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CODEIFAI LIMITED Annual Report 2005
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Annual Report
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Australis Mining Corporation Limited
Annual Report 30 June 2005
Company Announcements Office Australian Stock Exchange Limited
1st October 2005 Pages 66
ASX Code: AUV
Annual Report
Please find attached the audited Annual Report of Australis Mining Corporation Limited for the year ended 30 June 2005.
The printed version of the annual report and notice of meeting will be mailed to shareholders prior to the end of October.
For further information please contact:
| Contact: | Anthony Damianos |
|---|---|
| Executive Director & CEO | |
| Telephone: | +612 8908 5988 |
| Facsimile: | +612 8908 5977 |
| Web: | www.australismining.com.au |
CONTENTS
| Highlights | |
|---|---|
| Chairman's Statement | |
| Chief Executive's Review | |
| Directors' Report | |
| Audit Independence Declaration | |
| Corporate Governance Statement | |
| Financial Report | |
| Directors' Declaration | |
| Audit Opinion | |
| Shareholder Information | |
| Corporate Directory |
HIGHLIGHTS
- The prospectus issued to support an initial public offering of securities was over $\bullet$ subscribed and raised \$4.0 million.
- $\bullet$ Listing of shares and options on the Australian Stock Exchange in March 2005.
- Total capital expenditure of \$2.5 million since June 2004 on mine development, $\bullet$ mobile equipment and wash plant construction.
- Site development work on Nardoo site established initial operating platform. Over $\bullet$ 70,000 tonnes of material was moved in order to construct tailings dam, access roads and processing plant site.
- Processing plant commissioning completed and operating within reasonable levels of $\bullet$ throughput. Throughput of 208 tonnes per hour (104 loose cubic metres per hour) was achieved during June.
- During May and June, a total of 234,500 carats of rough sapphire was produced from 39,600 tonnes of material processed.
- The Company's proven resources totalled 109 million carats (21.8 million grams) of $\bullet$ rough sapphire. The area in which this resource is located is approximately 10% of mining leases or mining lease applications and there is significant potential for the enlargement of the proven reserve.
CHAIRMAN'S STATEMENT
Dear Shareholder,
The 2005 year has been a milestone in the progress of our Company towards establishing what will be the largest sapphire mining operation in the southern hemisphere. Our mine staff have achieved a tremendous amount of work. Starting with a vacant mining lease in January 2005, the Company has developed the mine infrastructure and processing plant to bring it all to an operational level within a matter of months.
The future for Australis is very bright with our large proven resource field ensuring sufficient raw materials for the next 5 years, a remaining area that holds great promise (but as yet unproven) and the largely operational mine site. These factors should produce substantial revenues in the years to come.
During the 2004-05 year there were a number of factors that delayed Australis in meeting its trading expectations. It is a credit to all the staff of Australis that these obstacles were overcome and the Company advanced to the extent that has been achieved.
The Company's over-subscribed capital raising and subsequent listing on the ASX has provided a platform for the Company's development into the future. The Board has appreciated the support of the shareholders during this initial phase of establishing operations. We look forward to building Australis into a profitable and well-managed Company.
CW Duchatel Chairman 30th September 2005
CHIEF EXECUTIVE REVIEW
Building the Platform
It's been an extremely busy year. It's been a challenging year. Above all, it's been a very successful year by almost any measure. In fact, the achievements of shareholders, directors and staff of the entity we now call Australis in the financial year have been quite remarkable.
Our primary objective has been to build the platform for a company that aims to be a world leader in its field. The Australis team has met the vast majority of the operational goals that were set at the beginning of the financial year. So while financial success was not achieved as early as envisaged, we can report with confidence that the Company has put in place a base of operations upon which future success can be achieved.
Plant Relocation
The year started with the relocation of our processing plant from Subera to Nardoo. Late in July 2004, the plant was decommissioned on the Subera leases, dismantled and transported to the Company's workshop located on The Miner's Common near the town of Sapphire. There the processing plant underwent an extensive servicing program that included the implementation of several modifications designed to increase the production rate in preparation for its re-commissioning on the Nardoo leases.
At the same time, plans and preparation for mining on the Nardoo leases were developed to an advanced stage. Australis began transforming the Nardoo project from a large empty grazing paddock with a farmer's track accessing the area, into a fully operational world-class alluvial mine site producing sapphire.
In January 2005 access to the area was completed with the building of a 12 kilometre allweather road through two properties with a major creek crossing at Retreat Creek. The Company was then able to prepare the mine site and relocate the plant onto the Nardoo leases.
Between the end of January and mid-April, the Australis team relocated the Company's processing plant and crected it on the new site. Meanwhile, the mine infrastructure was completed, including a tailings dam, access roads, internal haul roads and initial overburden removal. About 70,000 tonnes of material was excavated to excavate the tailings dam and used as the base platform for the plant site.
Water Supply
The most important component of the processing facility is a continuous supply of water. The Company's first plan to secure water was to drill for sub-artesian water on the Nardoo leases in the underlying Permian aquifers. This was the most logical option given the practicality and economic advantages of having an access point for water located close to the dam storage facilities (however, exploratory drilling was not successful in identifying the Permian aquifer and locating sub-artesian water below the Company's leases). Whilst the drilling was successful in locating a water supply, unfortunately the production was not sufficient enough to guarantee an uninterrupted supply of water for the operation.
It was a setback, but not an insurmountable one. The Company then actioned its contingency plan and built a 10km pipeline from our existing bore to deliver water to the Nardoo site. By late April the dam had enough water to supply the plant.
Wash Processing Plant Commissioning
During commencement of wash processing, a number of challenges were overcome. Logistical and mechanical problems with the plant trommel and jigs were identified early and quickly dealt with so that the plant could commence processing.
Production
Another key operational goal was met when production finally commenced. During the May-June period 234,500 carats of sapphire were produced from the processing of 39,600 tonnes of material. The average grade was 5.9 carats per tonne.
The size and quality of stones produced from the initial production have been very encouraging. The number of sapphires recovered greater than 4.1 mm and greater than 5.5 millimetres in size was higher than expected. A number of very attractive "special" stones (those over about 10 carats in weight) have also been produced. Sapphires in this size range carry a significant premium to the smaller sapphires.
An example of some of the "special" gemstones produced are shown in the following photographs:
- 63 carat dark blue sapphire
- 41 carat yellow/green/blue parti-colour sapphire
- 33 carat yellow green sapphire
- 31 carat blue sapphire
- 20 carat green sapphire
Sales
Reaction to the initial parcels of sapphire produced from potential gemstone buyers has been very encouraging. It has been proposed that Australis will sell all of its production to Nikiticorp Limited, its 50.2% majority shareholder. The sale agreement, which will be the subject of a shareholder resolution at the Company's annual general meeting, provides for an average sale price of \$4.50 per gram and favourable payment terms.
Finance
Australis raised \$5.3 million in equity capital during the financial year. No less than \$4 million of this amount was raised as part of the over-subscribed initial public offering. The shares and options of the Company commenced trading on 7 March 2005.
Throughout the period since the Company acquired the Nardoo site and equipment to the present, the Company's majority shareholder has been providing considerable financial support and other resources to ensure the Company's success. This was further evidenced by the extension and enlargement of its finance facility to A\$2 million on 1 July 2005. This placed the Company in a strong financial position and ensured it could complete the phase through to full production levels.
Capital expenditure of \$2.5 million was incurred during the reporting year. This covered the cost of commissioning the processing plant, mobile equipment purchase and mine development. The capital expenditure program for the establishment of the current site of operations is now largely completed. Ongoing annual expenditure will be required to renew the mobile fleet and gradually increase the processing plant's throughput capacity.
During the coming year the Company will consider adding further capacity to increase its ability to fulfill the sales opportunities that exist.
Exploration & Mineral Resource
The potential for the Nardoo field remains significant. The Company's proven resource for the Nardoo lease stands at $110.2$ million carats $(22.0$ million grams) with a grade of 20 carats per tonne (8 grams per loose cubic metre) as at 30 June 2005. This proven resource is contained in an area that is just 10.8% of the area of the Company's total lease holdings (both granted or applied).
The chart below illustrates the amount of explored areas within the currently held mining leases and mining lease applications compared to the total area.
The chart below presents the amount of sapphire mined in the 2005 reporting year 234,500 carats compared to the total proven resource of 110.2 million carats.
Further exploration activity during the financial year involved further drilling in areas surrounding the proposed mining area.
Australis' future exploration program has been designed to address both the Company's short and long term needs. The immediate need is to develop a detailed understanding of the sapphire bearing gravel body around the present mining pits. The longer-term goal is to extend the Company's reserves within the current lease areas
In order of priority, the exploration aims are as follows:
-
Detailed work around the current mining pits with the aim of better defining the extent, grade, depth and thickness of the sapphire resource prior to mining. This work will consist of high-density drilling, gamma ray logging and bulk sampling for grade analysis in ML 70006.
-
Extending the proven resource in ML's 70004, 70005, 70006, and 70029, This work began in April 2005 with a Calweld drilling program and a geophysical program of downhole gamma logging and ground magnetic mapping. This field program was a success in that the gamma logs were able to distinguish the different layers drilled, including the sapphire-bearing gravels, and confirmed the usefulness of the geophysical methods for future exploration work.
Outcomes of the April 2005 Exploration Program
- a) Drilling: The drilling and bulk sampling program was carried out with using truck-mounted large-diameter (75 cm) Calweld bucket drill. This program significantly enlarged the known area of potentially sapphire-bearing palaeochannel gravels within the Company's mining leases. The work proved that a large southeasterly trending feeder channel joins the main palaeo-channel in ML 70006. Thirteen samples were taken from this gravel body and these currently await processing for grade determination.
- b) Gamma Ray Logging: The thirteen holes were digitally logged using an Auslog DLS5 recording system and a 43 mm TS1 high sensitivity gamma tool on a portable winch. Minute amounts of natural gamma radiation from various minerals within different alluvial layers create a distinctly recognizable pattern for each layer in the wriggly-line gamma logs. The different clav, sand and gravel layers are interpreted from drill hole to drill hole to create a geological cross sections. This section shows gravel thicknesses of at least 7 metres in the feeder channel.
- c) Magnetic Mapping: A Geometrics G856 portable proton precession magnetometer was used to produce a total magnetic field intensity map over leases ML70004, 70005, and 70006. Magnetic minerals, such as magnetite, ilmenite, spinel, and ironstone in the alluvial gravels create a higher magnetic field intensity and hence this method has the potential to map the locations of buried gravel and basaltfilled palaaeo-channels.
Current Mining Plan
Company mining activity during 2005 has extracted the shallow portion of the gravel body at the western end of ML70006 as proposed in the Company's prospectus. As of the end of August 2005, a 5 hectare area has been mined out and rehabilitated, and a 1 hectare mining pit to the south of rehabilitated area is currently open. The mining operations will continue to move in a westerly direction.
Rehabilitation
Australis is following its program of progressive rehabilitation and reseeding of mined-out areas. The 5 hectare rehabilitated area in ML70006 has been sown with a mixture of Butterfly Pea, Secca Stylo and Verano grass at the request of the landowner in conjunction with advice from the Department of Primary Industry. These grasses represent an improvement on the former Buffel grass pasture.
Anthony Damianos Chief Executive Officer 30th September 2005
Note:
- The information contained in the Chief Executive's Review that relates to Mineral Resource is based on $1.$ information complied by Mr. Robert Coenraads, who is a member of the Australasian Institute of Mining and Metallurgy.
-
- Mr. Coenraads is a full time staff member of the Company.
-
- Mr. Coenraads has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'.
DIRECTORS' REPORT
The directors present their report and the financial statements of Australis Mining Corporation Limited (the "Company") and its controlled entities (the "Consolidated Entity") for the financial year ended 30 June 2005.
$\mathbf{1}$ . Directors & Secretary
As at the date of this report, the following persons were directors of the Company. Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.
| Independent Directors William Duchatel JW (Jerry) Goddard |
appointed 6 April 2005 appointed 28 April 2005 |
|---|---|
| Executive Directors Anthony Damianos Robert Coenraads |
appointed 6 April 2005 appointed 6 April 2005 |
| Non-Independent Directors Ted Tzovaras Elias Christianos (alternate for Ted Tzovaras) |
appointed 6 April 2005 appointed 8 July 2004 |
The following person held the position of company secretary at the end of the financial year:
Warren Kember appointed 6 December 2004
Mr. Keith Taylor, a non-executive, non-independent director, was appointed on 8th July 2004 and resigned on 30 June 2005.
$2.$ Principal Activities
The principal activity of the Company during the financial period was investment holding. The principal activity of the controlled entities during the financial period was the mining and sale of sapphire.
No significant change in the nature of these activities occurred during the financial year.
$\mathbf{a}$ Operating Results
The consolidated loss of the Consolidated Entity, after providing for income tax, amounted to \$2,329,000 for the financial period.
$4.$ Financial Position
The net assets of the Consolidated Entity have increased by \$1,855,000 from 30 June 2004 to \$12,765,000 in 2005. This increase has resulted from the following factors:
- an increase in net assets of \$4,184,000 from share issues, net of issue costs; and
- a reduction in net assets of \$2,329,000 from the reported net loss.
The Consolidated Entity increased its investment in plant and equipment, mine development and exploration by $$2,572,000$ during the financial year as part of the process of establishing its mining operations at Sapphire, Queensland. As the mine development and plant commissioning phase continued through to the end of the financial year, the commencement of trading activities were delayed. This delay led to the operating loss and, as a result, the net working capital of the Consolidated Entity at the end of the financial year was negative \$2,039,000, compared with negative \$1,819,000 as at 30 June 2004. Term debts have also increased by $$237,000$ to $$2,998,000$ .
Financial support for the Consolidated Entity during its mine development and plant commissioning phase has been provided by the Company's majority shareholder, Nikiticorp Limited ("Nikiticorp") (refer Notes 16 & 24).
During the past financial year the Consolidated Entity has established infrastructure to secure its long-term success. The investment required to establish the Nardoo mine site is now substantially complete and has commenced operations.
5. Future Developments, Prospects and Business Strategies
Disclosure of information relating to developments in operations, business strategies and prospects in future financial vears of the Company and the Consolidated Entity, which would not, in the opinion of the Directors, be prejudicial to the interests of the Company and the Consolidated Entity, is contained in the Chief Executives Review.
6. Dividends Paid
No dividends have been paid or been recommended for payment in respect of the financial year ended 30 June 2005.
$\mathbf{7}$ . Review of Operations
A review of the operations and the results of the Consolidated Entity for the financial year ended 30 June 2005 is contained in the Chief Executive's Review.
8. Events Subsequent to Balance Date
Other than the matters disclosed in Note 24, no events of significance have occurred subsequent to the end of the financial year.
9. Directors' & Secretary Experience and Special Responsibilities
CW (Bill) Duchatel
BE(Mining), FAustIMM, FIE(Aust), CPEng, FAICD (age 71) Chairman Member of Board Remuneration Committee Member of Board Audit Committee
Mr. Duchatel has been actively associated with the mining industry since 1958 and has held executive positions in mine operations, project design and construction and senior executive management fields with a number of publicly listed companies including Pancontinental Mining Limited, Comalco Limited, Noranda Australia Limited, Thiess Holdings Limited and MIM Holdings Limited. He is a past president of the Australian Mineral Industries association and was a director of Pancontinental Mining Limited, Giants Reef Mining Limited and Ashton Mining Limited. Mr. Duchatel is currently non-executive director of North Australian Diamonds Limited.
Anthony M. Damianos Executive Director & Chief Executive Officer (age 30)
Mr. Damianos has been involved in all aspects of the precious and semi-precious gem industry which included roles in mining, marketing and administration. He has extensive experience in sapphire, chrysoprase, emerald and tiger iron mining operations within Australasia. Mr. Damianos was the Chief Operations Officer of the Company's operating subsidiary for 5 years prior to its acquisition. In that role he was responsible for project planning, the construction and commissioning of the largest sapphire processing plant in the southern hemisphere as well as the day-today operations including environmental regulation compliance, rough sapphire classification and order fulfilment.
Robert Coenraads
BA (Hons), M.Sc., Ph.D., FAustIMM FGAA Dip. Diamond Technology (age 49) Executive Director & Chief Geologist
Dr. Coenraads is a gemmologist, geologist and geophysicist with over 25 years of industry and academic experience. He is a lecturer for the Gemmological Association of Australia, and author of 30 scientific publications and two books. Dr. Coenraads specializes in sapphire and ruby exploration, heat treatment and processing, and has worked on major gemfields in Australia, Laos and Thailand. He is a Fellow of the Gemmological Association of Australia and Research Associate of the Australian Museum.
Ted Tzovaras LLB, LLM, MBA, FAICD (age 53) Non-Executive Director Member of Board Remuneration Committee
Mr. Tzovaras is a solicitor and barrister of the Supreme Court of New South Wales and of the High Court of Australia. He is also a director of Austcorp Group Limited, President of the European Australian Business Council Ltd, Director, Belgium -Luxembourg Chamber of Commerce in Australia, Director, Hellenic Australia Chamber of Commerce and Industry. He is the founder of Tzovaras Legal, author of several legal and commercial publications and has held a number of academic appointments. Mr Tzovaras is a director of Nikiticorp Limited.
JW (Jerry) Goddard FAICD Non-Executive Director (age 66) Member of Board Audit Committee
Mr. Goddard is the founder and Managing Director of Prime Mortgage Group Limited, mortgage bankers and trust fund managers. Mr. Goddard has had over 40 years experience in corporate banking, finance and treasury functions. During this period he has worked closely with a number of listed mining companies, providing corporate advice and arranging resource funding. Mr. Goddard is also a non-executive director of publicly listed Pacific Magnesium Corporation Limited.
Mr. Elias Christianos Executive Director (alternate) (age 58)
Mr. Christianos has spent his lifetime working in all aspects of the gemstone industry, including mining and marketing of opals, diamonds and sapphires. Mr. Christianos is a director of Nikiticorp Limited.
Mr. Warren Kember B. Com, MBA, SIA Company Secretary (age 44)
Mr. Kember has over 20 years of professional and commercial experience as a chartered accountant. After an initial career in audit and investment banking, Mr. Kember has worked in Financial Officer and Company Secretarial roles for public and private companies for over 14 years.
10. Meetings of Directors
During the financial year, 16 Board meetings of directors were held. During the period prior to the Company's listing on the Australian Stock Exchange the full Board dealt with all relevant matters and no separate meetings of either the Remuneration or Audit Committees of the Board were held. Attendances by each director during the year were:
| Board Meetings | ||||
|---|---|---|---|---|
| Number eligible | Number | |||
| to attend | Attended | |||
| Bill Duchatel | 16 | 15 | ||
| Anthony Damianos | 16 | 16 | ||
| Robert Coenraads | 16 | 14 | ||
| Elias Christianos | 15 | ı | ||
| Jerry Goddard | ٠ | ٠ | ||
| Ted Tzovaras | 16 | 15 | ||
| Keith Taylor | 15 | 13 |
11. Directors' equity participation
As at 16 September 2005, the Directors' relevant interests in the equity securities of the Company were as follows:
| Ordinary | Options | |
|---|---|---|
| shares | ||
| Bill Duchatel | 500,000 | 500,000 |
| Anthony Damianos | 50,000 | 25,000 |
| Robert Coenraads | 650,000 | 630,000 |
| Jerry Goddard | 1,162,334 | 235,000 |
| Elias Christianos (1) | 48,000,000 | |
| Ted Tzovaras (1) | 48,000,000 |
Nikiticorp Limited, which holds 48,000,000 ordinary shares of the Note 1: Company, is controlled by Mr. Tzovaras and Mr. Christianos.
12. Remuneration Report
This section presents the nature and amount of remuneration for each director of the Company, and for the executives receiving the highest remuneration.
Remuneration Policy
The remuneration policy of the Company has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and a variable (at risk) component. The Board of the Company believes the remuneration policy to be appropriate for the current stage of development of the Company and to achieve its initial short to mid-term goals.
The Board's policy for determining the nature and amount of remuneration for Board members and senior executives of the Consolidated Entity is as follows:
- The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the Board. All executives receive an agreed mix of fixed salary (which is based on factors such as experience and level of responsibilities), superannuation, fringe benefits and an annual cash performance incentive. The Company's Remuneration Committee will review and make recommendations to the Board in respect of executive packages on an annual basis. Reference will be made to the Consolidated Entity's performance, executive performance and comparable information from industry sectors and other listed companies in similar industries.
- The performance of executives is measured against criteria agreed annually with each executive. Performance criteria include factors relating to the responsibilities of each position as well as company-wide factors such as the forecast growth of the Consolidated Entity's profits. All bonuses are linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and can recommend changes to the committee's recommendations. The policy is designed to attract the highest caliber of executives and reward them for performance that results in long-term growth in shareholder wealth.
- The executive directors and executives receive a superannuation guarantee $\bullet$ contribution required by the government, which is currently 9%, and do not receive any other retirement benefits.
- All remuneration paid to directors and executives is valued at the cost to the $\bullet$ Company and expensed. There are no share or options schemes as part of directors' or executive remuneration.
- The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The remuneration committee determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability.
The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting. Fees for non-executive directors are not linked to the performance of the Consolidated Entity. However, to align directors' interests with shareholder interests, the directors are encouraged to hold shares in the Company.
Where non-executive directors provide additional services to the Company, this must be approved in advance by the remuneration committee chair.
Performance Based Remuneration
As part of each executive director and executive's remuneration package there is a performance-based component, which is paid on achievement of key performance indicators ("KPIs"). The program seeks to align goals of directors and executives with that of the Company and its shareholders. The KPIs are reviewed annually by the Board in consultation with executives.
The measures are tailored to the areas each executive has a level of control over. The KPIs target areas the Board believes hold greater potential for group expansion and profit, covering financial and non-financial as well as short- and long-term goals. The level set for each KPI is based on budgeted figures for the group and respective industry standards.
Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed by the remuneration committee in light of the desired and actual outcomes, and their efficiency is assessed in relation to the group's goals and shareholder wealth, before the KPIs are set for the following year.
Company Performance, Shareholder Wealth and Directors' and Executives' Remuneration
In view of the Company's initial phase of development, KPIs for the 2005 year were absolute measures made without reference to other entities or indices. KPIs for the 2005 year were not met and as a result no performance payments were paid or are pavable.
Details of Remuneration for the Year Ended 30 June 2005
The remuneration for each director and each of the executive officers of the Consolidated Entity receiving the highest remuneration during the year is set out in the tables below. Due to the size of the Consolidated Entity, only 4 staff were considered to be executive officers.
Directors
| Salary & Fees |
Superannuation Contributions |
Non-cash Benefits |
Total | |
|---|---|---|---|---|
| \$ | s | \$ | ||
| Bill Duchatel | 60,000 | 5.400 | ÷ | 65,400 |
| Anthony Damianos | 142,140 | 12,793 | 15.683 | 170,616 |
| Robert Coenraads | 119,900 | ×, | $\omega$ | 119,900 |
| Keith Taylor | 39,231 | 3,531 | $\overline{\phantom{a}}$ | 42,762 |
| Jerry Goddard | 6.667 | $\overline{\phantom{0}}$ | 6.667 | |
| Ted Tzovaras | 40,000 | $\overline{\phantom{a}}$ | ÷ | 40.000 |
| Elias Christianos | $\overline{\phantom{a}}$ | ٠ | ٠ | |
| 407,938 | 21,723 | 15,683 445,345 |
Specified Executives
| Salary & Fees |
Superannuation Contribution |
Non-cash Benefits |
Total | |
|---|---|---|---|---|
| 8 | \$ | 5 | \$ | |
| George Christianos | 142,140 | 12,793 | 25,862 | 180,795 |
| Christian Christianos | 142,140 | 12,793 | 7.562 | 162,495 |
| Warren Kember | 104.765 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 104.765 |
| Penny Kyros | 103,130 | $\overline{\phantom{a}}$ | 103,130 | |
| 492,175 | 25,586 | 33,424 | 551,185 |
Employment Contracts of Directors and Senior Executives
The terms of employment for all directors and senior executives are formalised in contracts of employment. The key terms of the contracts with Directors and specified executives are:
- none of the contracts have fixed terms;
- resignation period or termination by the Company is one month's notice;
- termination or redundancy payments by the Company are not specifically provided for in the contracts, however, will be payable in accordance with relevant State legislation; and
- no termination payments are payable in respect of resignation or dismissal for serious misconduct. In the instance of serious misconduct the Company can terminate employment at any time.
13. Environmental regulation
The Consolidated Entity's operations are subject to environmental regulation under the mining laws of the Commonwealth and the Queensland State Government. The mining activities located at the Nardoo property, Central Queensland, are subject to environmental regulation as part of the specific approval of the lease license.
In addition there is a range of industry specific environmental laws which apply to all mining operations. The environmental laws and regulations generally address the potential impact on the Consolidated Entity's activities in relation to water and air quality, noise, surface disturbance and the impact upon flora and fauna.
The Consolidated Entity has an internal monitoring and reporting procedure in the event of any environmental events which breach or potentially breach any regulation or law.
$14.$ Indemnification of Directors, Officers and Auditor
Pursuant to Article 103 of its Constitution, the Company insures and indemnifies its current and former directors and officers, against liabilities to another person (other than the Company or a related body corporate) that may arise from their position as directors and officers of the Company and its controlled entities, except where the liability arises out of conduct involving lack of good faith.
Each Director and Secretary named in the Directors and Secretary section of this report and any past director or secretary, has entered into a Deed of Indemnity with the Company on these terms. No indemnity has been provided to the Company's auditor.
15. Insurance Premiums
During or since the financial year the Company has paid an insurance premium in respect of a contract insuring against liability of Directors and Officers in accordance with the Company's Constitution and the Corporations Act 2001.
The contract of insurance prohibits disclosure of the amount of the premium and the nature of the liability insured against. Each director of the Company has paid the insurance premium in respect of cover which may apply in relation to liabilities of the type referred to in Section 199B of the Corporations Act 2001.
16. Significant Changes in State of Affairs
The following significant changes in the state of affairs of the parent entity occurred during the financial period:
- (a) 12,750,000 ordinary shares were issued at 10 cents each for cash consideration. A free option was also issued with each share, exercisable at 20 cents at anytime prior to 31 December 2006.
- (b) 19,986,105 ordinary shares were issued at 20 cents each for cash consideration. A free option for every two shares was also issued, exercisable at 20 cents at anytime prior to 31 December 2006.
- (c) Processing of sapphire bearing alluvial deposits was commenced in April 2005 from the Company's newly established site of operations at Sapphire, Queensland.
17. Non-audit Services
The Board is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor's independence for the following reasons:
- all non-audit services are reviewed and approved by the Board prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor: and
- the nature of the services provided do not compromise the general principles relating to auditor independence as set out in the Institute of Chartered Accountants in Australia and CPA Australia's Professional Statement F1: Professional Independence.
Fees of \$55,347 for non-audit services that were paid or are payable to the external auditors during the vear ended 30 June 2005 were for the preparation of the Investigating Accountants Report included in the Company's Prospectus dated 9th December 2004.
18. Auditor's Independence Declaration
The auditor's independence declaration for the year ended 30 June 2005 has been received and is included on page 18 of this Annual Report.
19. Proceedings on Behalf of Company
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.
Rounding of Amounts 20.
The Company is an entity to which ASIC Class Order 98/100 applies and, accordingly, amounts in the financial statements and directors' report have been rounded to the nearest thousand dollars.
Signed in accordance with a resolution of the Board of Directors
$\bar{z}$
$L$ ata $\mathcal{U}$
William Duchatel Chairman
Anthony Damianos Director
Dated this 30th day of September 2005
RSM Bird Cameron Partners
Chartered Accountants
Level 12, 60 Castlereagh Street Sydney NSW 2000
GPO Box 5138 Sydney NSW 2001
T +6 2 9233 8933 F +61 2 9233 8521 www.rsmi.com.au
AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF AUSTRALIS MINING CORPORATION LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2005 there have been:
- (i) No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
- (b) No contraventions of any applicable code of professional conduct in relation to the audit.
Nor Brid because Parten
RSM Bird Cameron Partners Sydney, New South Wales
Dated this $\sqrt{\smash[b]{\mathcal{O}}}$ day of September 2005
Mide
Partner
LAAUDIT\Clients\2005\803700 Australis\Audit 30,06.05\Independence declaration - June.doc
Liability limited by a scheme approved under Professional Standards Legislation
Major Offices In: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036
RSM Bird Cameron Partners is an independent member firm of RSM International, an affiliation of independent accounting and consulting firms.
MARINE SER
CORPORATE GOVERNANCE STATEMENT
The Board of Australis Mining Corporation Limited (the "Company") determines the corporate governance arrangements for the Company and its controlled entities ("Consolidated Entity"). The Board believes that effective, proactive corporate governance enhances company performance and benefits all stakeholders. Governance practices are not considered as a fixed set of policies but evolve over time depending on the stage of the Company's development.
1. Corporate Governance Framework
As part of preparation for listing on the Australian Stock Exchange ("ASX"), the Board established a framework for corporate governance of the Company's activities. This statement provides a summary of that framework in comparison to the principles and recommendations presented in the document entitled Principles and Best Practice Recommendations, prepared by the ASX's Corporate Governance Council ("CGC"). Where the Company has not followed a recommendation for the whole of the financial year this has been identified together with the reasons for not following it.
In many instances, where a recommendation has not been followed in all respects, the principles of the recommendation have generally been followed, however, it may not have been documented and published on the Company's web site. During the financial year the focus of the Company has been on achieving its listing on the ASX and operational goals. The Board is now working on addressing the formalisation of its corporate governance policies during the 2006 financial year.
$\overline{2}$ Management Oversight by the Board
The Board established an authority delegation matrix, which was adopted on 28 April 2005. The delegation matrix provides a framework for the split of authority and duties between the Board and management. The matrix provides the authority required for a range of activities, including financial transactions, the engagement of consultants and advisors and the release of price sensitive information to the market. The authority delegation matrix is one component of a formal Board Charter, and the remaining components are currently being prepared.
3. Board Structure
Board Members
The Board of Australis consists of a mix of executive and non-executive directors that bring together the requisite skills to effectively oversee the management of the Company. The table below summarises the status of each director and the date of their appointment as director. Details of directors' skills and experience are contained in the Directors' Report.
| Director | Role | Nature of Board Membership |
Date of Appointment |
|---|---|---|---|
| Bill Duchatel | Chairman | Independent | 19 May 2004 |
| Jerry Goddard | Non-executive director | Independent | 28 April 2005 |
| Anthony Damianos | Chief Executive | Non-independent | 6 April 2004 |
| Robert Coenraads | Executive Director | Non-independent | 6 April 2004 |
| Ted Tzovaras | Non-executive director | Non-independent | 6 April 2004 |
| Elias Christianos | Non-executive Director (alternate for Ted Tzovaras) |
Non-independent | 8 July 2004 |
| Mr. Keith Taylor | Non-executive director | Non-independent | 8 July 2004 Resigned 30-6-05 |
The current Board structure does not comply with CGC's recommendations, as the majority of directors are not independent. However the Board believes the current structure is appropriate for the stage of development of the Company. The Board is of the view that the interests of Mr. Tzovaras (and his alternate director Mr. Christianos), as directors of the Company's majority shareholder, are sufficiently aligned with those of other shareholders to ensure Board decision making is in the best interests of all shareholders.
All directors of the Company are also directors of its active subsidiary company so as to facilitate decision-making within the group.
Independent Chairman
Mr. CW Duchatel is the Chairman of the Company and is considered independent by the Board. There is segregation between the role of chairman and the chief executive officer.
Nomination Committee
Nominations to the Board can be brought forward by any director, which would then be This approach does not comply with the CGC considered by the full Board. recommendations, as there is not a separate nomination committee of directors. In view of the size of the Company and its Board there is not considered any efficiency in having a separate nomination committee structure.
Details of the director's attendances at Board and special committee meetings are contained in the Directors' Report.
Independence Criteria
The Company has adopted the following criteria to determine director independence. A director is considered independent if the director:
- is not a current member of the management team, nor been employed as part of management during the past three years;
- is not a substantial shareholder (directly or indirectly) of the Company holding more than 5% of the Company's voting shares;
- within the last three years, has not been a principal of a material professional advisor or consultant to any company within the Consolidated Entity, or an employee materially associated with the service provided; Material is defined as being billings to the Consolidated Entity that exceed 10% of the advisor's revenue or as determined by the Board based on other factors;
-
is not a material supplier or customer of the Company. A material supplier is defined as being one who provides services or goods to the group that are more than 10% of the Consolidated Entity's costs. A material customer is defined as being one whose purchases from the Consolidated Entity amount to more that 10% of its revenue;
-
has no other material contractual relationship with the Consolidated Entity, other than as a director of the Company:
- has not served on the Board for a period which could reasonably be perceived to materially interfere with the director's ability to act in the best interests of the Company:
- is free from any interest and any business or other relationship which could materially interfere with the director's ability to act in the best interests of the Company.
$4.$ Promote ethical and responsible decision making
The Board is currently in the process of formulating a formal code of conduct, including a securities trading policy, for the directors and senior management, to comply with CGC recommendations. However, in the interim, an informal agreement between directors has been in place that any director wishing to buy or sell the securities of the Company should consult with the Chairman prior to the transaction occurring.
5. Safeguard integrity in financial reporting
The Chief Executive Officer and the Chief Financial Officer have made the following certifications to the Board:
- that the Company's financial reports are complete and present a true and fair view in $\blacksquare$ all material respects of the financial condition and operational results of the Company and Consolidated Entity and are in accordance with relevant accounting standards:
- that the statement is founded on a sound system of financial risk management and internal compliance and control which implements policies adopted by the Board; and
- the Company's risk management and internal compliance and control systems are $\bullet$ operating efficiently and effectively in all material aspects.
An Audit Committee was established at a Board meeting held on 28 April 2005. Prior to that all issues relating to the financial management of the Company requiring board oversight were discussed by the full Board of the Company. At these meetings, there was no change of chairman during those discussions.
The Audit Committee currently consists of Mr. Duchatel and Mr. Goddard (Chairman of Audit Committee). Mr. Keith Taylor and Mr. Ted Tzovaras were members of the committee during the financial year. While all members of the Audit Committee were non-executive directors, the committee structure did not comply with CGC recommendations in that:
- a majority of the committee is not independent; and $\bullet$
- it did not have a formal charter. $\bullet$
Subsequent to year-end, Mr. Jerry Goddard has been appointed to the Audit Committee, Mr. Keith Taylor has resigned as a director and Mr. Tzovaras has stepped down from the audit committee. The audit committee now consists of independent and non-executive directors as recommended by the CGC. A formal charter is currently being prepared for the committee.
6. Make Timely and Balanced Disclosure
The Company has a policy in respect of the review and approval by directors for all "price" sensitive" market releases to the ASX. This policy formed part of the authority delegation matrix referred to earlier and the timing and content of releases is closely scrutinised by Board members.
The Board is currently in the process of preparing formal, written policies and procedures to comply with CGC recommendations.
7. Respect the Rights of Shareholders
The Company has an informal policy in respect of providing communication to shareholders regularly and effectively. The Board is currently preparing a formal disclosure policy to comply with CGC recommendations.
The external auditor will attend the first annual general meeting of the Company and will be available to respond to questions about the conduct of the audit and content of the independent audit report.
8. Recognise and Manage Risk
The Company's authority delegation matrix provides a decision-making framework, which allows risks to be identified and managed. The Board as a whole considers issues of risk and financial management and given the current size of the Company a separate risk management committee or internal audit function is not warranted.
Australis does not have a single specific risk management policy, but addresses financial and operating risks through individual policies and procedures covering financial, contract management, safety and environmental activities of the Company. The Company engages an insurance brokering firm as part of its annual assessment of the coverage for insured assets and risks.
The integrity of the Consolidated Entity's financial reporting relies upon a sound system of risk management and control. Accordingly, to ensure management accountability, the Chief Executive Officer and Chief Financial Officer are required to provide a statement in writing to the Board that the financial reports of the Consolidated Entity are based upon a sound risk management policy.
The Board believes it has identified and understood the key risk areas of the Company and is managing them effectively.
9. Encourage Enhanced Performance
The Company's remuneration policies are set out in the Director's Report. A review of performance of directors and senior executives did not occur during the 2004-05 year as it was the Company's first full year of operation.
The Chairman undertakes the induction of new directors to the Board and ensures they have an understanding of:
- the Company's financial, strategic, operational and risk management position;
- their rights, duties and responsibilities;
- the role of the Board committees.
All directors are able to take independent financial advice, if necessary, at the Company's expense after conferring with the Chairman.
All directors are provided with accurate and timely information provided by management on an agreed timetable. Directors are able to request additional information from the Company Secretary where they consider that the information supplied by management is insufficient to support decision-making.
The Company Secretary is accountable to the Board, through the Chairman, on all governance matters. In accordance with directors voting on all other matters, the appointment and removal of the Company Secretary is a matter for approval by a majority of directors.
10. Remunerate Fairly and Responsibly
Australis has established a remuneration committee, which comprises Mr. Duchatel (Chairman) and Mr. Tzovaras. The Board is currently preparing a written charter to comply with CGC recommendations.
The committee did not meet during the year and all remuneration matters were dealt with by the full Board of the Company. Given the Company's size, the Board believes a two-person committee is sufficient to satisfactorily and effectively perform the functions required.
The Company's remuneration policies, and details of the remuneration of highest remunerated executives and the remuneration of all directors, can be found in Note 5 in the Financial Report.
There are no share or option schemes, nor any other retirement benefit schemes in existence.
Recognise the Legitimate Interests of Stakeholders 11.
The Board is currently preparing a formal code of conduct to comply with CGC recommendations.
Financial Report 30 June 2005
| Note | Consolidated Entity 2005 \$000 |
2004 \$000 |
2005 \$000 |
Parent Entity 2004 \$000 |
|
|---|---|---|---|---|---|
| Revenue | 2 | 43 | 29 | ||
| Materials and consumables used | (325) | (98) | |||
| Depreciation and amortisation expense | 3 | (132) | (9) | ||
| Employee benefits expense | (1, 109) | (152) | (856) | (137) | |
| Borrowing costs expense | 3 | (206) | (40) | (14) | |
| Other expenses | (600) | (95) | (434) | (63) | |
| Loss from ordinary activities before income tax expense |
3 | (2, 329) | (385) | (1, 284) | (198) |
| Income tax expense relating to ordinary activities |
4 | ||||
| Net loss from ordinary activities after income tax expense attributable to members of the Company |
(2, 329) | (385) | (1, 284) | (198) | |
| Total changes in equity other than those resulting from transactions with owners as owners |
(2,329) | (385) | (1, 284) | (198) | |
| Basic earnings per share (cents per share) |
7 | (2.9) | (0.3) | ||
| Diluted earnings per share (cents per share) |
7 | (2.9) | (0.3) |
STATEMENT OF FINANCIAL PERFORMANCE For the year ended 30 June 2005
The Statement of Financial Performance should be read in conjunction with the accompanying notes
STATEMENT OF FINANCIAL POSITION As at 30 June 2005
| Consolidated Entity | Parent Entity | ||||
|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | ||
| Note | \$000 | \$000 | \$000 | \$000 | |
| CURRENT ASSETS | |||||
| Cash assets | 8 | 105 | 323 | 104 | 323 |
| Receivables | Q. | 29 | |||
| Inventories | 10 | 159 | |||
| Other | 11 | 119 | 119 | ||
| TOTAL CURRENT ASSETS | 293 | 442 | 104 | 442 | |
| NON CURRENT ASSETS | |||||
| Receivables | 9 | 4,842 | 751 | ||
| Other financial assets | 12 | 10,000 | 10,000 | ||
| Property, plant and equipment | 14 | 5,050 | 3,532 | 63 | 35 |
| Exploration and development | 15 | 12,752 | 11,959 | ||
| TOTAL NON CURRENT ASSETS | 17,802 | 15,490 | 14,905 | 10,786 | |
| TOTAL ASSETS | 18,095 | 15,932 | 15,009 | 11,228 | |
| CURRENT LIABILITIES | |||||
| Payables | 16 | 2,176 | 1,558 | 986 | 131 |
| Interest bearing liabilities | 17 | 116 | 703 | ||
| Provision | 18 | 40 | 26 | ||
| TOTAL CURRENT LIABILITIES | 2,332 | 2,261 | 1,012 | 131 | |
| NON CURRENT LIABILITIES | |||||
| Payables | 16 | 2,761 | |||
| Interest bearing debts | 17 | 2,998 | |||
| TOTAL NON CURRENT LIABILITIES | 2,998 | 2,761 | |||
| TOTAL LIABILITIES | 5,330 | 5,022 | 1,012 | 131 | |
| NET ASSETS | 12,765 | 10,910 | 13,997 | 11,097 | |
| EQUITY Contributed equity |
19 | ||||
| Accumulated losses | 20 | 15,479 (2,714) |
11,295 (385) |
15,479 (1, 482) |
11,295 (198) |
| TOTAL EQUITY | 12,765 | 10,910 | 13,997 | 11,097 | |
The Statement of Financial Position should be read in conjunction with the accompanying notes.
STATEMENT OF CASH FLOWS For the year ended 30 June 2005
| Consolidated Entity | Parent Entity | ||||
|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | ||
| Note | \$000 | \$000 | \$000 | \$000 | |
| CASH FLOWS FROM OPERATING ACTIVITIES |
|||||
| Receipts from customers | 10 | ||||
| Payments to suppliers and employees | (1,266) | (487) | (409) | (69) | |
| Interest received | 29 | 1 | 29 | 1 | |
| Borrowing costs paid | (132) | (14) | |||
| Net cash provided by (used in) operating 26a activities |
(1, 359) | (486) | (394) | (68) | |
| CASH FLOWS FROM INVESTING ACTIVITIES |
|||||
| Purchase of property, plant and equipment | (1,268) | (70) | (37) | (35) | |
| Development expenditure | (741) | ||||
| Exploration expenditure | (83) | ||||
| Proceeds from sale of property, plant and equipment |
5 | ||||
| Net cash provided by (used in) investing activities |
(2,087) | (70) | (37) | (35) | |
| CASH FLOWS FROM FINANCING ACTIVITIES |
|||||
| Advances of related party loans | 1,161 | ||||
| Repayment of related party loans | (1, 453) | (298) | |||
| Payments for performance bond | (29) | ||||
| Repayment of borrowings | (753) | ||||
| Advances to controlled entities | (4,091) | (750) | |||
| Proceeds from issue of shares (net of costs) | 4,303 | 1,176 | 4,303 | 1,176 | |
| Net cash provided by (used in) financing activities |
3,229 | 878 | 212 | 426 | |
| Net increase/(decrease) in cash held | (217) | 322 | (219) | 323 | |
| Cash at 1 July 2004 | 322 | 323 | |||
| Cash at 30 June 2005 | 8 | 105 | 322 | 104 | 323 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES $\mathbf{1}$ .
The financial report is a general purpose financial report that has been prepared in accordance with Accounting Standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The financial report covers Australis Mining Corporation Limited and controlled entities (the "Consolidated Entity"), and Australis Mining Corporation Limited as an individual parent entity (the "Company" or "Parent"). The Company is a listed public company, incorporated and domiciled in Australia.
The financial report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets.
The following is a summary of the material accounting policies adopted by the Consolidated Entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.
$(a)$ Principles of consolidation
A controlled entity is any entity controlled by the Company. Control exists where the Company has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entity operates with the Company to achieve the objectives of the Company. Details of the controlled entities are contained in Note 13.
All inter-company balances and transactions between entities in the Consolidated Entity, including any unrealised profits or losses, have been eliminated on consolidation.
Where a controlled entity has entered or left the Consolidated Entity during the year its operating results have been included from the date control was obtained or until the date control ceased.
$(b)$ Income tax
The Consolidated entity adopts the liability method of tax effect accounting whereby the income tax expense is based on the profit from ordinary activities adjusted for any permanent differences.
Timing differences, which arise due to the different accounting periods in which items of revenue and expense are included in the determination of accounting profit and taxable income, are brought to account as either a provision for deferred income tax or as a future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable.
Future income tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of realisation of the benefit.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation, and the anticipation that the Consolidated Entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
Australis Mining Corporation Limited and its wholly owned subsidiary, Australis Mining Operations Old Pty Limited, have been consolidated for tax purposes under the Tax Consolidation System from 6 April 2004. Australis Mining Corporation Limited is responsible for recognising the current and deferred tax assets and liabilities for the consolidated group. The tax consolidated group has entered a tax sharing agreement whereby each company in the group contributes to the income tax payable in proportion to their contribution to the taxable profit of the tax consolidated group.
$(c)$ Inventories
Inventories are measured at the lower of cost and net realisable value. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity.
$(d)$ Property, plant and equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation.
Property
Freehold land and buildings are measured on the fair value basis, being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction. It is the policy of the Consolidated Entity to have an independent valuation every three years, with annual appraisals being made by the directors.
Plant and equipment
Plant and equipment are measured on the fair value basis, except for office equipment, which is measured on the cost basis.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from those assets. The recoverable amount is assessed on the basis of the expected net cash flows, which will be received from the assets employment and subsequent disposal. The expected net cash flows have not been discounted to present values in determining the recoverable amount. An annual appraisal of the fair value is made by the directors.
The cost of plant constructed by the consolidated entity includes the cost of all materials used in construction, direct labour on the project and an appropriate proportion of variable and fixed overhead expenditure. Output produced during commissioning of plant has been valued at cost and deducted from the costs of construction.
Revaluation
Increments arising from the valuation of non-current assets have been taken to Asset Revaluation Reserve. Decrements have been offset against previous increments relating to the same class of assets and the balance taken to the Statement of Financial Performance.
Depreciation
The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, are depreciated on a straight line basis over their useful lives to the Company commencing from the time the asset is held ready for use. Properties held for investment purposes are not subject to a depreciation charge. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
The depreciation rates used for each class of depreciable asset are:
| Class of fixed asset | Depreciation rate |
|---|---|
| Buildings | -25% |
| Plant and equipment | $10\% - 25\%$ |
$(d)$ Leases
Leases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership, are transferred to the entities within the Consolidated Entity, are classified as finance leases. Finance leases are capitalised, recording an asset and a liability equal to the present value of the minimum lease payments, including any guaranteed residual values. Leased assets are depreciated on a straight line basis over their estimated useful lives where it is likely that the Consolidated Entity will obtain ownership of the asset or over the term of the lease. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred. Lease incentives received under operating leases are recognised as a liability.
Investments $(e)$
Non-current investments are recognised at cost. The carrying amount of investments is reviewed annually by directors to ensure it is not in excess of the recoverable amount of these investments. The recoverable amount is assessed from the underlying net assets for non-listed companies. The expected net cash flows from investments have been discounted to their present value in determining the recoverable amounts.
$(f)$ Mine Development & Exploration
Exploration Expenditure
Exploration and evaluation expenditure is accumulated in respect of each identifiable area of interest. The expenditure is carried forward in the financial statements, in respect of areas of interest for which the rights of tenure are current and where:
- such costs are expected to be recouped through the successful development of $\bullet$ the area or, alternatively, its sale; or
- where activities in the area have not yet reached a stage which permits $\bullet$ reasonable assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.
Mine Development Expenditure
Mine development expenditure represents the acquisition costs and/or accumulation of exploration, evaluation and development expenditure in respect of areas of interest in which mining has commenced. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.
When further development expenditure is incurred in respect of a mine property after the commencement of production, such expenditure is carried forward as part of Development Expenditure only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.
Costs of site restoration are provided over the life of the facility from when mining commences. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal, and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on an undiscounted basis. Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.
$(g)$ Foreign currency transactions and balances
Foreign currency transactions during the year are converted to Australian currency at the rates of exchange applicable at the dates of the transactions. Amounts receivable and payable in foreign currencies at balance date are converted at the rates of exchange ruling at that date.
$(h)$ Employee benefits
Provisions are made for the Company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year together with benefits arising from wages and salaries, annual leave and sick leave which will be settled after one year, have been measured at the amounts expected to be paid when the liability is settled plus related on-costs. Other employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.
Contributions are made by the Consolidated Entity to an employee superannuation fund and are charged as expenses when incurred.
$(i)$ Revenue
Revenue from the sale of goods is recognised upon the delivery of goods to customers.
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.
Dividend revenue is recognised when the right to receive a dividend has been established.
Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.
$(i)$ Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST.
$(k)$ Rounding of Amounts
The parent entity has applied the relief available to it under ASIC Class Order 98/100 and, accordingly, amounts in the financial report and directors' report have been rounded off to the nearest \$1,000.
$(1)$ Impact of Adoption of Australian Equivalents to International Financial Reporting Standards
The Consolidated Entity will be required to prepare financial statements that comply with Australian equivalents to International Financial Reporting Standards ("AIFRS") for its annual reporting period beginning on 1 July 2005. The Consolidated Entity's first half-year report prepared under AIFRS will be for the period ended 31 December 2005, and its first annual report financial report prepared under AIFRS will be for the year ended 30 June 2006.
Adopting AIFRS for the first time will result in the comparative financial statements being restated to amounts reflecting the application of AIFRS to that comparative period. Most adjustments required on transition to AIFRS will be made retrospectively, against opening retained earnings as at 1 July 2004.
As at the date of this financial report, an assessment of the significance of the expected changes and preparation for their implementation is still being considered. However the initial view has been formed that the following key material differences in the Consolidated Entity's accounting policies will occur on conversion to AIFRS. Users of the this financial report should note, however, that the amounts disclosed could change if there are any amendments by standard-setters to the current AIFRS or interpretation of the AIFRS requirements changes from the continuing work on this issue.
Impairment of assets
Under AASB 136: Impairment of Assets, the recoverable amount of an asset is determined as the higher of fair value less costs to sell, and value in use. In determining value in use, projected future cash flows are discounted using a risk adjusted pre-tax discount rate and impairment is assessed, in the Company's case at the 'cash generating unit' (i.e. business unit) level. The Company's current policy is to determine the recoverable amount of an asset on the basis of undiscounted net cash flows that will be received from the asset's use and subsequent disposal. This change in accounting policy may lead to impairments being recognised more often.
Provision for rehabilitation
AASB 137 "Provisions, Contingent Liabilities and Contingent Assets" requires the rehabilitation, restoration and decommissioning obligations associated with the retirement or disposal of mine site assets to be recognised when the disturbance and obligation occurs. The provision is measured at the present value of the future expenditure and a corresponding asset is also recognised under AASB 116 "Property, Plant and Equipment". The capitalised cost is amortised over the life of the project and a provision is increased as further disturbance occurs which creates a further obligation to rehabilitate. Associated discounting of the liability unwinds throughout the life of the provision; with this unwind being recognised as an interest expense.
Currently under Australian generally accepted accounting principals, the Consolidated Entity recognizes a rehabilitation liability which progressively increases over the life of the operation. The build up is taken to the Statement of Financial Performance as the liability is raised.
Income taxation
Currently, tax losses have not been recognised under current Australian generally accepted accounting principals as there has not been virtual certainty that the losses will be utilised. Under AASB 112: Income Taxes unused tax losses may be recognised to the extent that it is probable that future taxable amounts within the entity will be available against which the losses can be utilized.
| Consolidated Entity | Parent Entity | |||
|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |
| \$000 | \$000 | \$000 | \$000 | |
| 2. REVENUE |
||||
| Revenue from operating and non-operating activities comprises: |
||||
| Operating Activities | ||||
| - sale of goods | 10 | |||
| - interest received - other persons | 29 | 29 | ||
| 39 | $\overline{\phantom{a}}$ | 29 | ||
| Non operating activities | ||||
| - sale of equipment | 4 | |||
| Total Revenue | 43 | 29 | ||
| з. LOSS FROM ORDINARY ACTIVITIES |
||||
| (a) Expenses | ||||
| Cost of goods sold | 21 | |||
| Borrowing costs - other persons | 206 | 40 | 14 | |
| Depreciation of non-current assets | ||||
| - buildings | $\mathbf{1}$ | |||
| - plant and equipment | 162 | 9 | ||
| - leased plant and equipment | 50 | |||
| 213 | 9 | |||
| Less capitalisation of depreciation charges | (81) | |||
| 132 | 9 | |||
| Amortisation of non-current assets | ||||
| - mine development | 30 | |||
| Less capitalisation of amortisation charges | (30) | |||
| Total depreciation and amortisation | 132 | 9 |
| Consolidated Entity | Parent Entity | ||||
|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | ||
| \$000 | \$000 | \$000 | \$000 | ||
| Rental expense on operating leases | |||||
| - minimum lease payments | 83 | ||||
| Net loss on disposal of non-current assets: | |||||
| - property, plant and equipment | 12 | ||||
| Provision for employee entitlements | 40 | 26 | |||
| (b) | Significant Expenses | ||||
| The following significant expense items are relevant in explaining the financial performance: |
|||||
| Costs relating to the Initial Public Offering of the shares of the Company not offset against the capital raised. |
318 | ||||
| Rehabilitation costs of mining lease not provided for in previous years |
660 | ||||
| 4. | INCOME TAX EXPENSE | ||||
| only be obtained if: | No income tax is payable by the consolidated entity and parent entity as each incurred a tax loss for the period ended 30 June 2005. The benefit of carried forward tax losses will |
||||
| (a) the Consolidated Entity and the parent entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised; |
|||||
| (b) tax legislation; and |
the Consolidated Entity and the parent entity continues to comply with the conditions for deductibility imposed by |
||||
| (c) | no changes in tax legislation adversely affect the Consolidated Entity and the parent entity in realising the benefit from the deductions for the losses. |
||||
| Carried forward tax losses | 4,032 | 1,948 | 1,284 | 198 |
5. DIRECTORS AND EXECUTIVE REMUNERATION
$\left( a\right)$ Names and positions held of Directors and Specified Executives of the Company and Consolidated Entity in office at any time during the financial year were:
Parent Entity Directors:
| William Duchatel | Chairman - Non-Executive | |
|---|---|---|
| Anthony Damianos | Managing Director - Executive | |
| Robert Coenraads | Director - Executive | |
| Keith Taylor | Director – Non Executive | Appointed 8 July 2004 |
| Resigned 30 June 2005 | ||
| John Goddard | Director – Non Executive | Appointed 28 April 2005 |
| Ted Tzovaras | Director – Non-Executive | |
| Elias Christianos | Alternate - Director- Non-Executive Appointed 8 July 2004 |
Specified Executives:
| George Christianos | General Manager - Operations | |
|---|---|---|
| Christian Christianos | General Manager - Marketing | |
| Warren Kember | Chief Financial Officer & | |
| Company Secretary | Appointed 6 December 2004 | |
| Penny Kyros | Company Secretary | Removed 24 March 2005 |
$(d)$ Parent Entity Directors' Remuneration
| 2005 | Post- | ||||
|---|---|---|---|---|---|
| Primary Benefits | Employment | ||||
| Director | Salary & | Non-cash Superannuation | Total | ||
| Fees | Benefits Contributions | Package | |||
| \$000 | \$000 | \$000 | \$000 | ||
| Bill Duchatel | 60 | 5 | 65 | ||
| Anthony Damianos | 142 | 16 | 13 | 171 | |
| Robert Coenraads | 120 | ٠ | پ | 120 | |
| Keith Taylor | 39 | 4 | 43 | ||
| Jerry Goddard | 6 | 6 | |||
| Ted Tzovaras | 40 | 40 | |||
| Elias Christianos | $\overline{\phantom{a}}$ | ||||
| 407 | 16 | 22 | 445 |
| 2004 | Post- | |||
|---|---|---|---|---|
| Primary Benefits | Employment | |||
| Director | Salary & | Non-cash Superannuation | Total | |
| Fees \$000 |
\$000 | Benefits Contributions \$000 |
Package \$000 |
|
| Bill Duchatel | 11 | 11 | ||
| Anthony Damianos | 29 | З | 32 | |
| Robert Coenraads | 21 | $\overline{a}$ | 21 | |
| Keith Taylor | $\sim$ | |||
| Ted Tzovaras | 6 | ٠ | 6 | |
| Elias Christianos | ٠ | |||
| 68 | з | 71 |
There were no post-employment, equity or other benefits provided to directors during either the 2004 or 2005 financial years.
Specified Executives' Remuneration $(c)$
| 2005 | Primary Benefits | Post- Employment |
||
|---|---|---|---|---|
| Director | Salary & Fees \$000 |
Benefits \$000 |
Non-cash Superannuation Contribution \$000 |
Total Package \$000 |
| George Christianos | 142 | 26 | 13 | 181 |
| Christian Christianos | 142 | 7 | 13 | 162. |
| Warren Kember | 105 | $\omega$ | 105 | |
| Penny Kyros | 103 | ٠ | 103 | |
| 492 | 33 | 26 | 551 | |
| ---- |
| 2004 | Post- | ||||
|---|---|---|---|---|---|
| Primary Benefits | Employment | ||||
| Director | Salary & | Non-cash Superannuation | Total | ||
| Fees \$000 |
Benefits \$000 |
Contribution \$000 |
Package \$000 |
||
| George Christianos | 29 | З | 32 | ||
| Christian Christianos | 29 | من | З | 32 | |
| Warren Kember | 17 | ٠ | L | 17 | |
| Penny Kyros | 11 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 11 | |
| 86 | 5 | 92 |
There were no post-employment, equity or other benefits provided to Specified Executives during either the 2004 or 2005 financial years.
$(d)$ Option Holdings
Number of options held by Specified Executives and Directors as at 30 June 2005 and any movements from the prior year are detailed below. All options have an expiry date of 31 December 2006, convert at one option for one ordinary share and have an exercise price of \$0.20 per share.
| Director | 30.6.04 | Balance Issued pre Issued on TPO(1) |
IPO(2) | Net Change Other $(3)$ |
Balance 30.6.05 |
|---|---|---|---|---|---|
| Parent Entity Directors | |||||
| William Duchatel | 500,000 | 500,000 | |||
| Anthony Damianos | 25,000 | 25,000 | |||
| Robert Coenraads | 610,000 | ÷. | 20,000 | 630,000 | |
| Keith Taylor | |||||
| Resigned 30 June 2005 | |||||
| Jerry Goddard | 200,000 | 85,000 | (50,000) | 235,000 | |
| Ted Tzovaras | |||||
| Elias Christianos | |||||
| Specified Executives | |||||
| George Christianos | 170,000 | 170,000 | |||
| Christian Christianos | |||||
| Warren Kember | 700,000 | 700,000 | |||
| Penny Kyros | |||||
| Removed 24 March 2005 | |||||
| Total 610,000 1,570,000 | 130,000 | (50,000) | 2,260,000 |
Issued upon subscription for ordinary shares for 10 cents each prior to the $(1)$ Initial Public Offering of the Company's securities.
Issued upon subscription for ordinary shares for 20 cents each as part of the $(2)$ Initial Public Offering of the Company's securities
Net change other refers to shares purchased or sold during the financial year. $(3)$
Shareholdings $(e)$
The number of shares held by Parent entity directors and Specified Executives as at 30 June 2005 and any movements from the prior year is detailed below.
| Net | |||||
|---|---|---|---|---|---|
| Balance Issued preIssued on | Change | Balance | |||
| Director | 30.6.04 | TPO(1) | IPO (2) | Other (3) | 30.6.05 |
| Parent Entity Directors | |||||
| William Duchatel | 500,000 | 500,000 | |||
| Anthony Damianos | ù. | 50,000 | 50,000 | ||
| Robert Coenraads | 610,000 | $\tilde{\phantom{a}}$ | 40,000 | 650,000 | |
| Keith Taylor | |||||
| Resigned 30 June 2005 | |||||
| John Goddard | 200,000 | 200,000 | |||
| Ted Tzovaras & | |||||
| Elias Christianos (4) | 48,000,000 | 48,000,000 | |||
| Specified Executives | |||||
| George Christianos | 170,000 | 170,000 | |||
| Christian Christianos | $\sim$ | ||||
| Warren Kember | 700,000 | 700,000 | |||
| Penny Kyros | |||||
| Removed 24 March 2005 | |||||
| Total | 48,610,000 1,570,000 | 90,000 | 50,270,000 |
(1) Issued upon subscription for ordinary shares for 10 cents each prior to the Initial Public Offering of the Company's securities.
(2) Issued upon subscription for ordinary shares for 20 cents each as part of the Initial Public Offering of the Company's securities
(3) Net change other refers to options purchased or sold during the financial year.
(4) Nikiticorp Limited owns 48,000,000 ordinary shares of the Company and is controlled by Mr. Tzovaras and Mr. Christianos.
$\mathbf{f}$ Remuneration Practices
The Company's policy for determining the nature and amount of emoluments of Board members and senior executives of the Company is as follows:
The remuneration structure for executive officers, including executive directors, is based on a number of factors, including length of service, particular experience of the individual concerned, and overall performance of the Company. The contracts for service between the Company and specified directors and executives are on a continuing basis the terms of which are not expected to change in the immediate future. Upon retirement specified directors and executives are paid employee benefit entitlements accrued to date of retirement.
The Company may terminate the contracts without cause by providing 1 month written notice or making payment in lieu of notice based on the individual's annual salary component together with any applicable redundancy payment as recommended by State-based legislation. Termination payments are generally not payable on resignation or dismissal for serious misconduct. In the instance of serious misconduct the Company can terminate employment at any time.
The group seeks to emphasize payment for results through a cash bonus scheme. The scheme provides for payment of a cash bonus upon achievement of key performance indicators ("KPIs") such as return on equity. Bonuses were not paid or provided for in the 2005 financial year as the KPIs were not met. The objective of the reward schemes is to both reinforce the short and longterm goals of the Company and to provide a common interest between management and shareholders.
Number of employees at year end gì
| Consolidated Entity | Parent Entity | |||
|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |
| \$000 | \$000 | \$000 | \$000 | |
| No. | No. | No. | No. | |
| Number of employees at year end | 30 | 10 | 11 | 8 |
options.
| Consolidated Entity | Parent Entity | ||||
|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | ||
| \$000 | \$000 | \$000 | \$000 | ||
| 6. | AUDITORS REMUNERATION | ||||
| During the year the following fees were paid to the auditor of the parent entity and its related practices. |
|||||
| Auditing and reviewing of financial reports | 47 | 18 | 32 | 5 | |
| Other services | 55 | 55 | |||
| Total fees | 102 | 18 | 87 | 5 | |
| The other services consisted of preparation of an Investigating Accountants Report for inclusion in a prospectus issued by the Company. |
|||||
| 7. | EARNINGS PER SHARE | ||||
| Basic earnings per share (cents per share) Diluted earnings per share(cents per share) |
(2.9) (2.9) |
(0.3) (0.3) |
|||
| Net profit after tax has been used as earnings in calculation of earnings per share |
(2, 329) | (197) | |||
| No. | No. | ||||
| Weighted average number of ordinary shares outstanding during the year used in the calculation of basic earnings per share |
79,332,170 62,950,000 | ||||
| Effective of dilutive securities - share options | |||||
| share | Adjusted weighted average number of ordinary shares outstanding during the year used in calculation of diluted earnings per |
79,332,170 62,950,000 | |||
| No adjustment has been made for dilution by share options as the share price at year end was less than the exercise price of the |
| Consolidated Entity | Parent Entity | ||||
|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | ||
| \$000 | \$000 | \$000 | \$000 | ||
| 8. | CASH ASSETS | ||||
| Cash at bank | 105 | 323 | 104 | 323 | |
| Reconciliation of Cash | |||||
| Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the Statement of Financial Position as follows: |
|||||
| Cash | 105 | 323 | 104 | 323 | |
| Bank overdraft | (1) | ||||
| 105 | 322 | 104 | 323 | ||
| 9. | RECEIVABLES | ||||
| Current | |||||
| Sundry receivables | 29 | ||||
| Non-current | |||||
| Amount receivable from controlled entity | 4,842 | 751 | |||
| 10. | INVENTORY | ||||
| Current | |||||
| Finished goods - at cost | 159 | ||||
| 11. | OTHER ASSETS | ||||
| Current | |||||
| Initial public offering expenditure | 119 | 119 | |||
| 12. | OTHER FINANCIAL ASSETS | ||||
| Shares in controlled entities - at cost | 10,000 | 10,000 | |||
| 13. | CONTROLLED ENTITIES | Country of Incorporation |
Percentage owned | ||
| 2005 % |
2004 % |
||||
| Parent Entity: | |||||
| Australis Mining Corporation Limited Subsidiaries: |
Australia | ||||
| Australis Mining Operations Qld Pty Ltd Queensland Sapphires Mining Pty Ltd |
Australia Australia |
100 51 |
100 51 |
| Consolidated Entity | Parent Entity | |||
|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |
| \$000 | \$000 | \$000 | \$000 | |
| 14. PROPERTY, PLANT AND EQUIPMENT | ||||
| LAND AND BUILDINGS | ||||
| Freehold Land | ||||
| Directors' valuation 2004 | 227 | 227 | ||
| Cost | 3 | 3. | ||
| Total Land | 230 | 230 | $\omega$ | |
| Buildings | ||||
| Cost | 16 | 8 | ||
| Accumulative depreciation | (7) | (6) | $\omega$ | |
| Total Buildings | G. | $\overline{2}$ | $\bar{\omega}$ | |
| Total Land and Buildings | 239 | 232 | $\overline{\phantom{a}}$ | |
| PLANT AND EQUIPMENT | ||||
| Plant and equipment: | ||||
| At cost | 1,298 | 80 | 72 | 35 |
| Directors' valuation 2004 | 3,250 | 3,250 | ù, | |
| Accumulated depreciation | (230) | (31) | (9) | |
| Total plant and equipment | 4,318 | 3,299 | 63. | 35 |
| Leased plant and equipment: | ||||
| At cost | 543 | |||
| Accumulated depreciation | (50) | |||
| Total leased plant and equipment | 493 | L. | $\overline{a}$ | |
| Total Plant and Equipment | 4,811 | 3,299 | 63 | 35 |
| Total Property, Plant and Equipment | 5,050 | 3,531 | 63 | 35 |
In adopting the valuation that is disclosed above, the Directors have had regard to an independent market appraisal of the plant and equipment prepared in 2004.
$\left( \mathrm{a}\right)$ Movements in carrying amounts
Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year:
| Freehold Land |
Buildings | Plant and Equipment |
Leased Plant and Equipment |
Total | |
|---|---|---|---|---|---|
| \$000 | \$000 | \$000 | \$000 | \$000 | |
| Consolidated Entity Balance at the |
|||||
| beginning of the period |
230 | 2 | 3,299 | 3,531 | |
| Additions | 8 | 1,198 | 543 | 1,749 | |
| Disposals | $\overline{a}$ | (17) | (17) | ||
| Depreciation expense |
(1) | (162) | (50) | (213) | |
| Carrying amount at the end of the period |
230 | 9 | 4,318 | 493 | 5,050 |
| Parent Entity Balance at the |
|||||
| beginning of the vear |
35 | 35 | |||
| Additions | 37 | 37 | |||
| Depreciation expense |
(9) | (9) | |||
| Carrying amount at the end of the period |
63 | 63 |
| Consolidated Entity | Parent Entity | ||||
|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | ||
| \$000 | \$000 | \$000 | \$000 | ||
| (b) | Carrying value of plant and equipment in the course of construction |
3.129 | 2.052 | $\blacksquare$ | $\overline{\phantom{a}}$ |
| Consolidated Entity | Parent Entity | |||
|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |
| \$000 | \$000 | \$000 | \$000 | |
| EXPLORATION AND DEVELOPMENT 15. |
||||
| DEVELOPMENT COSTS | ||||
| – PRODUCTION PHASE | ||||
| Directors' valuation 2004 | 11,959 | 11,959 | ||
| Expenditure incurred during the year | 740 | |||
| Amortisation | (30) | |||
| Total Mine Development | 12,669 | 11,959 | ||
| EXPLORATION EXPENDITURE | ||||
| Cost brought forward | ||||
| Expenditure incurred during the year | 83 | |||
| Amortisation | ||||
| Total Exploration Expenditure | 83 | |||
| Total Exploration and Development | 12,752 | 11,959 | $\blacksquare$ | |
| 16. PAYABLES |
||||
| Current | ||||
| Trade creditors | 849 | 181 | 540 | 43 |
| Sundry creditors | 587 | 627 | 115 | 88 |
| Amounts payable to | ||||
| - ultimate parent entity | 200 | 200 | ||
| - directors or director-related entities | 540 | 751 | 131 | |
| 2,176 | 1,558 | 986 | 131 | |
| Non current | ||||
| Amounts payable to director | 2,761 | |||
| The amounts payable to directors comprise: | ||||
| Loans payable to Mr Elias Christianos (1) | 3,063 | |||
| Fees payable to Tzovaras Legal, of which Mr Ted Tzovaras is a principal (2) |
469 | 338 | 131 | |
| Amounts owed to ultimate parent entity (3) | 200 | 200 | ||
| Amounts owed to Mr Anthony Damianos (4) | 71 | 112 | ||
| 740 | 3,513 | 330 |
| Consolidated Entity | Parent Entity | |||||
|---|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |||
| \$000 | \$000 | \$000 | \$000 | |||
| Current | 740 | 751 | 331 | |||
| Non-current | 2,762 | |||||
| 740 | 3,513 | 331 | ||||
| (1) (2) |
The amount payable to a director has been reclassified as an interest bearing debt The fees are payable to Tzovaras Legal at a date to be mutually agreed. |
17 | ||||
| (3) | The loan from the ultimate parent entity has been made pursuant to a standby loan facility agreement dated 3 May 2005 that expired on 30 June 2005. Refer Note 24. |
|||||
| (4) | The amount is payable to Mr Damianos at a date to be mutually agreed. |
|||||
| 17. | INTEREST BEARING LIABILITIES | |||||
| Current | ||||||
| Loan - secured | 701 | |||||
| Bank overdraft - secured | 2 | |||||
| Lease liability - secured | 21 | 116 | ||||
| 116 | 703 | - | ||||
| Non Current | ||||||
| Loan from director (1) | 16 | 2,683 | ||||
| Lease liability | 21 | 315 | ||||
| 2,998 | ||||||
| (1) | The loan is repayable within 3 years from 7 March 2005. During the financial year an amount of \$453,081 has been repaid and interest of \$73,564 capitalised since 7th March 2005 when the loan first became interest bearing. |
|||||
| (a) | Total current and non-current secured liabilities |
|||||
| Loan | 701 | |||||
| Bank overdraft | $\overline{2}$ | |||||
| Lease liability | 21 | 431 | ||||
| 431 | 703 |
| Consolidated Entity | Parent Entity | |||||
|---|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |||
| \$000 | \$000 | \$000 | \$000 | |||
| (b) | The carrying amounts of non-current assets pledged as security Assets subject to lease |
493 | ||||
| First Mortgage: | ||||||
| Freehold land and buildings | 233 | |||||
| Floating charge | 15,258 | |||||
| Total assets pledged as security | 493 | 15,491 | $\hat{\phantom{a}}$ | |||
| 18. | PROVISIONS | |||||
| Current | ||||||
| Employee entitlements | 40 | 26 | ||||
| 19. | CONTRIBUTED EQUITY | |||||
| 95,686,105 fully-paid ordinary shares | 15,479 | 11,295 | 15,479 | 11,295 | ||
| (a) | Ordinary Shares issued and fully paid | |||||
| Movements in ordinary shares by value At the beginning of the financial year Shares issued prior to public offering Shares issued on 15 February 2005 Transaction costs of share issues |
19c | 11,295 1,275 3,997 (1,088) |
11,295 | 11,295 1,275 3,997 (1,088) |
11,295 | |
| At the end of the financial year | 15,479 | 11,295 | 15,479 | 11,295 | ||
| Movements in ordinary shares by number |
No. | No. | No. | No. | ||
| At the beginning of the financial year Shares issued prior to public offering Shares issued on 15 February 2005 |
62,950,000 19c 12,750,000 19,986,105 |
$-62,950,000$ 62,950,000 12,750,000 $-19,986,105$ |
62,950,000 | |||
| At the end of the financial year | 95,686,105 | 62,950,000 95,686,105 | 62,950,000 | |||
| Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of eharee held |
At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.
| Consolidated Entity | Parent Entity | ||||
|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | ||
| \$000 | \$000 | \$000 | \$000 | ||
| Options over unissued shares | |||||
| Movement in options by number | No. | No. | No. | No. | |
| At the beginning of the financial year | 12,950,000 | $-12,950,000$ | |||
| Options issued prior to public offering | 19c 12,750,000 | 12.950.000 12.750.000 | 12.950.000 | ||
| Options issued on 15 February 2005 | 9,993,053 | $\overline{\phantom{a}}$ | 9,993,053 | ||
| At the end of the financial year | 35,693,053 | 12.950.000 35.693.053 | 12,950,000 |
The terms of all options are:
exercise price is \$0.20; $\bullet$
$(b)$
- each option entitles the holder to $\bullet$ one ordinary share; and
- the options are exercisable anytime ٠ before 31 December 2006 at the discretion of the option holder.
There were no options exercised during the financial year.
$(c)$ Shares and options issued pre-initial public offering by date of issue
| Ordinary Shares Issued | Options Issued | ||
|---|---|---|---|
| No. of shares |
Issue price | \$ No. of options | |
| 500,000 | \$0.10 | 50,000 | 500,000 |
| 1,000,000 | \$0.10 | 100,000 | 1,000,000 |
| 1,200,000 | \$0.10 | 120,000 | 1,200,000 |
| 400,000 | \$0.10 | 40,000 | 400,000 |
| 700,000 | \$0.10 | 70,000 | 700,000 |
| 250,000 | \$0.10 | 25,000 | 250,000 |
| 1,500,000 | \$0.10 | 150,000 | 1,500,000 |
| 50,000 | \$0.10 | 5,000 | 50,000 |
| 930,000 | \$0.10 | 93,000 | 930,000 |
| 480,000 | \$0.10 | 48,000 | 480,000 |
| 500,000 | \$0.10 | 50,000 | 500,000 |
| 490,000 | \$0.10 | 49,000 | 490,000 |
| 500,000 | \$0.10 | 50,000 | 500,000 |
| 200,000 | \$0.10 | 20,000 | 200,000 |
| 1,300,000 | \$0.10 | 130,000 | 1,300,000 |
| 500,000 | \$0.10 | 50,000 | 500,000 |
| 700,000 | \$0.10 | 70,000 | 700,000 |
| 100,000 | \$0.10 | 10,000 | 100,000 |
| 100,000 | \$0.10 | 10,000 | 100,000 |
| 60,000 | \$0.10 | 6,000 | 60,000 |
| 460,000 | \$0.10 | 46,000 | 460,000 |
| 120,000 | \$0.10 | 12,000 | 120,000 |
| 170,000 | \$0.10 | 17,000 | 170,000 |
| 540,000 | \$0.10 | 54,000 | 540,000 |
| 12,750,000 | 1,275,000 | 12,750,000 |
a.
| Consolidated Entity | Parent Entity | ||||
|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | ||
| \$000 | \$000 | \$000 | \$000 | ||
| 20. | ACCUMULATED LOSSES | ||||
| Accumulated losses at the beginning of the financial year |
(385) | (198) | |||
| Company | Net loss attributable to members of the | (2, 329) | (385) | (1, 284) | (198) |
| Accumulated losses at the end of the financial year |
(2, 714) | (385) | (1, 482) | (198) | |
| 21. | LEASING COMMITMENTS | ||||
| (a) | Operating lease commitments | ||||
| Non-cancellable operating leases contracted for but not capitalised in the financial statements: Payable: |
|||||
| Not later than 1 year | 125 | 20 | 121 | 20 | |
| Later than 1 year but less than 5 years | 536 | 536 | |||
| 661 | 20 | 657 | 20 | ||
| The property lease is a non-cancellable lease with a 5-year term, with rent payable monthly in advance. Rent is reviewed to market rates annually. An option exists to renew the lease at the end of the 5-year term for an additional term of 5 years. |
|||||
| (b) | Finance Lease Commitments | ||||
| Payable: | |||||
| Not later than 1 year | 137 | ||||
| Later than 1 year but less than 5 years | 356 | ||||
| 493 | |||||
| Less future finance charges | 62 | ||||
| 431 | ù. |
| Consolidated Entity | Parent Entity | |||||
|---|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |||
| \$000 | \$000 | \$000 | \$000 | |||
| 22. | CONTINGENT LIABILITIES | |||||
| aì | Costs of issue of shares and listing on the Australian Stock Exchange |
623 | 623. | |||
| b) | Bank guarantees issued by a bank secured over assets of Australis Mining Operations Qld Pty Limited. The guarantees were issued to the Queensland Department of Mines to secure rectification work required on leases held by the Consolidated Entity. The carrying amount of assets provided as security is \$227,000 (2004:\$227,000) |
42 | 54 | |||
| C) | Bank guarantee issued by a bank secured over cash held by the parent entity. The guarantees were issued to secure rental payments for leased office premises. The carrying amount of assets provided as security is \$111,000 (2004:Nil) |
111 | 111 |
| Note | Consolidated Entity | Parent Entity | ||||
|---|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |||
| \$000 | \$000 | \$000 | \$000 | |||
| 23. | RELATED PARTY TRANSACTIONS | |||||
| Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. |
||||||
| entities | Transactions with directors or director-related | |||||
| (a) | Fees incurred during the financial year for legal services by Tzovaras Legal, of which Mr. Ted Tzovaras is a principal. |
-16 | 142 | 338 | 142 | 338 |
| (b) | Fees and commissions paid to Axis Financial Group (Australia) Limited for advisory fees and stock broking commissions. Mr. Keith Taylor is a senior executive with Axis Financial Group (Australia) Limited. |
105 | 105 | |||
| (c) | Loan provided by Mr. Elias Christianos 16 | |||||
| Repayments | 453 | 453 | ||||
| Interest capitalised | 74 | 74 | ||||
| (c) | Amount owed to Mr. Anthony Damianos | |||||
| Repayments | 41 | 41 | ||||
| Transactions with ultimate parent entity | ||||||
| Advances and repayments made | 16 | |||||
| pursuant to standby loan facility agreement dated 3 May 2005. Advances |
||||||
| 1,161 | 1,161 | |||||
| Repayments | (961) | (961) | ||||
| Balance owing 30 June 2005 | 200 | 200 |
| Note | Consolidated Entity | Parent Entity | ||
|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |
| \$000 | \$000 | \$000 | \$000 |
$24.$ EVENTS SUBSEQUENT TO REPORTING DATE
- Capital expenditure of \$211,000 has $(a)$ been funded by way of a lease facility.
- The standby loan facility provided by $(b)$ the ultimate parent entity has been increased to \$2.0 million and its term $16$ extended until 30 June 2006. The loan facility became interest bearing from 1st July 2005.
- Sales of \$436,219 were made to the $(c)$ ultimate parent entity. An ongoing sales relationship between the Consolidated Entity and the ultimate parent entity has been proposed and is subject to shareholder approval.
SEGMENT REPORTING 25.
The Company operates in one geographic location, Australia, and undertakes the mining of sapphires.
26 CASH FLOW INFORMATION
| (a) | Reconciliation of Cash Flow from Operations with Profit from Ordinary Activities after Income Tax |
||||
|---|---|---|---|---|---|
| Profit from ordinary activities after income tax |
(2, 329) | (385) | (1, 284) | (198) | |
| Non-cash flows in profit from ordinary activities |
|||||
| Depreciation | 132 | 9 | |||
| Borrowing costs | 40 | ||||
| Loss on sale of equipment | 17 | ||||
| Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries: |
|||||
| Decrease in prepayments | 119 | ||||
| Increase in inventories | (158) | ||||
| (Increase)/decrease in payables | 820 | (140) | 855 | 131 | |
| (Increase)/decrease in provisions | 40 | 26 | $\overline{\phantom{a}}$ | ||
| Cash flow from operations | (1, 359) | (486) | (394) | (68) |
2006.
| Consolidated Entity | Parent Entity | |||||
|---|---|---|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 | |||
| \$000 | \$000 | \$000 | \$000 | |||
| (b) | Acquisition of Entity | |||||
| During the 2004 year 100% of the controlled entity Australis Mining Operations Qld Pty Ltd (formerly Junior Mining (Operations) Pty Limited) was acquired. Details of this transaction are: Purchase consideration (Note 19) |
10,000 | 10,000 | ||||
| Issue of ordinary shares (Note 19) | 10,000 | 10,000 | ||||
| Assets and liabilities held at acquisition date: |
||||||
| Property, plant and equipment | 15,350 | |||||
| Creditors | (5,350) | |||||
| 10,000 | ÷. | |||||
| (c) | Non-cash Financing and Investment Activities During the year the Consolidated Entity acquired plant and equipment with an aggregate value of \$480,000 (2004: \$Nil) by means of finance leases. These acquisitions are not reflected in the statement of cash flows |
|||||
| (d) | Credit Standby Arrangement 16 |
|||||
| Credit Facility | 1,000 | 1,000 | ||||
| Amount Utilised | (200) | (200) | ||||
| Unused credit facility | 800 | 800 | ||||
| The credit facility is provided by the ultimate parent entity, Nikiticorp Limited with the terms and conditions being set annually. No interest was paid or is owing in respect of the financial year. Since 30 June 2005 the facility has been increased to \$2 million and its term extended until 30 June |
| Consolidated Entity | Parent Entity | ||
|---|---|---|---|
| 2005 | 2004 | 2005 | 2004 |
| 8000 | \$000 | \$000 | \$000 |
27. FINANCIAL DEPENDENCY
Nikiticorp Limited holds 50.2% of the ordinary shares of the Company. Nikiticorp Limited is controlled by Mr. Ted Tzovaras and Mr. Elias Christianos, both directors of the Company.
Nikiticorp Limited has provided a standby loan facility to the Company, as described in Notes 16 & 26(d), and also has provided a letter of financial support.
28. FRANKING CREDITS
| Franking credits available | ||||
|---|---|---|---|---|
| ---------------------------- | -- | -- | -- | -- |
29. FINANCIAL INSTRUMENTS
Interest Rate Risk $(a)$
The Consolidated Entity's exposure to interest rate risk, which is the risk that a financial instrument's value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rates on classes of financial assets and financial liabilities, is detailed in the table below:
$(b)$ Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provisions for doubtful debts of those assets, as disclosed in the statement of financial position and notes to the financial statements.
The Consolidated Entity does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the Consolidated Entity.
Net Fair Values $(c)$
Net fair values of financial assets and liabilities are equal to their carrying amounts at balance date.
| Effective Interest rate |
Floating interest rate |
Fixed Interest rate maturing | Non-interest bearing |
Total | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Within 1 Year | 1 to 5 Years | |||||||||||
| 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | 2005 | 2004 | |
| % | % | 8000 | \$000 | \$000 | \$000 | 8000 | \$000 | \$000 | \$000 | \$000 | \$000 | |
| Financial Assets | ||||||||||||
| Cash | 5.0 | 4.0 | 105 | 323 | $\overline{\phantom{a}}$ | 105 | 323 | |||||
| Receivables | 29 | $\sim$ | $\blacksquare$ | $\blacksquare$ | $\sim$ | $\sim$ | 29 | |||||
| Total Financial Assets | 134 | 323 | ۰ | $\overline{\phantom{a}}$ | ٠ | 134 | 323 | |||||
| Financial Liabilities | ||||||||||||
| Loans | $\overline{\phantom{a}}$ | 12.0 | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | 702 | 702 | ||||||
| Lease Liabilities | 7.0 | $\blacksquare$ | $\sim$ | 116 | $\omega$ | 315 | $\sim$ | 431 | ||||
| Overdraft | ٠ | 10.0 | ۰ | 2 | $\overline{a}$ | $\omega$ | - | 2 | ||||
| Trade and sundry creditors | ٠ | ٠ | ٠ | $\tilde{\phantom{a}}$ | $\omega$ | 1,750 | 807 | 1,750 | 807 | |||
| Amounts payable to related parties |
8.9 | $\overline{\phantom{a}}$ | 2,683 | $\overline{\phantom{a}}$ | ۰ | $\omega$ | 740 | 3,513 | 3,423 | 3,513 | ||
| Total Financial Liabilities | 2,683 | 2 | 116 | 702 | 315 | $\overline{\phantom{a}}$ | 2,490 | 4.320 | 5,604 | 5,024 |
DIRECTORS' DECLARATION
The directors of the Company declare that:
-
- the financial statements and notes, as set out on pages 25 to 55, are in accordance with the Corporations Act 2001 and:
- a. comply with Accounting Standards and the Corporations Regulations 2001; and
- b. give a true and fair view of the financial position as at 30 June 2005 and of the performance for the year ended on that date of the Company and the Consolidated entity;
-
- the Chief Executive Officer and Chief Financial Officer have each declared that:
- a. the financial records of the Company for the financial year have been properly maintained in accordance with section 268 of the Corporations Act 2001;
- b, the financial statements and notes for the financial year comply with the Accounting Standards; and
- c. the financial statements and notes for the financial year give a true and fair view;
-
- in the directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the directors.
tr⁄1
William Duchatel Chairman
Dated the 30th day of September 2005 at Sydney
Anthony Damianos Director
RSM Bird Cameron Partners
Chartered Accountants
Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001
T +61 2 9233 8933 F +61 2 9233 8521 varw mmi com au
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF AUSTRALIS MINING CORPORATION LIMITED
Scope
We have audited the financial report of Australis Mining Corporation Limited for the financial year ended 30 June 2005, comprising the directors' declaration, statement of financial performance, statement of financial position, statement of cash flows and notes to the financial statements.
The company's directors are responsible for the financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of the company.
Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements in Australian and statutory requirements so as to present a view which is consistent with our understanding of the company's financial position, and performance as represented by the results of its operations and its cash flows.
The audit opinion expressed in this report has been formed on the above basis.
Independence
In accordance with ASIC Class Order 05/83, we declare to the best of our knowledge and belief that the auditor's independence declaration set out on page 24 of the financial report has not changed at the date of providing our audit opinion.
L:\AUDIT\C3ents\2005\803730 Australis\Audit 30.06.05Aeutit report 30 June doc
Liability limited by a scheme approved under Professional Standards Legislation
Major Offices in: Perth, Sydney, Melbourne, Adelaide and Canberra ABN 36 965 185 036
RSM Bird Cameron Partners is an independent member firm of RSM international, an affilialion of Independent accounting and consulting firms.
en de la provincia de la provincia de la provincia de la provincia de la provincia de la provincia de la provi
Audit Opinion
In our opinion, the financial report of Australis Mining Corporation Limited is in accordance with:
- (a) the Corporations Act 2001, including:
- giving a true and fair view of the company's financial position as at 30 June 2005 and of its $(i)$ performance for the year ended on that date; and
- $(ii)$ complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
- (b) other mandatory professional reporting requirements in Australia.
Inherent Uncertainty Regarding Financial Dependence on Related Party
Without qualification in the opinion expressed above, attention is drawn to the following matter.
The company at year end has a deficiency in working capital of \$2.039m. As stated in Note 24, the company has subsequent to year end renewed and increased its standby loan facility with its major shareholder Nikiticorp Limited to \$2 million repayable at 30 June 2006.
In addition the directors have received a letter from Nikiticorp Limited confirming its intention to provide continued financial support to the company as long as it is required.
In Note 27, the company has identified that it is dependent upon Nikiticorp Limited to continually purchase the mine product of the company. As at the date of this report all product sales subsequent to year end have been to Nikiticorp Limited.
As at the date of this report the company's production levels are below anticipated levels which means that the company's operations are still in cashflow deficiency. This places even more reliance on the continued financial support of the major shareholder and primary purchaser of its products.
While the directors and majority shareholder are confident the company will continue to operate as a going concern and pay its debts as and when they fall due, we are unable to satisfy ourselves as to the financial capacity of Nikiticorp Limited to be able to provide financial support under the standby loan facility and as the company's primary purchaser of its of product, and hence the going concern of the company.
War Bend Comercar Pactures
RSM Bird Cameron Partners Sydney, New South Wales
Waal
Partner
Dated this $\widehat{AD}$ day of September 2005
L'AUDIT/Clients/2005\$63700 Australis\Audit 30.06.05\Audit report 30 June dot
Page 2 of 2
senara da
$\mathbf{1}$ . Distribution of holders
The number of holders and amount of holdings by a range of holding sizes of the ordinary shares and options as at 29 September 2005 are detailed below.
| Holding Size | Ordinary Shares | Options | |||
|---|---|---|---|---|---|
| No. of holders | Shares Held No. of holders Options Held | ||||
| $1 - 1,000$ | ٠ | ||||
| $1,001 - 5,000$ | 18 | 76.329 | 247 | 1,230,001 | |
| $5,001 - 10,000$ | 252 | 2,490,317 | 80 | 679.750 | |
| $10,001 - 100,000$ | 216 | 7,321,628 | 130 | 4,277,303 | |
| $100,001 -$ and over | 46 | 85,797,831 | 41 | 29,506,000 | |
| 532 | 95,686,105 | 498 | 35,693,054 | ||
| Number of holdings less than a marketable parcel of \$500 |
5 |
$2.$ Substantial Shareholders
The. names $\alpha$ $\uparrow$ substantial shareholders listed in the Company's register as at 16 August 2005 are:
Nikiticorp Limited Tan Sri Kim Yew Lee Anangu Pty Limited
3. Voting Rights
The voting rights attached to each class of equity security are as follows:
- Each ordinary share holder $(a)$ is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands.
- $(b)$ Option holders do not have any voting rights until the option is converted into an ordinary share.
Number of Shares Held
48,000,000 6,000,000 5,189,300
$4.$ 20 Largest Ordinary Shareholders as at 29 September 2005
| Holder Name | Number of Ordinary Fully Paid Shares Held |
% Held of Issued Ordinary |
|---|---|---|
| Nikiticorp Limited | 48,000,000 | Capital 50.2% |
| Tan Sri Kim Yew Lee | 6,000,000 | 6.3% |
| Anangu Pty Ltd | 5,189,300 | 5.4% |
| Sarunic & Sons Pty Ltd | 4,000,000 | 4.2% |
| Billiva Pty Ltd | 2,750,000 | 2.9% |
| Three Pillars Investments Pty Ltd | 2,000,000 | 2.1% |
| Ng Investments Pty Ltd | 1,767,000 | 1.9% |
| Bubblegum Clothing Pty Ltd | 1,530,000 | 1.6% |
| Empark Pty Ltd | 1,422,000 | 1.5% |
| China Diamond Corp Ltd | 1,040,000 | $1.1\%$ |
| Wanganeen Nominees Pty Ltd | 1,000,000 | 1.0% |
| Prime Securities Pty Ltd | 892,334 | 0.9% |
| CFO Pty Ltd | 700,000 | 0.7% |
| Dr. Robert Coenraads | 610,000 | $0.6\%$ |
| Mr Stelios Tsilimos | 534,500 | 0.6% |
| Advance Publicity Pty Ltd | 500,000 | 0.5% |
| Mr Roberto Sciacca & Mr Tony Delle Coste | 500,000 | 0.5% |
| Mr Tony Delle Coste & Mrs Lyn Delle Coste | 500,000 | 0.5% |
| Mr Mark Persi & Mrs Adele Persi | 500,000 | 0.5% |
| Mr Charles William Duchatel | 500,000 | 0.5% |
| Total holdings top 20 shareholders | 79,935,134 | 83.5% |
| Other holders | 15,750,971 | 16.5% |
| Total issued ordinary shares | 95,686,105 | 100.0% |
| Consisting of: | ||
| Escrowed holdings | 52,770,001 | 55.2% |
| Non-escrowed holdings (& quoted) | 42,916,104 | 44.8% |
| Total ordinary issued shares | 95,686,105 | 100.0% |
5. 20 Largest Option Holders as at 29 September 2005
| Holder Name | Number of Options Held |
% Held of Options on issue |
|---|---|---|
| Anangu Pty Ltd | 4,426,250 | 12.4% |
| Sarunic & Sons Pty Ltd | 4,000,000 | 11.2% |
| Tan Sri Kim Yew Lee | 3,000,000 | 8.4% |
| Ng Investments Pty Ltd | 2,200,000 | 6.2% |
| Bubblegum Clothing Pty Ltd | 1,530,000 | 4.2% |
| Billiva Pty Ltd | 1,375,000 | 3.8% |
| Empark Pty Ltd | 1,250,000 | 3.5% |
| Wanganeen Nominees Pty Ltd | 1,000,000 | 2.8% |
| China Diamond Corp Ltd | 790,000 | 2.2% |
| CFO Ptv Ltd | 700,000 | 1.9% |
| Dr. Robert Coenraads | 610,000 | 1.7% |
| Advance Publicity Pty Ltd | 500,000 | 1.4% |
| Mr Roberto Sciacca & Mr Tony Delle Coste | 500,000 | 1.4% |
| Mr Tony Delle Coste & Mrs Lyn Delle Coste | 500,000 | 1.4% |
| Mr Mark Persi & Mrs Adele Persi | 500,000 | 1.4% |
| Mr Charles William Duchatel | 500,000 | 1.4% |
| Treloar Holdings Pty Ltd | 500,000 | 1.4% |
| Kuringai Nominess Pty Ltd | 461,000 | 1.3% |
| Mr Paul Wright | 375,000 | 1.1% |
| Lionel M Chang Pty Ltd | 375,000 | 1.1% |
| Total holdings top 20 option holders | 25,092,250 | 70.3% |
| Other holders | 10,600,803 | 29.7% |
| Total 2006 options issued | 35,693,053 | 100.0% |
| Consisting of: | ||
| Escrowed holdings | 4,155,000 | 11.6% |
| Non-escrowed holdings (& quoted) | 31,538,053 | 88.4% |
| Total 2006 Options issued | 35,693,053 | 100.0% |
6. Release Dates of Escrowed Holdings
Shares and options subject to escrow restrictions will be released from those restrictions on dates indicated below.
| Date Released from Escrow | No. Shares | No. Options |
|---|---|---|
| 19 October 2005. | 145,000 | 217,500 |
| 22 October 2005 | 350,000 | 525,000 |
| 28 October 2005 | 100,000 | 150,000 |
| 29 October 2005 | 250,000 | 375,000 |
| 4 November 2005 | 250,000 | 375,000 |
| 8 November 2005 | 350,000 | 525,000 |
| 11 November 2005 | 100,000 | 150,000 |
| 18 November 2005 | 315,001 | 472,500 |
| 19 November 2005 | 270,000 | 405,000 |
| 7 March 2007 | 50,640,000 | 960,000 |
| Total Holdings Escrowed | 52,770,001 | 4,155,000 |
7. Application of Cash
In the prospectus issued by Australis Mining Corporation Limited on 9th December 2004 statements were made as to the proposed application of funds to be raised via an initial public offering ("IPO") and the Company's existing cash assets. An amount of \$3,997,000 was raised from the IPO. At the time of admission to the official listing of the Australian Stock Exchange the Company had minimal other cash assets.
The application of the funds from the date of admission until the end of the financial year (30 June 2005) is presented in the table below. The actual application is compared to the proposed application of the minimum subscription required under the prospectus and the proposed prospectus application adjusted for the size of the actual amount raised.
| Item | Prospectus Application of be raised \$000 |
Application minimum funds to adjusted for size of issue \$000 |
Prospectus Actual Application of funds \$000 |
|---|---|---|---|
| Gross Funds Raised | 3,500 | 3,997 | 3,997 |
| Less issue costs $(1)$ | (545) | (575) | (213) |
| 2,955 | 3,422 | 3,784 | |
| Use of funds | |||
| Repayment of JMO Guaranteed Third Party Loans |
742. | 742. | 753 |
| Repayment of JMO Trade Debts (2) | 470. | 470. | 120 |
| Repayment of JMO Guaranteed Related Party Loan |
200 | 200 | 240 |
| Repayment of Nikiticorp Loan (3) | 961 | ||
| Exploration (4) | 300 | 300. | 83 |
| Working Capital & capital expenditure |
1,243 | 1,710 | 1,627 |
| 2,955 | 3.422 | 3,784 |
Notes:
-
- Issues costs amounts owed to some parties for costs incurred in preparing the prospectus have been deferred by mutual agreement.
-
- JMO Trade debts consists of monies owed to staff members and directors. These monies are repaid by mutual agreement as funds allow.
-
- Repayment of Nikiticorp Loan represents the balance owed to Nikiticorp Limited as a result of advances made during the December 2004 to February 2005 period. The repayment was made pursuant to an agreement between Australis Mining Corporation Limited and the Australian Securities and Investment Commission.
-
- Exploration exploration expenditure was reduced from that contained in the prospectus as funds were diverted into putting mining operations into production.
8. On-Market Buy Back
There is currently no on-market buy back.
CORPORATE DIRECTORY
REGISTERED AND HEAD OFFICE
Level 35, Suite 3504 100 Miller Street North Sydney NSW 2060 68 108 649 421 ABN Telephone: +612 8908 5988 Facsimile: +612 8908 5977 Email: [email protected] Website: www.australismining.com.au
MINE SITE OFFICE
Australis Mining Operations OLD Pty Ltd Lot 1057 Rubyvale Road Sapphire OLD 4702 Telephone: +617 4981 0000 Facsimile: +617 4981 0110
SHARE REGISTRY
Registries Limited Level 2, 28 Margaret Street Sydney NSW 2000 Telephone: +612 9290 9600 Facsimile: +612 9279 0664 Email: [email protected] www.registriesltd.com.au Web site:
AUDITORS
RSM Bird Cameron Partners Level 12, 60 Castlereagh Street Sydney NSW 2000 Telephone: +612 9233 8933 Facsimile: +612 9233 8521 Email: [email protected] Web site: www.rsmi.com.au
STOCK EXCHANGE LISTING
The shares and options of Australis Mining Corporation Limited are listed on the Australian Stock Exchange.
| ASX Codes: | Ordinary Shares | AUV |
|---|---|---|
| Options | AUVO | |
| Web site: | www.asx.com.au |
LAWYERS
Minter Ellison 15th Floor 1 King William Street Adelaide SA 5000 Telephone: +618 8233 5555 Facsimile: +618 8212 7518 Email: [email protected] Web site: www.minterellison.com
DIRECTORS
CW (Bill) Duchatel Chairman
Anthony Damianos Chief Executive Officer
Robert Coenraads Executive Director
Ted Tzovaras Non-executive Director
Mr. Elias Christianos Alternate Non-executive Director
JW (Jerry) Goddard Non-executive Director
COMPANY SECRETARY
Warren Kember