 (632,747) 1,872,890 (632,747) Cents Cents Income tax expense Profit/(loss) after income tax expense for the half-year Other comprehensive income Total comprehensive income for the half-year is attributable to: Non-controlling interest Owners of Viking Mines Limited Basic earnings per share Diluted earnings per share 9 9 0.71 0.71 The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 9 (0.27) (0.27) Viking Mines Limited Statement of financial position As at 31 December 2017 Consolidated 31 December Note 2017 30 June 2017 $ $ Assets Current assets Cash and cash equivalents Trade and other receivables Total current assets 3,677,318 22,827 3,700,145 2,063,442 24,650 2,088,092 1,521 254,900 256,421 250,000 250,000 3,956,566 2,338,092 Current liabilities Trade and other payables Total current liabilities 80,879 80,879 335,295 335,295 Total liabilities 80,879 335,295 3,875,687 2,002,797 22,537,072 (341,495) (17,578,665) 4,616,912 (741,225) 22,537,072 27,038 (19,820,088) 2,744,022 (741,225) 3,875,687 2,002,797 Non-current assets Property, plant and equipment Exploration and evaluation Total non-current assets 4 Total assets Liabilities Net assets Equity Issued capital Reserves Accumulated losses Equity attributable to the owners of Viking Mines Limited Non-controlling interest 5 6 Total equity The above statement of financial position should be read in conjunction with the accompanying notes 10 Viking Mines Limited Statement of changes in equity For the half-year ended 31 December 2017 Total equity $ Consolidated Balance at 1 July 2016 21,345,697 224,971 (16,339,010) (741,225) 4,490,433 Loss after income tax expense for the half-year Other comprehensive income for the half-year, net of tax - - (688,853) - (688,853) - 56,106 - - 56,106 Total comprehensive income for the half-year - 56,106 (688,853) - (632,747) Issue of shares (net of share issue costs) 1,191,375 - - - 1,191,375 Balance at 31 December 2016 22,537,072 281,077 (17,027,863) (741,225) 5,049,061 Consolidated Issued capital $ Noncontrolling interest $ Total equity $ Balance at 1 July 2017 22,537,072 27,038 (19,820,088) (741,225) 2,002,797 - - 2,241,423 - 2,241,423 - (368,533) - - (368,533) - (368,533) 2,241,423 - 1,872,890 22,537,072 (341,495) (17,578,665) (741,225) 3,875,687 Profit after income tax expense for the halfyear Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Balance at 31 December 2017 Retained profits $ Noncontrolling interest $ Issued capital $ Reserves $ Retained profits $ Reserves $ The above statement of changes in equity should be read in conjunction with the accompanying notes 11 Viking Mines Limited Statement of cash flows For the half-year ended 31 December 2017 Consolidated 31 December 31 December Note 2017 2016 $ $ Cash flows from operating activities Payments to suppliers and employees Interest received (645,192) 3,622 (711,929) 7,175 Net cash used in operating activities (641,570) (704,754) Cash flows from investing activities Payments of plant and equipment Loan to others Payments for exploration and evaluation Proceeds from sale of tenements (1,522) (17,841) 2,509,552 (9,743) (233,218) - Net cash from/(used in) investing activities 2,490,189 (242,961) - 1,267,420 (76,045) - 1,191,375 Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial half-year Effects of exchange rate changes on cash and cash equivalents 1,848,619 2,063,442 (234,743) 243,660 1,306,449 10,303 Cash and cash equivalents at the end of the financial half-year 3,677,318 1,560,412 Cash flows from financing activities Proceeds from issue of shares Share issue transaction costs 5 Net cash from financing activities The above statement of cash flows should be read in conjunction with the accompanying notes 12 Viking Mines Limited Notes to the financial statements 31 December 2017 Note 1. Significant accounting policies These general purpose financial statements for the interim half-year reporting period ended 31 December 2017 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2017 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Note 2. Operating segments The Group has adopted AASB 8 Operating Segments which requires operating segments to be identified on the basis of internal reports about components of the Group that are reviewed by the chief operating decision-maker in order to allocate resources to the segment and to assess its performance. For management purposes, the Board of Directors of the Company has been defined as the Chief Operating Decision Maker. The Board of Viking Mines Limited reviews internal reports prepared as consolidated financial statements and strategic decisions of the Group are determined upon analysis of these internal reports. During the period the Group operated predominately in one business and three geographical segments, being the resources sector in Ghana, Thailand and Mongolia. Accordingly, under the management approach outlined only one operating sector has been identified and no further disclosures are required in the notes to the consolidated financial statements. Note 3. Revenue Consolidated 31 December 31 December 2017 2016 $ $ Interest Other revenue 3,622 2,784,050 7,175 - Revenue 2,787,672 7,175 13 Viking Mines Limited Notes to the financial statements 31 December 2017 Note 4. Non-current assets - exploration and evaluation Consolidated 31 December 2017 30 June 2017 $ $ Exploration project acquisition costs Less: Impairment 2,504,900 (2,250,000) 2,500,000 (2,250,000) 254,900 250,000 Reconciliations Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below: Consolidated $ Total $ Balance at 1 July 2017 Additions 250,000 4,900 250,000 4,900 Balance at 31 December 2017 254,900 254,900 The recoupment of exploration project acquisition costs carried forward is dependent upon the recoupment of costs through successful development and commercial exploitation, or alternatively by sale of the respective areas. In the year ended 30 June 2017 an impairment charge was raised against the carrying value of the Group’s coal tenements in Mongolia. The Group has been unable to advance development of its main coal tenement asset, Berkh Uul due to post acquisition government determinations. As a result, the Group has written down these assets to a carrying value of $250,000. Note 5. Equity - issued capital Consolidated 31 December 31 December 2017 30 June 2017 2017 30 June 2017 Shares Shares $ $ Issued capital 313,717,856 313,717,856 22,537,072 22,537,072 Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Share buy-back There is no current on-market share buy-back. 14 Viking Mines Limited Notes to the financial statements 31 December 2017 Note 6. Equity - reserves Consolidated 31 December 2017 30 June 2017 $ $ Foreign currency reserve Share-based payments reserve (585,495) 244,000 (216,962) 244,000 (341,495) 27,038 Note 7. Equity - dividends There were no dividends paid, recommended or declared during the current or previous financial half-year. Note 8. Events after the reporting period On 1 March 2018, the Company changed its Company Secretary to Mr Dean Jagger. The Company also changed its registered office and principal administrative office to Level 29, 201 Elizabeth Street Sydney NSW 2000 No other matter or circumstance has arisen since 31 December 2017 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years. Note 9. Earnings per share Consolidated 31 December 31 December 2017 2016 $ $ Profit/(loss) after income tax 2,241,423 (688,853) Profit/(loss) after income tax attributable to the owners of Viking Mines Limited 2,241,423 (688,853) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 313,717,856 257,334,592 Weighted average number of ordinary shares used in calculating diluted earnings per share 313,717,856 257,334,592 Cents Cents Basic earnings per share Diluted earnings per share 0.71 0.71 15 (0.27) (0.27) Viking Mines Limited Directors' declaration 31 December 2017 In the directors' opinion: ● the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements; ● the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at 31 December 2017 and of its performance for the financial half-year ended on that date; and ● there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Raymond Whitten Acting Chairman 14 March 2018 16