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GOLDARC RESOURCES LIMITED Annual Report 2012
64961_rns_2012-04-26_f5aa70cb-e4b7-4de9-a848-8502844d058c.pdf
Annual Report
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CORPORATE DIRECTORY
DIRECTORS
Peter Ashcroft, Executive Chairman Ian Johns, Executive Director Mark Cashmore, Non-executive Director
COMPANY SECRETARY
Elissa Hansen
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
Suite 1, Level 10 15-17 Young Street Sydney NSW 2000
POSTAL ADDRESS
PO Box R353 Royal Exchange NSW 1225
CONTACT DETAILS
Telephone: 02 9247 2277 Facsimile: 02 9247 7055 Email: [email protected] www.torianresource.com
SHARE REGISTRY
Advanced Share Registry Services 150 Stirling Highway Nedlands WA 6009 Telephone: 08 9389 8033 Facsimile: 08 9389 7871 www.advancedshare.com.au
AUDITORS
K. S. Black & Co Level 6, 350 Kent Street SYDNEY NSW 2000 Telephone: 02 8839 3000 Facsimile: 02 8839 3055
ASX CODE
TNR
CONTENTS
| 1.0 | - | CHAIRMAN'S REPORT | 4 |
|---|---|---|---|
| 2.0 | - | CORPORATE GOVERNANCE STATEMENT | 9 |
| 3.0 | - | DIRECTORS'REPORT | 13 |
| 4.0 | - | AUDITORS INDEPENDENCE DECLARATION | 24 |
| 5.0 | - | CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 31 DECEMBER 2011 | 25 |
| 6.0 | - | CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011 | 26 |
| 7.0 | - | CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 31 DECEMBER 2011 | 27 |
| 8.0 | - | CONSOLIDATED STATEMENT OF CASH FLOWS FOR YEAR ENDED 31 DECEMBER 2011 | 28 |
| 9.0 | - | NOTES TO THE FINANCIAL STATEMENTS | 29 |
| 10 | - | DIRECTORS' DECLARATION | 52 |
| 11 | - | INDEPENDENT AUDITOR'S REPORT | 53 |
| 12 | - | SHAREHOLDER INFORMATION | 55 |
1.0 CHAIRMAN'S REPORT
Late 2011 and early 2012 have been a very difficult time for the company, despite enormous progress with our projects in Madagascar.
LA JOLLA DISCHARGE
The funding the company put into place with the US group, La Jolla Investors has proved to be particularly unfavourable, as La Jolla has aggressively traded our stock, resulting in a price slide that ultimately was not sustainable for the company. The board undertook an appropriate process of due diligence prior to entering the funding agreement but the conduct of La Jolla after the 2011 December special general meeting has been such that it was the direct result of the fall in the price of the stock. La Jolla carried on its trading with no consideration for the market at the time or the achievements we had made with our Madagascan project or indeed potential from such projects. The board recognised that there was an urgent need to resolve some alternate structure. By March this year, unfortunately the share price had fallen so far that there were no viable funding alternatives. Our immediate solution was to discharge the La Jolla agreement and to thereafter examine some funding arrangements.
Whilst the share price deteriorated Torian continued to manage all of its projects, with particular emphasis on continuing to work at Vatovorona in Madagascar and complete numerous rehabilitation obligations in Australia.
MADAGASCAN SUMMARY
VATOVORONA
Torian has undertaken the role of project manager and director for all the operations of Varun Torian (International) SARL (VTI) in Madagascar. Varun Madagascar provided all back office support, administration and local geologists and on site support. Although Torian only has a 35% interest in the VTI we directed its activity and provide all high end professional services. Torian elected to focus on the gold permit at Vatovorona where local artisanal workings extended over approximately 2 kilometres.
In January 2011 Torian supervised the collection of over half a tonne of material from the central Madagascan gold permit which ultimately became known as Vatovorona. This sample was thoroughly examined and assayed by ALS in Perth and a gold grade of 12.3 grams per tonne obtained (see ASX release 7 March 2011). The sample was also thoroughly processed which resulted in over 90% gold recovery using gravitational processing only. Second stage gravity processing saw a recovery of 98% of the gold. These results were very encouraging which lead us directly to undertake and complete stage 1 of the project. We undertook the excavation of the trial pit which, when completed, was over 150 metres long, 40 metres wide and 18 metres deep. The pit revealed a line of mineralisation with expanded pods of mineralisation to over 1.5 metres wide by 4 to 5 metres in length. Subsequent samples confirmed the grade from our January sample (see ASX r release 3 January 2012). The pit also confirmed that there was little bleeding of the gold into the surrounding host rock. As the area of the pit was within the artisanal mining area and most of the gold in the upper weathered zone had been removed by the local miners the potential for a large open pit in the immediate area was diminished because of the cost of removing the over burden before exposing the unmined mineralisation. The mineralisation was however open at both ends of the pit and clearly continued at depth.
This result indicates a need to investigate the area to the immediate south which has not been subjected to artisanal mining. This is where our initial drilling program was focused and from where we are waiting further sample assays.
In order to further investigate the gold area we decided that a focused drilling program in two stages would be required. Each phase was intended to be approximately 6000 metres in length with a thorough review at the conclusion of each phase before further drilling. A contract with local Madagascan drilling was eventually completed for an initial program of 5900 metres and as at today that has been completed to approximately 3000 metres. The diamond core drilling is proceeding steadily but slowly. Results from the initial diamond holes are not expected for a further 3 months. Significant time and effort is being invested in shortening the time between the completion of the core, its crushing and the production of the results. However all samples must be sent to South Africa and there are time delays that have to date not been overcome. The company has been criticised because of these delays but we are committed to publish all results as they become available and we will do so. The initial drilling program comprised mainly RAB holes to about 15 metres and these were primarily designed to identify the line of zone of mineralisation so the subsequent diamond program could be more readily located. Although some sampling of the RAB hole samples is taking in place the results are similar to a soil sample study and although we expect some trace results for gold it is not expected that the RAB sampling will be definitive of the overall grade of the permit and the target area.
Torian has acted as project manager of the Vatovorona gold project since its inception despite only retaining a 35% equity in the joint venture company, Varun Torian (International) SARL. The board of Torian remains positive of the medium and long term success of the Vatovorona project but there is no doubt substantial further work is required.
Torian supervised the construction of a support camp containing permanent accommodation, flushing toilets, showers, kitchen and mess rooms, workshop, offices, and sample storage rooms. We have a structure capable of supporting on site operations for some years to come.
At the same time we are further developing our local relationships. We have sponsored and supported a local basketball team, and are about to do the same for a local soccer team. We have plans to remain in Madagascar for many years to come and good local relations are critical to our future.
Torian prepared an initial budget to further explore the southern Vatovorona licence and focused on undertaking large pit to undertake some trial mining. The company was seeking to confirm the initial sample grade over a larger volume of material and determine if an economic resource was present to justify large scale mining. Local development and environmental approvals were obtained to undertake this initial development phase. Torian engaged on behalf of VTI, AMBOL a local Madagascan earth moving and mine operator to undertake the construction of the pit. Torian staff supervised and directed all aspects of the pit. The pit excavations have revealed that the target mineralisation is relatively narrow, there is little bleeding of gold into the surrounding host rock, but there are larger pods of mineralisation likely to be commercially mineable evidenced in the pit. The zone of mineralisation was also observed to be obviously open at both ends and at depth. We concluded that further work was required to determine the best method of producing economic levels of recovery from such source rocks. It is apparent that open cut mining in areas where the local artisanal miners have worked to the base of the weathered zone is unlikely to be justified, however small focused narrow underground mining may indeed be more effective and more cost effective than a large open cut operation. Samples from the mineralisation at the bottom of the pit confirmed our initial sample grade, but there was little evidence of gold outside of this area throughout the pit.
From these conclusions it was determined that a drilling program of approximately 12,000 metres should be
designed to further test our hypothesis. In order to manage the total costs and ensure the performance of our contractors we sought tenders from drilling companies for an initial 6000 metre program. Torian negotiated and approved a contract for VTI with a Madagascan drilling company called Lanoe Forages. Lanoe has now been on site for 4 months including throughout the wet season which in Madagascar is usually the first quarter of the calendar year. Lanoe elected to operate through this season at its risk as our contract provided only for payment of the drilling on a metre basis. To date Lanoe has completed approximately 3000 metres of a contract for 5900 metres of drilling. Progress has been slower than Torian anticipated. Lanoe also constructed a permanent camp with excellent sleeping quarters, a full kitchen and mess facility, flushing toilets and showers. Torian arranged for offices and a pre-sampling lab to be delivered to the site. We are well positioned to carry on operations for the long term. We have focused our attention on the area to the south of the pit where artisanal workings are less concentrated. We are planning to map the mineralisation zone as it extends south. 3D computer modelling will then be utilised to determine if a further open pit is warranted in this area.
We have also been undertaking a disciplined exploration program mainly around a stream sediment sampling program. Sampling and panning of samples within 2 to 3 kilometres of the pit have provided further encouragement as small amounts of gold were in evidence.
The potential of the two licences at Vatovorona remain significant. Each is largely unexplored and the total area exceeds 210 sq klms. Each of these licences is a mining licence and has terms of 20 years. There are issues in respect to the northern licence which will not be resolved until Madagascar undertakes an election and a properly constituted government comes into existence. The Madagascan government is operating in a non-constitutional manner at this time and efforts are continuing by the international community including the United Nations to encourage Madagascar to undertake free and open elections. The international community has withheld substantial foreign aid until this takes place. Many international mining companies have been operating in Madagascar throughout the past decade and longer in the case of Rio Tinto but the past 5 years has seen this increase substantially despite the constitutional uncertainties. All major parties are supportive of development and Torian sees no evidence not to continue to invest and promote projects in Madagascar. We do support the country undertaking elections and returning to a constitutional government. Opportunities in Madagascar abound for those companies willing to invest their time and energies in building local relationships and undertaking some exploration work. Torian and its partner Varun Madagascar are doing just that.
Torian's Vatovorona gold project is closely watched by the government not because of any negative but primarily because of the professionalism and the application of western standards of practice to the project. Torian's pit is not simply a hole in the ground but a professionally designed and constructed quarry like you would expect to see in Australia. This approach and application provides us with enormous opportunities to build on further projects. We are examining various other opportunities.
Our budget for Madagascar for the period to March 2013 was approximately \$2.5 million. This amount was primarily to be funded by our arrangements we had with La Jolla Investors
NEW MADAGASCAN PROJECTS LIKELY
Ian Johns and I have been speaking to our partners, Varun and we are confident of further projects in Madagascar on favourable terms. We are conscious that we are only a small resource company with limited financial resources
and we are particularly looking at joint ventures where we can apply our management and geological expertise in substitution of direct financial contributions but where we still have a significant equity.
A FIRM AND SUSTAINABLE FINANCIAL POSITION
The board's primary target in the near term is to get the company into a firm and sustainable financial position. We have thus settled with La Jolla and arranged a discharge of the funding agreement without penalty. These negotiations have proven particularly difficult but there is no doubt in my opinion without a discharge there was little future for Torian. We do not have any substitute funding immediately available but intend to promote our future at Vatovorona and other Madagascan potential projects before seeking further funds.
The board of Torian remains confident that the company can survive this current period and indeed prosper. The relationships we have forged with Varun place us in a unique position to add significantly to our portfolio of assets and to apply our expertise for the benefit of Madagascan joint ventures in the future.
NEW ALLIANCE IN AUSTRALIA
In Australia we have continued to complete the restoration of old areas mined or explored by the company over many years. This has maintained our credibility with local authorities and other junior and mid ranked resource companies. We have recently entered a strategic alliance with A1 Investments & Resources Limited, Hazelwood Resources Limited and Lithex Resources Limited where we will seek out some antimony projects to combine with other companies to deliver a combined resource to large Japanese and Chinese industrial buying groups. This opportunity arose because of my association with A1I&R and our continued interest in tin in Australia. Further funding is yet to be resolved.
The board is examining various opportunities to secure the company's future. Torian has built up an excellent reputation over many years and its project management performance over the past year has been outstanding. This has resulted in our invitation to join other joint ventures where this expertise is highly valued. The board appreciates that our capitalisation has reduced substantially in the past 12 months and we gauge our personal performance by this alone and we are therefore not satisfied with our own performance. We have met our statutory compliance obligations in all jurisdictions where we carry on business but we fully accept this is not good enough.
I will continue to work hard and long for the benefit of all shareholders and the board is determined that our capitalisation will increase.
APPRECIATION OF THE EFFORTS OF THE BOARD AND THE STAFF
I take this opportunity to thank all staff whose contributions have been significant and without which we would not have achieved our operation gaols. I also thank all members of the board for the past 12 months including, Cameron Young, Scott Enderby and Mark Cashmore., and our new company secretary Mrs Elissa Hansen. But I would like to particularly thank Ian Johns for his enormous efforts over the past 2 years and no less over the past 12 months.
CONCLUSION
In conclusion I would like to emphasise that we do have a future. Yes there remain some tough times ahead. But we have a structure and projects all focused on the future. I invite all our shareholders to remain and indeed contribute when the time arises.
Image above: Rig drilling RAB holes to the south of the trial mining pit
2.0 CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Torian Resources NL ("Company") is committed to maintaining high standards of Corporate Governance. This statement outlines the main Corporate Governance practices that where adopted or in place throughout the financial year, which comply with the ASX Corporate Governance Council recommendations, unless otherwise stated.
ROLES OF THE BOARD AND MANAGEMENT
Torian Resources has established the functions reserved to the Board as detailed in the Board Charter which is published on the Company's website.
The Board's key objectives are to:
- create an environment for employees, other contributors and stakeholders which engenders trust, confidence, faith, loyalty and dedication to the interests and affairs of the Company;
- increase shareholder value within an appropriate framework which safeguards the rights and interests of the Company's shareholders; and
- ensure the Company is properly managed and operated with integrity.
The Board is also governed by the Company's constitution. The day to day management of the Company's affairs and implementation of corporate strategies and policy initiatives are formally delegated by the Board to the Executive Chairman.
The Board reviews the performance of all staff periodically and at least annually. The Executive Chairman meets one-on-one with each staff member for the purpose of reviewing and evaluating their performance in meeting key responsibilities and achieving objectives.
The evaluation of the performance of all members of staff took place throughout the year.
BOARD STRUCTURE
The Board is comprised of three directors, one of whom is a non-executive and none of whom are independent. Given the Company's background, the nature and size of its business and the current stage of its development, the Board believes that this is both appropriate and acceptable at this time. The skills, experience and period in office for each director are set out in this Annual Report in the Directors' Report and on the website.
The Board reviews its composition periodically and has the intention to appoint appropriate independent directors as required.
The Chairperson, Mr Peter Ashcroft is not independent but, due to his experience and expertise in areas the Company operates in, the Board considers he is suitably skilled to perform the role.
The positions of Chairman and Chief Executive Officer are held by the same person. The Board believes this conserves cash resources by utilising the skills of Mr Peter Ashcroft.
NOMINATION COMMITTEE
The Company will establish a nomination committee charter; however it has not established a nomination committee at this time due to the company's background, nature and size of its business and the current stage of its development.
The Board reviews its composition periodically and at least annually to ensure that it has the appropriate mix of expertise and experience. When a vacancy exists, for whatever reasons, or where it is considered that the Board would benefit from the services of a new Director with particular skills, the Board will select appropriate candidates with relevant qualifications, skills and experience. External advisors may be used to assist in such a process. The Board will then appoint the most suitable candidate who must stand for election at the next annual general meeting of shareholders.
For Directors retiring by rotation, the Board assesses that director before recommending re-election.
BOARD PERFORMANCE
The Board has established a Board Performance Evaluation Policy which is published on the Company's website.
The Company believes it is important that the Board review its own performance and those of its Committees (if any) with a view to achieving and maintaining a high level of performance. It will meet periodically for the purpose of reviewing and evaluating its performance in meeting its key responsibilities and achieving its objectives. As part of this review, the performance of the Board as a whole, each Director and the Chairman will be assessed.
A review was not conducted in 2011 due to the number of changes in the composition of the Board and the direction of the Company. The Board chose to defer the review until there has been a period of consistency.
ACCESS TO EXTERNAL RESOURCES
The Directors have access to external resources including independent professional advice, as required to fully discharge their obligations as Directors of the Company as detailed in the Board Charter, published on the Company's website. The use of this resource is co-ordinated through the Chairman of the Board.
CODE OF CONDUCT
The Company is committed to its Directors and employees maintaining high standards of integrity, and ensuring that activities are in compliance with the letter and spirit of both the law and Company policies.
It has established a Code of Conduct which is available of the Company's website. Each staff member is to be issued with the Company's Code of Conduct at the beginning of their employment with the Company.
DIVERSITY POLICY
The Company is actively managing diversity as a means of enhancing the Company's performance by recognising and utilising the contributions of diverse skills and talent from its employees. It has established a diversity policy which is published on the Company's website.
The Company believes that the promotion of diversity on boards, in senior management and within the organisation generally broadens the pool for recruitment of high quality directors and employees; is likely to support employee retention; through the inclusion of different perspectives, is likely to encourage greater innovation; and is socially and economically responsible governance practice.
The Board of Directors is responsible for adopting and monitoring the Company's Diversity Policy. The policy sets out the beliefs and goals and strategies of the Company with respect to diversity within the Company. Diversity within the Company means all the things that make individuals different to one another including gender, ethnicity, religion, culture, language, sexual orientation, disability and age. It involves a commitment to equality and to treating one another with respect.
The Company employs three women out of a total of eight employees for the whole organisation. This includes the Office Manager and Company Secretary.
The Board is small, comprising three members, which the Director's feel is appropriate given the Company's background, the nature and size of its business and the current stage of its development. There are currently no women on the Board.
AUDIT COMMITTEE
The Board has not established an audit committee. All Directors are responsible for the integrity of the Company's financial reporting and, given the size of the current Board, the Directors feel that there would be no efficiencies gained from a formal committee structure.
The Company will establish an Audit Committee Charter and publish the same on its website when it is of the appropriate size and stage of development to warrant a separate Audit Committee.
CONTINUOUS DISCLOSURE
The Company has a formal Continuous Disclosure Policy which is published on the Company's website. The policy requires all executives and Directors to inform the Executive Chairman or, in his absence, the Company Secretary of any potentially material information as soon as practical after they become aware of that information.
Information is material if it is likely that the information would influence investors who commonly acquire securities on the ASX in deciding whether to buy, sell or hold the Company's securities.
Information need not be disclosed only if the ASX listing rules provide for non-disclosure.
The Executive Chairman is responsible for interpreting and monitoring the Company's disclosure policy and where necessary informing the Board. The Company Secretary is responsible for all communications with ASX.
COMMUNICATION WITH SHAREHOLDERS
The Company recognises the importance of regular and proactive interaction with the market in order to ensure the Company's investors remain fully informed about its activities.
The Company has established a formal Shareholder Communications Policy which is published on the Company's website.
RISK MANAGEMENT
The Board is responsible for the oversight of the Company's risk management and control framework. Responsibility for control and risk management is delegated to the appropriate level of management within the Company, with the Executive Chairman, having ultimate responsibility to the Board for the risk management and control framework.
The Company's Risk Management Policy is published on the Company's website.
REMUNERATION COMMITTEE
The Company has a charter for a remuneration committee however a committee has not been established at this time. Given the small size of the Board, the entire Board performs the functions of the remuneration committee.
The Company outlines the structure of remuneration of non-executive Directors and executives of the Company in the Remuneration report in the Annual Report.
The Company does not provide any schemes for retirement benefits, other than superannuation, for non-executive Directors. It prohibits employees and Directors from entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration schemes.
3.0 DIRECTORS'REPORT
In respect of the financial year ended 31 December 2011, the Directors of Torian Resources NL present their report together with the Financial Report of the Company and the Consolidated Financial Report of the Consolidated Group (the "Group"), being the Company and its controlled entities, and the Auditor's Report thereon.
DIRECTORS
The following persons held office as Directors of Torian Resources NL at anytime during or since the end of the financial year:
Mr Peter Ashcroft Mr Ian Johns Mr Mark Cashmore (Appointed 15 December 2011) Mr Scott Enderby (Resigned 29 August 2011) Mr Cameron Young (Appointed 1 July 2011, Resigned 16 December 2011)
Unless otherwise stated all Directors have been in office for the whole of the period.
COMPANY SECRETARY
Mr Scott Enderby has held the role of Company Secretary from the beginning of the financial until his formal resignation on 27 October 2011.
Ms Elissa Hansen was appointed as Company Secretary on 27 October 2011.
INFORMATION ON DIRECTORS
Peter Ashcroft LLB
Executive Chairman Appointed: 9 December 2008
Age: 59 years
Peter Ashcroft is a commercial law specialist with over 30 years' experience. He is the owner and principal of Ashlaw Legal Services, which is a specialised commercial legal practice focusing upon the provision of advice to natural resource companies, both in production and exploration stages, and logistic and transport businesses. Peter is familiar with mining and resource developments throughout Australia and has advised on joint ventures in Indonesia, New Zealand, Philippines, India, USA, Sweden, Ghana and Canada.
Peter is a Non-executive Director of A1 Investment and Resources Limited (ASX: AYI) and a director of number of other private companies.
Ian Johns
Executive Director Appointed: 9 December 2008
Age: 41 years
Ian Johns brings 20 years of operational business experience to the Torian Board. He consults in the manufacturing industry as well as a business developer and contract negotiator. Ian was a founding director of Royalco Resources; a successful royalty income based mineral exploration company.
Ian is a director of a number of private companies.
Mark Cashmore
Non-Executive Director Appointed: 15 December 2011 Age: 41 years
Mark Cashmore has a broad range of business development and consulting experience, including project management, risk management, occupational workplace health and safety expertise and marketing. He currently consults to utility companies and government bodies on risk mitigation with a particular focus on occupational workplace health and safety (OWHS).
Mark is a director of a number of private companies.
Scott Enderby
Executive Director Resigned 29 August 2011
Age: 44
Since joining the Board in 1996, Scott Enderby applied his extensive marketing experience to Torian's many and varied projects.
Cameron Young BBus; Grad Dip Applied Finance and Investment
Non-Executive Director
Appointed: 21 June 2011, Resigned 16 December 2011
Age: 38
Cameron Young has eight years' experience as a private client advisor. Cameron completed a Bachelor of Business majoring in Finance, and went on to complete the Graduate Diploma in Applied Finance and Investment with the Securities Institute of Australia.
Cameron is an executive director of BRR Media Pty Ltd.
INFORMATION ON THE COMPANY SECRETARY
Scott Enderby
Company Secretary Appointed: 3 October 2003, Resigned 27 October 2011 Age: 44 years
Elissa Hansen B.Comm; Gad Dip ACG; GAICD
Company Secretary Appointed: 27 October 2011 Age: 39 years
Elissa Hansen is a Chartered Secretary with over 10 years' experience advising management and boards of ASX listed companies on investor relations, governance, compliance and other corporate issues.
PRINCIPAL ACTIVITIES
The principal activities of the Group during the course of the financial year were the exploration and evaluation of mineral interests. There were no other significant changes in the nature of those activities during the financial year.
RESULTS OF OPERATIONS
The consolidated loss for the Group for the financial year ended 31 December 2011 is \$4,490,027 (2010: \$685,086).
DIVIDENDS
No dividends were paid or declared by the Group since the end of the previous financial year and the Directors do not recommend dividends be paid for the year ended 31 December 2011.
REVIEW OF OPERATIONS
During the year, the Group has focused on developing its Madagascar Joint Venture with Varun Madagascar, a division of Mumbai-listed company Varun Industries. This is a production sharing joint venture to mine both gold and gemstones from two highly prospective adjacent exploitation (production) licences in Vatovorona, Madagascar.
With respect to these particular tenements, the joint venture allows Torian a 35% share of profits from production upon earning this ongoing interest through the initial expenditure of 75% of the first US\$3.4 million (being US\$2.55 million), to be invested in the ground.
Highlights of the Vatovorona gold project:
- 35% of the gold production to Torian;
- Exploitation licences issued for 20 years;
- Gold quartz vein and exposed at the surface, and open in all directions;
- Good topography for ease of access and development;
- No modern investigation has ever taken place;
- Torian contribution is 75% of the first US \$3.4 million (being US\$2.55 million) to be invested in the ground;
- No upfront fees payable or share issues required to enter into the JV;
- All pre-JV costs to be recovered by Varun from its 65% share of production
At the date of this report, the venture company has completed a trial mining pit as well as over 3000 metres of drilling. Assay results from samples gathered to date has also shown promising results indicative of high grade gold mineralisation along the trial zones.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
During the year the Group raised \$1,419,410 from share issues net of costs of capital and the exercising of options (2010: \$1,009,879). This has enabled the continuation of the exploration and evaluation of mineral interests.
In 2011, the Group changed its strategic direction from developing its diamond exploration projects in New South Wales towards the exploration and production of gold and gemstones in Madagascar. This is being undertaken as a joint venture with Varun Madagascar as Varun Torian International Limited.
The Group has also rationalised its corporate structure by winding up several of its unused subsidiaries and applying for their deregistration with ASIC. These companies held no tenements and have no other assets or legal liabilities.
During the year, the Group completed the sale of its office and warehouse premises in Inverell, NSW at a value of \$310,000. Having extensively reviewed the Group's operations within Australia, as well as the cost of maintaining permanent facilities in Inverell, the Directors have decided that the Group will utilise contract services for all exploration and trial mining activities in the future.
The Company entered into a funding agreement with La Jolla Cove Investors Inc to issue two tranches of funding in return for proceeds of USD\$3 million, with an option by the Company to secure a further USD\$1.5 million.
After reviewing the capitalised exploration assets of the Group at 31 December 2011, the Directors have decided to recognise an impairment expense of \$883,888 against the Egerton gold prospects following a shift in focus towards the Madagascan joint venture.
There were no other significant changes in the state of affairs of the Group during the financial year.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS
Further information about likely developments in the operations of the Company and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Company.
MATTERS SUBSEQUENT TO YEAR END
At the date of this report the following events have arisen since 31 December 2011 and will significantly affect the operations of the Group:
- Post balance date, the Company has received additional USD\$450,000 of convertible note proceeds under its agreement with LJC;
- Further conversions by LJC under the convertible note agreement amounted to USD\$490,556;
- By February 2012, the joint venture company, Varun Torian International, had completed the drilling of 139 15 meter RAB holes as part of its drilling program in Madagascar. To date, over 3,000 metres have been drilled and samples taken from these holes are stored on site prior to freighting to South Africa for assaying;
- Varun Torian International has also established an onsite sample preparation lab in Vatovorona, which after commissioning and certification will enable the JV to expedite the drying, crushing, pulverising, homogenising and labelling of samples for shipment to assay labs.
In the Directors opinion, no other subsequent events have arisen that significantly affect the operations of the Group.
MEETINGS OF DIRECTORS
The number of meetings of the Company's Board of Directors and of each board committee held during the financial year ended 31 December 2011 and the number of meetings attended by each Director were:
| Directors Meetings | |||||
|---|---|---|---|---|---|
| Director | Held whilst in office | Attended | |||
| Peter Ashcroft | 11 | 11 | |||
| Ian Johns | 11 | 11 | |||
| Scott Enderby | 8 | 8 | |||
| Cameron Young | 4 | 4 | |||
| Mark Cashmore | - | - |
DIRECTORS' INTERESTS
The Directors' and their associates' interests in shares and options of the Company at 31 December 2011 were:
| Peter Ashcroft | Ian Johns | Mark Cashmore | |
|---|---|---|---|
| Ordinary shares | 176,775,834 | 259,977,382 | 6,400,000 |
| Unlisted options | |||
| \$0.004 exercise, expiring 31 Dec 2012 | 9,950,000 | 10,000,000 | - |
| \$0.010 exercise, expiring 31 Dec 2012 | 10,000,000 | 10,000,000 | - |
| \$0.010 exercise, expiring 31 Dec 2012 | 47,000,000 | 51,000,000 | - |
| \$0.011 exercise, expiring 31 Dec 2013 | 47,000,000 | 51,000,000 | - |
| \$0.012 exercise, expiring 31 Dec 2014 | 47,000,000 | 50,000,000 | - |
| \$0.013 exercise, expiring 31 Dec 2015 | 47,000,000 | 50,000,000 | - |
| \$0.0023 exercise, expiring 31 Dec 2015 | 100,000,000 | 100,000,000 | - |
REMUNERATION REPORT
This report outlines the remuneration arrangements in place for Directors and executives of Torian Resources NL.
DIRECTORS AND KEY MANAGEMENT PERSONNEL
The full Board of Directors sets remuneration policies and practices generally and makes specific recommendations on remuneration packages and other terms of employment for Executive Directors, other Senior Executives and Non-Executive Directors.
Executive remuneration and other terms of employment are reviewed annually having regard to performance against goals set at the start of the year, relevant comparative information and independent expert advice. As well as basic salary, remuneration packages include superannuation. Directors and executives are also able to participate in an Employee Share Scheme.
Remuneration packages are set at levels that are intended to attract and retain executives capable of managing Group's operations.
Remuneration of Non-Executive Directors is determined by the Board within the maximum amount approved by shareholders from time to time.
The Board undertakes an annual review of its performance and the performance of the Board Committees against goals set at the start of the year.
Details of the nature and amount of each element of the emoluments of each Director of Torian Resources NL are set out below.
DIRECTORS
Names and positions held of key management personnel in office at any time during the financial year are:
Mr Peter Ashcroft Mr Ian Johns Mr Mark Cashmore (Appointed 15 December 2011) Mr Scott Enderby (Resigned 29 August 2011) Mr Cameron Young (Appointed 21 June 2011, Resigned 16 December 2011)
KEY MANAGEMENT PERSONNEL COMPENSATION
| Salary, wages and directors fees |
Bonus | Non-monetary benefits |
Other employee entitlements |
Total | |
|---|---|---|---|---|---|
| \$ | \$ | \$ | \$ | \$ | |
| 2011 | |||||
| Peter Ashcroft | 78,510 | - | 1,142,000 | - | 1,220,510 |
| Ian Johns | 27,871 | - | 1,197,700 | - | 1,225,571 |
| Scott Enderby | 92,326 | - | 56,000 | - | 148,326 |
| Cameron Young | 15,000 | - | - | - | 15,000 |
| Total Compensation |
213,707 | - | 2,395,700 | - | 2,609,407 |
| 2010 | |||||
| Peter Ashcroft | - | - | 85,000 | 85,000 | |
| Ian Johns | - | - | 85,000 | 85,000 | |
| Scott Enderby | 99,541 | - | 10,000 | 3,598 | 113,139 |
| Peter Kennewell | 97,611 | - | - | 24,230 | 121,841 |
| Total Compensation |
197,152 | - | 180,000 | 27,828 | 404,980 |
SHARES HELD BY KEY MANAGEMENT PERSONNEL AND THEIR ASSOCIATES
| Balance | Granted as | Purchases | Disposals | Balance | |
|---|---|---|---|---|---|
| 1 Jan 2011 | Compensation | 31 Dec 2011 | |||
| Peter Ashcroft | 50,059,167 | 116,666,667 | 10,050,000 | - | 176,775,834 |
| Ian Johns | 159,977,382 | 100,000,000 | - | - | 259,977,382 |
| Mark Cashmore | 6,400,000 | - | - | - | 6,400,000 |
| Total | 216,436,549 | 216,666,667 | 10,050,000 | - | 443,153,216 |
OPTIONS HELD BY KEY MANAGEMENT PERSONNEL AND THEIR ASSOCIATES
| Balance 1 Jan 2011 |
Granted as Compensation |
Purchases | Disposals | Balance 31 Dec 2011 |
|
|---|---|---|---|---|---|
| Peter Ashcroft | 87,152,500 | 304,666,667 | - | (83,869,167) | 307,950,000 |
| Ian Johns | 101,434,007 | 302,000,000 | - | (81,434,007) | 322,000,000 |
| Mark Cashmore | - | - | - | - | - |
| Total | 188,586,507 | 606,666,667 | - | (165,303,174) | 629,950,000 |
CONSULTANCY DEEDS
Peter Ashcroft
Executive Chairman
- Deeds ratified by shareholders on 16 December 2011;
- Consultancy fee of \$15,000 per month;
- Deed is set for a term of five (5) years;
- The Consultant is entitled to receive a performance payment comprising the issue of shares in the Company on the satisfaction of certain performance targets (see ASX announcement on 16 December 2011 for details of targets);
- No amount is payable by the Consultant upon satisfaction of the set performance targets for the issue of shares.
Ian Johns
Non-Executive Director
- Deeds ratified by shareholders on 16 December 2011;
- Consultancy fee of \$8,000 per month;
- Deed is set for a term of five (5) years;
- The Consultant is entitled to receive a performance payment comprising the issue of shares in the Company on the satisfaction of certain performance targets (see ASX announcement on 16 December 2011 for details of targets);
- No amount is payable by the Consultant upon satisfaction of the set performance targets for the issue of shares.
LOANS TO DIRECTORS AND KEY MANAGEMENT PERSONNEL
There were no loans made to directors or key management personnel of the Company and the Group during the period commencing at the beginning of the financial year and up to the date of this report.
SHARES UNDER OPTION
Unissued ordinary shares of Torian Resources NL under option at the date of this report are as follows:
| Number | Class |
|---|---|
| 3,000,000 | Unlisted \$0.0033 Employee Options expiring 14 October 2013 |
| 19,950,000 | Unlisted \$0.004 Options expiring 31 December 2012 |
| 25,000,000 | Unlisted \$0.01 Options expiring 31 December 2012 |
| 14,000,000 | Unlisted \$0.005 Options expiring 31 December 2012 |
| 101,500,000 | Unlisted \$0.01 Options expiring 31 December 2014 |
| 101,500,000 | Unlisted \$0.011 Options expiring 31 December 2014 |
| 100,500,000 | Unlisted \$0.012 Options expiring 31 December 2015 |
| 100,500,000 | Unlisted \$0.013 Options expiring 31 December 2015 |
| 200,000,000 | Unlisted \$0.0023 Options expiring 29 December 2015 |
| 73,724,328 | 20c ordinary shares partly paid to 18c |
| 1 | Convertible Note expiring 31 August 2015 |
No option holder has any right under the options to participate in any other share issue of the Company or of any other entity.
SHARES ISSUED ON THE EXERCISE OF OPTIONS
There were 34,719,557 ordinary shares of Torian Resources NL issued during the financial year ended 31 December 2011 on the exercise of options. No amounts are unpaid on any of the shares. None have been issued since the end of the financial year.
SHARES ISSUED ON THE PARTIAL CONVERSION OF CONVERTIBLE NOTE
There were 208,987,422 ordinary shares of Torian Resources NL issued during the financial year ended 31 December 2011 on the partial conversion of Convertible Note. No amounts were unpaid on any of the shares. 263,638,650 shares have been issued since the end of the financial year.
ENVIRONMENTAL REGULATIONS
The Group's operations are subject to normal Government Environmental Regulations. There were no breaches of these regulations during the financial year and up to the date of this report.
INDEMNIFICATION
During or since the end of the financial year the Company has not been indemnified or made a relevant agreement to indemnify an officer of the Company or any related entity against liability incurred as such an officer or auditor. In addition, the Company has not paid, or agreed to pay, a premium in respect of a contract insuring against a liability incurred by an officer.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.
The Company was not a party to any such proceedings during the year.
DECLARATION BY THE EXECUTIVE CHAIRMAN
The Directors have received and considered declaration from the Executive Chairman in accordance with Section 295A of the Corporations Act. The declaration states that in their opinion the Company's and Group's financial reports for the twelve month period ended 31 December 2011 in all material aspects present a true and fair view of the financial position and performance and are in accordance with the relevant accounting standards.
The auditor's independence declaration for the period ended 31 December 2011 has been received and can found on page 21 of the financial report.
NON-AUDIT SERVICES
The external auditor did not provide any non-audit services to the Company during the year ended 31 December 2011.
Signed in accordance with a resolution of the Board of Directors:
_____________________________________
Peter Ashcroft Executive Chairman Sydney 29 March 2012
4.0 AUDITORS INDEPENDENCE DECLARATION
5.0 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR YEAR ENDED 31 DECEMBER 2011
| Note | 2011 | 2010 | |
|---|---|---|---|
| \$ | \$ | ||
| Sales revenue | - | 1,736 | |
| Cost of sales | - | (20,370) | |
| Gross profit | - | (18,634) | |
| Other revenue | 2 | 245,718 | 242,593 |
| Bad debts expense | - | - | |
| Depreciation and amortisation expense | 3 | (11,946) | (59,942) |
| Impairment expense | (883,888) | - | |
| Employee benefits expense | 5 | (231,536) | (237,674) |
| Equity based employee benefits | (2,450,200) | (187,644) | |
| Due diligence and professional services | (502,797) | (294,396) | |
| Finance costs | (14,756) | (19,681) | |
| Exploration expenditure | (112,334) | (73,968) | |
| Share of joint venture's loss | 10 | (211,594) | - |
| Other expenses | (316,694) | (218,940) | |
| Loss from ordinary activities before income tax expenses |
(4,490,027) | (868,286) | |
| Income tax expense relating to ordinary activities | 4 | - | - |
| Loss attributable to members of the parent entity | (4,490,027) | (868,286) | |
| Other comprehensive income | - | 183,200 | |
| Total comprehensive income for the period | (4,490,027) | (685,086) | |
| Basic earnings per share | 7 | (0.0018) | (0.0004) |
6.0 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011
| Note | 2011 | 2010 | |
|---|---|---|---|
| \$ | \$ | ||
| ASSETS | |||
| CURRENT ASSETS | |||
| Cash and cash equivalents | 8 | 362,445 | 210,478 |
| Inventories | 80,084 | 80,084 | |
| Trade and other receivables | 9 | 318,707 | 20,217 |
| TOTAL CURRENT ASSETS | 761,236 | 310,779 | |
| NON-CURRENT ASSETS | |||
| Trade and other receivables | 9 | 349,960 | 237,733 |
| Property, plant and equipment | 12 | 38,628 | 202,450 |
| Investment in joint ventures | 10 | 278,124 | - |
| Capitalised exploration assets | 13 | 10,787,754 | 11,563,121 |
| TOTAL NON-CURRENT ASSETS | 11,454,466 | 12,003,304 | |
| TOTAL ASSETS | 12,215,702 | 12,314,083 | |
| CURRENT LIABILITIES | |||
| Trade and other payables | 14 | 216,443 | 101,088 |
| Short term provisions | 15 | 78,091 | 84,550 |
| TOTAL CURRENT LIABILITIES | 294,534 | 185,638 | |
| NON-CURRENT LIABILITIES | |||
| Financial liabilities | 16 | 423,140 | - |
| TOTAL NON-CURRENT LIABILITIES | 423,140 | - | |
| TOTAL LIABILITIES | 717,674 | 185,638 | |
| NET ASSETS | 11,498,028 | 12,128,445 | |
| EQUITY | |||
| Issued capital | 17 | 54,020,419 | 52,201,009 |
| Reserves | 18 | 2,130,200 | 183,200 |
| Accumulated losses | (44,652,591) | (40,255,764) | |
| TOTAL EQUITY | 11,498,028 | 12,128,445 |
7.0 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR YEAR ENDED 31 DECEMBER 2011
| Share Capital | |||||
|---|---|---|---|---|---|
| Note | Shares on Issue |
Accumulated Losses |
Options Reserve |
Total | |
| \$ | \$ | \$ | \$ | ||
| Balance at 1 January 2010 | 51,191,130 | (39,767,478) | 380,000 | 11,803,652 | |
| Loss for the period | - | (868,286) | - | (868,286) | |
| Other comprehensive income for the period |
- | - | - | - | |
| Total comprehensive income for the period |
- | (868,286) | - | (868,286) | |
| Shares issued during the period | 1,029,852 | - | - | 1,029,852 | |
| Cost of capital raising | (19,973) | - | - | (19,973) | |
| Options issued, net of expirations | - | 380,000 | (196,800) | 183,200 | |
| Balance at 31 December 2010 | 17 | 52,201,009 | (40,255,764) | 183,200 | 12,128,445 |
| Balance at 1 January 2011 | 52,201,009 | (40,255,764) | 183,200 | 12,128,445 | |
| Loss for the period | - | (4,490,027) | - | (4,490,027) | |
| Other comprehensive income for the period |
- | - | - | - | |
| Total comprehensive income for the period |
- | (4,490,027) | - | (4,490,027) | |
| Shares issued during the period | 1,870,060 | - | - | 1,870,060 | |
| Cost of capital raising | (50,650) | - | - | (50,650) | |
| Options issued, net of expirations | - | 93,200 | 1,947,000 | 2,040,200 | |
| Balance at 31 December 2011 | 17 | 54,020,419 | (44,652,591) | 2,130,200 | 11,498,028 |
8.0 CONSOLIDATED STATEMENT OF CASH FLOWS FOR YEAR ENDED 31 DECEMBER 2011
| Note | 2011 | 2010 | |
|---|---|---|---|
| \$ | \$ | ||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Receipts from customers | 464 | 6,805 | |
| Payments to suppliers and employees | (950,808) | (892,027) | |
| Financial charges | (11,031) | (19,681) | |
| Payments for exploration | (112,334) | (75,340) | |
| Interest received | 14,513 | 25,368 | |
| Net cash used in operating activities | 19 | (1,059,196) | (954,875) |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Proceeds from disposal of sale of property, plant and equipment |
215,628 | 588,906 | |
| Purchase of property, plant and equipment | (48,064) | (26,923) | |
| Payments for exploration | (108,520) | (632,642) | |
| Payments for rehabilitation | (6,460) | - | |
| Deposits paid to government bodies | (116,153) | - | |
| Investment in joint venture | (562,101) | - | |
| Net cash used in investing activities | (625,670) | (70,659) | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Proceeds from issue of shares | 841,542 | 1,026,177 | |
| Costs of raising share equity | (50,650) | (19,973) | |
| Proceeds from issue of convertible notes | 1,057,826 | - | |
| Repayment of third party loan | - | (330,000) | |
| Net cash provided by financing activities | 1,848,718 | 676,204 | |
| Net increase/(decrease) in cash held | 163,852 | (349,330) | |
| Adjustment for reclassification of cash assets to non current receivables |
- | (214,568) | |
| Adjustment for foreign exchange translation | (11,885) | - | |
| Cash and cash equivalents at beginning of financial year | 210,478 | 774,376 | |
| Cash and cash equivalents at end of financial year | 362,445 | 210,478 |
9.0 NOTES TO THE FINANCIAL STATEMENTS
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report includes the consolidated financial statements and notes of Torian Resources NL and controlled entities ('Consolidated Group' or 'Group'), and the separate financial statements and notes of Torian Resources NL as an individual parent entity ('Company').
BASIS OF PREPARATION
The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions to which they apply. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are reported below. They have been consistently applied unless stated otherwise.
The financial report has been prepared on an accruals basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
ACCOUNTING POLICIES
A. PRINCIPLES OF CONSOLIDATION
A controlled entity is any entity Torian Resources NL has the power to control the financial and operating policies of so as to obtain benefits from its activities.
A list of controlled entities is contained in Note 11 to the financial statements. All controlled entities have a 31 December 2011 financial year-end for this current year.
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year ended. Where controlled entities have entered (left) the Group during the year, their operating results have been included (excluded) from the date control was obtained (ceased).
All inter-company balances and transactions between entities in the Group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the Company.
Where controlled entities have entered or left the Group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.
Minority interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity interests held by persons outside the Group, are shown separately within the Equity section of the Consolidated Statement of Financial Position and in the Consolidated Statement of Comprehensive Income.
B. INCOME TAX
The charge for current income tax expense is based on the results for the year adjusted for any nonassessable or disallowed items. It is calculated using the tax rates that have been enacted or are substantially enacted by the balance date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.
Torian Resources NL formed an income tax consolidated group under the tax consolidation regime with its domestic subsidiaries listed under Note 11.
C. PLANT AND EQUIPMENT
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.
DEPRECIATION
The depreciable amount of all fixed assets is depreciated on a straight-line basis over their useful lives to the Group commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:
| Class of Fixed Asset | Depreciation Rate |
|---|---|
| Office equipment and furniture | 25% |
| Plant and equipment | 25% |
| Motor vehicles | 25% |
| Buildings and improvements | 2% |
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Statement of Comprehensive Income.
D. EXPLORATION AND EVALUATION EXPENDITURE
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.
Currently the practice is to capitalise all expenses that have been incurred and are in direct relation to the exploration of resources.
Indirect costs such as administrative and general operational costs will be expensed on the basis that they are necessarily incurred.
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.
F. IMPAIRMENT OF ASSETS
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the Statement of Comprehensive Income.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
G. INVESTMENTS IN JOINT VENTURES
Investments in joint venture companies are recognised in the financial statements by applying the equity method of accounting. The equity method of accounting recognised the Group's share of post-acquisition reserves of joint ventures.
I. EMPLOYEE BENEFITS
Provision is made for the Company's liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present value of the estimated future cash flows to be made for those benefits. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of the cash flows.
J. EQUITY-SETTLED COMPENSATION
There has been no equity based compensation with the exception of that described at Note 21. The capital subscribed to as per this note was acquired at fair value at the time of purchase.
Options issues have their fair value determined with reference to an approved valuation methodology, such as the Black-Scholes valuation method. On issue, the fair value of an option is taken to the Income Statements equity settled compensation, with a corresponding credit to the options reserve. This is then disclosed as other comprehensive income in the Statement of Comprehensive Income to show other net profit position of the Group from a third party perspective.
Shares have their value determined using the direct method of share price at date of issue multiplied by the number of shares issued.
K. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, deposits held at call with banks and other short-term highly liquid investments with original maturities of three months or less.
L. REVENUE AND OTHER INCOME
Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue.
Revenue from the sale of goods is recognised at the point of delivery as this corresponds to the transfer of significant risks and rewards of ownership of the goods and the cessation of all involvement in those goods.
Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument. Dividend revenue is recognised when the right to receive a dividend has been established
Dividends received from associates and joint venture entities are accounted for in accordance with the equity method of accounting.
M. FINANCE
Finance costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other finance costs are recognised in income in the period in which they are incurred.
N. GOODS AND SERVICES TAX (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Statement of Financial Position are shown inclusive of GST.
Cash flows are presented in the Statement of Cash Flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. There is provision made in the Statement of Cash Flows to disclose the applicable GST refunds/payments that have been remitted to the ATO to accurately show the cash position of Torian Resources NL.
O. COMPARATIVE FIGURES
Comparative figures have been derived from the audited financial statements for Torian Resources NL for the year ended 31 December 2010, and changes in presentation are made where necessary to comply with accounting standards.
P. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.
Key Estimates — Impairment
The Group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.
Key Judgments — Doubtful Debts Provision
As a result of no trading throughout the period, Torian Resources NL has no questionable receivables.
Key Judgments — Recoverability of Capitalised Exploration Assets
To date, Torian Resources NL has achieved results which have been verified through independent reporting and testing. The capitalised exploration assets are therefore concluded to be fully recoverable at balance date.
In the current year, the Group has adopted all of the new and revised current standards and interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to its operations and effective for the current annual reporting period. The adoption of these new and revised standards and interpretations' has not resulted in changes to the groups accounting policies.
Q. ADOPTION OF NEW AND REVISED ACCOUNTING STANDARDS
At the date of authorisation of the financial report, new accounting standards have been issued but are not yet effective. Directors do not expect that these changes will have a material effect on the financial report in future periods.
R. GOING CONCERN
The Directors have prepared the financial report on a going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.
For the financial year ended 31 December 2011, the Group incurred a net loss after tax of \$4,490,027 (2010: loss \$685,086). The Group generated negative cash flows from operating activities for the year of \$1,059,196 (2010: negative \$954,875). The Group's net current asset position at 31 December 2011 was \$466,702 (Company: \$305,234) and its cash balance amounted to \$362,445 (Company: \$204,379) at that date.
The Directors' cash flow forecasts project that the Company and the Group will continue to be able to meet their liabilities and obligations as and when they fall due for a period of at least 12 months from the date of signing of this financial report. The cash flow forecasts are dependent upon the generation of sufficient cash flows from operating activities, or the receipt of additional debt or equity funds, to meet working capital requirements and the ability of the Group to manage discretionary spending.
The Directors are of the opinion that the use of the going concern basis of accounting is appropriate as they are satisfied as to the ability of the Company and the Group to implement the above.
The Directors continue to assess the financing and capital requirements of the Group, which may include the need to raise additional funds to meet future obligations and expansion. However, the Directors believe that the ability of the Company and the Group to continue to pay their liabilities and obligations as and when they fall due and to meet their contractual commitments is not dependent upon the raising of additional funds.
The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company and the Group not continue as a going concern.
NOTE 2: REVENUE
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| Other revenue | ||
| Interest received | 14,513 | 25,368 |
| Profit on disposal of non-current assets | 225,689 | 211,121 |
| Gain on revaluation of inventory | - | 1,034 |
| Other revenue | 5,516 | 5,070 |
| Total other income | 245,718 | 242,593 |
NOTE 3: RESULTS FOR THE YEAR
| Expenses | 2011 | 2010 |
|---|---|---|
| \$ | \$ | |
| Impairment of pre-development expenditure | - | - |
| Depreciation of plant and Equipment | 11,496 | 59,942 |
NOTE 4: INCOME TAX EXPENSE
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| The components of tax expense comprise: | ||
| Current tax | - | - |
| Deferred tax | - | - |
| Total | - | - |
| Prima facie tax benefit on loss from ordinary activities before income tax at 30%: |
(1,347,008) | (260,486) |
| Add tax effect of: | ||
| Other non allowable items | 1,063,705 | 56,705 |
| Subtotal | (203,781) | |
| Less tax effect of: | ||
| Items deductible for taxation but not accounting | (36,136) | (268,451) |
| Deferred tax assets not brought to account: | 319,439 | 472,232 |
| Income tax expense | - | - |
NOTE 4: INCOME TAX EXPENSE (CONT.)
The Group has carry forward tax losses, calculated according to Australian income tax legislation of \$30,358,169 (2010: \$29,293,372), which will be deductible from future assessable income provided that income is derived, and:
- The Company and its controlled entities carry on prescribed mining operations as defined in the income Tax Assessment Act, as appropriate; or a)
- The Company and its controlled entities carry on a business of, or a business that includes exploration or prospecting in Australia, for the purpose of discovering or extracting minerals, as appropriate; and b)
- No change in tax legislation adversely affects the Company and its controlled entities in realising the benefit from the deduction for the losses. c)
The benefit of these losses will only be recognised where it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
NOTE 5: EMPLOYEE BENEFITS EXPENSE
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| Employee benefits incurred during the year | ||
| • Salaries and wages |
208,288 | 197,687 |
| • Superannuation |
18,701 | 35,644 |
| • Other employee benefits |
4,547 | 4,343 |
| Total | 231,536 | 237,674 |
NOTE 6: AUDITOR REMUNERATION
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| Remuneration of the auditor of the Group for | ||
| • auditing or reviewing the financial report |
20,000 | 20,000 |
| Total | 20,000 | 20,000 |
NOTE 7: EARNINGS PER SHARE
| 2011 | 2010 | ||
|---|---|---|---|
| \$ | \$ | ||
| a. | Reconciliation of earnings | ||
| Loss | (4,490,027) | (868,286) | |
| No. | No. | ||
| b. | Weighted average number of ordinary shares outstanding during the year used in calculating EPS |
2,562,891,719 | 2,289,329,624 |
| \$ | \$ | ||
| c. | Basic EPS | (0.0018) | (0.0004) |
| d. | Diluted EPS | (0.0018) | (0.0004) |
NOTE 8: CASH AND CASH EQUIVALENTS
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| Cash at bank and in hand | 362,445 | 210,478 |
| Total | 362,445 | 210,478 |
NOTE 9: TRADE AND OTHER RECEIVABLES
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| CURRENT | ||
| Trade and other receivables from third parties | ||
| • Trade receivables |
284,409 | 2,026 |
| • Other receivables |
34,298 | 18,191 |
| Total current assets | 318,707 | 20,217 |
NOTE 9: TRADE AND OTHER RECEIVABLES (CONT.)
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| NON-CURRENT | ||
| Trade and other receivables from third parties | ||
| • Bonds on deposit |
19,239 | 23,165 |
| • Deposits with government bodies |
330,721 | 214,568 |
| Total non-current assets | 349,960 | 237,733 |
There is no expectation of the Director's that any of the above amounts are required to be impaired as all amounts are anticipated to be fully recoverable. Whilst the above amounts are unsecured, there is no question as to the creditworthiness of the Group's debtors.
ALLOWANCE FOR IMPAIRMENT LOSS
Trade receivables and other receivables are non-interest bearing and are generally on 30-60 day terms. A provision for impairment loss is recognised when there is objective evidence that an individual receivable is impaired. No impairment has been recognised by the Group and Company in the current year. No receivable is past due.
FAIR VALUE AND CREDIT RISK
Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value. The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group's policy to transfer on-sell receivables to special purpose entities.
INTEREST RATE RISK
Detail regarding interest rate risk exposure is disclosed in Note 23.
NOTE 10: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD
| 2011 | 2010 | ||
|---|---|---|---|
| \$ | \$ | ||
| Interests in joint ventures | |||
| a. | Varun Torian (International) SARL | ||
| Investment at cost | 489,718 | - | |
| Equity accounted share of loss for the year | (211,594) | - | |
| Allowance for impairment | - | - | |
| Closing balance | 278,124 | - |
NOTE 10: INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (CONT.)
Investments in joint venture companies are valued at fair value at year end, which is calculated as follows:
- fair value of the investment at the beginning of the year (or, for acquisitions during the year, the fair value of the investment on acquisition);
- less equity accounted share of losses during the year;
- less impairment losses during the year.
Any impairment losses during the year are calculated as the difference between:
- the fair value of the investment at the beginning of the year (or, for acquisitions during the year, the fair value of the investment on acquisition) less equity accounted share of losses during the year; and
- the fair value of the investment calculated at year end using the last quoted bid price plus the value of any options held, calculated using the assumptions set out below.
NOTE 11: CONTROLLED ENTITIES
| Controlled Entities Consolidated | Country of Incorporation |
Percentage Owned (%)* |
|---|---|---|
| 2011 | ||
| PARENT ENTITY: | ||
| Torian Resources NL | Australia | |
| SUBSIDIARIES OF TORIAN RESOURCES NL: | ||
| NSW Tin Pty Ltd | Australia | 100 |
| Cluff Mining Pty Limited | Australia | - |
| Cluff Open Cut Mining Pty Limited | Australia | - |
| Cluff Minerals (Australia) Pty Limited | Australia | 100 |
| NSW Gold NL | Australia | 100 |
| Torian Exploration Pty Ltd | Australia | 100 |
| Egerton Gold Pty Limited | Australia | - |
| Elephant Metals Pty Limited | Australia | - |
| * Percentage of voting power is in proportion to ownership |
During the 2011 year, the Group rationalised its corporate structure by winding up its unused subsidiaries, Cluff Mining Pty Limited, Cluff Open Cut Mining Pty Limited, Egerton Gold Pty Limited and Elephant Metals Pty Limited and applying for their deregistration with ASIC. These companies held no tenements and have no other assets or legal liabilities.
NOTE 12: PLANT AND EQUIPMENT
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| OFFICE EQUIPMENT | ||
| At cost | 31,038 | 83,381 |
| Accumulated depreciation | (3,855) | (74,622) |
| Total office equipment | 27,183 | 8,759 |
| PLANT AND EQUIPMENT | ||
| At cost | 11,899 | 1,034,950 |
| Accumulated depreciation | (454) | (967,904) |
| Total property, plant and equipment | 11,445 | 67,046 |
| MOTOR VEHICLES | ||
| At cost | - | 107,802 |
| Accumulated depreciation | - | (107,802) |
| Total motor vehicles | - | - |
| LAND & BUILDINGS | ||
| At cost | - | 138,900 |
| Accumulated depreciation | - | (12,255) |
| Total land and buildings | - | 126,645 |
| TOTAL | 38,628 | 202,450 |
| Movements in Carrying Amounts | ||||||
|---|---|---|---|---|---|---|
| Office Equipment |
Plant and Equipment |
Motor Vehicles |
Land and Buildings |
Total | ||
| \$ | \$ | \$ | \$ | \$ | ||
| Balance at 1 January 2010 | 14,604 | 109,074 | 6,080 | 483,496 | 613,254 | |
| Additions | 1,913 | 25,010 | - | - | 26,923 | |
| Disposals | (3,488) | (12,983) | (4,463) | (356,851) | (377,785) | |
| Depreciation expense | (4,270) | (54,055) | (1,617) | - | (59,942) | |
| Balance at 31 December 2010 | 8,759 | 67,046 | - | 126,645 | 202,450 | |
| Additions | 25,333 | 11,899 | - | - | 37,232 | |
| Disposals | (4,370) | (58,093) | - | (126,645) | (189,108) | |
| Depreciation expense | (2,539) | (9,407) | - | - | (11,946) | |
| Balance at 31 December 2011 | 27,183 | 11,445 | - | - | 38,628 |
NOTE 12: PLANT AND EQUIPMENT (CONT.)
During the year, two properties in Inverell, NSW were disposed of for a total of \$310,000. One of these, a parcel of land, has been sold subject to receiving development approval from Inverell Council. At the date of this report the Company expects the approval to be granted and sale of land of \$110,000 to be finalised.
Other asset sales of general property, property plant and equipment were made through trade sales and auctions to recover funds and rationalise the Group's asset base.
NOTE 13: CAPITALISED EXPLORATION ASSET
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| Exploration expenditure capitalised | 13,687,080 | 13,578,559 |
| Provision for impairment | (2,899,326) | (2,015,438) |
| Total | 10,787,754 | 11,563,121 |
| Balance at beginning of financial year | 11,563,121 | 10,930,019 |
| Additions | 108,521 | 633,102 |
| Impairment recognised during the financial year | (883,888) | - |
Intangibles will be amortised once their useful life has been determined when the exploration and development phase has concluded, and production begins.
Impairment expense in the current year of \$883,888 (2010: \$0) relates to capitalised expenditure in the Company's Egerton Gold prospects. The Directors' have decided to recognise impairment against the Egerton Gold prospects following a shift in focus towards the Madagascan joint venture.
NOTE 14: TRADE AND OTHER PAYABLES
| CURRENT | 2011 | 2010 |
|---|---|---|
| \$ | \$ | |
| Accounts payable | 163,120 | 32,523 |
| Employee benefits payable | 39,598 | 32,937 |
| Share applications | - | 770 |
| Other payables | 13,725 | 34,858 |
| Total | 216,443 | 101,088 |
NOTE 15: SHORT TERM PROVISIONS
| CURRENT | 2011 | 2010 |
|---|---|---|
| \$ | \$ | |
| Provision for rehabilitation | 78,091 | 84,550 |
| Total | 78,091 | 84,550 |
NOTE 16: FINANCIAL LIABILITIES
| NON-CURRENT | 2011 | 2010 |
|---|---|---|
| \$ | \$ | |
| Convertible note on issue | 423,140 | - |
| Total | 423,140 | - |
During the year, the Company entered into a funding agreement with La Jolla Cove Investors Inc to issue two tranches of funding in return for proceeds of USD\$3 million, with an option by the Company to secure a further USD\$1.5 million.
The term of the agreement is 3 years, starting with an initial payment of \$450,000 and \$200,000 per month thereafter until total proceeds of \$3,000,000 has been received. Interest accrues on the convertible notes at 4.5% p.a. and the Group has the option to settle any interest accrued by way of equity issue. Where the convertible notes have not yet been converted to ordinary shares by 2 years and 9 months from the date of issue, the Group is entitled to compel La Jolla to convert the unconverted notes.
The conversion price of the convertible notes is the lesser of \$0.04 or 85% of the three lowest volume weighted average prices (VWAP) during the twenty-one trading days prior to the election to convert. Assuming a share price of \$0.002, the remaining balance of the convertible note will be convertible to 248,905,882 fully paid ordinary shares in the Company.
The first convertible note was issued on 2 September 2011 and total proceeds of USD\$1.05 million have been received to 31 December 2011. By 31 December 2011, USD\$539,066 of the convertible note balance had been converted to 208,987,422 fully paid shares in Torian (at an average conversion price of \$0.0029) and a repayment of USD\$77,069 has been made by the Company to LJC.
NOTE 17: ISSUED CAPITAL
| 2011 | 2010 | |||
|---|---|---|---|---|
| No of Shares | \$ | No of Shares | \$ | |
| Ordinary shares | ||||
| Fully Paid | ||||
| At the beginning of reporting period | 2,294,125,078 | 52,101,009 | 2,067,606,680 | 51,091,130 |
| Shares issued during the year | 635,220,447 | 1,870,060 | 226,518,398 | 1,029,852 |
| Costs of raising share capital | N/A | (50,650) | N/A | (19,973) |
| At reporting date | 2,929,345,525 | 53,920,419 | 2,294,125,078 | 52,101,009 |
| Partially Paid | ||||
| At the beginning of reporting period | 73,724,328 | 100,000 | 73,724,328 | 100,000 |
| Shares issued during the year | - | - | - | - |
| At reporting date | 73,724,328 | 100,000 | 73,724,328 | 100,000 |
The Company has authorised share capital amounting to 2,803,069,853 ordinary shares of no par value.
Ordinary shares participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held. At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.
CAPITAL MANAGEMENT
Management controls the capital of the Group in order to maintain a good debt to equity ratio, provide the shareholders with adequate returns and ensure that the group can fund its operations and continue as a going concern.
The Group's capital includes ordinary share capital, shares and financial liabilities, supported by financial assets. There are no externally imposed capital requirements.
Management effectively manages the Group's capital by assessing the group's financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distribution to shareholders and share issues.
NOTE 18: RESERVES
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| Options reserve | 2,130,200 | 183,200 |
| Total reserves | 2,130,200 | 183,200 |
| The options reserve records the fair value of options on issue. |
NOTE 19: CASH FLOW INFORMATION
| Reconciliation of Cash Flow from Operations with | 2011 | 2010 |
|---|---|---|
| Profit after Income Tax | ||
| \$ | \$ | |
| Loss after income tax | (4,490,027) | (868,286) |
| Non-cash flows in profit: | ||
| Depreciation | 11,946 | 59,942 |
| Impairment expense | 883,888 | - |
| Profit on disposal of investments | (225,689) | (211,121) |
| Equity based payments | 2,450,200 | 187,644 |
| Share of joint venture's loss | 211,594 | - |
| Gain on foreign exchange | (5,053) | - |
| Changes in current assets and liabilities: | ||
| (Increase)/decrease in trade and term receivables | (14,779) | (20,606) |
| (Increase)/decrease in inventories | - | 19,335 |
| Increase/(decrease) in accounts payable and accruals | 118,724 | (121,783) |
| Net cash used in operating activities | (1,059,196) | (954,875) |
NOTE 20: RELATED PARTY DISCLOSURES
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. |
||
| Transactions with related parties: | ||
| Ashlaw Legal Services | 65,432 | 108,740 |
| Penna (S&I) Pty Ltd | 60,328 | - |
| Johns Corporation Pty Ltd ATF Johns Family Trust | 27,871 | - |
| Terradoodle Pty Ltd | 92,326 | 45,607 |
NOTE 20: RELATED PARTY DISCLOSURES (CONT.)
Mr Peter Ashcroft is the principal of Ashlaw Legal Services and director of Penna (S&I) Pty Ltd, which throughout the year have provided legal advisory and consultancy services to the Group. All fees tendered have been on an arm's length basis.
Mr Ian Johns is a director of Johns Corporation Pty Ltd, which throughout the year has provided consultancy and corporate management services to the Group. All fees tendered have been on an arm's length basis.
Mr Scott Enderby is a director of Terradoodle Pty Ltd, which the throughout the year has provided company secretarial and other consultancy services to the Group. All fees tendered have been on an arm's length basis.
KEY MANAGEMENT PERSONNEL
The following were key management personnel of the Company at any time during the reporting period and unless otherwise indicated were key management personnel for the entire period:
| Peter Ashcroft | Chairman |
|---|---|
| Ian Johns | Director |
| Scott Enderby | Director, Company Secretary (Resigned 29 August 2011) |
| Cameron Young | Director (Appointed 21 June 2011, Resigned 15 December 2011) |
| Mark Cashmore | Director (Appointed 15 December 2011) |
SHARES HELD BY KEY MANAGEMENT PERSONNEL AND THEIR ASSOCIATES
| Balance | Granted as | Purchases | Disposals | Balance | |
|---|---|---|---|---|---|
| 1 Jan 2011 | Compensation | 31 Dec 2011 | |||
| Peter Ashcroft | 50,059,167 | 116,666,667 | 10,050,000 | - | 176,775,834 |
| Ian Johns | 159,977,382 | 100,000,000 | - | - | 259,977,382 |
| Mark Cashmore | 6,400,000 | - | - | - | 6,400,000 |
| Total | 216,436,549 | 216,666,667 | 10,050,000 | - | 443,153,216 |
OPTIONS HELD BY KEY MANAGEMENT PERSONNEL AND THEIR ASSOCIATES
| Balance 1 Jan 2011 |
Granted as Compensation |
Purchases | Disposals | Balance 31 Dec 2011 |
|
|---|---|---|---|---|---|
| Peter Ashcroft | 87,152,500 | 304,666,667 | - | (83,869,167) | 307,950,000 |
| Ian Johns | 101,434,007 | 302,000,000 | - | (81,434,007) | 322,000,000 |
| Mark Cashmore | - | - | - | - | - |
| Total | 188,586,507 | 606,666,667 | - | (165,303,174) | 629,950,000 |
NOTE 20: RELATED PARTY DISCLOSURES (CONT.)
DIRECTORS' AND EXECUTIVE OFFICERS' REMUNERATION
The Board sets all remuneration packages. The broad remuneration policy is to ensure that each senior staff member's remuneration package properly reflects the person's duties and responsibilities. Current market conditions are also taken into account in determining the appropriate remuneration package.
| Salary, wages and directors fees |
Bonus | Non-monetary benefits |
Other employee entitlements |
Total | |
|---|---|---|---|---|---|
| \$ | \$ | \$ | \$ | \$ | |
| 2011 | |||||
| Peter Ashcroft | 78,510 | - | 1,142,000 | - | 1,220,510 |
| Ian Johns | 27,871 | - | 1,197,700 | - | 1,225,571 |
| Scott Enderby | 92,326 | - | 56,000 | - | 148,326 |
| Cameron Young | 15,000 | - | - | - | 15,000 |
| Total Compensation | 213,707 | - | 2,395,700 | - | 2,609,407 |
| 2010 | |||||
| Peter Ashcroft | - | - | 85,000 | 85,000 | |
| Ian Johns | - | - | 85,000 | 85,000 | |
| Scott Enderby | 99,541 | - | 10,000 | 3,598 | 113,139 |
| Peter Kennewell | 97,611 | - | - | 24,230 | 121,841 |
| Total Compensation | 197,152 | - | 180,000 | 27,828 | 404,980 |
NOTE 21: SHARE BASED PAYMENTS
The Company established the Torian Executive Incentive Plan in June 2011 as a long term incentive scheme to recognise talent and motivate executives to strive for group performance. Under the plan, eligible executives are to be granted milestone rights upon the satisfaction of criteria as set out under the rules of the plan. The general terms and conditions of the options can be found under the Company' s announcements on the ASX website.
A summary of the movements of all Company options issued is as follows:
| Number of Options | Weighted Average Exercise Price |
|
|---|---|---|
| Options Outstanding as at 31 December 2010 | 734,216,921 | 0.0088 |
| Granted | 654,166,667 | 0.0138 |
| Forfeited | - | - |
| Exercised | (34,719,577) | 0.0071 |
| Expired | (687,714,011) | 0.0091 |
| Options Outstanding as at 31 December 2011 | 665,950,000 | 0.0115 |
| Options Exercisable as at 31 December 2011 | 665,950,000 | 0.0115 |
Value of options issued during the year were calculated using the Black-Scholes option pricing model applying the following inputs:
| Options Issued on: | |||||||
|---|---|---|---|---|---|---|---|
| 3 Jun 2011 |
3 Jun 2011 |
3 Jun 2011 |
3 Jun 2011 |
25 Aug 2011 |
25 Aug 2011 |
16 Dec 2011 |
|
| Share price | \$0.006 | \$0.006 | \$0.006 | \$0.006 | \$0.007 | \$0.007 | \$0.0020 |
| Exercise price | \$0.010 | \$0.011 | \$0.012 | \$0.013 | \$0.005 | \$0.010 | \$0.0023 |
| Days to expiry | 1,307 | 1,307 | 1,672 | 1,672 | 494 | 494 | 1,474 |
| Interest rate | 4.76% | 4.76% | 4.89% | 4.89% | 3.81% | 3.81% | 3.23% |
| Volatility | 110% | 110% | 110% | 110% | 156% | 156% | 194% |
A basket of comparable companies has been used as a proxy for the volatility of the Company's shares. Shares granted to directors are part of their remuneration were as follows:
| Grant Date | Number | |
|---|---|---|
| 16 December 2011 | 200,000,000 |
The value of those fair value equity instruments, determined by reference to market price, was \$0.0020. Shares granted to employees are part of their remuneration were as follows:
| Grant Date | Number |
|---|---|
| 25 August 2011 | 2,428,571 |
NOTE 21: SHARE BASED PAYMENTS (CONT.)
The value of those fair value equity instruments, determined by reference to market price, was \$0.0068.
Included under equity based employee benefits in the Statement of Comprehensive Income is \$2,450,200 which relates to equity-settled share based payment transactions. \$2,395,700 of this relates to options as issued to the Directors. The balance of \$54,500 was a mixture of shares and options directed to key employees.
NOTE 22: EVENTS AFTER THE BALANCE SHEET DATE
At the date of this report the following events have arisen since 31 December 2011 and will significantly affect the operations of the Group:
- Post balance date, the Company has received additional USD\$450,000 of convertible note proceeds under its agreement with LJC;
- Further conversions by LJC under the convertible note agreement amounted to USD\$490,556;
- By February 2012, the joint venture company, Varun Torian International, had completed the drilling of 139 15 meter RAB holes as part of its drilling program in Madagascar. To date, over 2,000 metres of RAB holes have been drilled and samples taken from these holes are stored on site prior to freighting to South Africa for assaying;
- Varun Torian International has also established an onsite sample preparation lab in Vatovorona, enabling the JV to expedite the drying, crushing, pulverising, homogenising and labelling of samples for shipment to assay labs.
In the Directors opinion, no other subsequent events have arisen that significantly affect the operations of the Group.
NOTE 23: FINANCIAL INSTRUMENTS
GENERAL OBJECTIVES, POLICIES AND PROCESSES
The Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Groups' exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.
The Board has overall responsibility for the determination of the Group's risk management objectives and policies. The Group's risk management policies and objectives are therefore designed to minimise the potential impacts of these risks on the results of objectives where such impacts may be material. The Board periodically reviews the effectiveness of the process put in place and the appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible. Further details regarding these policies are set out below:
NOTE 23: FINANCIAL INSTRUMENTS (CONT.)
CREDIT RISK
Credit risk is the risk that the other party to a financial instrument will fail to discharge their obligation resulting in the Group incurring a financial loss. This usually occurs when debtors or counterparties to derivative contracts fail to settle their obligations owing to the Group. The Group does not have any material credit risk exposure to any single receivable or group of receivables under financial instruments entered into by the Group.
The maximum exposure to credit risk at balance date is as follows:
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| Trade receivables | 318,707 | 20,217 |
| Security bonds | 19,238 | 23,165 |
| Deposits with government bodies | 330,721 | 214,568 |
LIQUIDITY RISK
Liquidity risk is the risk that the Group may encounter difficulties raising funds to meet commitments associated with financial instruments due to creditors. The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate unutilised borrowing facilities are maintained. The Group's operations require it to raise capital on an on-going basis to fund its planned exploration program and to commercialise its tenement assets.
MATURITY ANALYSIS OF FINANCIAL LIABILITIES
| Carrying Amount | Contractual Cash Flows |
< 6 Months | |
|---|---|---|---|
| \$ | \$ | \$ | |
| 2011 | |||
| CURRENT LIABILITIES | |||
| Accounts payable | 163,120 | 163,120 | 163,120 |
| Employee benefits payable | 39,598 | 39,598 | 39,598 |
| Other payables | 13,725 | 13,725 | 13,725 |
| 2010 | |||
| CURRENT LIABILITIES | |||
| Accounts payable | 32,523 | 32,523 | 32,523 |
| Employee benefits payable | 32,937 | 32,937 | 6,805 |
| Other payables | 34,858 | 34,858 | 34,858 |
NOTE 23: FINANCIAL INSTRUMENTS (CONT.)
INTEREST RATE RISK
The Group is constantly monitoring its exposure to trends and fluctuations in interest rates in order to manage interest rate risk. The following tables demonstrate the sensitivity to a reasonably possible change in interest rates, with all other variables held constant.
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| Change in Cash and Cash Equivalents | ||
| Increase in interest rate by 1% | 3,624 | 2,105 |
| Decrease in interest rate by 1% | (3,624) | (2,105) |
NOTE 24: PARENT ENTITY DISCLOSURES
FINANCIAL POSITION
| 2011 | 2010 | |
|---|---|---|
| \$ | \$ | |
| Assets | ||
| Total current assets | 546,677 | 105,647 |
| Total non-current assets | 10,932,891 | 11,019,365 |
| Total assets | 11,479,568 | 11,125,012 |
| Liabilities | ||
| Total current liabilities | 241,443 | 90,633 |
| Total non-current liabilities | 423,140 | - |
| Total liabilities | 664,583 | 90,633 |
| Equity | ||
| Contributed equity | 54,020,419 | 52,201,009 |
| Reserves | 2,130,200 | 183,200 |
| Accumulated losses | (45,335,634) | (41,349,830) |
| Total equity | 10,814,985 | 11,034,379 |
| Financial performance | ||
| Loss for the year | (4,079,003) | (828,149) |
| Other comprehensive income | - | 183,200 |
| Total comprehensive loss | (4,079,003) | (644,949) |
NOTE 25: COMPANY DETAILS
TORIAN RESOURCES NL
The registered office of the Company is::
Torian Resources NL Suite 11 Level 10 15 - 17 Young Street Sydney NSW 2000
The principal place of business is:
Torian Resources NL Suite 11 Level 10 15 - 17 Young Street Sydney NSW 2000
10 DIRECTORS' DECLARATION
The Directors of the Company declare that:
-
- the financial statements and notes, as set out on pages 22 to 47, are in accordance with the Corporations Act 2001 and:`
- a. comply with Accounting Standards and the Corporations Regulations 2001; and
- b. give a true and fair view of the financial position as at 31 December 2011 and of the performance for the year ended on that date of the Company and Consolidated Group;
-
- the Executive Chairman has declared that:
- a. the financial records of the company for the financial year have been properly maintained in accordance with section 286 of the Corporations Act 2001;
- b. The financial statements and the notes for the financial year comply with the accounting standards; and
- c. the financial statements and notes for the financial year give a true and fair view; and
-
- in the Director's opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable;
-
- the remuneration disclosures included on pages 16 to 18 of the Directors' Report (as part of the Audited Remuneration Report) for the year ended 31 December 2011,comply with section 300A of the Corporations Act 2011.
This declaration is made in accordance with a resolution of the Board of Directors.
______________________________________
Peter Ashcroft Executive Chairman Sydney 29 March 2012
11 INDEPENDENT AUDITOR'S REPORT
1 2 SHAREHOLDER INFORMATION
SPREAD OF SHAREHOLDERS
At 28 March 2012, there were 7,746 holders of shares. The shareholders were entitles to one vote for each share held.
| Spread of Holdings | No of Holders | No of Units | % of Total Issued Capital |
|---|---|---|---|
| 1 – 1,000 | 174 | 102,341 | 0.003 |
| 1,001 – 5,000 | 763 | 2,399,708 | 0.074 |
| 5,001 – 10,000 | 755 | 6,252,807 | 0.192 |
| 10,001 – 100,000 | 3,502 | 150,770,387 | 4.625 |
| 100,001 and over | 2,552 | 3,100,025,699 | 95.106 |
| Total | 7,746 | 3,259,550,942 | 100 |
There were 6,747 shareholders holding less than a marketable parcel of 500,000 shares as at 28 March 2012.
TOP 20 HOLDINGS AS AT 28 MARCH 2012
| Holder Name | Balance at 28 March 2012 |
% |
|---|---|---|
| JOHNS CORPORATION PTY LTD | 153,372,167 | 4.705 |
| LA JOLLA COVE INVESTORS INC | 152,178,465 | 4.669 |
| PENNA (S & I) PTY LIMITED | 100,000,000 | 3.068 |
| CACHE MANAGEMENT CONSULTING PTY LIMITED | 100,000,000 | 3.068 |
| MR JOHN HABIB | 45,000,000 | 1.381 |
| MR JOHN RICHARD HABIB & JDR JANE FRANCIS HABIB <mungo fundA/C> | 43,000,000 | 1.319 |
| PARKVIEW SERVICES (AUSTRALIA) PTY LTD | 40,666,667 | 1.248 |
| MR PETER JOHN FALKENSTEIN | 30,000,000 | 0.920 |
| PARKVIEW SERVICES (AUSTRALIA) PTY LTD | 26,716,667 | 0.820 |
| MR RODNEY KENNETH DAVISON | 25,843,623 | 0.793 |
| MRS WENDY CHERIE EDWARDS | 23,959,345 | 0.735 |
| JONENDERBEE INVESTMENTS PTY LTD | 23,480,000 | 0.720 |
| MR PETER ANDREW THOMPSON & MRS JENNIFER ROBYN THOMPSON | 23,000,000 | 0.706 |
| LINREY PTY LTD | 20,000,000 | 0.614 |
| STEVE MACDONALD PTY LTD | 20,000,000 | 0.614 |
| MRS MARIA ANGELA MAVICA-GARAFFA | 16,428,080 | 0.504 |
| MR PAUL KALDAWI | 15,637,761 | 0.480 |
| MRS MARIA SUSAN GRECH & MR MARIO ROMEO GRECH <adrian &="" audreyGRECH A/C> | 15,000,000 | 0.460 |
| MR WILLIAM ANTHONY SCHOLTZ & MRS SHIRLEY JUNE SCHOLTZ | 15,000,000 | 0.450 |
| BRIDGELINK PTY LTD | 15,000,000 | 0.460 |
| TOTAL | 904,282,775 | 27.743 |
SPREAD OF OPTION HOLDERS
At 28 March 2012, there were 4 holders of unlisted options. Options holders are not entitled to voting rights.
| Spread of Holdings | No of Holders | No of Units | % of Total Issued Capital |
|---|---|---|---|
| 100,001 and over | 4 | 665,950,000 | 100 |
| Total | 4 | 665,950,000 | 100 |
TOP 20 HOLDINGS AS AT 28 MARCH 2012
| Holder Name | Balance at 28 March 2012 | % |
|---|---|---|
| JOHNS CORPORATION PTY LTD | 322,000,000 | 48.352 |
| PARKVIEW SERVICES (AUSTRALIA) PTY LTD |
307,950,000 | 46.242 |
| MR SCOTT MONRO ENDERBY | 31,000,000 | 4.655 |
| MR RHYS BEVAN | 5,000,000 | 0.751 |
| TOTAL | 665,950,000 | 100 |
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A difficult year managed professionally and expertly that produced encouraging results for the future. A continued focus on Madagascar will see further opportunities realised with the capacity to add real value to the company. Torian will continue to undertake its business respecting its staff, its contractors, the environment in which it operates, local people (including their customs and culture) and our partners.