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RED MOUNTAIN MINING LIMITED Annual Report 2010
65719_rns_2011-08-29_3f06d941-8d72-4729-ae17-f88ed9fa7994.pdf
Annual Report
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Red Mountain Mining Ltd ACN 119 568 106
Red Mountain Mining Ltd ACN 119 568 106
Contents
Page
| Corporate Directory | |
|---|---|
| Directors' Report | 2 |
| Auditors' Independence Declaration | 8 |
| Financial Report | 9 |
| Directors' Declaration | 28 |
| Independent Audit Report to the Members | 29 |
Red Mountain Mining Ltd ACN 119 568 106
$\overline{1}$
Corporate Directory
Directors M B Wolley Chairman
N F Warburton
B Zhou
K B Rowe
Secretary D J Kelly
Auditor
Butler Settineri (Audit) Pty Ltd Unit 16, First Floor Spectrum Offices 100 Railway Road Subiaco WA 6008
Bankers
National Australia Bank 1232 Hay St West Perth WA 6005
Principal registered office in Australia Unit 2 2 Richardson Street West Perth WA 6005
Directors' Report
Your directors present their report on the Consolidated Entity ("Group") consisting of Red Mountain Mining Ltd ("RMM" or "Company") and the entities it controlled at the end of, or during, the financial year ended 30 June 2010.
Directors
The following persons were directors of Red Mountain Mining Ltd for the full financial year and up to the date of this report, unless otherwise stated:
M B Wolley Non-executive chairman (appointed 4 April 2011) N F Warburton Non-executive director B Zhou Non-executive director K B Rowe Executive director
Principal activities
During the financial year the principal continuing activities of the consolidated entity consisted of sourcing and evaluating suitable exploration properties for prospective purchase in China and establishing an experienced exploration management team.
Review of operations
A summary of consolidated revenues and results is set out below:
| 2010 | 2009S | |
|---|---|---|
| Revenue | 196 | 1,210 |
| Loss before income tax expenseIncome tax expense | (628, 165) | (282, 629) |
| Loss attributable to members of Red Mountain Mining Ltd | (628, 165) | (282, 629) |
Financial Position
During the financial year the Group had a net increase in contributed equity of $311,030 net of share issue costs (from $$1,663,635$ to $$1,974,665$ ) as a result of a placement to existing shareholders of 2,750,000 shares at 10 cents and a placement of 500,000 at 10 cents as consideration for consulting services rendered.
At the end of the financial year the Company had net cash balances of $145,561 (2009: $84,997) and net liabilities of $338,652 (2009: $262,145).
Total liabilities amounted to $496,008 (2009: $355,717) being trade and other creditors of $392,258 and borrowings of $103,750.
Commentary
On 22 August 2009 it was resolved to issue 500,000 ordinary shares at a deemed price of 10 cents per share to a China based consultant as per his appointment and remuneration agreement.
On 14 September 2009 the Company entered into an agreement with Terrain Capital Limited ("Terrain") whereby Terrain will undertake to provide Corporate Services in relation to capital raising including sourcing potential investors and other capital raising activities. In addition to consulting fees the Company issued 3,000,000 options to Terrain. in These options carried a strike price of 10 cents and a three year expiry term.
Directors' Report
Review of operations (continued)
In November 2009 Red Mountain Mining Ltd began negotiations with its Chinese partners Lingbao Xuanrui Mineral Resources Company Limited to acquire a controlling interest in the Zhongqu Gold Project.
Geological Solutions Asia, RMM's independent geologist, completed initial due diligence on the Zhongqu Project in December 2009 and concluded that the mineralisation style has the potential to produce significant gold deposits. A diamond drilling programme is currently scheduled for 2011 depending on funding and availability of equipment.
On 1 May 2010 Red Mountain Mining (Hong Kong) Holdings Limited ("RMMHK") secured an option ("Zhongqu Option") to acquire a 51% controlling interest of the Chinese Zhongqu Gold Project from its vendor, Lingbao Xuanrui Mineral Resources Company Limited. Further due diligence conducted by Geological Solutions Asia during May 2010 confirmed high probability of depth extensions to the existing high grade underground gold resource and possible along strike extensions.
The Zhongqu Option gives RMM two years to elect to acquire 51% of an operating underground gold mine, 400,000 tpa treatment facility and infrastructure in the Qinling Mountain Fold of Gansu Province in western China. The Zhongqu Gold Project has been operating profitably since 2007 at a production rate of approximately 30,000 oz of gold per annum. The Zhongqu Gold Project has reported non JORC compliant Chinese categorisation resource estimate. The company is confident about the project's potential and gold endowment.
Also on 1 May 2010 RMMHK signed a revised version of the option agreement for the purchase of 90% interest in the Deibu Gold tenements. The revised version supersedes the previous agreement and better reflects the current undertakings of both parties.
Significant changes in the state of affairs
RMM has continued to seek funding in order to secure title to the Chinese gold projects.
Other than those matters shown above, no significant changes in the state of affairs of the consolidated entity occurred during the financial year.
Matters subsequent to the end of the financial year
On 15 November 2010 the Company issued 6,000,000 ordinary shares to sophisticated investors at 10 cents per share to increase working capital.
On 4 March 2011 the Company restructured its share capital and options on issue with a consolidation whereby share and option holders received 1 new share or option for every 1.6 share or option held before consolidation. As part of this consolidation process it was resolved to convert certain options as described into ordinary shares.
On 5 March 2011 the Company issued 9,375,000 ordinary shares at 16 cents per share to sophisticated investors to increase working capital.
On 31 March 2011 the Company issued 17,728,125 options to participating shareholders at a price of 1 cent per option to increase working capital. These options carry a strike price of 20 cents per ordinary share and have a three and a half year term.
Directors' Report
Matters subsequent to the end of the financial year (continued)
During the first quarter of 2011 the Company entered into an initial public offering which is aimed to obtain official listing on the Australian Stock Exchange to enhance the ability of the company to raise a total of $8,000,000 in capital in order to advance the transaction with Xanrui as described above, to further enhance the Group's ability to raise funds in future years to advance its strategic and operational plan, and to increase the tradability of the equity instruments of the Company.
No matter or circumstance has arisen since 30 June 2010 that has significantly affected, or may significantly affect:
- (a) the consolidated entity's operations in future financial years, or
- (b) the results of those operations in future financial years, or
- (c) the consolidated entity's state of affairs in future financial years.
Likely developments and expected results of operations
Further information on likely developments in the operations of the consolidated entity and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.
Information on directors
Michael Wolley Non-Executive Chairman, BE, MM, MAICD
Michael Wolley was appointed as Non-Executive Chairman for Red Mountain Mining Ltd in April 2011. Michael has a depth of experience in the resources and industrial sectors in both Australia and internationally. Michael was recently Managing Director of a junior gold development business, Golden Iron Resources, and prior to that was Chief Operating Officer for Lynas Corporation, an ASX 100 company that is a vertically integrated mining and minerals business with mining and processing facilities in Western Australia and downstream processing in Malaysia. Prior to Lynas Corporation, Michael held senior executive roles with industrial and construction services businesses across Asia Pacific including the position of Managing Director Asia Pacific for a refrigeration and climate control business and as President BlueScope Steel China. Prior to joining BlueScope Steel Michael was General Manger Operations for Dexion, a business servicing the logistics industry across Asia Pacific. He began his career with Mobil Oil Australia and over a 15 year period held senior roles in engineering, production and planning across Australia and New Zealand.
Michael holds a first class honours degree in Chemical and Materials Engineering from Auckland University and a Masters of Management from Macquarie Graduate School of Management. Michael is a Member of the Australian Institute of Company Directors.
Keith Rowe Executive Director, B App Sci (Pt), Grad Dip (Mt), MAICD
Keith Rowe is a Consultant to mining operations in the development, delivery and management of occupational health and safety systems, and prior to accepting the Executive role at Red Mountain Mining Ltd was Senior Safety Advisor to Ausdrill Ltd. He has over 20 years' experience in the mining industry and has delivered safety programmes at over 40 mine sites throughout Australia.
Keith's involvement with China began with a university study tour in 1977. He has broad experience as a business manager in a variety of fields and in recent years he has developed business interests in China. He brings valuable experience to the Board in dealing with Chinese affairs and mining safety systems.
Directors' Report
Information on directors (continued)
Keith is a founding Director of the Finding Sydney Foundation which managed the successful search for the HMAS Sydney II which was sunk off the Western Australian Coast in 1941 and located in 2008, and received the Gold Swan Award at the 2010 Western Australia Citizen of the Year Awards. Keith qualified as a physiotherapist at Curtin University and has a B.App.Sci (PT) and Grad.Dip (Manip. Th.) and is a Member of the Australian Institute of Company Directors.
Neil Warburton Non-Executive Director, MAusIMM, FAICD
Neil Warburton is Chief Executive Officer of Barminco, Australia's largest domestic underground mining contractor with operations in Australia and Africa. Barminco mines (under contract) over 800,000 oz of gold per annum in Australia alone. Neil has successfully guided and grown the company with annual revenues having more than doubled during his tenure. Before joining Barminco he was Managing Director of Coolgardie Gold NL.
Neil is also a non executive director of Australian Mines Limited, a company publicly listed on the ASX. Neil has over 30 years' experience in gold and base metal mining. His experience includes 7 years with Western Mining Corporation as a Senior Mining Engineer and Mine Manager at Kambalda, Western Australia.
Neil is a graduate from the Western Australian School of Mines and is a Fellow of the Australian Institute of Company Directors.
Bo Zhou Non Executive Director, BSc, PhD, MBA, MAusIMM
Bo Zhou is currently Managing Director of Qzcorp Pty Ltd, a resource consultancy business, and is General Manager China Operations for Griffin Mining Ltd, a UK listed company with operations in China.
Over the last 10 years Bo has worked on various resource projects covering many projects in China in both senior geological and management banking roles. Bo previously worked as Managing Director of Sinovus Mining Ltd and as General Manager Operations for Guangxi Golden Tiger Mining Joint Venture, a Sino-Australian Joint Venture gold company focused in Guangxi, China. He has also worked as Senior Geologist for Silk Road Resources and as an exploration geologist and programme manager for Turnbull and Partners (Mr Malcolm Turnbull's mining ventures in China in the 1990s).
Bo holds a Bachelor of Science degree in geology from the Peking University and a PhD in exploration geology from the University of Sydney. He also has an MBA from the Australian Graduate School of Management. He is a member of the Australian Institute of Mining and Metallurgy.
Desmond Kelly Company Secretary, B Comm, CPA, MAICD
Desmond Kelly is a commerce graduate from the University of Western Australia and is a member of CPA Australia and the Australian Institute of Company Directors. Desmond has over 35 years' experience in the mining industry and accounting profession. He has been an accountant in public practice and currently is consulting to various companies as a company secretary and management consultant. He has held the positions of Director, Managing Director and Company Secretary with a number of public listed mining and industrial companies.
Directors' Report
Directors' interests in shares and options
As at the date of this report the interests of the Directors in the shares and options of the Company were:
| Ordinary Shares | Options over Ordinary Shares | |||
|---|---|---|---|---|
| Direct | Indirect | Direct | Indirect | |
| MB Wolley | $\overline{\phantom{a}}$ | $\overline{\phantom{a}}$ | ۰ | |
| N F Warburton | 6,290,625 | $\overline{\phantom{a}}$ | 3,774,375 | |
| B Zhou | 625,000 | 1,793,750 | 375,000 | 1,076,250 |
| K B Rowe | 312,500 | 5,040,625 | 187,500 | 3,024,375 |
Directors' Remuneration
Please refer to note 14 to the financial statements for information relating to the directors' remuneration for the fir year.
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 30 June 2010 and the number of meetings attended by each director were:
| Held | Attended | |
|---|---|---|
| N F Warburton | ||
| B Zhou | ||
| K B Rowe |
Held - denoted the number of meetings held during the time the director held office or was a member of the committee during the year.
Insurance of officers
At present the Group carries Directors and Officers liability insurance, with a limit of liability of $10,000,000. This policy came into effect as of 2 May 2011.
Shares options
There are currently 19,446,558 unlisted options on issue with a strike price of 20 cents per share and 17,728,125 have an expiry dates of 30 June 2014 and 1,718,433 an expiry date of 12 September 2013..
Dividends
No dividends were paid to members during the financial period and the directors do not recommend the payment of a dividend.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company, or to 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 part of those proceedings.
No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.
Directors' Report
Environmental regulations
The operations of the Group are not subject to any particular and significant environmental regulations under a low of the commonwealth or state. There have been no known significant breaches of any other environmental requirement applicable to the scheme.
Non-audit services
During the financial year the Group did not procure any non-audit services.
Auditors' Independence Declaration
A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 8.
This report is made in accordance with a resolution of the directors.
KBROOK
Keith Rowe Director
Perth, Western Australia 28 June 2011
Annual Report - 30 June 2010
$\overline{7}$
AUDITOR'S INDEPENDENCE DECLARATION
As lead auditor for the audit of Red Mountain Mining Limited for the year ended 30 June 2010, I declare that, to the best of my knowledge and belief, there have been:
- a) No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit: and
- b) No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Red Mountain Mining Limited and the entities it controlled during the year.
BUTLER SETTINERI (AUDIT) PTY LTD
Lay Est
LUCY P GARDNER Director
Perth Date: 28 June 2011 BUTLER SETTINE
Unit 16, First Floor Spectrum Offices 100 Railway Road (Cnr Hay Street) Subiaco WA 6008
Locked Bag 18 Subiaco WA 6904 Australia
Phone: (08) 6389 5222 (08) 6389 5255 Fax: Email: [email protected]
Directors: Colin Butler FCA
Paul Chabrel FCA
Lucy Gardner CA
Butler Settineri (Audit) Pty Ltd
A.C.N. 112 942 373 Registered Company Auditor Number 289109 Liability limited by a scheme approved under Professional Standards Legislation
Chartered Accountants
Red Mountain Mining Ltd Financial report - 30 June 2010
Contents
Page
| Financial report | |
|---|---|
| Statement of Comprehensive Income | 1 C |
| Statement of Financial Position | 11 |
| Statements of Changes in Equity | 12 |
| Statement of Cash Flows | 13 |
| Notes to the financial statements | 14 |
| Directors' declaration | 28 |
| Independent audit report to the members | 29 |
This financial report covers both Red Mountain Mining Ltd as an individual entity and the Consolidated Entity consisting of Red Mountain Mining Ltd and its controlled entities.
This financial report is presented in Australian dollars.
Red Mountain Mining Ltd is a Company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:
Red Mountain Mining Ltd Unit 2, 2 Richardson Street West Perth WA 6005
A description of the nature of the Consolidated Entity's operations and its principal activities is included in the Directors' Report, which is not part of this Financial Report.
The financial report was authorised for issue by the directors on 28 June 2011. The Company has the power to amend and reissue the financial report.
Consolidated Statement of Comprehensive IncomeFor the year ended 30 June 2010
| 2010 | 2009 | ||
|---|---|---|---|
| Notes | $ | $ | |
| Revenue | 5 | 196 | 1,210 |
| Professional fees | (59,764) | (51, 298) | |
| Consultancy costs | (407, 429) | (174, 242) | |
| Legal fees | (48, 657) | (32, 726) | |
| Travel costs | (15, 161) | (8, 413) | |
| Interest paid | (13, 151) | (21, 470) | |
| Investment option fee | 13 | (252, 335) | |
| Net foreign exchange (losses)/gains | (68, 022) | 261,645 | |
| Other expenses | (16, 177) | (5,000) | |
| Loss before income tax | (628, 165) | (282, 629) | |
| Income tax expense | 6 | ||
| Loss for the year attributable to members ofRed Mountain Mining Ltd | (628, 165) | (282, 629) | |
| Other comprehensive income:Exchange differences on translation of foreigncontrolled entities | 63,794 | (200, 114) | |
| Total comprehensive income for the yearattributable to members of Red MountainMining Ltd | (564, 371) | (482, 743) | |
| Cents | Cents | ||
| Basic and diluted loss per share | 22 | (1.59) | (0.76) |
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Consolidated Statement of Financial Position As at 30 June 2010
| 2010 | 2009 | ||
|---|---|---|---|
| Notes | $ | $ | |
| Current assets | |||
| Cash and cash equivalents | 7 | 145,561 | 84,997 |
| Trade and other receivables | 8 | 11,795 | 5,468 |
| Total current assets | 157,356 | 90,465 | |
| Non-current assets | |||
| Other financial assets | 3,107 | ||
| Total non-current assets | 3,107 | ||
| Total assets | 157,356 | 3,107 | |
| Current liabilities | |||
| Trade and other payables | 9 | 392,258 | 226,247 |
| Borrowings | 10 | 103,750 | 129,470 |
| Total current liabilities | 496,008 | 355,717 | |
| Total liabilities | 496,008 | 355,717 | |
| Net (liabilities) | (338, 652) | (262, 145) | |
| Equity | |||
| Contributed equity | 11 | 1,974,665 | 1,663,635 |
| Reserves | 208,621 | (32,007) | |
| Accumulated losses | 12 | (2,521,938) | (1,893,773) |
| Total (deficiency) | (338, 652) | (262, 145) |
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
Statements of Changes in EquityFor the financial year ended 30 June 2010
| ShareCapitalS | AccumulatedLossS | ForeigncurrencytranslationreserveS | OptionReserveS | TotalS | |
|---|---|---|---|---|---|
| Consolidated Group | |||||
| Balance at 1 July 2008 | 1,438,635 | (1,611,144) | 168,107 | - | (4, 402) |
| Total comprehensive income for the year | $\blacksquare$ | (282, 629) | (200, 114) | $\blacksquare$ | (482, 743) |
| Transactions with owners in their capacityas owners: | |||||
| Contributions of equity | 225,000 | ٠ | 225,000 | ||
| Balance at 30 June 2009 | 1,663,635 | (1,893,773) | (32,007) | (262, 145) | |
| Total comprehensive income for the year | $\overline{\phantom{a}}$ | (628, 165) | 63,794 | - | (564,371) |
| Transactions with owners in their capacityas owners: | |||||
| Contribution of equity | 311,030 | $\qquad \qquad \blacksquare$ | 176,834 | 487,864 | |
| Balance at 30 June 2010 | 1,974,665 | (2,521,938) | 31,787 | 176,834 | (338, 652) |
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes
Consolidated Statement of Cash FlowsFor the financial year ended 30 June 2010
| 2010 | 2009 | |
|---|---|---|
| Notes | S | $ |
| Cash flows from operating activities | ||
| Payments to suppliers (inclusive of goods and | ||
| services tax) | (157, 562) | (152, 758) |
| Interest Received | 196 | 1,210 |
| Interest Paid | (13, 151) | |
| 21Net cash outflow from operating activities | (170, 517) | (151, 548) |
| Cash flows from investing activities | ||
| Investment option fee | (252, 335) | |
| Net cash outflow from investing activities | (252, 335) | |
| Cash flows from financing activities | ||
| Borrowings | 129,470 | |
| Repayment of borrowings | (25, 720) | (300,000) |
| Proceeds from issues of securities | 275,000 | (225,000) |
| Share issue costs | (13,970) | |
| Net cash inflow from financing activities | 235,310 | 54,470 |
| Net increase/(decrease) in cash held | 64,793 | (349, 413) |
| Cash at the beginning of the year | 84,997 | 372,878 |
| Net foreign exchange (gains)/losses | (4,229) | 61,532 |
| 7Cash at the end of the year | 145,561 | 84,997 |
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
Note 1. Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report contains separate financial statements for Red Mountain Mining Ltd as an individual entity and the consolidated entity consisting of Red Mountain Mining Ltd and its subsidiary.
Basis of preparation of the financial report $(a)$
This general purpose financial report has been prepared in accordance with Australian Equivalents to International Financial Accounting Standards (AIFRS), other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
Historical cost convention
These financial statements have been prepared under the historical cost convention.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group's accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 3.
$(b)$ Principles of consolidation
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Red Mountain Mining Ltd ("Company" or "parent entity") as at 30 June 2010 and the results of all subsidiaries for the financial year then ended. Red Mountain Mining Ltd and its subsidiaries together are referred to in this financial report as the Group or the consolidated entity.
Subsidiaries are all those entities (including special purpose entities) over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
$(c)$ Segment reporting
Operating segments are reported in a manner consistent with the internal reporting to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Chairman.
Changes in accounting policy
The group has adopted AASB 8 Operating Segments from 1 July 2009. AASB 8 replaces AASB 114 Segment Reporting. The new standard requires a 'management approach', under which segment information is presented on the same basis as that used for internal reporting purposes. This has resulted in a decrease in the number of segments reported. There has been no other impact on the measurement of the company's assets and liabilities.
Note 1. Summary of Significant Accounting Policies (continued)
Revenue recognition $(d)$
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Consolidated Entity and the revenue can be measured reliably. The following specific criteria must also be met before revenue is recognised:
Interest income
Interest revenue is recognised on a time proportionate basis using the effective interest method.
All revenue stated is net of goods and services tax ("GST").
$(e)$ Income tax
The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
$(f)$ Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.
$\left( \varrho \right)$ Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for doubtful debts. Trade receivables are due for settlement no more than 120 days from the date of recognition.
Collectibility of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the provision is recognised in the income statement.
Note 1. Summary of Significant Accounting Policies (continued)
$(h)$ Investments and other financial assets
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and re-evaluates this designation at each reporting date.
(i) Loans and receivables
Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of selling the receivable. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables are included in receivables in the statement of financial position.
(ii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group's management has the positive intention and ability to hold to maturity.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date - the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
$(i)$ Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are carried at amortised cost, using the effective interest method.
$(i)$ Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
$\left( \mathbf{k}\right)$ Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Note 1. Summary of Significant Accounting Policies (continued)
$(1)$ Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the Australian Taxation Office. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the Australian Taxation Office is included with other receivables or payables in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the Australian Taxation Office, are presented as operating cash flow.
(m) Foreign exchange
Both the functional and the presentation currency of Red Mountain Mining Limited is the Australian Dollar.
Transactions in foreign currencies are initially recorded in the functional currency at the rate of exchange of the transaction date. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange at the balance sheet date. Resulting exchange differences are brought to account in determining the result for the period.
The functional currency of Red Mountain Mining (HK) Holdings Ltd is the Australian Dollar. The functional currency of Red Mountain Mining Consulting (Shenyang) Co Ltd is the Chinese Yuan.
At the reporting date the assets and liabilities of the overseas subsidiary are translated into presentation currency of Red Mountain Mining Limited at the rate of exchange ruling at balance date and the income statements are translated at the weighted average exchange rates for the period. Resulting exchange differences are recognised in equity.
$(n)$ Impairment of assets
Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the profit or loss immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years.
A reversal of an impairment loss is recognised in the profit or loss immediately.
Note 1. Summary of Significant Accounting Policies (continued)
$\omega$ Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities, which are not an incremental cost relating to the actual draw-down of the facility, are recognised as prepayments and amortised on a straight line basis over the term of the facility.
Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in other income or other expenses.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.
(p) Capital risk management
The Group's and the parent entity's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue to fund investment opportunities and develop or secure access to a producing mining asset.
Consistently with others in the industry, the Group and parent entity monitor capital on the basis of working capital requirements.
During 2008, the Group's strategy - which was unchanged from 2007 - was to maintain a current account balance sufficient to meet the Company's day to day expenses with the balance held in commercial paper investments or term deposits.
New accounting standards and interpretations $(q)$
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2010 reporting periods. The Group's assessment is that the impact of these new standards and interpretations is minimal and is not expected to change the amounts recognised in the financial statements.
Note 2. Financial risk management
The Group's activities expose it to a variety of financial risks; market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk.
The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.
Risk management is carried out by the full Board of Directors. The Board identifies and evaluates financial risks in close co-operation with management and provides written principles for overall risk management.
(i) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, prudent oversight of future funding requirements and maintaining ongoing contact to facilitators of further funding.
It is the Group's policy to review the Group's liquidity position including cash flow forecasts to determine the forecast liquidity position and maintain appropriate liquidity levels.
Note 2. Financial risk management (continued)
The remaining contractual maturities of the Group's and parent entity's financial liabilities are:
| 2010 | 2009 | |
|---|---|---|
| Three months or less | 392,258 | 226,247 |
| Greater than three months | 103,750 | 129,470 |
| 496,008 | 349,355 |
The Group funds its activities through capital raising in order to limit its liquidity risk.
(ii) Cash flow and fair value interest rate risk
As the Group's major assets are cash deposits held in fixed and variable interest rate deposits, the Consolidated Entity's income and operating cash flows are materially exposed to changes in market interest rates. The Consolidated Entity manages this risk by only investing in AAA rated institutions.
At balance date, the Group had the following exposure to Australian variable interest rate risk.
| 2010 | 2009 | |
|---|---|---|
| Financial assets | ||
| Cash and cash equivalents | 145,561 | 84.997 |
The following sensitivity analysis is based on the interest rate risk exposure in existence at the balance sheet date. The 1% sensitivity is based on reasonably possible changes over a financial year, using the observed range of actual historical rates for the preceding five year period.
At 30 June 2010, if interest rates had moved, as illustrated in the following table, with all other variables held constant, post-tax profit would have been affected as follows:
Judgments of reasonably possible movements:
| Higher/(Lower) | ||
|---|---|---|
| 2010 | 2009 | |
| Post tax profit | ||
| $+1.0%$ (100 basis points) | 1,456 | 850 |
| $-1.0%$ (100 basis points) | (1, 456) | (850) |
The Group deals with financial institutions that have a AA rating or better.
(iii) Market Risk
Price risk - The Group is not exposed to equity securities price risk as it holds no investments in securities classified on the balance sheet either as available-for-sale or at fair value through profit or loss. The Group is not exposed directly to commodity price risk.
(iv) Credit Risk
The Group's maximum exposures to credit risk at the reporting date in relation to each class of recognised financial asset is the carrying amount of those assets as indicated in the balance sheet.
The Group trades only with recognised, credit worthy third parties. The Group has no significant concentrations of credit risk.
Notes to the financial statements For the vear ended 30 June 2010
Note 2. Financial risk management (continued)
(v) Currency risk
The Company's subsidiary is based in Hong Kong and its sustainability is dependent on the provision of cash from the parent entity. Cash funds in Hong Kong are held in Hong Kong dollars and US dollars thus the Company is exposed to diminution of cash balances through currency exchange risk.
The Group's subsidiary is based in China and its sustainability is dependent on the provision of cash from its parent entity. Cash funds in China are held in Chinese Yuan and US dollars thus the Group is exposed to diminution of cash balances through currency exchange risk.
Note 3. Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.
Principles of going concern
The Consolidated Entity recorded a loss of $628,165 (2009: 282,629) for the year ended 30 June 2010 and had a net asset deficiency of $338,652 (2009: $262,145). The directors reviewed the working capital requirements of the company for a relevant period of two years from the date of the directors' report, and determined that subject to a successful initial public offering, listing and capital raising, the Group will be able to continue to pay its debts as and when they fall due.
Although the above facts indicates a material uncertainty in relation to the applicability of the going concern concept as it pertains to these financial statements, the directors are confident of the successful outcome of the capital raising activities and therefore the financial report has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.
Note 4. Segment information
Activities in the operating segments are identified by management based on the manner in which resources are allocated, the nature of the resources provided and the identity of service line manager and country of expenditure. Discrete financial information about each of these areas is reported to the executive management team on a monthly hasis.
Based on these criteria, management has determined that the company has one operating segment being mineral exploration in China. As the company is focused on mineral exploration, the Board monitors the company based on actual versus budgeted exploration expenditure incurred by area of interest. These areas of interest meet aggregating criteria and are aggregated into one reporting sector. This internal reporting framework is the most relevant to assist the Board with making decisions regarding the company and its ongoing exploration activities, while also taking into consideration the results of exploration work that has been performed to date.
Notes to the financial statements For the year ended 30 June 2010
| 2010S | 2009$ | |
|---|---|---|
| Note 5. Revenue | ||
| Other revenueInterest receivedNet foreign exchange gains | 196 | 1,210261,645 |
| 196 | 262,854 | |
| Note 6. Income tax | ||
| (a) Income tax expense | ||
| Current tax | ||
| Deferred tax | ||
| (b) Numerical reconciliation of income tax expense to prima facie tax payable | $\overline{\phantom{0}}$ | |
| Loss from continuing operations before income tax expense | (628, 165) | (282, 629) |
| Tax at the Australian tax rate of 30% | (188, 450) | (84, 789) |
| Tax effect of amounts which are not deductible (taxable) incalculating taxable income: | ||
| Legal fees | 1,529 | |
| Net foreign exchange losses | 20,407 | |
| Consulting fees | 91,339 | |
| Other | (104, 863) | |
| Current year tax assets not recognised | (272,906)272,906 | (8,079)8,079 |
| Income tax expense | ||
| (c) The estimated potential deferred tax benefits not brought to account at 30% | ||
| Revenue losses | 294,438 | 21,532 |
| The potential future income tax benefit will only be obtained if: |
the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit to be $(i)$ realised;
the Company continues to comply with the conditions for deductibility imposed by law; and $(ii)$
$(iii)$ no changes in tax legislation adversely affect the Company in realising the benefit.
No deferred tax assets have been recognised due to the fact that it is not probable that future taxable profit will be available against which the unused tax losses can be utilised
The franking account balance at year end was nil.
Note 7. Current assets - Cash assets
Cash at bank and on hand
145,561 84,997
Annual Report - 30 June 2010
$\overline{21}$
| 2010 | 2009 | |
|---|---|---|
| S | $ | |
| Note 8. Current assets - Receivables | ||
| Other receivables | 11,795 | 5,468 |
| Note 9. Current liabilities - Payables | ||
| Trade and other creditors | 392,258 | 226,247 |
| Note 10. Current liabilities - Borrowings | ||
| Loan from related party | 103,750 | 129,470 |
Note 11. Contributed equity
| Parent entity | |||
|---|---|---|---|
| Notes | 2010 | ||
| Shares | |||
| (a) Share capital | |||
| Ordinary shares fully paid | 1(b) | 41,275,000 | 1,974,665 |
(b) Movements in ordinary share capital
| Date | Details | Notes | SharesNo. | Issue price | |
|---|---|---|---|---|---|
| 1 July 2008 | Balance | 35,775,000 | 1,438,635 | ||
| 20 October 2008 | Conversion of debt to equity | (d)(i) | 2,000,000 | 0.10 | 200,000 |
| 23 October 2008 | Placement to seed capitalist | (d)(ii) | 250,000 | 0.10 | 25,000 |
| 30 June 2009 | 38,025,000 | 1,663,635 | |||
| 15 September 2009 | Placement to consultant | (d)(iii) | 500,000 | 0.10 | 50,000 |
| 24 December 2009 | Placement to seed capitalist | (d)(iv) | 750,000 | 0.10 | 75,000 |
| 14 January 2010 | Placement to sophisticated investors | (d)(v) | 300,000 | 0.10 | 30,000 |
| 10 March 2010 | Placement to sophisticated investors | (d)(vi) | 1,700,000 | 0.10 | 170,000 |
| Share issue expenses | (13,970) | ||||
| 30 June 2010 | 41,275,000 | 1,974,665 |
(c) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Effective 1 July 1998, the corporations legislation abolished the concepts of authorised capital and par value shares. Accordingly the Company does not have authorised capital nor par value in respect of its issued capital.
(d) Ordinary share issues
(i) On 20 October 2008 debt of $200,000 was converted to equity resulting in the issue of 2,000,000 shares.
(ii) On 23 October 2008 a placement of 250,000 ordinary shares was made to a seed capitalist.
(iii) On 15 September 2009 a placement of 500,000 ordinary shares was made to a consultant for services.
(iv) On 24 December 2009 a placement of 750,000 ordinary shares was made to a seed capitalist.
(v) On 14 January 2010 a placement of 300,000 ordinary shares was made to sophisticated investors.
(vi) On 10 March 2010 a placement of 1,700,000 ordinary shares was made to sophisticated investors.
Annual Report - 30 June 2010
$22$
Notes to the financial statements For the year ended 30 June 2010
| 2010 | 2009 | |
|---|---|---|
| Note 12. Accumulated losses | ||
| Accumulated losses at the beginning of the financial periodNet loss attributable to members of Red Mountain Mining Ltd | (1,893,773)(628, 165) | (1,611,144)(282, 629) |
| Accumulated losses at the end of the financial year | (2,521,938) | (1,893,773) |
| Note 13. Investment option fee | ||
| Investment option fee paid | 252,335 |
This payment was made in accordance with the framework agreement between the Group and Lingbao Xuanrui Mineral Resources Company Limited, as an option to acquire 90% interest in the Deibu Gold tenements as described in more detail in the Directors' report.
Note 14. Key management personnel disclosures
(a) Directors
The following persons were directors of Red Mountain Mining Ltd during the financial year:
N F Warburton B Zhou K B Rowe
(b) Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the group, directly or indirectly, during the financial year:
Name Position Employer DJ Kelly Company Secretary Mosman Management Pty Ltd
Key management personnel compensation $(c)$
All payments to key management personnel have been accrued only. No cash payments have been made since May 2008.
| Short Term Benefits. | 2010S | 2009$ |
|---|---|---|
| Name | ||
| N Warburton | 120,000 | $\qquad \qquad \blacksquare$ |
| K Rowe | 100,000 | 100,000 |
| B Zhou | 48,000 | 48,000 |
| D J Kelly | 30,000 | 30,000 |
| Total | 298,000 | 178,000 |
Note 14. Key management personnel disclosures (continued)
(d) Equity instrument disclosures relating to key management personnel
Options provided as remuneration and shares issued on exercise of such options
There have been no options issued as remuneration to key management personnel.
Share holdings
The numbers of shares in the Company held during the financial year by each director of Red Mountain Mining Ltd and other key management personnel of the group, including their personally related parties, are set out below. There were no shares granted during the reporting period as compensation.
| Balance atthe start ofthe period | Receivedduring the yearon the exerciseof options | Other changesduring theperiod | Balance at theend of theyear |
|---|---|---|---|
| 10,065,000 | 10,065,000 | ||
| 3,870,000 | 3,870,000 | ||
| 8,065,000 | 8,065,000 | ||
| 1,000,000 | $\qquad \qquad \blacksquare$ | 1,000,000 | |
| 2009Name | Balance atthe start ofthe period | Receivedduring the yearon the exerciseof options | Other changesduring theperiod | Balance at theend of theyear |
|---|---|---|---|---|
| Directors of Red Mountain Mining Ltd | ||||
| N F Warburton | 8,065,000 | $\overline{\phantom{a}}$ | 2,000,000 | 10,065,000 |
| B Zhou | 3,870,000 | 3,870,000 | ||
| K B Rowe | 8,065,000 | - | 8,065,000 | |
| Other key management personnel of the group | ||||
| D J Kelly | 1,000,000 | - | 1,000,000 |
(e) Loans to key management personnel
There are no loans made to directors or other key management personnel of Red Mountain Mining Ltd or the consolidated entity.
(f) Other transactions with key management personnel
Directors of Red Mountain Mining Ltd
During 2008, Mr Warburton advanced the company a sum of $300,000. The loan had an interest rate of 11.25% and was provided on normal commercial terms and conditions. During 2009 $200,000 of this was converted to equity at a price of 10 cents per share. During 2010 $25,720 was repaid to Mr. Warburton. $2010$ $2000$
| 2010 | ZUUY | |
|---|---|---|
| S | ||
| Note 15. Remuneration of auditors | ||
| During the year the following services were paid tothe auditor of the parent entity: | ||
| Assurance services | ||
| Audit services | ||
| Audit and review of financial report | 8,000 | 8,000 |
| Annual Report - 30 June 2010 | 24 | |
Notes to the financial statements For the year ended 30 June 2010
Note 16. Contingent liabilities
The Group has no contingent liabilities at 30 June 2010.
Note 17. Commitments for expenditure
The Group has no commitments for expenditure at 30 June 2010.
Note 18. Related parties
Directors and specified executives
Disclosures relating to directors and other key management personnel are set out in Note 14.
Wholly-owned group
The wholly-owned group consists of Red Mountain Mining Ltd and its wholly-owned subsidiary: Red Mountain Mining (HK) Holdings Ltd as described in Note 19.
Aggregate amounts receivable from Red Mountain Mining (HK) Holdings Ltd at balance date:
Aggregate amounts receivable from its controlled entities at balance date:
| rarent | ||
|---|---|---|
| 2010 | 2009 | |
| Non-current receivables | 1,489,855 | 1,369,855 |
| Less: Provision for non-recovery | (1,489,855) | (1,369,855) |
Ownership interests in related parties
Interests held in the following classes of related parties are set out in the following note.
Note 19. Investments in controlled entities
| Name of entity | Country of incorporation | Class of shares | Equity holding2010$\frac{0}{\alpha}$ |
|---|---|---|---|
| Red Mountain Mining (HK) Holdings Ltd | Hong Kong | Ordinary | 100 |
| Red Mountain Mining Consulting (Shenyang) Co Ltd | People's Republic of China | Ordinary | 100 |
Note 20. Events occurring after reporting date
On 15 November 2010 it was resolved to issue 6,000,000 ordinary shares at a deemed price of 10 cents per share to sophisticated and professional investors.
On 4 March 2011 the Company restructured its share capital and options on issue with a consolidation whereby share and option holders received 1 new share or option for every 1.6 share or option held before consolidation. As part of this consolidation process it was resolved to convert certain options as described into ordinary shares.
On 5 March 2011 the Company issued 9,375,000 ordinary shares at 16 cents per share to sophisticated investors to increase working capital
On 31 March 2011 the Company issued 17,728,125 options to participating shareholders at a price of 1 cent per option to increase working capital. These options carry a strike price of 20 cents per ordinary share and have a three and a half year term
Notes to the financial statements For the year ended 30 June 2010
Note 20. Events occurring after reporting date(continued)
During the first quarter of 2011 the Company entered into an initial public offering which is aimed to obtain official listing on the Australian Stock Exchange to enhance the ability of the company to raise a total of $8,000,000 in capital in order to advance the transaction with Xanrui as described above, to further enhance the Group's ability to raise funds in future years to advance its strategic and operational plan, and to increase the tradability of the equity instruments of the Company
No other matter or circumstance has arisen since 30 June 2010 that has significantly affected, or may significantly affect:
- (a) the consolidated entity's operations in future financial years, or
- (b) the results of those operations in future financial years, or
- (c) the consolidated entity's state of affairs in future financial years.
Note 21. Reconciliation of loss from ordinary activities after income tax to net cash outflow used in operating activities
| 2010S | 2009 | |
|---|---|---|
| S | ||
| Operating loss after income tax | (628, 165) | (282, 629) |
| Investment option fee | 252,335 | |
| Share based payments | 226,834 | $\blacksquare$ |
| Net foreign exchange losses/(gains) | 68,022 | (261, 645) |
| Change in operating assets and liabilities | ||
| (Increase)/decrease in other receivables | (3,220) | (2,179) |
| Increase in trade creditors | 166,011 | 142,570 |
| Net cash used in operating activities | (170, 518) | (151, 548) |
| Note 22. Loss per share |
| 2010 | 2009 | |
|---|---|---|
| Cents | Cents | |
| Basic and diluted loss per share | (1.59) | (0.76) |
| 2010 | 2009 | |
| Number | Number | |
| Weighted average number of shares used as the denominator | ||
| Weighted average number of ordinary shares used as the denominator in | ||
| calculating basic and diluted loss per share. | 39,340,753 | 37,340,753 |
| Losses used in calculating losses per share | ||
| Net loss | (628, 165) | (282, 629) |
Note 23. Parent entity information
The following information relates to the parent entity, Red Mountain Mining Limited, as at 30 June 2010. The information presented here has been prepared using accounting policies consistent with those presented in Note 1.
| Parent Entity | |||
|---|---|---|---|
| 2010 | 2009 | ||
| Current assets | 63,923 | 40,797 | |
| Non-current assets | 17 | 17 | |
| Total assets | 63,940 | 40,814 |
Annual Report - 30 June 2010
$\overline{26}$
Note 23. Parent entity information (continued)
| Parent Entity | |||
|---|---|---|---|
| 2010 | 2009$ | ||
| Current liabilities | 484,691 | 349,355 | |
| Total liabilities | 484,691 | 349,355 | |
| Contributed equity | 1,974,665 | 1,663,635 | |
| Reserves | 176,834 | ||
| Accumulated losses | (2,572,250) | (1,972,176) | |
| Total deficiency | (420, 751) | (308, 541) | |
| Loss for the year | (600, 074) | (484, 552) | |
| Other comprehensive income | |||
| Total comprehensive income for the year | (600, 074) | (484, 552) |
The parent entity has no contingent liabilities as at 30 June 2010.
Directors' Declaration
In the directors' opinion:
- (a) The financial statements and notes set out on pages 10 to 27 are in accordance with the Corporations Act 2001, including:
- (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
- (ii) giving a true and fair view of the Company's and the consolidated entity's financial position as at 30 June 2010 and of their performance, as represented by the results of their operations, changes in equity and their cash flows, for the financial period ended on that date; and
- (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the directors.
Z
Keith Rowe Director
Perth, Western Australia 28 June 2011
Financial Statements - 30 June 2010
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RED MOUNTAIN MINING LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Red Mountain Mining Limited and its controlled entities, which comprises the statement of financial position as at 30 June 2010, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors' declaration.
Red Mountain Mining Limited comprises the company and the entities it controlled at the year's end or from time to time during the financial year.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001.
This responsibility also includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our We conducted our audit in accordance with Australian Auditing audit. Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Butler Settineri (Audit) Pty Ltd A.C.N. 112 942 373 Registered Company Auditor Number 289109 Liability limited by a scheme approved under Professional Standards Legislation Chartered
Unit 16, First Floor Spectrum Offices 100 Railway Road (Cnr Hay Street) Subiaco WA 6008
Locked Bag 18 Subiaco WA 6904 Australia
Phone: (08) 6389 5222 Fax: (08) 6389 5255 Email: [email protected]
Directors:
Colin Butler FCA Paul Chabrel FCA
Lucy Gardner CA
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor's Opinion
In our opinion,
- the financial report of Red Mountain Mining Limited is in accordance with the $a)$ Corporations Act 2001, including:
- $i)$ giving a true and fair view of the consolidated entity's financial position as at 30 June 2010 and of its performance for the year ended on that date; and
- $\overline{ii}$ complying with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Regulations 2001.
Material inherent uncertainty regarding going concern
Without qualification to the opinion expressed above, attention is drawn to the following matter. As a result of matters referred to in note 3 to the financial statements, "Principles of going concern", the ability of the consolidated entity to continue as a going concern and meet its planned and committed expenditures is dependent upon the consolidated entity raising further working capital. These conditions indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity's ability to continue as a going concern and therefore the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business.
Other matter
The directors and shareholders of Red Mountain Mining Limited held an Annual General Meeting on 18 December 2010 at which it was resolved to receive the financial report for the year ended 30 June 2010 including the directors' report, directors' declaration and audit report. The audit report was dated 22 November 2010 and misrepresented that an unmodified opinion had been issued on the attached financial report. The report dated 22 November 2010 was falsely generated without the directors' knowledge and should not be relied upon.
BUTLER SETTINERI (AUDIT) PTY LTD
hay be
LUCY P GARDNER Director
Perth Date: 28 June 2011