Page 73 - Sundance Resources 2014 Annual Report

SUNDANCE RESOURCES LIMITED ANNUAL REPORT 2014 71
Note 6(c) Borrowings (continued)
This note provides information about how the Group determines fair values of various financial assets and financial liabilities.
Fair value of the Group’s financial assets and financial liabilities that are measured at fair value on a recurring basis
Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting
period. The following table gives information about how the fair values of these financial assets and financial liabilities are
determined (in particular, the valuation technique(s) and inputs used).
Financial
Assets /
Financial
Liabilities
Fair Value as at
Fair Value
Hierarchy
Valuation Technique(s) and
key input(s)
Significant unobservable
input(s)
Relationship of
unobservable
inputs to fair
value
30 Jun 14 30 Jun 13
Hanlong
Note:
– Derivative
Component
$90,000 $85,000 Level 2 Black Scholes Option Pricing
Model at 30 June 2014
Key inputs include:
- Underlying share price
$0.084
- Risk free rate 2.54%
- Volatility 80%
- Expected term 0.50 year
N/A N/A
Noble Note:
– Derivative
Component
$1,339,590 - Level 3 Binomial Model at 30 June
2014
Key inputs include:
- Underlying share price $0.084
- Risk free rate of 2.47%
- Volatility 71%
- Expected term ranging from
1.15 to 1.30 years
- Vesting dates ranging from 30
June 2015 to 21 Oct 2015
Valuation of Market Co is
based on the discounted
cash flow used to value the
Project which includes the
following assumptions:
- Forecast commodity
prices
- Estimated start-up date
- Estimated commissions
payable to Market Co
- Estimated production
tonnage of the project
- Forecast revenue
- Estimated overhead
expenses
The higher the
value of Market
Co, the higher
the fair value.
Investor
Consortium
Note:
– Derivative
Component
$2,800,000 - Level 2 Binomial Model at 30 June
2014
Key inputs include:
- Underlying share price of
$0.084
- Risk free rate 2.47%
- Volatility of 71%
- Expected term 0.65 years
- Vesting date 30 June 2014
N/A N/A
The options issued to Noble and the Investor Consortium have been valued using the binomial model and key assumptions
including an underlying share price at shareholder approval date of $0.114, a volatility of 71%, a risk free rate of 2.73% for
Noble and 2.58% for the Investor Consortium, an expected term of 1.91 for Noble and 1.15 for Investor Consortium and
vesting dates of 19 October 2015 for Noble and 30 April 2014 for the Investor Consortium. The use of these inputs resulted
in a value of $12,700,000 being recorded in the Convertible Note and Option Reserve.
There were no transfers between any Levels in the period.
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014