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EQ RESOURCES LIMITED Annual Report 2006
64867_rns_2006-09-27_557454e2-be0a-4990-bbdf-d94fcdb2ae67.pdf
Annual Report
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Annual Report $2006$
CORPORATE DIRECTORY
Directors
Andrew White
John Bishop
| Chairman |
|---|
| Managing Director |
Steve Bartrop
Non-executive Director
Company Secretary
Robert Waring
Registered and Principal Office
Suite 404, 25 Lime St, Sydney, NSW, 2000
Telephone: 02 9279 1252
Facsimile: 02 9279 2727
Share Registrar
Website: www.iconresources.com.au
Email: [email protected]
Computershare Investor Services Pty Ltd Level 2, 45 St George Tce, Perth, WA, 6000 Telephone: 1300 557 010
Auditors
Barnes Dowell James
Listed on the Australian Stock Exchange
ASX Code: III
ABN: 77 115 009 106
TABLE OF CONTENTS
| SECTION 1 $\mathbb{Z}$ |
Chairman's Report | 3 |
|---|---|---|
| SECTION 2 $\sim 10^{-1}$ |
Review of Operations | 4 |
| SECTION 3 | - Schedule of Tenements | 14 |
| SECTION 4 $\sim$ |
Directors' Report | 15 |
| SECTION 5 - Income Statement | 20 | |
| SECTION 6 - Balance Sheet | 21 | |
| SECTION 7 $\sim$ $\sim$ |
Statement of Cash Flows | 22 |
| SECTION 8 | Statement of Changes in Equity | 23 |
| SECTION 9 $\sim$ $\pm$ |
Notes to the Accounts | 24 |
| SECTION 10 - | Directors' Declaration | 38 |
| SECTION 11 - | Auditor's Independence Declaration | 39 |
| SECTION 12 - | Independent Auditor's Report | 40 |
| SECTION 13 - | Corporate Governance Statement | 41 |
| SECTION 14 - | Shareholder Information | 43 |
Í
CHAIRMAN'S REPORT
Icon Resources Ltd was incorporated on 28 June 2005 with the aim of conducting mineral exploration in Australia. Icon listed on the ASX on 6 June 2006 raising \$4 million. At present our tenements are in Eastern Australia: most are gold prospects but the portfolio also includes prospects with zinc, nickel and iron ore potential. A description of each of the tenements is given in the prospectus.
Although less than four months has elapsed since we completed our capital raising, we have vigorously pursued our strategy to make a significant discovery, one that will greatly benefit the shareholders. As explained in the prospectus, Icon's strategy is to select the best possible prospects and then rapidly and cost efficiently test them for economic mineralisation. If any prospect doesn't measure up we move on, knowing that there is a weight of evidence gathered by the industry over the last few decades that this approach is the key to lowering the odds and maximising the chance for discovery.
During the four months, Icon has already completed an airborne geophysical survey and two ground geophysical surveys; drill tested the Crystal Mount prospect and commenced drilling at Tara. We have also apolied for additional tenements across NSW and Queensland after developing new geological concepts, Icon has also acquired the minority interest in the Grieves zinc prospect on the west coast of Tasmania, and now owns 100% of this tenement.
Whilst there are no quarantees of success in exploration, we believe that if we stay with our strategy, our shareholders will be rewarded with success.
Finally, I would like to thank my fellow Directors, Steve Bartrop and John Bishop, our Company secretary, Rob Warind, and our key consultant Roger Lewis for the hard work, dedication and commitment to the Company that they all showed dufing the capital raising process and since. I would also like to acknowledge the contributions made by Mark Gross and his/team at ABN AMRO Morgans which supported Icon's IPO, Lastly, I would like to thank our fellow shareholders for sharing the Company's vision and for providing the funding to allow us to explore.
that dolts
Dr Andrew H White Chairman 30 September 2006
P.
lcon has been assiduously applying its exploration 'conveyor belt' strategy since successfully listing on the ASX in June, 2006. We have drill tested the first of our projects; commenced drilling the next and implemented geophysical surveys to define targets for the third and fourth projects. In addition, several new prospects have been evaluated, leading to new tenement applications.
A summary of the individual projects is given below. It is assumed that the reader is familiar with the background material provided in Icon's IPO prospectus. Figure 1 shows the locations of lcon's current exploration licences and applications.
Professor Tenements, Tasmania (ELs 47/2005 and 8/2005)
Soon after listing Icon acquired the remaining one third of the Professor tenements it did not already own. Zinifex Ltd has an option agreement, expiring on 30 September 2006, over the Grieves zinc deposit in EL 47/2004 to test whether the near-surface zinc sulphide mineralisation (sphalerite) at Grieves could be used as a low grade feedstock to the Rosebery mill to help smooth out head-grade fluctuations. Under the agreement Zinifex excavated five shallow pits for bulk sampling. Zinc grades assayed from these samples varied between 2.5% and 17.5% Zn.
The sphalerite was found to occur in material with a significant organic content. After the testwork Zinifex concluded that the material was unsuitable as a feed for the Rosebery mill circuit without prior treatment. lcon is now conducting a range of innovative metallurgical tests which are designed to identify the organic mineral and develop a suitable separation process, icon believes that the Grieves zinc deposit and other previously identified zinc deposits in the area can generate significant value when this metallurgical testwork is completed. A program is also being planned to test the options for treating the underlying zinc oxide mineralisation.
Apart from the significant zinc mineralisation at Grieves, the Professor tenements are regarded as highly prospective for frish style zinc-lead sulphide mineralisation. The existing magnetic and gravity data have been partially evaluated by the loon team and some interesting new potential targets have emerged with some of these targets highlighted in Figure 2. A 3D IP survey is planned over the carbonate sequences early in 2007 when local ground conditions should improve. It is anticipated that drilling will be able to commence in late summer-early autumn '07 to test identified targets.
Tara (EL6532), Central NSW
The Tara prospect covers a large area of alteration beneath the ~50m of soil and sandy cover. Attention was drawn to the area by the presence of a prominent and discrete magnetic high. Previous exploration has followed the conventional Cobar mineralisation model which has focused on this magnetic high and previous driffing has shown that the source of the magnetic high is pyrrhotite with associated sub-economic base metal mineralisation.
lcon is conducting a drilling program to test four different targets. These targets are the central magnetic low, a chargeability high, a residual gravity high (both removed from the modelled source of the magnetic response). and a vector towards increased alteration. These are individually described in the following paragraphs.
As described in the prospectus, lcon, will be drilling the central 俳 magnetic low at Tara to investigate the possibility for a reduced granite style of gold deposit. A/regional fault splaying off the Bootheragandra Fault Zone passes through the low in a NW direction and it is hypothesised that this may have acted as a deep-seated plumbing system allowing mineralising fluids to ascend and hopefully precipitate in economic mineralisation close to the surface.
As well as orebodies coincident with magnetic responses, there are 猫厂 also orebodies at Cobar significantly removed from the magnetic responses; e.g. at the Peak Mine where a 250nT magnetic anomaly due to pyrrhotite /is centred about 250m east of the mineralisation and has masked any (magnetic) response that the mineralised body might have given" (Hingian and Scott, 1990: AustMM Monograph 14). lcon is targeting a previously recorded IP chargeability high which is best develóped over the pyrrhotite, but which extends further to the west than the modelled source of the magnetic response. Icon will driff test this region for economic development of base metal and/or
(iii) A détailed gravity survey was carried out by previous explorers which identified two discrete gravity highs masked by the dominating effect of the underlying granite. Icon will test the western and more grominentiof these highs.
gold-bearing supphides away from the pyrrhotite.
(iv) A re-examination of the Tara core by Icon suggests that alteration increasesieastwards beyond the coverage of the IP survey. A drilthole will be sited to test an area some 500m to the east of the existing drilling to test this alteration trend.
This round of dislling will be relatively shallow (100-150m) and is designed to look for geochemical indications within the fresh rock. The holes will be cased so that diamond core 'tails' can be drilled to extend any of the holes. Figure 3 shows the locations of the four drill collars superimposed on an image of the total magnetic intensity. Figures showing the chargeability and residual gravity were included in Icon's ASX release dated 4 September 2006 with a copy available or our webssite (www.iconresoprces.com.bu). At the time of writing this report, the Tara drilling was in progress.
Ę
Grenfell (EL6559), Central NSW
The target in exploration licence EL6559 is gold mineralisation associated with a blind intrusive similar to the igneous intrusive that hosts the gold mineralisation at nearby Grenfell. There is evidence of historical gold-quartz workings in the northern section of the licence. The prospect has shed over 30,000oz of gold which was mined from placer deposits in the 1860's, but while there is a hard-rock sheeted quartz vein gold bearing system that was also mined in the 1860's, it was never fully developed due to the high transport costs in that era. The workings occur just east of the intersection of the Young serpentinite belt and a north trending fault which passes through the Grenfell Gold Field.
Considerable untested modern geophysical and geochemical data came with this acquisition, and the magnetics suggests that there may be intrusives underlying the veins. Icon has just completed a 3D IP survey fargeting a bulk tonnage deposit of sulphide-associated gold related to the inferred intrusive(s). The data are currently being processed and any emerging targets are likely be tested by drilling in October 2006.
In the southern part of EL6559, historic silver, gold and tin workings occur near Tyagong but have not been explored since the 19th century. This area will be investigated by icon as the exploration program advances in the licence.
Hiawatha (EL6291), Central NSW
This tenement contains a number of old gold workings and, in a similar manner to Grenfell, aeromagnetic images indicate the possibility of underlying intrusives. The licence was originally held in the name of Tackle Resources Ltd and has recently been re-applied for in the name of Icon Resources.
A 3D IP survey is planned for December, to ensure minimal disruption to the crop farming within the licence. Follow up drilling is planned for late summer - early autumn '07.
Peel Fault Project, NE NSW
Icon is developing a better understanding of the Peel Fault and its relationship to the nearby gold occurrences, A brief review is presented below which outlines the reasons why the Peel Fault has developed into an important project within Icon's exploration portfolio.
Approximately half the world's gold has been produced from greenstone hosted deposits. The greenstone betts are dominated by mafic and ultramafic volcanic and intrusives, and derivative sedimentary rocks. The greenstone belts typically host major sutures or faults sub-paraflel to the long axes of the belts that appear to penetrate at least to the mantle below the Earth's crust. Evidence for major transcurrent movement along the greenstone belt sutures is common.
Figure 2 - Residual gravity image superimposed on geology, Professor Tenements, Tasmania
iĝ,
There is a close association of greenstones, crustal sutures with major transcurrent shear, carbonate alteration of mafic and ultramafic rocks along the shears, and gold. Although the Archaean age (older than 2200my) greenstone belts, such as those in Western Australia and Canada, are best known for gold production, gold-bearing greenstone belts occur throughout geological time, always with a similar set of features, including gold endowment.
The Peel Fault on the western margin of the New England province of NSW, is a classic greenstone belt of Palaeozoic age. The fault zone contains mylonites, mafic and ultramafic volcanics and intrusives and derived sediments. It separates mid Devonian mafic volcanic-derived sedimentary rocks on the west from early Devonian (volcanic derived and carbonate shelf sediments), and Ordovician and Cambrian deep ocean floor rocks to the east. The fault is marked by serpentinites.
An independent consultant employed by Icon to inspect the Crow King licence (EL6295) has confirmed our view that the Peel Fault is strongly analogous to the Mother Lode Belt in California which has produced more than 114 million ounces. Icon has therefore applied for more ground along the Peel Fault and intends to carry out a major investigation of the Peel Fault for gold and nickel. Icon's investigations to date indicate that very little effective modern exploration has been carried out along the Fault,
especially for nicket in the ultramafic rocks which characterise the Peel Fault zone. Summary descriptions of the individual tenements comprising the Peel Fault Project are given below and recent applications are described at the end of the section.
D
Upper Hunter (ELA2655)
This tenement covers the 'Moonan Brook' and Stewart's Brook' coldfields on the western side of the Barrington Tops, and on the southern side of the Peel Fault (Figure 4). The old workings were mostly on quartz veins or alluvial deposits, with some individual mines producing up to half a tonne of gold (Departmental records). Despite the amount of gold taken from this EL it appears to have been subject to very little if any, modern exploration. Icon's application has progressed through the various statutory stages and we are expecting an imminent granting of the title.
The existing magnetic data coverage is poor and a detailed aeromagnetic/radiometric survey is blanned for early 2007. Combined with detailed mapping, location of/the old hard rock workings and selected sampling, this data will be used to design 3D IP, surveys to look for intrusive-associated, bulk tonnade gold mineralisation and/or sulphide-associated guartz velh stockworks.
Figure 3 - Drill targets, Tara Central NSW
Figure 4 - Upper Hunter and Golden Crystal tenements showing locations of old gold workings
Figure 5 · Weabonga and Niangala applications showing locations of old gold workings
Golden Crystal (ELA2656)
This has many similarities to fcon's Upper Hunter tenement, consisting of numerous old workings on the eastern side of the Barrington Tops which have had little attention since mining ceased in the late nineteenth - early twentieth centuries. Most of the ground comprises rugged topography and some of the leases cover conservation areas. Therefore the exploration activities in some areas within the licence will require a firm indication that future mining would be permitted before Icon commits to significant exploration expenditure. Initial investigations are planned for early 2007.
Weabonga (EL6620)
Weabonga goldfield is an old gold field approximately 26.5km2 in area and about 40km south east of Tamworth in the New England province of NSW. A large number of quartz veins were mined in this area, the most significant producer being the Highland Mary Mine. According to very imprecise records, the gold field produced about 15,000 ounces. The Highland Mary mine closed in 1916 after a strike and depletion of the mine work force when miners left to join the AIF in WW1. The mine was reported to be producing gold at a grade of 3cz per ton at a depth of 100m at the time of closure. The quartz veins occur in schistose sandstones and black carbonaceous slate. Figure 5 shows the locations of the old gold workings and occurrences.
The only exploration since 1916 that added real information about the goldfield was a drill hole subsidised by the NSW Department of Mines in 1967 and an IP survey at about the same time. The drill hole failed to test the IP anomalies that were found by the geophysical survey. Traces of gold (less than 2.6q/t) were found in 5 samples from the drift hole, and one sample assayed 7.6g/t silver, Icon is testing two possibilities at Weabonga: bulk mineable gold in sulphide mineralised quartz vein stockworks, and very high grade quartz vein hosted mesothermal gold occurrences, such as a depth extension of the Highland Mary vein(s). Icon has recently completed an airborne magnetic/radiometric survey and a 3D IP is currently underway. Drilling is planned for later in the year.
Crow King (EL6297)
This tenement straddles the Peel Fault and contains a number of old gold workings (Figure 6). It was originally pegged by Tackle Resources Ltd and is in the process of re-application under the name of Icon Resources.
Detailed mapping and sefected sampling is planned for late 2006 plus one or more trial lines of IP across the Fault. The results will then be integrated with the rest of the ground held as part of the Peel Fault Project and a series of deep drill holes will test along the fault in the regions of highest anomalous gold levels. Planning of these holes will use the recent NSW Geological Survey's interpretation showing the fault dipping to the west rather than the previously presumed easterly dip (Figure 7).
Stanthorpe Projects, SE Old
These comprise the Warwick (EPM15007) and Glentanna (EPM15401) tenements. The Crystal Mt prospect was surveyed with 3D IP early in 2006. Drilling confirmed a very targe volume of sulphide-bearing altered rock probably related to a blind rhyolite plug that was intersected in one of the drillholes. Unfortunately, the drill sample assays indicated only low levels of copper and zinc mineralisation and traces of gold. Recent field work on the Logan Ck molybdenite mineralisation downgraded both the potential size and grade of the prospect. As a consequence it has been decided to relinquish EPM15007.
The nearby Glentanna tenement was applied for after identifying altered (silicified) Texas Beds which had been previously mapped as unprospective felsic volcanics. A recent field inspection has also revealed a previously unmapped gossanaus zone extending for several hundreds of metres. A sample from the gossan was assayed and returned anomalous copper (81ppm) (ead (45ppm) and zinc (185ppm). A third target will be to further investigate the previously identified zinc mineralisation at Griéves Quárry (not to be confused with the Grieves zinc deposit in the Professor Project, Tasmama).
'New Century', NW Uld
Three contiguous fenements have been applied fox to look for Centurystyle lead-zinc m/neralisa/ion (Figyre 8). /This covered area appears/to fulfil several criteria which Icon believes are necessary for this type of orebody. The applications are based purely on conceptibal work rather than, eg, the Upper Hunter EL where the large number of gold occurrences (ie, old workings) was the dominating driterion. This is a/high risk/ exploration play/ but the reward for another world-class sediment-hosted base metal body would be more than comménsurate with the risk.
Elizabeth Ck (EPM14589), NW Cld
This tenement is prospective for fead-zinc mineralisation as well as contáining significant ton ore. Icon has a joint venture agreement with Zinifex whereby Zinifex cari earn up to a 75% ownership after spending \$5 million over the next seven years.
Zinifex have completed a review of the previous exploration data including the interpreted structure and are presently planning a field program.
$\Box$
Figure 6 - Crow King tenement showing gold occurrences superimposed on an image of the magnetics
Figure 9 - Recent applications on and near the Peel Fault, NE NSW
Burketown (EPM15368, Application), NW Old
The application for this tenement has progressed to the point where Icon is negotiating a Native Title and Heritage Agreement with the Gangalidda and Garawa Peoples. When granted, Icon's first target at Burketown will be to test the coincident gravity-magnetic anomaly for possible iron oxide copper gold or Olympic Dam style mineralisation. A number of possibilities are being evaluated including a preparatory magnetotelluric survey to locate any significant conductors at depth. Such a program would also serve to test for the nickel mineralisation which was the original reason for lcon's interest in the area.
If the licence is granted within the next two months, Icon hopes to be able to make a start on the exploration program before the onset of the wet season.
Leichhardt (EPMs 15386, 15387, 15388 Applications), NW Old
A small portion of EPM15386 covers a Native Title Area of the Gangalidda and Garawa Peoples and Icon are in the process of negotiating an agreement. The Leichhardt licences are towards the 'back of the conveyor belt' and we do not anticipate any serious onsite work this field season.
Recent Applications (ELAs2805, 2806, 2807, 2827)
These areas cover further zones on and adjacent to the Peel Fault (Figure 9). They include the Bingara District which Departmental Records show as having produced more than 1.3 t of gold. When granted, the areas will be mapped and selectively sampled. Some of the areas have been picked as having possible intrusives at depth
and, given favourable results from the sampling programs, these will be covered with 3D IP to locate a possible bulk-mineable target of auriferous sulphides.
These areas will also be investigated for nickel and platinum group minerals
Overall, Icon is largely on track despite the present difficulties in obtaining staff and equipment within the resources sector. One project has already been tested and relinquished and we are in the process of testing the next three: Tara, Grenfell-and Weabonga. Grenfell does not appear in the prospectus, but has been recently acquired with 100% ownership.
Icon has assembled a range of tegements in eastern Australia ranging from totally under cover, grass roots regions with encouraging geophysical attributes for mingralisation through to areas with a highdensity of old workings. Our strategy will be to quickly and effectively evaluate these. Areas to replace those relinquished are constantly evaluated with the more gromising, taken up. At the same time, Icon is open to opportunities in the industry to increase loon's value other than by successful drilling.
John Bishoó Managing Director
Competent Person
The information in this report that relates to Exploration Flesults is based on information compiled by Dr John Bishop, who is a member of the Australian Institute of Geoscientists. Dr Bishop is a full-time employee of Icon and has sufficient experience relevant to the styles of mineralisation and types of deposits under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Regults, Mineral Resources and Ore Reserves". Dr Bishop consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
徽
SCHEDULE OF TENEMENTS
| Project | Number | Holder | Expiry | Comment |
|---|---|---|---|---|
| New South Wales | ||||
| Bingara | ELA2806 | liom | ||
| Crow King | ELA2786 | lcon | Repegged over Tackle Resources' EL6297 | |
| Idby | LLA2885 | loon | ||
| Baldwin | FLA2807 | |||
| Weabonga | EL6620 | lom. | 29 Aug 2008 | |
| Niangala | FLA2827 | lcon | ||
| Upper Hunter | ELAZ655 | icon. | ||
| Golden Crystal | $-LA2656$ | |||
| Tara | EL6532 | lton | 14 Mai 2008 | |
| Hiawatha | FLA2785 | lcor | ||
| Grentell | ELC559 | D.I Perkin (being transferred to loon) | 12 Арг 2000 | |
| Queensland |
| Hizabeth Creek | EPM14589 | Cast Resources | 4 Aug 2010 | S5M IV with Zinitex | |
|---|---|---|---|---|---|
| "New Century" | FPMA15866 | Troutstone | |||
| EMPA15867 | troutstone | ||||
| Burketowr | EPMA15368 | Golden Reef, being | |||
| transferred to Troutstone | |||||
| Leichhardt | LPMA15366 | houtstone | |||
| EPMA15387 | Troutstone | ||||
| EPMA15388 | Imutstone | ||||
| Warwick | EPM15007 | lcon | 26 Sep 2007 | to be relinquished | |
| Glentanna | EPM15401 | Icon. | 28 June 2009 |
OS.
| Anto Ril | South Fastern Resources | 10 Feb 2010 | Zinifex has an option agreement |
|---|---|---|---|
| expring 30 September 2006 | |||
| · South Eastern Resources | 29 Mar 2011 | Zinifex has an option agreement | |
| expiring 30 September 2006 |
DIRECTORS' REPORT
Your Directors present the financial report of the Company for the period ended 30 June 2006.
The following persons hold office as Directors at the date of this report and throughout the period. Their qualifications and experience are:
Icon Board of Directors: Andy White, Steve Bartrop, John Bishop
Dr Andrew H White, Chairman
Andy White has been a director of Icon since 8 November 2005. Andy is a geologist with more than 35 years experience in the industry. He has been exploration minerals manager for exploration and mining companies and has been an independent consultant since 1983. Andy is the author of the text 'Management of Mineral Exploration' and has for many years conducted courses on exploration and financial evaluation of mining projects for senior industry personnel.
Dr John R Bishop, Managing Director
John Bishop has been a director since 18 October 2005. John formed the geophysical consulting Company Mitre Geophysics in 1980 and has provided exploration advice, often leading to increased resources and/or reserves, for a variety of commodities in several countries. Prior to Mitre, John had government, industry and academic experience. John has had a long interest in developing innovative techniques to improve the effectiveness of mineral exploration and has published more than twenty five papers on geophysical applications to exploration.
Stephen B Bartrop, Director
Steve Bartrop has been a director since 28 June 2005. Steve is a principal of Stock Resource and has been a top rated resource. analyst working for Macquarie Bank, Bankers Trust, Ord Minnett and JPMorgan. Prior to entering the financial markets, Steve worked with Ashton Mining for five years and then for MIM for a similar period. Steve is currently completing a PhD in mineral economics at Curtin University of Technology.
Robert J Waring, Company Secretary
Robert Waring's experience has been gained over 34 years in finalgoial and corporate roles including 15 years in Company secretarial roles for ASX listed companies and 1/ years as a Director of an ASX listed Company. He is a Director of Óakhill Mamilton Pty Ltd, a Company which provides secretarial and corporate advisory services to a range of listed and unlisted compánies.
Directors' Interests in Shares and Options
Directors' interests in shares and options/as at 30 June 2006 are set out in the table below. Between the end of the financial year and the date of this ieport, Andy White has purchased no shares/John Bishop 19,300 shares ا and Steve Bartrop 292.174 shares.
Shares Directly
4.395.714
3,235,714
Options
Director
Stephen Bartrop
and Indirectly Held
John Bishop
Andrew White
Activities
The continuing principal activity of the Company is the exploration for econémic deposits of minerals. For the period of this report, the emphasis has been on geld and, to a lesser extent, zinc.
Besilts
The net result of operations after applicable income tax expense was a loss of \$384.951.
Dívidánds
No dividends were paid or proposed during the period.
ylcon Reso∂rces โld - Annual Report∕2006
儩
Review of Operations
A review of the operations of the Company during the financial period and the results of those operations are contained in pages 5 to 13 in this report
Corporate Structure
lcon Resources Ltd is a limited Company that is incorporated and domiciled in Australia
Employees
The Company had one employee as at 30 June 2006. The Company uses contract geologists and other consultants as required.
Significant Changes
The Directors are not aware of any significant changes in the state of affairs of the Company occurring during the financial period, other than as disclosed in this report.
Matters Subsequent to the End of the Financial Period
There were at the date of this report no matters or circumstances which have arisen since 30 June 2006 that have significantly affected or may significantly affect:
- $\left{ \cdot \right}$ the operations of the Company,
- $\dddot{\mathbf{B}}$ the results of those operations, or
- iii) the state of affairs of the Company,
Likely Developments and Expected Results
As the Company's areas of interest are at an early stage of exploration, it is not possible to postulate likely developments and any expected results. The Company is hoping to identify other precious and base metal exploration and evaluation targets.
Remineration Report
The remuneration report is set out under the following main headings:
- Principles used to determine the nature and amount fal of remuneration
- $(b)$ Details of remuneration
- ${c}$ Service agreements
- $|d\rangle$ Share-based compensation.
(a) Principles used to determine the nature and amount of remuneration
The objective of the Company's remuneration framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders. The Board believes that executive remuneration satisfies the following key criteria:
- competitiveness and reasonableness.
- acceptability to shareholders
- performance linkage / alignment of executive compensation
- transparency
- capital management.
These criteria result in a framework which can be used to provide a mix of fixed and variable remuneration, and a blend of short and long-term. incentives in line with the Company's limited financial resources.
Board and Senior Management
Fees and payments to the non-executive Directors and senior executives. reflect the demands which are made on, and the responsibilities of, the Directors and the senior management. Such fees and payments are reviewed annually by the Board. The executive and non executive Directors, senior executives and officers are entitled to receive options under the Company's employee share option scheme.
(b) Details of remuneration
Directors' and Executives' Remuneration
Directors are entitled to remuneration out of the funds of the Company but the remuneration of the non-executive Directors may not exceed in any year the amount fixed by the Company in general meeting for that purpose. The aggregate remuneration of the non-executive directors has been fixed at a maximum of \$200,000 per annum to be apportioned among the non-executive Directors in such a manner as they determine (refer below). Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in consequence of their attendance at Board meetings and otherwise in the execution of their duties as Directors.
The Directors have resolved that non-executive Directors fees paid for the 2006 year would be paid through the issue of 150,000 shares to A H White and 50,000 to S B Bartrop.
Details of the nature and amount of each element of the remuneration of each of the Directors of Icon Resources Ltd and each of the five senior executives of the Company and the consolidated entity who received the highest emoluments during the year ended 30 June 2006 are set out in the following tables.
DIRECTORS' REPORT
| Table 1: Director and senior executive remuneration | |
|---|---|
| Directors of Icon Directors' Salaries Consulting Resources Ltd Fees 17995 |
Super Options Shares Total Cont |
| S S Á. 5,500 AH White |
Ä, ۸. S S 11,500 6,000 |
| J & Bishop 16,598 10:092 |
909 983 28,591 |
| S B Bartrop Senior executives of Nii |
2,000 2.000 |
| the consolidated entity | |
| 1. Options and shares do not represent cash payments to Directors or senior executives and share options granted may ar may not be exercised | |
| by the Directors or executives 2. Shares issued to Directors are in lieu of Directors fees |
|
| The consolidated entity had no senior executives during the period 3. |
|
| Table 2: Options and shares granted as part of remuneration Grant date Options Grant Value per Werk |
Value at Exercised Value per 统. |
| Date option at number grant data |
nť option at date option number exercise date lapsed remuneration |
| S | 8 |
| 0.00246* 8.3.2006 8.3.2006 J R Bishop 500,000 |
3% |
| * Valued at 80% due to not being listed | |
| Grant number Grant date Shares |
$\frac{6}{10}$ of Issue date Value per share at remuneration |
| grant date | |
| S B Bartrop 8.3.2006 50,000 A + White 8.3.2006 150000 |
8.3.2006 0.04 100% 8.9.2006 0.04 57% |
| The value of the shares granted have been recognised as expenses in the | Fair value of options |
| financial statements and are expensed, resulting in an increase in employee benefits expense of \$8,000 for the 2006 financial year. |
The fair value of each ontion is estimated on the date of grant using a |
| Options granted as a part of a director and executive remuneration have | Black & Scholes option-pricing model with the following weighted average assumptions used for grants made on 8 March 2006: |
| been valued using a Black and Scholes option-pricing model, which takes account of factors including the option exercise price, the share price at |
Dividend yield 0.0% |
| time of grant, volatility of the underlying share price, the risk-free interest rate and the expected life of the option. |
Expected volatility 50.00% Risk-free interest rate 5.50% |
| Expected life of option h years. |
|
ji.
M
DIRECTORS' REPORT
The dividend yield reflects the assumption that no dividends will be paid out. The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.
The resulting weighted average fair values per option for those options vesting after 1 July 2005 are:
| Grant | Crantdate | Expiry date | Weighted |
|---|---|---|---|
| numher | average | ||
| value per option |
|||
| 500.000 | 8.3.2006 | $-8.3.2011$ | \$0.00246 |
| 500,000 | 8.3.2006 | P 2 2 1 1 | 8000246 |
| 150.000 | 8.3.2006 | 8.3.2011 | \$0.00246 |
| 50.000 | 832006 | B 2 2011 | 80 00248 |
| 4 OOB DOD |
These fair values of the options are recognised as expenses in the financial statements and are expensed, resulting in an increase in employee benefits expense of \$2,358 for the 2006 financial year. Options issued to Directors are escrowed until 29 March 2008.
(c) Service agreements
Remuneration and other terms of employment for the Directors and executives are formalised in Service/Appointment agreements.
All contracts with executives may be terminated early by either party with the stipulated number of months notice, subject to termination payments as detailed below.
Dr Andrew White
There is no written contract with Dr White, who received payments and benefits totalling \$11,500 in his role as a director of the Company.
Stephen B Bartrop
There is no written contract with Mr Bartrop, who received payments and benefits totalling \$2,000 in his role as a director of the Company.
Dr John Bishop
籟
Pursuant to an agreement dated 27 February 2006 between Icon Resources Ltd and Dr John Bishop, the parties agreed that Dr Bishop would provide services to the Company. The agreement is effective from the date on which the Company's shares are first listed on the ASX (being 6 June 2006.) The Company will pay a salary of \$165,000 per annum (inclusive of Director's fees), subject to review on each 31 December during the term of the Agreement.
The agreement can be terminated by a minimum of 3 months notice.
d) Share Options
At 30 June 2006 the Company had granted options over 1,200,000 unissued shares to Directors and consultants, all issued in the 2006 financial year. These include:
John Bishop - 500,000
These were granted on 3 March 2006/and expire 3 March 2011 at an exercise price of 30 cents per share. They are escrowed until 29-March 2008.
Directors' Interests
The relevant interest of each/Director/including their associates) in the share capital of the Company as at 30 June 2006 are set out in note 16 to the financial statements.
Options included in Directors' and executives' remuneration are treated as follows:
Fair values have been/assessed using the Black and Schole's option valuation methodology which takes into account the exercise price, the term of the orition, the vesting and performance critéria, the impact of dilution, the non-tradable nature of the options, the current price and expected price volatility of the underlying share, the expected dividend yierd and the risk free interest rate for the term of the option.
Share Capital and Options
A detailed breakdown of the Company's capital, including options (unquoted options and emptoyee options) and convertible instruments is contained in Note 12 to the Financial Statements.
Meetings of Directors
Director's attendance at Directors meetings are shown in the following table:
| lifeistor e a | |||
|---|---|---|---|
| MAXIMUM SEELERIMING | Eligible Meetings | Meetings Attended | |
| Dr A H White | The House All Modern Art 및 Association Art Web 및 | ||
| rd Bishop ( ) 2 2 2 3 3 3 3 3 3 3 3 3 3 3 4 3 4 3 4 3 | |||
| Mr S Bartrop | . Samming management is a strong special of the second second second second second second second second second |
Non-Executive Directors, Dr White and Mr Bartrop are members of the Company's Audit Committee. The Committee will review the Company's financial systems, accounting policies, balf-year and annual financial statements. There were no Audit Committee meetings during the period. The first meeting was held in September 2006.
Directors, Officers, Senior Employees and Consultants Share Option Plan
The Company has established the Icon Resources Ltd Employees and Officers Share Options Plan ('the Plan') to assist in the attraction, retention and motivation of the Company's Directors, officers, employees and senior consultants. No options have been granted under the Plan as at the date of this report.
A summary of the rules of the Plan is as follows. All Directors, officers, employees and senior consultants (whether full- or part-time) will be eligible to participate in the Plan after a qualifying period of 12 months. employment by the Company or its subsidiaries (or, in the case of a senior consultant, having provided consulting services to the Company or its subsidiaries on a continuous basis for at least 12 months), although the Board may waive this requirement.
The allocation of options under the Plan is at the discretion of the Board.
If permitted by the Board, options may be issued to a nominee of a director, officer, employee or senior consultant (for example, to a spouse or family Company).
Each option allows the option holder to subscribe for one fully paid ordinary share in the Company and will expire five years from its date of issue. Options will be issued free. The exercise price of options will be determined by the Board subject to a minimum price equal to the market value of the Company's shares at the time the Board resolves to issue the options. The total number of shares the subject of options issued under the Plan, when aggregated with other options issued under the Plan during the previous five years must not exceed five percent of the Company's issued share capital at the time.
The Board may amend the Plan rules at any time subject to the requirements of the ASX Listing Rules.
Indemnification and Insurance of Directors and Officers
The Company has not, either during or since the end of the financial period, in respect of any person who is or has been an officer or auditor of the Company or a related body corporate indemnified or made any relevant agreement for indemnifying against a liability incurred as an officer, including costs and expenses in successfully defending legal proceedings.
Environmental Performance
Icon holds exploration licences issued by the Mines Departments of two state governments which specify guidelines for environmental impacts in relation to exploration activities. The licence conditions provide for the full rehabilitation of the areas of exploration in accordance with the various Mines Departments' guidelines and standards. There have been no significant known breaches of the licence conditions.
Auditor's Independence and Non-Audit Services
Set out below are details of the non-audit services previously provided by the Company's auditor, Barnes Dowell James. The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised. The Directors received a declaration of independence from the auditors of Icon Resources Ltd. It forms Section 11 of this report.
Barnes Dowell James received the following amount for the provision of non-audit services carried out in connection with lcon's ASX IPO. Prospectus:
Independent Accountant's report:
\$5,000
Signed at Sydney this 26th day of September 2006 in accordance with a resolution of the Directors.
And delite
A H WHITE Chairman
INCOME STATEMENT
PERIOD FROM DATE OF INCORPORATION 28 JUNE 2005 TO 30 JUNE 2006
| Consolidated | Parent Entity | ||
|---|---|---|---|
| Note | 2006 | 2006 | |
| \$ | \$ | ||
| REVENUE | 2 | 98,166 | 73,621 |
| Advertising | (9, 129) | (1, 110) | |
| ASX and ASIC fees | (5, 183) | (4,824) | |
| Audit and accounting services | (12, 924) | (11, 637) | |
| Computer services | (3, 183) | (3, 183) | |
| Contract administration services | (32, 618) | (32, 618) | |
| Corporate advisory services | (21, 818) | (21, 818) | |
| Depreciation | (493) | ${493}$ | |
| Directors' Fees | (8,000) | (8,000) | |
| Insurance | (6,582) | (5,640) | |
| Legal fees | (6, 157) | (50) | |
| Management fee | (13,000) | ||
| Printing and stationery | (5,022) | (5,022) | |
| Share registry costs | (7,453) | (7,453) | |
| Telephone | (7, 897) | (7, 897) | |
| Travel and accommodation | (35, 422) | (35, 422) | |
| Salaries and employee benefits expense | (21, 358) | (21, 358) | |
| Share based payments - Options issued | (2,358) | (2,358) | |
| Write down of carrying value of exploration expenditure | (270, 452) | (270, 452) | |
| Other expenses from ordinary activities | (14,068) | (13,983) | |
| (483, 117) | ${453,318}$ | ||
| (LOSS) BEFORE INCOME TAX EXPENSE | (384, 951) | (379, 697) | |
| INCOME TAX EXPENSE | 3 | ||
| (LOSS) AFTER INCOME TAX EXPENSE | 13 | (384, 951) | (379, 697) |
| NET (LOSS) ATTRIBUTABLE TO MEMBERS OF ICON RESOURCES LTD | (384, 951) | (379, 697) | |
| Basic loss per share (cents per share) | $\overline{14}$ | (4.311) | (4.253) |
| Diluted loss per share (cents per share) | $\mathord{\uparrow} 4$ | (4.311) | (4.253) |
20
BALANCE SHEET
AT 30 JUNE 2006
| Consolidated | Parent Entity | ||
|---|---|---|---|
| Note | 2006 | 2006 | |
| \$ | \$ | ||
| CURRENT ASSETS | |||
| Cash assets | 3,319,515 | 3,319,508 | |
| Receivables | 5 | 80,371 | 80,371 |
| TOTAL CURRENT ASSETS | 3,399,886 | 3,399,879 | |
| NON-CURRENT ASSETS | |||
| Shares in controlled entities | 6 | 480,004 | |
| Tenement security deposits | 7 | 56,500 | 42,500 |
| Plant and equipment | 8 | 2,357 | $2,35\lambda$ |
| Deferred exploration and evaluation expenditure | 9 | 572,187 | 52,934 |
| Loans to controlled entities. | $\mathbb{1}0$ | 58,510 | |
| TOTAL NON-CURRENT ASSETS | 631,044 | 636,305 | |
| TOTAL ASSETS | 4,030,930 | 4,036,184 | |
| CURRENT LIABILITIES | |||
| Payables | $\mathbb{1}$ | 90,707 | 90,707 |
| TOTAL CURRENT LIABILITIES | 90,707 | 90,707 | |
| TOTAL LIABILITIES | 90,707 | 90,707 | |
| NET ASSETS | 3,940,223 | 3,945,477 | |
| EQUITY | |||
| Issued capital | $\sqrt{12}$ | 4,322,816 | 4,322,816 |
| Accumulated losses | $^{\rm 13}$ | (384, 951) | (379, 697) |
| Reserves | $13$ | 2,358 | ,2,358 |
| TOTAL EQUITY | 3,940,223 | 3,945,477 | |
20
e
British
STATEMENT OF CASH FLOWS
PERIOD FROM DATE OF INCORPORATION 28 JUNE 2005 TO 30 JUNE 2006
| Consolidated | Parent Entity | ||
|---|---|---|---|
| Note | 2006 | 2006 | |
| \$ | S | ||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Payment to suppliers and employees | (188, 627) | (158, 828) | |
| Other income | 89,221 | 64,676 | |
| Interest received | 8,945 | 8,945 | |
| NET CASH FLOWS (USED IN) OPERATING ACTIVITIES | 24 | (90, 461) | (85, 207) |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Investment in subsidiaries | (4) | ||
| Purchase of shares in South Eastern Resources | (160,000) | ||
| Purchase of plant and equipment | (2,849) | (2,849) | |
| Expenditure on mining interests (exploration) | (522, 642) | (323, 389) | |
| Tenement security deposits | (56, 500) | (42,500) | |
| NET CASH FLOWS (USED IN) INVESTING ACTIVITIES | (581, 991) | ${528,742}$ | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Advances to controlled entities | (58, 510) | ||
| Proceeds from issue of shares | 4,426,757 | 4,426,757 | |
| Equity raising expenses | (434,790) | (434,790) | |
| NET CASH FLOWS FROM FINANCING ACTIVITIES | 3,991,967 | 3,933,457 | |
| Net increase in cash held | 3,319,515 | 3,319,508 | |
| Add opening cash brought forward | |||
| CLOSING CASH CARRIED FORWARD | 24 | 3.319.515 | 3,319,508 |
22
STATEMENT OF CHANGES IN EQUITY
PERIOD FROM DATE OF INCORPORATION 28 JUNE 2005 TO 30 JUNE 2006
| Attributable to the shareholders of Icon Resources Ltd | ||||
|---|---|---|---|---|
| CONSOLIDATED | Issued | Accumulated | Total | |
| Capital | Losses | Reserves | Equity | |
| \$ | \$ | S | S | |
| AT 1 JULY 2005 | ||||
| Loss for the period | (384, 951) | (384, 951) | ||
| Total expense for the period | (384, 951) | ${384,951}$ | ||
| Cost of share based payments taken directly to Equity | 2,358 | 2,358 | ||
| Issue of share capital | 4,322,816 | $\cdot$ | 4,322,816 | |
| AT 30 JUNE 2006 | 4,322,816 | (384, 951) | 2,358 | 3,940,223 |
| وستحجب والمريدين |
| Attributable to the shareholders of Icon Resources Ltd | ||||
|---|---|---|---|---|
| PARENT | Issued | Accumulated | Total | |
| Capital | Losses | Reserves | Equity | |
| S | \$ | S. | ||
| AT 1 JULY 2005 | $\ddot{\phantom{0}}$ | |||
| Loss for the period | (379, 697) | (379,697) | ||
| Total expense for the period | (379, 697) | (379, 697) | ||
| Cost of share based payments taken directly to Equity | 2.858 | 2,358 | ||
| Issue of share capital | 4,322,816 | $\mathbf{u}$ | 4,322,816 | |
| AT 30 JUNE 2006 | 4,322,816 | (379, 697) | 2,358 | 3,945,477 |
.
Voor Resources Etd - Annual Report/2006
29
$\left\langle \left\langle \left\langle \left\langle \left\langle \left\langle \left\langle \left\langle \left\langle \left\langle$
II.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1
Basis of preparation ${x}$
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards.
The financial report has been prepared on a historical cost basis except for land and buildings, which have been measured at fair value.
Statement of compliance 攝
The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards ("AlFRS"). Compliance with AIFRS ensures that the financial report, comprising the financial statements and notes thereto, complies with International Financial Reporting Standards ("IFRS").
This is the first financial report prepared based on AIFRS, and also the first report prepared for the Company as a listed entity and its first year of operations, thus it has no prior year comparisons. There are no reconciliations applicable to prior periods that would be affected under AIFRS.
(c) Basis of consolidation
The consolidated financial statements comprise the financial statements of lcon Resources Ltd (icon or the "Company") and its subsidiaries ("the Group") as at 30 June each year.
The financial statements of subsidiaries are prepared for the same reporting period as the parent Company, using consistent accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies that may exist.
All inter-Company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full.
Subsidiaries are fully consolidated from date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.
(d) Property, plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Land and buildings are measured at fair value less accumulated depreciation.
Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows:
plant and equipment - 4 years
Impairment
21
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
An item of plant and equipment is derecognised upon disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised.
(e) Borrowing costs
Borrowing costs are recognised as an expense when incurred.
借 Intangible assets
Acquired both separately and from a business combination
Intangible assets acquired separately are capitalised at cost and from a business combination are capitalised at fair value as at the date of acquisition. Following recognition, the cost model is applied to the class of intangible assets.
The useful lives of these intangible assets are assessed to be either finite or indefinite.
Where amortisation is charged on assets with finite lives, this expense is taken to the income statement through the "administrative expenses" line item.
Intangible assets, excluding development costs, created within the business are not capitalised and expenditure is charged against profits in the period in which the expenditure is incurred.
Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of indefinite life intangibles annually, either individually or at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable, are made on a prospective basis.
Recoverable amount of assets $(a)$
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use.
(h) Investments
All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the investment.
After initial recognition, investments, which are classified as held for trading and available-for-sale, are measured at fair value. Gains or losses on investments held for trading are recognised in the income statement.
Gains or losses on available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the income statement.
NOTES TO AND FORMING PART OF THE ACCOUNTS CONTINUED
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Group has the positive intention and ability to hold to maturity, investments intended to be held for an undefined period are not included in this classification.
Other long-term investments that are intended to be held-to-maturity, such as bonds, are subsequently measured at amortised cost using the effective interest method.
Amortised cost is calculated by taking into account any discount or premium on acquisition, over the period to maturity.
For investments carried at amortised cost, gains and losses are recognised in income when the investments are derecognised or impaired, as well as through the amortisation process.
For investments that are actively traded in organised financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date.
For investments where there is no quoted market price, fair value is determined by reference to the current market value of another instrument which is substantially the same or is calculated based on the expected cash flows of the underlying net asset base of the investment.
Purchases and sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place are recognised on the trade date, being the date that the Group commits to purchase he asset.
Exploration, evaluation, development and restoration costs 什
Exploration and evaluation
Exploration and evaluation expenditure incurred by or on behalf of the Company is accumulated separately for each area of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure, but does not include general overheads or administrative expenditure not having a specific connection with a particular area of interest.
Exploration and evaluation costs in relation to separate areas of interest for which rights of tenure are current are brought to account in the year in which they are incurred and carried forward provided that:
- such costs are expected to be recouped through successful development. ٠ and exploitation of the area, or alternatively through its sale; or
- exploration and/or evaluation activities in the area have not yet reached ٠ a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves.
Once a development decision has been taken, all past and future exploration and evaluation expenditure in respect of the area interest is aggregated within costs of development.
Exploration and evaluation - impairment
The Directors assess at each reporting date whether there is an indication that an asset has been impaired and for exploration and evaluation cost whether the above carry forward criteria are met.
Accumulated costs in respect of areas of interest are written off or a provision. made in the Income Statement when the above criteria do not apply or when the Directors assess that the carrying value may exceed the recoverable amount. The costs of productive areas are amortised over the life of the area of interest to which such costs relate on the production output basis, provisions would be reviewed and if appropriate, written back.
Development
Development expenditure incurred by or on behalf of the Company is accumulated separately for each area of interest in which economically recoverable reserves. have been identified to the satisfaction of the Directors. Such expenditure comprises net direct costs and, in the same manner as for exploration and evaluation expenditure, an appropriate portion of related overhead expenditure having a specific connection with the development property.
All expenditure incurred prior to the commencement of commercial levels of production from each development property is carried forward to the extent to which recoupment out of revenue to be derived from the sale of production) from the relevant development property, or from the sale of that property, is reasonably assured.
No amortisation is provided in respect of development properties until à decision has been made to commence mining. After this decision, the costs are amortised over the life of the area of interest to which such costs relate on a production output basis.
Restoration
Provisions for restóration costs are recognised when the Company has a present obligation (legal or constructive) as a result of a past everit, and it is probable that an outflow/of resourcés embodying economic benefits will bé required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
If the effect of the time value of money is material, provisions are determined by discognting the expected cash flows/at a pre-tax rate that reflects current market/assessments of the time value of money and, where appropriate, the risks specific to the liability
When discounting is used, the increase in the provision due to the passage of time is recognised as a firiance cost.
Remaining mine life
In estimating the remaining life of the mine at each mine property for the purpose of amortisation and depreciátion calculations, due regard is given not only to the volume of remaining economically recoverable reserves but also to limitations which could arise from the potential for changes in technology, demand, products ubstitution and other issues that are inherently difficult to estimate over a lengthy time frame.
(j) Mine property held for sale
Where the carrying amount of mine property and related assets will be recovered principally through a sale transaction rather than through continuing use, the assets are reclassified as Mine Property Held for Sale and carried at the lower of the assets' carrying amount/and fair value
less costs to sell - where such fair value can be reasonably determined, and otherwise at its carrying amount. Liabilities and provisions related to mine property held for sale are similarly reclassified as Liabilities - Mine Property Held for Sale and, Provisions - Mine Property Held for sale, as applicable, and carried at the value at which the liability or provisions expected to be settled.
(k) Trade and Other Receivables
Trade receivables, which generally have 5-30 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amnunts.
An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified.
Cash and cash equivalents 什
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of any outstanding bank overdrafts, if any.
(m) Other provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(n) Employee Entitlements
Liabilities for wages and salaries are recognised and are measured as an amount unpaid at the reporting date at current pay rates in respect of employee's services up to that date. Current employee contracts do not entitle them to annual leave and long service leave. A liability in respect of superannuation at the current superannuation guarantee rate has been accrued at the reporting date.
(o) Share-based payments
An employee share option scheme has been established where selected employees, consultants, contractors and Directors of the Company are issued with options over ordinary shares in Icon Resources Ltd. The options, issued for nil consideration, are issued in accordance with a performance review by the Directors. The options cannot be transferred and will not be quoted on the ASX. There were 1,200,000 options issued in March 2006 which expire on 8 March 2011, which are exercisable at 30 cents and which have vested. Options expire if not exercised 90 days after a participant resigns from the Company. The cost of these equity-settled transactions is determined by reference to the fair value at the date at which they are granted. The fair value of the options is determined by using the Black and Scholes option pricing model.
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (a) the extent to which the vesting period has expired and (b) the number of awards that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at orant date. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. The Company has applied the requirements of AASB 1 "First-time Adoption of Australian Equivalents to International Financial Reporting Standards" in respect of equity-settled awards and has applied AASB 2 "Share-Based Payments" only to equity instruments granted after 7 November 2002 that had not vested on or before 1 January 2005.
(p) Leases
Finance leases, which transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as the lease income.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
の
アムセ
NOTES TO AND FORMING PART OF THE ACCOUNTS CONTINUED
${m}$ Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
Sale of goods
Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably. Risks and rewards are considered passed to the buyer at the time of delivery of the goods to the customer.
Interest
Revenue is recognised as the interest accrues (using the effective interest method, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the net carrying amount of the financial asset.
Dividends
Revenue is recognised when the shareholders' right to receive the payment is established.
${r}$ income tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted at the balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their cariving amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
- $\bullet$ except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carty-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balancé sheet date.
Income taxes relating to items redognised directly in equity are recognised in equity and not in the income statement.
Other taxes $\left{ \mathbf{v}\right}$
Revenues, expenses and assets are recognised net of the amount of GST except
where the GST incurred on/a purchase of goods and services is not $\bullet$ recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applisable; and
receivables and payables are stated with the amount of GST included. $\bullet$ The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or/payables in the balance sheet/ Cash flows are included in the Cash Flow Statement on a pross/basis and the GST component of gash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recovérable from, or payable to, the taxation authority.
Currancy 丗
Both the functional and presentation currency is Australian dollars (A\$).
Comparatives ${u}$
There are no comparative figures as this is Company's first year of operation.
Investment in Controlled Entities $(v)$
The Company's investment in its controlled entities is accounted for under the equity method of accounting in the Company's financial statements.
2,
Consolidated Parent 2006 2006 \$ $\mathbb{S}$ REVENUE FROM ORDINARY ACTIVITIES $2.$ Interest received - other persons/corporation 8,945 8,945 Other income 89,331 64,676 98,166 73,621 INCOME TAX З. Income tax expense $(a)$ Current tax
| Deferred tax | |
|---|---|
| (Over) under provision in prior years | |
| Income tax expense is attributable to: | |
| Profit from continuing operations | |
| Aggregate income tax expense |
(b) Numerical reconciliation of income tax expense to prima facie tax payable
| Losses from continuing operations before income tax expense | (384, 951) | (379, 697) |
|---|---|---|
| Tax at the Australian tax rate of 30% | (115, 485) | (113,909) |
| Tax effect of amounts which are not deductible (taxable) in calculating taxable income: | ||
| Additional deductions | $\ddot{\phantom{a}}$ | |
| (Over) under provision prior year. | $\ddot{\phantom{0}}$ | |
| Non-allowable deductions | $\mathbf{a}$ | |
| Other | $\ddot{\phantom{0}}$ | |
| income taxes not brought to account | 115,485 | 113,909 |
NOTES TO AND FORMING PART OF THE ACCOUNTS CONTINUED
| Consolidated | Parent | |||
|---|---|---|---|---|
| 2006 | 2006 | |||
| \$ | \$ | |||
| (C). | Current tax liabilities | |||
| Balance at beginning of year | ||||
| Income tax paid | ||||
| Current year's income tax on profit | ||||
| Under (over) provided in prior year | ||||
| Balance at end of year | ||||
| No provision for income tax is considered necessary in respect of the Company for the period ended 30 June 2006. | ||||
| No recognition has been given to any future income tax benefit which may arise from operating losses not claimed for tax purposes. The Company has | ||||
| estimated its losses not claimed of \$115,485. These amounts have not been brought to account in calculating any future tax benefit. | ||||
| A benefit of 30% of approximately \$115,485 will only be obtained if: | ||||
| ٠ | the Company 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, | |||
| ٠ | the Company continues to comply with the conditions for deductibility imposed by the law, and | |||
| ٠ | no changes in tax legislation adversely affect the Company in realising the benefit from the deductions for the losses, i.e. current tax legislation permits carried forward tax losses to be carried forward indefinitely. |
|||
| No franking credits are available for subsequent years. | ||||
| Tax consolidation | ||||
| The Tax Consolidation scheme is applicable to the Company. As at the date of this report the Directors have not assessed the financial effect, if any, the | ||||
| scheme may have on the Company and the consolidated entities, and accordingly the Directors bave not made a decision whether or not to be taxed as a | ||||
| single entity. The financial effect of the tax consolidation scheme on the Group has not been recognised in the financial statements. | ||||
| Consolidated | Parent | |||
| 2006 | 2006 | |||
| s | ||||
| 4. | AUDITORS' REMUNERATION | |||
| Total amounts receivable by the current auditors of the Company for: | ||||
| Audit of the Company's accounts | 6,000 | 6,000 | ||
| Other services - Independent Accountant's Report for IPO Prospectus | 5,012 | 5,012 | ||
| 11,012 | 11,0仅 | |||
| 5. | RECEIVABLES - CURRENT | |||
| Interest | 5,661 | 5,661 | ||
| Refund for GST paid* Other receivables |
74,710 | 74,710 | ||
| 80,371 | 80,871 |
* The refund amount of GST paid may be less than shown following advice received from the ATO regarding some items that may be classified under Financial Acquisition Threshold Legislation and forming part of the capital raising for the IPO of the Company, and thus not admissible on the GST return. As at the date of this report no further details are available.
24
I
| Consolidated | Parent | ||
|---|---|---|---|
| 2006 | 2006 | ||
| S | S | ||
| 鹽層 | SHARES IN CONTROLLED ENTITIES 6. South Eastern Resources Ltd |
$\mathbf{r}$ | 480,000 |
| Cast Resources Pty Ltd | $\ddot{\phantom{0}}$ | 2 | |
| Troutstone Resources Pty Ltd | $\mathbf{u}$ | 2 | |
| $\mathbf{u}$ | 480,004 | ||
| $\overline{J}$ . | TENEMENT SECURITY DEPOSITS | ||
|---|---|---|---|
| Cash with government mines department | \$56,500 | \$42,500 |
These deposits are restricted so that they are available for any rehabilitation that may be required on exploration tenements (refer to Note 19).
8. PLANT AND EQUIPMENT
Costs hmught forward
| Plant and equipment - at cost | 2,849 | 2,849 |
|---|---|---|
| Accumulated depreciation | (492) | ${492}$ |
| 2,357 | 2,357 | |
| Reconciliation of the carrying amount of plant and equipment at | ||
| the beginning and end of the current and previous financial year. | ||
| Carrying amount at beginning | $\mathbf{u}$ | |
| Additions | 2,849 | 2,849 |
| Disposals | ||
| Depreciation expense | (492) | ${492}$ |
| 2,357 | 2,357 |
9. DEFERRED EXPLORATION AND EVALUATION EXPENDITURE
| Costs incurred during the period | 842,639 | 323,386 |
|---|---|---|
| Expenditure written off during period | (270, 452) | (270, 452) |
| Costs carried forward | 572,187 | 52,934 |
| Exploration expenditure costs carried forward are made up of: | ||
| Expenditure on joint venture areas | - 11 | |
| Expenditure on non joint venture areas. | 572,187 | 52,934 |
| Costs carried forward | 572,187 | 52,934 |
The above amounts represent costs of areas of interest carried forward as an asset in accordance with the accounting policy set out in Note 1. The ultimate recoupment of deferred exploration and evaluation expenditure in respect of an area of interest carried forward is dependent upon the discovery of commercially viable reserves and the successful development and exploitation of the respective areas or alternatively sale of the underlying areas of interest for at least their carrying value. Amortisation, in respect of the relevant area of interest, is not charged until a mining operation has commenced.
Ø.
| Consolidated | Parent | ||||
|---|---|---|---|---|---|
| 2006 | 2006 | ||||
| s | S | ||||
| 10. LOANS TO CONTROLLED ENTITIES | |||||
| Unsecured loan to a controlled entity (interest free). | 58,510 | ||||
| CURRENT LIABILITIES - PAYABLES 11. Trade creditors |
56,237 | ||||
| Accrued expenses | 56,237 26,843 |
26,843 | |||
| Other | 7,627 | 7,627 | |||
| 90,707 | 90,70% | ||||
| 12. CONTRIBUTED EQUITY | |||||
| Share capital | |||||
| 40,000,000 ordinary shares fully paid | 4,322,816 | 4,322,816 | |||
| Movements in ordinary share capital | Date | Number of shares | Íssue price | S | |
| Shares issued to initial Shareholders | 23-01-06 | 8,691,429 | \$0.00, | 613 218 | |
| Shares issued at a deemed price of 0.013 cents each | 03-03-06 | 10,491,429 | \$0.013 | 136,388 | |
| Shares issued to acquire tenements | 03-03-06 | /617,142 | \$0.00 | ||
| Shares issued to Directors in lieu of Directors fees Shares issued for cash in IPO |
03-03-06 $03 - 06 - 06$ |
200,000 | \$0.04 | (8,000) | |
| Costs of IPO share issue. | 20,000,000 | \$0.20 | 4,000,000 | ||
| Balance at end of current financial period | 03-06-06 30-06-06 |
40,000,000 | (434,790) 4,322,816 |
||
| Terms and conditions of contributed equity | |||||
| Ordinary Shares | |||||
| Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of | |||||
| all surplus assets in proportion to the number of and amounts paid up on shares held. | |||||
| Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company. Option holders have no voting rights until the options are exercised. | |||||
| Options | |||||
| There are 1,200,000 options outstanding which expire on 8 March 2011, which are exercisable at 30 cents. These options issued during the current peridd. | |||||
| 2006 | 2006 | ||||
| Options expense reserve | S | \$ | |||
| Balance at 1 July 2005 | |||||
| Options transferred to reserve | 2,358 | 2,358 | |||
| Balance at the end of the financial year | 2,358 | 2,358 | |||
| Vcon Reso∂rces โtd - Annual Report/2006 |
).
Militari
I
| RESERVES 13. |
\$ | s |
|---|---|---|
| Balance at the beginning of period | ||
| Operating profit (loss) after income tax expense | (384,951) | (379, 697) |
| Share-based payments reserve | 2,358 | 2,358 |
| Balance at the end of period | (382,593) | (377, 339) |
| 14. LOSS PER SHARE | ||
| Basic loss per share (cents per share). | 4.311 | 4.253 |
| Diluted loss per share (cents per share). | 4.311 | 4.253 |
| Weighted average number of ordinary shares on issue used in the calculation of basic and diluted loss per share is 8,928,673. | ||
| Loss used in calculating basic and diluted loss per share. | \$384,951 | \$379,697 |
Conversion, call, subscription or issue after 30 June 2006:
Since the end of the financial period there have been no other conversions to, call of, or subscriptions for ordinary shares or issues of potential ordinary shares since the reporting date and before the completion of these financial statements.
15. REMUNERATION AND RETIREMENT BENEFITS
(a) Directors' remuneration
The following table outlines the nature and amount of the elements of the remuneration of specified Directors of the Company for the period ended 30 June 2006.
| Salary | Directors | Consulting Fees |
Superannuation Fees |
Options Contributions |
Shares | Total | |
|---|---|---|---|---|---|---|---|
| 2006 | \$ | \$ | \$ | \$ | \$ | \$ | \$ |
| A H White | $\tilde{\phantom{a}}$ | × | 5,500 | $\cdot$ | ЮO. | 11,500 | |
| J R Bishop | 10,092 | × | 16,598 | 908 | 983 | 28,581 | |
| S B Bartrop | $\mathbf{w}$ | $\alpha$ | $\alpha$ | $\mathbf{u}$ | $\alpha$ | 2,000 | 2,000 |
| 10,092 | × | 22,098 | 908 | 983 | 8,000 | 42,081 | |
| Shares | Value of | Total | |||||
| 2006 | Number | shares \$ | \$ | ||||
| A H White* | 150,000 | 6,000 | 6,000 | ||||
| J R Bishop | $\mathbf{w}$ | $\alpha$ | $\mathbf{u}$ | ||||
| S B Bartrop* | 50,000 | 2,000 | 2,000 | ||||
| 200,000 | 8,000 | 8,000 |
* shares issued in lieu of Directors fees
Directors' interests in shares and options in the Company are set out in Note 16.
(b) Executive Officers' remuneration, shares and options
Other than Directors, there are no other officers who satisfy the definition of "Executive Officers" who are or were involved in, concerned with, or who take part in, the management of the affairs of III and/or related bodies corporate.
16. RELATED PARTY DISCLOSURES
The Directors in office during the period were A H White, J R Bishop and S Bartrop.
Since the date of incorporation interests and movements in the shares and options of the Company held by Directors and their Director-related entities as at 30 June 2006:
Fully Paid Ordinary Shares
at 30 June 2006
| Directors | Balance | Net changes | Balance | Balance held |
|---|---|---|---|---|
| 1.7.05 | Number | 30.6.06 | Nominally | |
| Number | ||||
| A H White | ă, | 3,235,714 | 3,235,714 | |
| J R Bishop | u, | 3,085,714 | 3,085,714 | |
| S B Bartrop | $\cdots$ | 4,395,714 | 4,395,714 | |
| 10,717,142 | 10/717,142 | - 1 | ||
| Options | ||||
| at 30 June 2006 | ||||
| Directors | Balance | Net changes | Balance | Balance held |
| 1.7.05 | Number | 30.6.06 | Nominally | |
| Number | ||||
| A H White | ||||
| J R Bishop | ,500,000 | 500,000 | ||
| S Bartrop | $\cdots$ | $\mathbf{w}$ | ||
| ×, | 500,000 | 5¢0,000 | ||
Directors interests in shares and Options includes holdings in their names and in the names of director related entities.
Remuneration options: Granted and vested during the year
During the financial year options were granted as equity compensation benefits to following specified Directors as disclosed below. The options were issued free of charge. Each option entitles the holder to subscribe for one fully paid ordinary share in the entity at specified exercise prices and within the specified time prior to expiry of the options.
| Vested | Granted | Terms & Conditions for each Grant | |||||
|---|---|---|---|---|---|---|---|
| Value ger | Exercise | ||||||
| option at | price per | ||||||
| grant date | share | ||||||
| Specified Directors | Number | Number | Grant date | S | \$ | Expiry date | |
| J R Bishop | $\ddot{\phantom{a}}$ | 500,000 | 8.3.2006 | 0.00246 | 0.30 | 8.3.2011 | |
| Total | 500,000 | ||||||
| . |
* valued at 80% due not being listed
a.
CONTINUED
No options were granted to Directors during the current period under the Company's Employees Option Plan. Shares and options held by Directors included those held by the Directors and their Director-related entities, including the spouses of such Directors and relatives of such Directors. All shares and options, were issued or granted on terms no more favourable than to other shareholders or option holders.
Dr Bishop is an employee and Director of and has a significant financial interest in Mitre Geophysics Pty Ltd, a Company that provided technical services to the Company during the period. Services provided during the period ended 30 June 2006, which are referred to in the remuneration of Directors in Note 15, amounted to \$16,598. Dr White is a Director and has a significant financial interest in Andrew White Associates, a partnership that provides geological and exploration management services to the Company. Services provided during the period ended 30 June 2006 amounted to \$5,500, this amount is included in the remuneration of Directors in Note 15.
Services provided by Director-related entities were under normal commercial terms and conditions. No other benefits have been received or are receivable by Directors, other than those already disclosed in the notes to the accounts.
17. JOINT VENTURES
The Company is a party to two exploration joint venture agreements to explore for copper and gold. Under the terms of the agreements the Company will be required to contribute towards the exploration and other costs if it wishes to maintain or increase its percentage holdings. The joint ventures are not separate legal entities. There are contractual arrangements between the participants for sharing costs and future revenues in the event of exploration success. There are no assets and liabilities attributable to the Company at balance date resulting from these joint ventures, other than exploration excenditure costs carried forward as detailed in Note 9.
Percentage equity interests in joint ventures at 30 June 2006 were as follows:
| Percentage Interest 2006 | |
|---|---|
| Tasmania | |
| Professor Tenements | 100% |
| Zinifex Ltd has an option for certain mining rights over the project which expires 30 September 2006 | |
| Queensland | |
| Fiizabeth Creek NW Old | $100\%$ |
| Zinifex Ltd can earn an equity in the project by funding and managing exploration and development of the project |
18. FINANCIAL REPORT BY SEGMENT
The Company operates predominantly in the one business and in one geographical area, namely Australian mineral exploration and evaluation.
19. CONTINGENT LIABILITIES
The Group has provided quarantees totalling \$56,500 in respect of mining tenements. These quarantees in respect of mining tenements are secured against deposits with the relative State Department of Mines. The Company does not expect to incur any material liability in respect of the quarantees.
20. EMPLOYEE ENTITLEMENTS
An employee share option plan has been established where selected officers and employees of the Company can be issued with options over ordinary shares in Icon Resources Ltd. The options, issued for nil consideration, will be issued in accordance with a performance review by the Directors. The options cannot be transferred and will not be quoted on the ASX. The Company has not yet made an issue under the Plan.
Ø
21. FINANCIAL INSTRUMENTS
Interest rate risk exposure
At balance date, the Company was exposed to a floating weighted average interest rate as follows:
| Consolidated | Parent | |
|---|---|---|
| 2006 | 2006 | |
| Weighted average rate of cash balances | 5.08% | 5.08% |
| Cash balances | \$3,319,515 | \$3,319,508 |
Bank negotiable certificates of deposit are normally invested for 30 days and other cash at bank balances are at call. All other financial assets and liabilities are non-interest bearing.
Net fair value of financial assets and liabilities, on balance sheet and credit risk
The net fair value of cash and cash equivalents and non-interest bearing monetary financial assets and financial liabilities of the Company approximates their carrying value. Credit risk is minimal at balance date.
22. COMMITMENTS
Exploration licence expenditure requirements
In order to maintain the Company's tenements in good standing with the various mines departments, the Company will be required to incur exploration expenditure under the terms of each licence. These expenditure requirements will diminish as the Conipany joint ventures projects to third parties. It is the Company's exploration strategy to farm-out where appropriate to larger companies to fund drilling programmes. In addition, the Company has commitments to expend funds towards earning or retaining an interest under joint venture agreements.
| Consolidated | Parent | |
|---|---|---|
| 2006 | 2006 | |
| S | ||
| Payable not later than one year | 327,000 | 327,000 |
| Payable later than one year but not later than two years | 332,000 | 332,000 |
| \$659,000 | \$659,000 | |
It is likely that the granting of new licences and changes in licence areas at renewal or expiry, will change the experiditure commitment to the Company from time to time.
23. SUBSEQUENT EVENTS
There have been no material events subsequent to 30 June 2006. The finalisation of the Comparty's ASX IPO and all applicable transactions were concluded during June 2006.
24. STATEMENT OF CASH FLOWS
Reconciliation of net cash outflow from operating activities to operating loss after income tax
| Consolidated | Parent | ||
|---|---|---|---|
| 2006 | 2006 | ||
| \$ | S | ||
| ${a}$ | Operating (loss) after income tax | (384, 951) | (379, 697) |
| Depreciation | 493 | 493 | |
| Share/Option based payments for services | 2,358 | 2,358 | |
| Share based payments for Directors fees | 8,000 | 8,000 | |
| Change in assets and liabilities: | |||
| (Increase)/decrease in receivables | (80.371) | (80, 371) | |
| (Decrease)/increase in trade and other creditors | 90,707 | 90,707 | |
| Exploration expenditure written off | 260,303 | 260,303 | |
| Management fee paid/received | 13,000 | 13,000 | |
| Net cash outflow from operating activities | (90, 461) | (85, 207) | |
| (b) | For the purpose of the Statement of Cash Flows, cash includes cash on hand, at bank, deposits and bank bills used as part of the cash management function. The Company does not have any unused credit facilities. |
||
| The balance at 30 June 2006 comprised: |
| Cash assets | 3.319.515 | 3,319,508 |
|---|---|---|
| Cash on hand | \$3,319,515 | \$3,319,508 |
25. TRANSITION TO AIFRS
The Group entity's prepared financial statements comply with Australian equivalents to International Financial Reporting Standards ("A-IFRS"). This is the first financial report prepared based on AIFRS, and also the first report prepared for the Group as a listed entity and its first year of operations, thus it has no prior year comparatives. There are no reconciliations applicable to prior periods that would be affected under AIFRS.
The following items are noted as the main changes from previous AGAAP and AIFBS:
- Equity-based compensation in the form of shares and options will be recognised at fair value as expenses in the period during which Director, employee $\bullet$ or consultant provides related services. The Company may issue equity based compensation to Directors, employees and consultants. The options issued under the Employee Share Option Plan (ESOP) during the period have been expensed and included in retained earnings.
- Under previous Australian GAAP exploration and evaluation expenditure carried forward is valued on a cost basis in accordance with the exploration. $\bullet$ evaluation and development expenditure accounting policy set out in Note 1 to the Financial Statements. Under AIFRS this remains unchanged except that "pre-exploration" cost will not be recognised. Pre-exploration costs are costs incurred prior to licences being granted. Costs under "preexploration" cost during the period have been expensed.
The following Accounting Standards Amendments and Interpretations may have application to the Group's financial reports in future years but have not been early adopted for the purpose of this financial report;
k.
NOTES TO AND FORMING PART OF THE ACCOUNTS
CONTINUED
| AIAS 3 Affected Standard (s) Amendment AASB 132 Financial Instruments: Disclosure and 2005-10 |
Nature of change to accounting policy Currently being |
Applicable date of standard |
Application date for Group 1 July 2007 |
|
|---|---|---|---|---|
| Presentation of Financial Statements, AASB 114 | assessed | 1. January 2007 | ||
| Segment Reporting, AASB 117 Leases, AASB 133 | ||||
| Famings per Share, AASB 139 Financial Instruments: | ||||
| Recognition and Measurement, AASB 1 First-time | ||||
| adoption of AIFRS, AASB 4 Insurance Contracts, | ||||
| AASB 1023 General Insurance Contracts and AASB | ||||
| 1038 Life Insurance Contracts | ||||
| AASB 7 Financial Instruments: Disclosures New Standard |
Currently being assessed |
1 January 2007 | 1.30ly 2007 | |
| The following Accounting Standard amendments and interpretations are not applicable to the Group as at 30 June 2006 and therefore are not expected to have any | ||||
| impact on future financial reports. | ||||
| AASB Amendment Affected Standard |
Nature of change to accounting policy |
Application date of standard |
Applicable date for Group |
|
| AASB 139 Financial Instruments: Recognition 2005-1 |
No change, no impact | 1 January 2006 | 2006 yil | |
| and Measurement | ||||
| AASB 1 First time adoption of AIFAS and AASB 139 2005-5 Financial Instruments recognition and Measurement |
No charge, no impact | 1 January 2006 | 1 July 2006 | |
| AASB 3 Business Combinations 2005-6 2006-1 AASB 121 The effects of the change in foreign |
No change, no impact No change, no impact |
1 January 2006 1 January 2006 |
July 2006 1 40y 2006 |
|
| exchange rates | ||||
| The following amendments are not applicable to the Group and therefore have no impact. | ||||
| AASB Amendment Affected Standard 2005-2 AASB 1023: General Insurance Contracts |
||||
| AASB 1: First-time adoption of AIFRS 2005.4 AASB 1023 General Insurance Contracts |
||||
| AASB 4: Insurance Contracts 2005-9 |
||||
| AASB: 1023 General insurance contracts | AASB 132: Emancial Instruments: Disclosures and Presentation AASB 139 Financial Instruments: Recognition and Measurement |
|||
| CORPORATE INFORMATION |
The financial report of the Group for the year ended 30 June 2006 was authorised for issue in accordance with a resolution of the Directors on 21 \$eptember 2006. Icon Resources Ltd is a Company limited by shares and incorporated in Australia. Its shares are publicly traded on the Australian Stock Exchange under the ASX code "III".
Ż.
Je
Je
DIRECTORS' DECLARATION
In accordance with a resolution of the Directors of Icon Resources Ltd, I state that:
- (1) In the opinion of the Directors:
- (a) financial statements and notes of the Company are in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the Company's financial position as at 30 June 2006 and of its performance for the year ended on that date: and
- (ii) complying with Accounting Standards and the Corporations Regulations 2001; and
- (b) there are reasonable grounds to befleve that the Company will be able to pay its debts as and when they become due and payable.
- {2} This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2006.
On behalf of the Board
J R Bishop Director
Sydney, 26 September 2006
BARNES DOWELL JAMES
CHARTERED ACCOUNTANTS
AJD:KG
25 September, 2006
The Directors Icon Resources Pty Ltd Suite 302 25 Lime Street SYDNEY NSW 2000
Partners C H Barnes FCA A I Dowell CA M W James CA B Kolevski (Affiliate ICAA)
Associate M A Nakkan CA North Sydney Level 13, 122 Arthur St North Sydney NSW 2060
Manly Level 5, 22 Central Ave Maniv National Building Manly NSW 2095
Correspondence PO Box 1664 North Sydney NSW 2059
Telephone (02) 9956 8500 Facsimile (02) 9929 7428 email:[email protected]
Dear Sirs.
AUDITOR'S INDEPENDENCE DECLARATION TO THE DIRECTORS OF ICON RESOURCES PTY, LTD
In relation to our audit of the financial report of Icon Resources Pty Ltd for the financial year ended 30 June, 2006, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Yours faithfully BARNES DOWELL JAMES
Hoult.
A.J. DOWELL Partner
Liability limited by a scheme approved under Professional Standards Legislation G:\Ceedata\dala\v0\060908\01102224.doc
Website: www.bdj.com.au
To members of Icon Resources Ltd
Scone
We have audited the financial report of Icon Resources Ltd for the financial period ended 30 June 2006 as set out on pages 20 to 38.
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 Australia 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.
Audit opinion
In our opinion, the financial report of Icon Resources Ltd is in accordance with:
- (a) the Corporations Act 2001, including:
- (i) qiving a true and fair view of the Company's financial position as at 30 June 2006 and its performance for the period 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.
Wavell.
ANTHONY DOWELL Partner 26 September 2006
M
BARNES DOWELL JAMES
NORTH SYDNEY NSW 2060
Chartered Accountants
Level 13, 122 Arthur St
The Board of Directors of Icon Resources Ltd (III) is responsible for corporate governance and strives for high standards in this regard. The Board monitors the business and affairs of III on behalf of the shareholders by whom they are elected and to whom they are accountable. The Board draws on relevant best practice principles particularly those issued by the ASX Corporate Governance Council in March 2003. At a number of its meetings the Board examined the III corporate governance practices and the progress towards a review of its practice compared to the best practice principles proposed by the ASX Corporate Governance Council. While III is attempting to adhere to the principles proposed by ASX, it is mindful that there may be some instances where compliance is not practicable for a Company of Ill's size.
The March 2003 Australian Stock Exchange Corporate Governance Council publication "Principles of Good Corporate Governance and Best Practice Recommendations" is for quidance purposes, however all listed companies are required to disclose the extent to which they have followed the recommendations; to identify any recommendations that have not been followed; and reasons for not doing so. The Company's Board of Directors has reviewed the recommendations. In many cases the Company was already achieving the standard required. In other cases the Company will have to consider new arrangements to enable compliance. In a limited number of instances, the Company may determine not to meet the standard set out in the recommendations. largely due to the recommendation being considered by the Board to be unduly onerous for a Company of this size.
The following paragraphs set out the Company's position relative to each of the 10 principles contained in the ASX Corporate Governance Council's report.
Principle 1: Lay solid foundations for management and oversight
The Company has not yet formalised and disclosed the functions reserved to the Board and those delegated to management. However, the Company has a small Board of three Directors (two Non-Executive Directors and the Director Technical) and a small team of people, so roles and functions have to be flexible to meet specific requirements.
Principle 2: Structure the Board to add value
The Company complies with most of the recommendations within this area as the Chairman is separate from the Executive Director. The Company does not comply with the recommendation that a majority of Directors are independent, because one is an Executive Director and the Chairman is a substantial shareholder and the third Non-executive Director represents an associated Company and a substantial shareholder. The Company has a Board nomination committee.
Two of the Company's three Directors are non-executives, and the employer of one of the non-executives has undertaken consultancy. work for the Company within the past three years. Each Director of the Company has the right to seek independent professional advice at the expense of the Company. Prior approval of the Chairman is required, but this will not be unreasonably withheld.
Principle 3: Promote ethical and responsible decision-making
The Company has a policy concerning trading in its securities by Directors, management, staff and significant consultants which is set out below. The Company does not have a formal code of conduct. again reflecting the Company's size and the close interaction of individuals throughout the organisation.
Principle 4: Safeguard integrity in financial reporting
At this stage the Company's financial statements are prepared by an external accountant who confirms/to the Audit Committee in writing that the Company's financial reports represent a true and fair view, in all material respects, of the $\ell$ ompany's financial condition $\det$ operational results and are in accordagice with relevant accounting standards. The Manáging Director reviews and approves the financial statements before they are submitted to the Audit Committee and also confirms this in writing to the Board.
The Company bas an Audit Committee which consists of the two Non-Executivé Directors, Dr White and Mr Bartrop. These Directors have applicable expertise and skills for this Committee. This structure does not meet the ASX's guidance regarding independence, in that it should have a majority of independent Directors. The audit committée reporté to the Board aftér each committee meeting. In coniunction with the full board, the committee meets with and reviews the performance of the external auditors (including scope and quality of the audit).
Principle 5: Make timely and halanced disclosure
The Company, its Directors and consultants are very aware of the ASX's continuous disclosure requirements and operate in an environment where strong emphasis is placed on full and appropriate disclosure to the market. Whilst the Company does not have formal written policies regarding disclosure, it uses strong informal systems. underbinned by experienced individuals. The Company maintains a register of matters considered for possible market disclosure.
ylcon Reso∂rces โld - Annual Report∕2006
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Principle 6: Respect the rights of shareholders
All significant information disclosed to the ASX is posted on the Company's website as soon as it is disclosed to the ASX. When analysts are briefed on aspects of the Group's operations, the material used in the presentation is released to the ASX and posted on the Company's website. Procedures have also been established for reviewing whether any price sensitive information has been inadvertently disclosed, and if so, this information is also immediately released to the market.
Whilst the Company does not have a communications strategy to promote effective communication with shareholders, as it believes this is excessive for small companies, the Company does communicate requiarly with shareholders. The Company has requested the external auditor to attend general meetings and this has been supported by the Company's audit partner at Barnes Dowell James.
Principle 7: Recognise and manage risk
The Company is a small, exploration Company and does not believe that at this stage there is significant need for formal policies on risk oversight and management of risk, although these issues are actively considered at all times in the Company's activities. Risk management arrangements are the responsibility of the Board of Directors and senior management collectively. Risk Factors is an agenda item for each Board meeting. The Company has an Occupational Health and Safety policy with which all of the Company's staff, contractors and consultants must comply.
Principle 8: Encourage enhanced performance
The Company has a Remuneration Committee of Dr White and Mr Bartrop which meets as and when required, to review performance matters and remuneration. There has been no formal performance evaluation of the Board during the past financial period, although its composition will be reviewed at a Board meeting at least annually. The Directors work closely with management and have full access to all the Company's files and records.
Principle 9: Remunerate fairly and responsibly
Directors believe that the size of the Company makes individual salary and consultant negotiations more appropriate than formal remuneration policies. The Remuneration Committee will seek independent external advice and market comparisons as necessary. In accordance with Corporations Act requirements, the Company discloses the fees or salaries paid to all Directors, plus the five highest paid officers. The Company has an Employee Share Option Plan that was introduced in 2006 but has not made an issue under the Plan at this time.
Principal 10: Recognise the legitimate interests of stakeholders
Due to the Company's size and relative level of operational activity which makes legal compliance a less onerous task than with larger companies, the Company does not have a formal code of conduct to quide compliance with legal and other obligations. The Board of Directors continues to review the situation to determine the most appropriate and effective operational procedures.
Ethical Standards
The Board's policy is for the Directors and management to conduct themselves with the highest ethical standards. All Directors and employees will be expected to act with integrity and objectivity, striving at all times to enhance the reputation and performance of the Company.
Securities Trading and Trading Windows
Directors, employees and key consultants must consult with the Chairman of the Board, or in his absence the Managing Director, before dealing in shares of the Company. Purchases or sales of the Company's shares by Directors, employees and key consultants may not be carried out other than in the "window", being the period commencing one day following the date of an ASX announcement leading, in the opinion of the Board, to an informed market. However, Directors, employees and key consultants are prohibited from buying or selling the Company's shares at any time if they are aware of price sensitive information that has not been made public.
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SHAREHOLDER INFORMATION
Information relating to shareholders at 14 September 2006 (per ASX Listing Rule 4.10)
| Substantial Shareholders | Shareholding | |
|---|---|---|
| Troppo Resources Pty Ltd | 4,762,888 | |
| Fallon Nominees Pty Ltd | 4,345,714 | |
| Golden Reef Enterprises Pty Ltd | 3,275,715 | |
| John Richard Bishop | 3,085,714 | |
| Roger James Golfan Lewis | 3,085,714 | |
| Distribution of Shareholders | ||
| Number of ordinary shares held | Number of Hølders | Ordinary Shares |
| $1 - 1,000$ | 1,000 | |
| $1,001 - 5,000$ | 13 | 48,676 |
| $5,001 - 10,000$ | 195 | 1,938,693 |
| 10,001 - 100,000 | 402 | 14,529,600 |
| 100,001 - and over | 30 | 23,482,031 |
| 641 | 40,000,000 | |
| At the prevailing market price of 14 cents per share, there are eight shareholders with less than a marketable parcel of \$500. | ||
| Top 20 Shareholders of Ordinary Shares as at 14 September 2006 | Shares | % Shares issued |
| Troppo Resources Pty Ltd | 4,762,888 | 1 1.91 |
| Fallon Nominees Pty Ltd | 4,345,714 | 10.86 |
| Golden Reef Enterprises Pty Ltd | ,8,085,7∕15 | 7.71 |
| Mr John Richard Bishop | 1,542,857 | 3.86 |
| Sarah Victoria Bishop | 1,542,857 | 3.86 |
| Mr Roger James Gollan Lewis | 1,465,714 | 386 |
| Amelia Barbara Lewis | 1,388,571 | 3,47 |
| Gage Resources Pty Ltd | 629,486 | 1.57 |
| St Jude Exploration Pty Ltd | 829,486 | 1.57 |
| Mandel Pty Ltd | 500,000 | 1.25 |
| Jogib Investments Pty Ltd | 400,000 | 1.00 |
| Australian Asiatic Gems Pty Ltd | 370,286 | ğ.93 |
| G J N Enterprises Pty Ltd | 222,171 | 0,56 |
| Mr David John Matthew Tildesley & Mrs Tanya Sascha Tildesley | 210,000 | 0.53 |
| Mr Julian Alfred Burnett | 200,000 | 0.50 |
| Mr Lindsay George Dudfield | 200,000 | $0.50\%$ |
| Mr Jeffrey Douglas Pappin | 195,000 | 0.49 |
| Mr William Ross McCorquodale | 190,000 | 0.48 |
| Boussal Pty Ltd | 170,000 | ₿.43 |
| Liddington Technology Pty Ltd | १५४,२८६ | Q 39 |
| Total of top 20 holdings | 22,205,031 | 55,53 |
| Other holdings | 17,794,969 | 44,47 |
| Total fully paid shares issued | 40,000,000 | 100,00 |
ton Resources Ltd - Annual Report 2006
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Employee Share Option Plan
At a General Meeting held in March 2006, shareholders approved the adoption of the Company's Employee Share Option Plan. No options have been issued under the plan, however a total of 1,200,000 options have been issued prior to the establishment of the Plan.
Voting rights
There are no restrictions on voting rights. On a show of hands every member present or by proxy shall have one yote and upon a poll each share shall have one vote. Where a member holds shares which are not fully paid, the number of votes to which that member is entitled on a poll in respect of those part paid shares shall be that fraction of one vote which the amount paid up bears to the total issued price thereof. Option holders have no voting rights until the options are exercised.
Audit Committee
At the date of the Report of the Directors, the Company has a committee of two Non-Executive Directors which meets with the Company's external auditors at least once during each half-year. These meetings will take place prior to the finalisation of the half-year financial statements and Annual Report and prior to the signing of the Audit Report.
Statement under ASX Listing Rule 4.10.19
From the date of admission of the Company's shares on ASX (6 June 2006) to the date of this Annual Report, the Company has used the cash and assets in a form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives. Expenditures have been in line with Prospectus estimates.
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