AI assistant
RIEDEL RESOURCES LIMITED Annual Report 2011
65702_rns_2011-09-07_0b27d6f1-7f9f-4563-a91d-a1c60878368b.pdf
Annual Report
Open in viewerOpens in your device viewer
ANNUAL REPORT
30 JUNE 2011
| CORPORATE DIRECTORY 1 | |
|---|---|
| DIRECTORS' REPORT 2 | |
| AUDITOR'S INDEPENDENCE DECLARATION 17 | |
| DIRECTORS' DECLARATION 18 | |
| STATEMENT OF COMPREHENSIVE INCOME 19 | |
| STATEMENT OF FINANCIAL POSITION 20 | |
| STATEMENT OF CHANGES IN EQUITY 21 | |
| STATEMENT OF CASH FLOWS 23 | |
| NOTES TO AND FORMING PART OF THE ACCOUNTS 24 | |
| INDEPENDENT AUDITOR'S REPORT 50 | |
| CORPORATE GOVERNANCE 52 | |
| SHAREHOLDER INFORMATION 65 | |
| SCHEDULE OF MINING TENEMENTS 68 |
CORPORATE DIRECTORY
DIRECTORS
Bruce Franzen Andrew Childs Wolfgang Zimmer Ian Tchacos Jeffrey Moore
COMPANY SECRETARY
Bruce Franzen
REGISTERED & PRINCIPAL OFFICE
Suite 1 45 Ord Street WEST PERTH WA 6005
Telephone: (08) 9226 0866 Facsimile: (08) 9486 7375
AUDITORS
PKF Mack and Co Level 2 35 Havelock Street WEST PERTH WA 6005
SHARE REGISTRY
Computershare Investor Services Pty Limited Level 2, Reserve Bank Building 45 St George Terrace PERTH WA 6000
STOCK EXCHANGE LISTING
Australian Securities Exchange (Home Exchange: Perth, Western Australia) Code: RIE
DIRECTORS' REPORT
Your directors present the following report on Riedel Resources Limited and the entities it controlled during or at the end of the financial year for the financial year ended 30 June 2011.
DIRECTORS
The Directors of the Company at any time during or since the end of financial year are:
| Ian Tchacos | Chairman |
|---|---|
| Qualifications | B.Eng (Mech.) |
| Experience | Mr Tchacos is a mechanical engineer with over 25 years internationalexperience in corporate development and strategy, mergers andacquisitions,exploration,developmentandproductionoperations,marketing and finance. He has a proven management track record in arange of international company environments. In his last appointmentas Managing Director of Nexus Energy he was responsible for thiscompany's development from an onshore micro cap explorer to an ASXtop 200 offshore producer and operator. He is currently Non ExecutiveChairman of ADX Energy Limited. |
| Directorships of other | ADX Energy Limited |
| listed companies | Australian Oil Company Limited |
| Interest in Shares | 300,000 |
| Interest in Options | 2,150,000 |
| Jeffrey Moore | Managing Director (Appointed on 30 September 2010) |
| Qualifications | B.Sc, MAusIMM, MGSA |
| Experience | Mr Moore is a geologist with extensive technical, managerial andproject finance experience in exploration and mining for publicly listedcompanies. During his career, he has generated and managed projectsfor commodities including precious metals, base metals, diamonds,nickel and industrial minerals throughout Australia, Central and SouthAmerica, Africa and Asia. |
| Mr Moore has held previous directorships with Allied Gold Limited from |
2004 to 2008 and Great Australian Resources Limited from 2005 to 2007 and is currently a director of Abra Mining Limited (commencing 2006), Cougar Metals NL (commencing 2008) and Alchemy Resources Limited (commencing 2010).
Mr Moore is also a Corporate Member of the Australasian Institute of Mining and Metallurgy and a Member of the Geological Society of Australia.
Directorships of other listed companies Abra Mining Limited Cougar Metals NL Alchemy Resources Limited
Interest in Shares 250,000 Interest in Options 100,000 Interest in Performance Rights 6,000,000
DIRECTORS' REPORT (CONT)
| Bruce FranzenQualifications | Director & Company SecretaryB.Bus CPA FFin |
|---|---|
| Experience | Mr Franzen is a certified practicing accountant with over twenty year'slocal and international experience in the resources industry. Bruce hassubstantial experience in commercial administration and financialcontrolrelatedtooffshoreoil&gasdrilling,exploration,anddevelopment of large scale capital resource projects. |
| Bruce has held senior positions for large companies such as WoodsidePetroleum, Inpex and Origin Energy. He also was a former ChiefFinancial Officer and Company Secretary for Globe Metals & Miningfrom 2007 - 2009, and a founding Director of DMC Mining Limited. Heserved as an Executive Director, Company Secretary and ChiefFinancial Officer of DMC Mining from 2006 – 2009. | |
| Directorships of otherlisted companies | Nil |
| Interest in SharesInterest in OptionsInterest in PerformanceRights | 686,7602,300,0492,000,000 |
| Andrew ChildsQualifications | Director |
| Experience | Mr Childs is currently Chairman of Australian Oil Company Limited, NonExecutive Director of ADX Energy Limited. He also sits on the Boards ofa number of unlisted private and public companies including AIM listedStratic Energy Corporation. Andrew graduated from the University ofOtago, New Zealand in 1980 with a Bachelor of Science in Geology andZoology. |
| Having started his professional career as an Exploration Geologist intheEasternGoldfieldsof WesternAustralia,Andrewmovedtopetroleum geology and geophysics with Perth-based Ranger OilAustralia (later renamed Petroz NL). He gained technical experiencewith Petroz as a Geoscientist and later commercial experience as theCommercial Assistant to the Managing Director. Andrew is a member ofthe Petroleum Exploration Society of Australia and the American | |
| Association of Petroleum Geologists. | |
| Directorships of otherlisted companies | ADX Energy LimitedAustralian Oil Company Limited |
DIRECTORS' REPORT (CONT)
| Wolfgang Zimmer | Director |
|---|---|
| Qualifications | PhD Geology and Petrology |
Experience Mr Zimmer has 29 years experience in the oil and gas industry. He received his Ph.D from the University of Vienna in Geology and Petrology. His career began with Mobil Oil in Vienna where he worked for 11 years primarily in Europe and the USA in oil and gas exploration and production. In 1991 he joined OMV, the Austrian oil company, and fulfilled a variety of senior management roles for the next 15 years. Most recently he was the CEO of Grove Energy, a Canadian and UK listed oil and gas explorer which he successfully merged with another exploration company in 2007. Mr Zimmer is currently Managing Director of ADX Energy Limited.
| Directorships of otherlisted companies | ADX Energy Limited | ||
|---|---|---|---|
| Interest in Shares | 300,000 | ||
| Interest in Options | 2,000,000 |
The directors have been in office to the date of this report unless otherwise stated.
The position of company secretary was held by Bruce Franzen throughout and since the end of the financial year.
PRINCIPAL ACTIVITIES
The principle activity of the consolidated group during the period was the raising of capital and listing on the ASX to fund its mineral exploration plans.
OPERATING RESULTS
The net loss of the consolidated group for the financial period after provision for income tax was $887,784 (2010: $4,775)
DIRECTORS' REPORT (CONT)
REVIEW OF OPERATIONS
Riedel Resources Limited is an Australian-based exploration company established to explore for and develop mineral deposits. Since listing on ASX on 31 January 2011 the Company has successfully secured the services of a core team of experienced corporate and technical professionals, experienced in all facets of exploring and developing minerals deposits in Australia and overseas.
Riedel's assets include a portfolio of gold, copper and nickel projects and significant land holdings in prospective areas in Archaean- and Proterozoic-age regions of Western Australia. The Company has a mixture of early stage and advanced prospects, with an initial focus on the following four core Projects (see Figure 1):
- Mt Webb;
- Marymia;
- Millrose (Inferred Mineral Resources of 4.0Mt @ 2.4g/t Au for 309,000 oz); and
- 1Cheritons Find.
These Projects host Inferred Gold Resources and numerous advanced to conceptual copper, gold, nickel and copper-gold targets and the core Projects are augmented with a number of additional prospects, including existing joint ventures, royalty agreements and free carried interests.
Figure 1: Riedel Resources Project Locations
1 Under application
DIRECTORS' REPORT (CONT)
REVIEW OF OPERATIONS (CONT)
1. Millrose Project
An independent experts review of the Millrose Gold Project has commenced with the aim of assessing exploration and development strategies.
The Millrose Project comprises two tenements, E53/1304 and E53/1305, owned 100% by Riedel Resources Limited. The Project is located within the Yandal-Millrose Greenstone Belt, in the Murchison region of the north-eastern Goldfields of Western Australia. It is situated approximately 90km ENE of the Wiluna gold operations of Apex Minerals Limited, and 30km east of the Nimary-Jundee gold operations of Newmont Australia Pty Limited.
In the 1980s the project area was explored by several exploration companies for gold and base metals, and in 1990 BHP reported 2m @ 4.3g/t from the Old Camp Bore anomaly. While follow-up work was undertaken by Marymia Exploration it wasn't until the mid-1990s when Mines and Resources Australia Pty Limited (MRA), the managers of a JV with Audax Resources Limited over E53/600, drilled a number of deep RC holes which intersected significant gold mineralisation at the Old Camp Bore, later renamed the Millrose deposit. MRA withdrew from the JV in 2004 and Audax completed an aircore drilling program in 2005. Thereafter there has been only little exploration carried out.
The Project has Inferred Mineral Resources of 4Mt at 2.4g/t Au for 309,000oz (using a 1.0g/t Au lower cut-off) on EL53/1304. The gold mineralisation is considered to be ductile shear zone type lying within the north-south orientated Celia shear zone. Strike extents of the shear zone extend over a distance of 9km within EL53/1304, and 15km within EL53/1305. The tenements for the most part cover the same ground as the "original" E53/600.
2. Cheritons Find Project (E77/1793 under application)
An independent experts review of the Cheritons Find Gold Project has commenced to assess exploration and development options for the Redwing gold prospect.
The Redwing prospect is located immediately adjacent to the old Cheritons Find Laterite Pit, within the Jilbadji Nature Reserve, approximately 55 kilometers by road from Marvel Loch.
The prospect is hosted within a west-north-west striking sequence of para-amhibolites, ultramafic and ortho-amphibolites and is located on the south-western flank of the Parker Range Dome. Gold mineralisation has been defined along a strike length of 500m to a vertical depth of 160m. The mineralised zone dips shallowly to the west and has a true thickness of between 5m and 30m. The host rock sequence and controlling structural zone extend a further 2,500m south of Redwing and is characterised by quartz veining and similar altered rock. Gold mineralisation is related to discrete sheeted quartz veins from 1m to 4m thick. Free gold is evident in veins and alteration halos comprise calc-silicate, carbonate, garnet and pyrite assemblages.
3. Marymia Project
The Marymia gold-copper-nickel project is located approximately 180km north-east of Meekatharra in Western Australia and lies within the Marymia Dome. It comprises an Archaean basement high, which hosts a complexly folded and faulted greenstone sequence which forms part of the major Proterozoic Capricorn Orogenic Belt. The Marymia Project Area is comprised of two major contiguous ELs, which overlie most of the Baumgarten Greenstone Belt. EL52/2394 and EL52/2395 occupy a total area of approximately 431.4 km2 . The project area is situated on the Ned's Creek and Marymia pastoral leases and is approximately 50km north east from Sandfire Resources Ltd's recently discovered DeGrussa copper-gold deposit, with tenements also directly overlying the highly prospective Jenkin fault.
DIRECTORS' REPORT (CONT)
REVIEW OF OPERATIONS (CONT)
Existing exploration targets include structurally controlled gold and copper-gold, magmatic nickel-sulphide and base metals mineralisation. Previous exploration has consisted of acquisition, processing and interpretation of remote sensing data, geological mapping, soil, lag and rock chip sampling, RAB and limited RC and diamond drilling.
4. Bronzewing South and Kara Project
The Bronzewing South/Kara Project is located within the Yandal Greenstone Belt approximately 65km north-east of Leinster and immediately south of the Bronzewing Mine site. It includes tenements E36/734, E36/215, E36/623, M36/670, and E36/509.
Exploration work at this Project has included prospecting, airborne magnetic/DTM/radiometric surveys, ground electromagnetic surveys, regolith mapping, geological mapping, rock chip sampling, soil and lag sampling surveys, RAB/Aircore/RC and diamond drilling.Until the discovery of the Bronzewing Mine in the mid 1990s, relatively little work had been done on the area. Since the grant of E36/215 in 2002, the area has been explored by Newmont Yandal Operations Limited (Newmont), ADX, Independence Group NL (Independence) and View Gold NL/Navigator.While results have generated a number of interesting anomalies and confirmed the geological prospectivity of the area, they have been disappointing in that they have not delivered a significant open pitable oxide resource. Model-driven exploration by Newmont and Independence, while generating a number of gold and nickel sulphide targets, meant that these companies did not follow up a number of targets.
The area is still considered to have excellent potential to host a small to moderate underground prospect. The area is under drilled relative to other areas within the eastern Goldfields and the Yandal Belt in particular. Due to its proximity to the Bronzewing Gold Mine, it is probable that material from any small resources would best be treated at the Bronzewing mill and is therefore best managed and explored by Navigator (Bronzewing) Pty Ltd, which owns the Bronzewing plant
5. Planned Activities
- Millrose Complete studies into determining optimal exploration and development options for the advancement of the Millrose Gold Project
- Mt Webb Exploration and access negotiations with Central Desert Native Title Services Ltd, representative for the Tjamu Tjamu and Ngururrpa Groups to facilitate the commencement of geophysical field activities
- Cheritons Find Complete independent expert review of the Redwing gold prospect to assess the potential for future development options and plan optimal exploration strategies
- Marymia Geophysical targeting review and planning for field activities
- Project Generation Utilise the strong local and overseas contact network available to the Company's corporate and technical team to generate project opportunities for acquisition or joint venture with the aim of generating Company growth and increased shareholder value.
Competent Person's Statement
The information in this report that relates to Exploration Results is based on information compiled by Mr Edward Turner, who is a Member of The Australian Institute of Geoscientists. Mr Turner has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activities undertaken to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Exploration Targets, Mineral Resources and Ore Reserves'. Mr Turner consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
DIRECTORS' REPORT (CONT)
REVIEW OF OPERATIONS (CONT)
The information in this report that relates to Mineral Resources is based on information compiled by Mr Allen Maynard, who is a Member of the Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists, with 30 years' experience in mineral exploration and evaluation and more than 25 years' experience in mineral asset valuation. Mr Maynard accepts responsibility for the accuracy of the Mineral Resources information contained within this report. Mr Maynard has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Exploration Targets, Mineral Resources and Ore Reserves'. Mr Maynard consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.
Corporate
Riedel was incorporated on 9 April 2010 for the purposes of acquiring all of the mineral exploration assets of ADX Energy Limited (formerly AuDAX Resources Limited), and for further investment in resource opportunities.
On 29 September 2010 at a meeting of members, approved the grant of 8,000,000 unlisted options to Directors of the Company for nil consideration the terms being exercisable at $0.30 on or before 30 June 2014.
On 30 September 2010, the Board allotted seed capital in the Company, 6,500,000 shares at $0.10 each to raise $650,000. The funds raised were to meet IPO preparation expenses and general working capital.
On 14 October 2010, Riedel acquired by way of a share sale agreement from ADX Energy Limited (formerly AuDAX Resources Limited), a portfolio of gold, copper and nickel projects and significant land holdings held by AuDAX Minerals Pty Ltd (wholly owned subsidiary of ADX Energy Limited) in prospective areas in the Archaean and Proterozoic areas in Western Australia. The Company has a mixture of early stage and more advanced prospects, with an initial focus on four core Projects, comprising the Mary Mia, Millrose, Mt Webb, and Cheritons Projects. These Projects comprise an existing inferred gold resource, numerous drill ready Cu, Ni, Au and Cu-Au targets as well as a number of quality conceptual targets.
Riedel lodged a prospectus with ASIC dated 12 November 2010, for the purposes of offering up to 35 million shares at $0.20 each to raise up to $7 million before costs with a minimum subscription of $5 million. The prospectus offer was closed on 24 December 2010 raising $5.22m before costs, and the Company subsequently listed on the ASX on 31 January 2011, ASX code: RIE.
On 4 February 2011, Riedel announced the appointment of Mr Jeffrey Moore as Managing Director. He commenced on 4 April, 2011.
On 1 March 2011, Riedel through its wholly owned subsidiary AuDAX Minerals Pty Ltd acquired all of the minority interests (10%) in the Marymia Project tenements EL 52/2394 and EL 52/2395, from Galtrad Pty Ltd by way of a cash payment. Upon settlement of this transaction, Riedel held a 100% interest in these tenements collectively known as the Marymia Project.
DIRECTORS' REPORT (CONT)
REVIEW OF OPERATIONS (CONT)
On 17 March 2011, Riedel announced through its wholly owned subsidiary AuDAX Minerals Pty Ltd, completion of a Farmin Joint Venture Agreement at the Bronzewing South and Kara tenements, EL36/215, EL36/623, EL36/509, EL36/734, and ML36/670 with Navigator Resources Limited. On 14 March 2011 (being the commencement of the farmin), the parties entered into a new agreement between Navigator, ADXM (instead of ADX) and Hot Holdings ("New Joint Venture Agreement"), which replaces the Previous Joint Venture Agreement. The New Joint Venture Agreement amends some of the original farmin terms, expands the number of tenements to include the Delaney Well tenement (being E36/734) and an additional Bronzewing South tenement (being M36/670) in addition to the original Bronzewing South/Kara Tenements (collectively, the Tenements).
On 13 April 2011, Riedel announced that it had entered through its wholly owned subsidiary AuDAX Minerals Pty Ltd, into a conditional agreement for the disposal of a 100% interest in Cheritons East Tenement EL77/1223 to Silverstone Minerals Pty Ltd, a wholly owned subsidiary of Silver Stone Resources Limited. The Agreement is conditional upon ASX granting Silver Stone conditional approval to be admitted to the Official List of the ASX, subject only to completion of the Agreement occurring and the satisfaction of such other conditions as may reasonably be within Silver Stone's control. As at 30 June 2011, this transaction had not been completed.
Riedel lodged a Prospectus with ASIC dated 4 May 2011 for the purposes of making a pro rata nonrenounceable offer to issue approximately 29,104,050 New Options at an issue price of $0.01 (1 cent) per New Option to raise approximately $291,040 before expenses. The new options had an exercise price of $0.20 and an expiry date of 30 November 2012. The New Options were being offered on the basis of one (1) New Option for every two (2) Shares held on the Record Date of 18 May 2011. The offer was completed and final allotment occurred on 30 June 2011, ASX code: RIEO.
POST BALANCE DATE EVENTS
On 13 April 2011, Riedel announced that it had entered through its wholly owned subsidiary AuDAX Minerals Pty Ltd, into a conditional agreement for the disposal of a 100% interest in Cheritons East Tenement EL77/1223 to Silverstone Minerals Pty Ltd, a wholly owned subsidiary of Silver Stone Resources Limited. The Agreement is conditional upon ASX granting Silver Stone conditional approval to be admitted to the Official List of the ASX, subject only to completion of the Agreement occurring and the satisfaction of such other conditions as may reasonably be within Silver Stone's control. This transaction was completed on 11 August 2011.
Pursuant to a General Meeting of Shareholders held on 14 July, 2011 and the Company Performance Rights Plan, the following issues of securities to related parties were approved by shareholders as follows:
| Holder | Number of PerformanceRights | Exercise Price |
|---|---|---|
| Jeffrey Moore | 2,000,0002,000,0002,000,000 | 27 cents36 cents45 cents |
| Bruce Franzen | 666,667666,667666,666 | 27 cents36 cents45 cents |
Zen Magnolia Pty Ltd (Bruce Franzen is a Director and Shareholder) 86,660 ordinary shares
DIRECTORS' REPORT (CONT)
There are no other matters or circumstances that have arisen since the end of the financial period that have significantly affected or may significantly affect the operations of the company, the results of those operations or the state of affairs of the company, in future years.
DIVIDENDS PAID OR RECOMMENDED
No dividend has been paid or declared since the start of the financial period.
LIKELY DEVELOPMENT AND RESULTS
Likely developments in the operations of the company and the expected results of those operations in future financial years have not been included in this report, as inclusion of such information is likely to result in unreasonable prejudice to the company.
ENVIRONMENTAL REGULATION
The company's operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory.
INDEMNITIES
The company has not, during or since the financial period, in respect of any person who is or has been an officer of the company:
- − Indemnified or made any relevant agreement for the indemnifying against a liability, including costs and expenses in successfully defending legal proceedings; or
- − Paid or agreed to pay a premium in respect of a contract insuring against a liability for the costs or expenses to defend legal proceedings.
During the financial year the company paid a premium of $13,507 in respect of a contract insuring against a liability for the costs or expenses to defend legal proceedings that may be brought against the directors and secretary of the company.
PRINCIPLES OF COMPENSATION
Company performance, shareholder wealth and director and executive remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives by the issue of options to the directors and executives to encourage the alignment of personal and shareholder interests. The company believes this policy will be effective in increasing shareholder wealth.
MEETINGS OF DIRECTORS
During the financial period, 17 meeting of directors were held. The number of meetings attended by each director during the period is stated below:-
| Number of eligible to | Number attended | |
|---|---|---|
| attend | ||
| Ian Tchacos | 17 | 17 |
| Jeff Moore (Appointed 30 September 2010) | 13 | 13 |
| Bruce Franzen | 17 | 17 |
| Andrew Childs | 17 | 17 |
| Wolfgang Zimmer | 17 | 16 |
DIRECTORS' REPORT (CONT)
OPTIONS
Unissued shares under options
At the date of this report, the unissued ordinary shares of Riedel Resources Limited under options are as follows:
| Grant date | Expiry date | Exercise price(cents) | Quantity |
|---|---|---|---|
| 29/09/2010 | 30/06/2014 | 30 | 8,000,000 |
| 12/07/2011 | 30/06/2014 | 30 | 1,500,000 |
| 9,500,000 | |||
Each option entitles the holder to one fully paid ordinary share in the company at any time up to expiry date. To the date of this report no shares had been issued as a result of the exercise of options.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court 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 any part of those proceedings.
The company was not a party to any such proceedings during the period.
NON AUDIT SERVICES
The board of directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditors' independence for the following reasons:
- − All non-audit services are reviewed and approved by the directors prior to commencement to ensure they do not adversely affect the integrity and objectivity of the audit; and
- − The nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.
The following fees were paid out to PKF Mack & Co Chartered Accountants for non-audit services provided during the year ended 30 June 2011:
| Accounting advice | $5,000 |
|---|---|
| Taxation compliance services | $1,350 |
| $6,350 |
AUDITOR'S INDEPENDENCE DECLARATION
The auditor's independence declaration for the period ended 30 June 2011 has been received and is included in the financial report.
DIRECTORS' REPORT (CONT)
REMUNERATION REPORT - AUDITED
This report outlines the remuneration arrangements in place for the key management personnel of Riedel Resources Limited (the "Company") for the financial year ended 30 June 2011. The information provided in this remuneration report has been audited as required by Section 308(3C) of the Corporations Act 2001.
The remuneration report details the remuneration arrangements for key management personnel ("KMP") who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the five executives in the Parent and the Group receiving the highest remuneration.
Key Management Personnel
Directors
Ian Tchacos (Chairman) Jeffrey Moore (Managing Director) - Appointed on 30 September 2010 Bruce Franzen Andrew Childs Wolfgang Zimmer
Remuneration Philosophy
The performance of the Company depends upon the quality of the directors and executives. The philosophy of the Company in determining remuneration levels is to:
- set competitive remuneration packages to attract and retain high calibre employees;
- link executive rewards to shareholder value creation; and
- establish appropriate, demanding performance hurdles for variable executive remuneration
Remuneration Committee
The Remuneration Committee is to assist the Board in establishing human resources and compensation policies and practices for the Directors (executive and non-executive) and senior executives, including retirement termination policies and practices, company share schemes and other incentive schemes, Company superannuation arrangements and remuneration arrangements.
DIRECTORS' REPORT (CONT)
REMUNERATION REPORT – AUDITED (CONT)
Remuneration Policy
The remuneration policy of Riedel Resources Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component which is assessed on an annual basis in line with market rates and offering specific long-term incentives based on key performance areas affecting the economic entity's financial results. The Board of Riedel Resources Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best directors and executives to run and manage the economic entity.
The Board's policy for determining the nature and amount of remuneration for Board members and senior executives of the economic entity is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the Board. All executives receive a base salary (which is based on factors such as length of service and experience) and superannuation. The Board reviews executive packages annually by reference to the economic entity's performance, executive performance and comparable information from industry sectors and other listed companies in similar industries.
The Board may exercise discretion in relation to approving incentives, bonuses and options. The policy is to attract the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.
Directors and executives are also entitled to participate in the Employee incentive Option Scheme and Performance Rights Plan. The executive directors and executives receive a superannuation guarantee contribution required by the government, which is currently 9%, and do not receive any other retirement benefits. All remuneration paid to directors and executives is valued at the cost to the Company and expensed. Options are valued using the Black-Scholes method.
The Board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities. The Board determines payments to the nonexecutive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting (currently $250,000). Fees for non-executive directors are not linked to the performance of the economic entity. However, to align directors' interests with shareholder interests, the directors are encouraged to hold shares in the Company and are able to participate in the employee incentive option scheme.
DIRECTORS' REPORT (CONT)
REMUNERATION REPORT – AUDITED (CONT)
The objective of the Company's executive reward framework is set to attract and retain the most qualified and experienced directors and senior executives. The board ensures that executive reward satisfies the following key criteria for good reward governance practices:
- Competitiveness
- Acceptability to shareholders
- Performance linkage
- Capital management
Directors' fees
A director may be paid fees or other amounts as the directors determine where a director performs special duties or otherwise performs services outside the scope of the ordinary duties of a director. A director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties.
Bonuses
No bonuses were given to key management personnel during the 2010 and 2011 year.
Performance based remuneration
The Company currently offers eligible Directors and Key Executives participation in the Company Performance Rights Plan and/or Incentive Option Scheme. This is in addition to cash remuneration.
Company performance, shareholder wealth and director's and executive's remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders and directors and executives. Currently, this is facilitated through the issue of options or Performance Rights to eligible directors and executives to encourage the alignment of personal and shareholder interests. The Company believes the policy will be effective in increasing shareholder wealth. For details of directors and executives interests in options at year end, refer Note 21 of the financial statements.
DIRECTORS' REPORT (CONT)
REMUNERATION REPORT – AUDITED (CONT)
Remuneration of directors and key management personnel
For the year ended 30 June 2011
| Short-TermBenefits | PostEmploymentBenefits | Equity-SettledShare-BasedPayments | Value ofequity asproportion ofremuneration | |||
|---|---|---|---|---|---|---|
| DirectorsFees | Salary andConsultingFees | Superannuation | Shares | Total | ||
| $ | $ | $ | $ | $ | % | |
| Directors | ||||||
| Ian Tchacos | 21,053 | - | 1,895 | - | 22,948 | - |
| Jeffrey Moore | 5,132 | 67,615 | 6,547 | - | 79,294 | - |
| Bruce Franzen | - | 105,263 | 9,474 | 120,000 | 234,737 | 51 |
| Andrew Childs | 12,632 | - | 1,137 | - | 13,769 | - |
| Wolfgang Zimmer | 12,632 | - | - | - | 12,632 | - |
| Total | 51,449 | 172,878 | 19,053 | 120,000 | 363,380 |
The overall level of key management personnel remuneration takes into account the performance of the Company since the Company's incorporation on 9 April 2010. As a result, remuneration was not paid to directors or executives until the Company was admitted to the Official List of ASX on 31 January 2011.
Options and rights over equity instruments granted as compensation
Details on options over ordinary shares in the Company that were granted as compensation to each key management person during the reporting period and details on options that vested during the period are as follows;
| Options | Number ofoptionsgranted andvested in2011 | Grant date | Fair valueper option atgrant date ($) | Exerciseprice peroption ($) | Expiry date |
|---|---|---|---|---|---|
| Directors | |||||
| Ian Tchacos | 2,000,000 | 29/09/2010 | 0.00 | 0.30 | 30/06/2014 |
| Bruce Franzen | 2,000,000 | 29/09/2010 | 0.00 | 0.30 | 30/06/2014 |
| Andrew Childs (i) | 2,000,000 | 29/09/2010 | 0.00 | 0.30 | 30/06/2014 |
| Wolfgang Zimmer | 2,000,000 | 29/09/2010 | 0.00 | 0.30 | 30/06/2014 |
DIRECTORS' REPORT (CONT)
REMUNERATION REPORT – AUDITED (CONT)
The options had no vesting conditions attached.
- (i) Andrew Childs received the options via his nominee Marina Childs.
- (ii) For details on the valuation of the options, including models and assumptions used, please refer to Note 12. There were no alterations to the terms and conditions of options granted as remuneration since their grant date.
No options have been exercised or granted since the end of the financial year. The options were provided at no cost to the recipients.
At the date of this report unissued ordinary shares of the Company under option are:
| Options | Number of optionsissued | Expiry date | Exercise price($) |
|---|---|---|---|
| Director options | 8,000,000 | 30/06/2014 | 0.30 |
| Executive options | 1,500,000 | 30/06/2014 | 0.30 |
| Listed loyalty options | 29,094,050 | 30/11/2012 | 0.20 |
| Shares | Number of sharesissued in 2011 | Issue date | Fair value pershare at issuedate ($) |
| Directors | |||
| Bruce Franzen | 600,000 | 20/01/2011 | 0.20 |
Signed in accordance with a resolution of the Board of Directors.
Bruce Franzen Director
Date: 8 September 2011
AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF RIEDEL RESOURCES LIMITED
I declare that to the best of my knowledge and belief, during the period ended 30 June 2011 there have been:
- (i) No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
- (ii) No contraventions of any applicable code of professional conduct in relation to the audit.
PKF MACK & CO
N A CALDER PARTNER
8 SEPTEMBER 2011 WEST PERTH, WESTERN AUSTRALIA
DIRECTORS' DECLARATION
The directors of the company declare that:
-
- The attached financial statements and notes are in accordance with the Corporations Act 2001:
- (a) comply with accounting standards and the Corporations Regulations 2001; and
- (b) give a true and fair view of the Company's financial position as at 30 June 2011 and of its performance for the period ended on that date.
-
- In the directors' opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Bruce Franzen Director
Date: 8 September 2011
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2011
| NOTES | Consolidated2011$ | Parent2011$ | Parent2010$ | |
|---|---|---|---|---|
| Interest revenue | 114,151 | 114,151 | 748 | |
| Administration expensesDepreciationEmployee benefits expenseAcquisition costsWrite-off of exploration expenditure | (271,692)(2,056)(395,791)(61,258)(271,061) | (270,113)(2,056)(395,791)(61,258)(272,756) | (5,523)---- | |
| Loss before income tax expense | 2 | (887,707) | (887,823) | (4,775) |
| Income tax expense | 3 | (77) | (77) | - |
| Loss for theperiod | (887,784) | (887,900) | (4,775) | |
| Other comprehensive income | - | - | - | |
| Total comprehensive loss for the year | (887,784) | (887,900) | (4,775) | |
| Basic (loss) per share (cents) | 15 | (3.19) | (3.19) | (0.02) |
The accompanying notes form part of these financial statements.
STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011
| NOTES | Consolidated2011$ | Parent2011$ | Parent2010$ | |
|---|---|---|---|---|
| CURRENT ASSETS | ||||
| Cash and cash equivalents | 5 | 4,317,723 | 4,316,617 | 115,355 |
| Trade and other receivables | 6 | 258,199 | 251,139 | 470 |
| TOTAL CURRENT ASSETS | 4,575,922 | 4,567,756 | 115,825 | |
| NON CURRENT ASSETS | ||||
| Property, plant and equipment | 7 | 11,976 | 11,976 | - |
| Trade and other receivables | 6 | - | 673,886 | - |
| Financial assets | 18 | - | 5,000,000 | - |
| Exploration and development expenditure | 8 | 5,680,285 | - | - |
| TOTAL NON CURRENT ASSETS | 5,692,261 | 5,685,862 | - | |
| TOTAL ASSETS | 10,268,183 | 10,253,618 | 115,825 | |
| CURRENT LIABILITIES | ||||
| Trade and other payables | 9 | 411,387 | 396,938 | 120,500 |
| Provisions | 10 | 7,712 | 7,712 | - |
| TOTAL CURRENT LIABILITIES | 419,099 | 404,650 | 120,500 | |
| TOTAL LIABILITIES | 419,099 | 404,650 | 120,500 | |
| NET ASSETS | 9,849,084 | 9,848,968 | (4,675) | |
| EQUITY | ||||
| Issued capital | 11 | 10,450,602 | 10,450,602 | 100 |
| Option reserve | 12 | 291,041 | 291,041 | - |
| Accumulated losses | 13 | (892,559) | (892,675) | (4,775) |
| TOTAL EQUITY | 9,849,084 | 9,848,968 | (4,675) |
The accompanying notes form part of these financial statements.
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011
| Consolidated | IssuedCapital | OptionReserve | AccumulatedLosses | Total |
|---|---|---|---|---|
| Balance at 1 July 2010 | 100 | - | (4,775) | (4,675) |
| Total comprehensive income forthe year | ||||
| Loss for the period | - | - | (887,784) | (887,784) |
| Other comprehensive income | - | - | - | - |
| - | - | (887,784) | (887,784) | |
| Contributions by anddistributions to owners | ||||
| Equity issued during the year | 10,871,600 | 291,041 | - | 11,162,641 |
| Transaction costs | (541,098) | - | - | (541,098) |
| Share based payment transactions | 120,000 | - | - | 120,000 |
| 10,450,502 | 291,041 | - | 10,741,543 | |
| Balanceat 30 June 2011 | 10,450,602 | 291,041 | (892,559) | 9,849,084 |
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2011
| Company | IssuedCapital | OptionReserve | AccumulatedLosses | Total |
|---|---|---|---|---|
| Balance at 1 July 2010 | 100 | - | (4,775) | (4,675) |
| Total comprehensive income forthe year | ||||
| Loss for the periodOther comprehensive income | -- | -- | (887,900)- | (887,900)- |
| - | - | (887,900) | (887,900) | |
| Contributions by and distributionsto owners | ||||
| Equity issued during the yearTransaction costs | 10,871,600(541,098) | 291,041- | -- | 11,162,641(541,098) |
| Share based payment transactions | 120,000 | - | - | 120,000 |
| 10,450,502 | 291,041 | - | 10,741,543 | |
| Balance at 30 June 2011 | 10,450,602 | 291,041 | (892,675) | 9,848,968 |
| Company | Issued | Option | Accumulated | Total |
| Capital | Reserve | Losses | ||
| Balance at 1 July 2009 | - | - | - | - |
| Total comprehensive income forthe year | ||||
| Loss for the period | - | - | (4,775) | (4,775) |
| Other comprehensive income | -- | -- | -(4,775) | -(4,775) |
| Contributions by anddistributions to owners | ||||
| Equity issued during the year | 100 | - | - | 100 |
| Transaction costs | - | - | - | - |
| Share based payment transactions | - | - | - | - |
| 100 | - | - | 100 | |
| Balance at 30 June 2010 | 100 | - | (4,775) | (4,675) |
The accompanying notes form part of these financial statements.
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2011
| NOTES | Consolidated2011$ | Parent2011$ | Parent2010$ | |
|---|---|---|---|---|
| Cash Flows from Operating Activities | ||||
| Interest received | 70,727 | 70,727 | 278 | |
| Payments to suppliers and employees | (451,465) | (443,565) | (23) | |
| Net cash from/(used in) operating activities | 14 | (380,738) | (372,838) | 255 |
| Cash Flows from Investing Activities | ||||
| Purchase of plant and equipment | (14,032) | (14,032) | - | |
| Payment for exploration and evaluation | (251,351) | (272,756) | - | |
| Payment for subsidiary | (489,843) | (238,880) | - | |
| Net cash used in investing activities | (755,226) | (525,668) | - | |
| Cash Flows from Financing ActivitiesProceeds from issue of shares | 5,756,600 | 5,756,600 | 100 | |
| Proceeds from issue of options | 122,830 | 122,830 | - | |
| Payments for share issue costs | (541,098) | (541,098) | - | |
| Proceeds from application for shares | - | - | 115,000 | |
| Loan to subsidiary | - | (238,564) | - | |
| Net cash provided in financing activities | 5,338,332 | 5,099,768 | 115,100 | |
| Net increase in cash held | 4,202,368 | 4,201,262 | 115,355 | |
| Cash and cash equivalents at 1 July | 115,355 | 115,355 | - | |
| Cash and cash equivalents at 30 June | 5 | 4,317,723 | 4,316,617 | 115,355 |
The accompanying notes form part of these financial statements
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
Riedel Resources Limited (the "Company") is a Company domiciled in Australia.
The address of the Company's registered office is Suite 1, 45 Ord Street, West Perth WA 6005. The consolidated financial statements of the Company as at and for the year ended 30 June 2011 comprise the Company and its subsidiaries (together referred to as the "Group" and individually as "Group entities") and the Group's interest in associates and jointly controlled entities.
The Group primarily is involved in mining and exploration activity.
Basis of Preparation
The accounting policies set out below have been consistently applied to all years presented.
Statement of Compliance
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial report of the Group and the financial report of the Company comply with International Financial Reporting Standards (lFRSs) and interpretations adopted by the International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by the Board of Directors on 8 September 2011.
Basis of Measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the statement of financial position:
- derivative financial instruments are measured at fair value
- financial instruments at fair value through profit or loss are measured at fair value
- available-for-sale financial assets are measured at fair value
- liabilities for cash-settled share-based payment arrangements are measured at fair value
- the defined benefit asset is measured as the net total of the plan assets, plus unrecognised past service cost and unrecognised actuarial losses, less unrecognised actuarial gains and the present value of the defined benefit obligation.
Functional and Presentation Currency
These consolidated financial statements are presented in Australian dollars, which is the Company's functional currency.
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, all financial information presented in Australian dollars has been rounded to the unless otherwise stated.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Use of Estimates and Judgements
The preparation of financial statements in conformity with AASBs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
Going Concern
The accounts have 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 normal course of business. The Group incurred a loss of $887,784 for the year ended 30 June 2011 (2010: $4,775).
The ability of the Company and the Group to continue to pay its debts as and when they fall due is dependent upon the Company successfully raising additional share capital and ultimately developing one of its mineral properties.
The Directors believe it is appropriate to prepare these accounts on a going concern basis because:
- the Directors have an appropriate plan to raise additional funds as and when it is required. In light of the Group's current exploration and development projects, the Directors believe that the additional capital required can be raised in the market; and
- the Directors have an appropriate plan to contain certain operating and exploration expenditure if appropriate funding is unavailable.
The accounts have been prepared on the basis that the entity can meet its commitments as and when they fall due and can therefore continue normal business activities, and the realisation of assets and liabilities in the ordinary course of business.
(a) Critical Accounting Judgements, Estimates and Assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:
Share Based Payment Transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an internal valuation using Black-Scholes option pricing model, using the assumptions detailed in Note 12.
Exploration and Evaluation Costs
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are carried forward in respect of an area that has not at balance sheet date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or relating to, the area of interest are continuing.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
Impairment of Exploration and Evaluation Assets and Investments in and Loans to Subsidiaries
The ultimate recoupment of the value of exploration and evaluation assets, the Company's investment in subsidiaries, and loans to subsidiaries is dependent on the successful development and commercial exploitation, or alternatively, sale, of the exploration and evaluation assets.
Impairment tests are carried out on a regular basis to identify whether the asset carrying values exceed their recoverable amounts. There is significant estimation and judgement in determining the inputs and assumptions used in determining the recoverable amounts.
The key areas of judgement and estimation include:
- Recent exploration and evaluation results and resource estimates;
- Environmental issues that may impact on the underlying tenements;
- Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities.
Classification of Investments
The Company has decided to classify investments in listed securities as fair value through the profit and loss. These securities are accounted for at fair value. Any increments or decrements in their value at year end are charged or credited to the income statement.
Income tax expenses
Judgement is required in assessing whether deferred tax assets and liabilities are recognised on the balance sheet. Deferred tax assets, including those arising from temporary differences, are recognised only when it is considered more likely than not that they will be recovered, which is dependent on the generation of future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised.
(b) Principles of Consolidation
The consolidated financial statements incorporate the financial statements of Riedel Resources Limited and entities controlled by Riedel Resources Limited (its subsidiaries). A list of subsidiaries is contained in note 20. All controlled entities have a 30 June financial year-end. Control is achieved where Riedel Resources Limited has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
The results of the subsidiaries acquired or disposed of during the year are included in consolidated statement of profit or loss from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by other member of the Riedel Group. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquire and the equity instruments issued by the Group in exchange for control of the acquire. Acquisition-related costs are recognised in profit or loss as incurred.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
(b) Principles of Consolidation (con't)
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value at the acquisition date, except that:
- Deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are recognised and measure in accordance with AASB 112 'Income Taxes' and AASB 119 'Employee Benefits' respectively;
- Liabilities or equity instruments related to share-based payment arrangement of the acquire or share-based payments of the Group entered into to replace share-based payment arrangements of the acquire are measured in accordance with AASB 2 'Share-based Payment' at the acquisition date; and
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
This is the first year that the entity has become a Consolidated Entity. Given the subsidiaries are merely inactive Company with holding assets. There is only immaterial difference between comparative figure for consolidated entity's figures and parent entity's figures.
Business combinations that took place prior to 1 July 2009 were accounted for in accordance with the previous version of AASB 3.
(c) Income Tax
The charge for current income tax expense is based on the profit 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 statement of comprehensive income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
(c) Income Tax (con't)
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.
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
(d) Exploration and Evaluation Expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are carried forward only if they relate to an area of interest for which rights of tenure are current and in respect of which:
- such costs are expected to be recouped through successful development and exploitation or from sale of the area; or
- exploration and evaluation activities in the area have not, at balance date, reached a stage which permit a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active operations in, or relating to, the area are continuing.
Accumulated costs in respect of areas of interest which are abandoned are written off in full against profit in the year in which the decision to abandon the area is made.
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.
The recoverability of the carrying amount of the exploration and development assets is dependent on the successful development and commercial exploitation or alternatively sale of the respective areas of interest.
Rehabilitation, Restoration and Environmental Costs
Long-term environmental obligations are based on the Company's environmental management plans, in compliance with current environmental and regulatory requirements.
The costs will include obligations relating to reclamation, waste site closure, plant closure and other costs associated with the restoration of the site, when relevant.
Full provision is made based on the net present value of the estimated cost of restoring the environmental disturbance that has been incurred as at the balance date. Increases due to additional environmental disturbance (to the extent that it relates to the development of an asset) are capitalised and amortised over the remaining lives of the mines.
Annual increases in provision relating to the change in the present value of the provision are accounted for in earnings.
The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances. Cost estimates are not reduced by the potential proceeds from sale of assets or from plant clean-up at closure.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
(e) Financial Instruments
The Company classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables, 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.
Recognition
Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.
(i) Financial assets at fair value through profit or loss
Financial assets are classified at 'fair value through profit or loss' when they are either held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.
(ii) 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 company 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.
(iii) Held-to-maturity Investments
Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Company's intention to hold these investments to maturity. They are subsequently measured at amortised cost.
(iv) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.
Fair value
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm's length transactions, reference to similar instruments and option pricing models.
Financial liabilities
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
(e) Financial Instruments (con't)
Derivative instruments
Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the statement of comprehensive income unless they are designated as hedges.
(f) Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.
(g) Revenue
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured.
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. All revenue is stated net of the amount of goods and services tax (GST).
(h) 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 cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.
(i) Impairment
(i) Financial Assets
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the effective interest rate. An impairment loss in respect of an available-for-sale financial asset is calculated by reference to its fair value. Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in Groups that share similar credit risk characteristics. All impairment losses are recognised either in the income statement or revaluation reserves in the period in which the impairment arises.
(ii) Exploration and Evaluation Assets
Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of the asset may exceed its recoverable amount at the reporting date.
Exploration and evaluation assets are tested for impairment in respect of cash generating units, which are no larger than the area of interest to which the assets relate.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
(i) Impairment (con't)
(iii) Non-Financial Assets Other Than Exploration and Evaluation Assets
The carrying amounts of the Consolidated Entity's non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset's recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated at each reporting date.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units, then to reduce the carrying amount of the other assets in the unit on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exits. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss has been recognised.
(j) Investments
All investments are initially recognised at cost, being the fair value of the consideration given and including acquisition charges associated with the investment.
After initial recognition, investments, which are classified as held for trading and available-for-sale, are measured at fair value. Gains or losses on investments held for trading are recognised in the income statement.
Gains or losses on available-for-sale investments are recognised as a separate component of equity until the investment is sold, collected or otherwise disposed of, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is included in the income statement.
For investments that are actively traded in organised financial markets, fair value is determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date.
(k) Trade and Other Payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of consideration to be paid in the future for goods and services received, whether or not billed to the company.
Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accrual basis.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
(l) Share-Based Payment Transactions
The Group provides benefits to employees (including Directors) of the Group in the form of sharebased payment transactions, whereby employees render services in exchange for shares or rights over shares ("equity-settled transaction").
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ("vesting date").
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the number of awards that, in the opinion of the Directors of the Company, will ultimately vest. This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.
(m) Trade and Other Receivables
Trade receivables, which generally have 30-90 day terms, are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less an allowance for any uncollectible amounts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts that are known to be uncollectible are written off when identified. An allowance for doubtful debts is raised when there is objective evidence that the group will not be able to collect the debt.
(n) Issued capital
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. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
(o) Acquisition of Assets
The purchase method of accounting is used for all acquisitions of assets regardless of whether equity instruments or other assets are acquired. Cost is determined as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition.
(p) New standards and interpretations not yet adopted
The AASB has issued the following new and amended accounting standards and interpretations that have mandatory application dates for future reporting periods. The Group has decided against early adoption of these standards, and has not yet determined the potential impact on the financial statements from the adoption of these standards and interpretations.
| AASB NO. | TITLE | ISSUE DATE | OPERATIVE DATE |
|---|---|---|---|
| (ANNUAL REPORTINGPERIODS BEGINNING | |||
| ON OR AFTER) | |||
| 9 | Financial Instruments | Dec 2010 | 1 Jan 2013 |
| 10 | Consolidation | Aug 2011 | 1 Jan 2013 |
| 11 | Joint Arrangements | Aug 2011 | 1 Jan 2013 |
| 12 | Disclosure of Interests in Other Entities | Aug 2011 | 1 Jan 2013 |
| 13 | Fair Value Measurement | Sep 2011 | 1 Jan 2013 |
| 1053 | Application of Tiers of AustralianAccounting Standards | Jun 2010 | 1 Jul 2013 |
| 2009 – 12 | Amendments to Australian AccountingStandards[AASBs 5, 8, 108, 110, 112, 119, 133,137, 139, 1023 & 1031 andInterpretations 2, 4, 16, 1039 & 1052] | Dec 2009 | 1 Jan 2011 |
| 2010 – 2 | Amendments to Australian AccountingStandards arising from ReducedDisclosure Requirements | Jun 2010 | 1 Jul 2013 |
| 2010 – 4 | Further Amendments to AustralianAccounting Standards arising from theAnnual Improvements Project[AASB 1, AASB 7, AASB 101 & AASB134 and Interpretation 13] | Jun 2010 | 1 Jan 2011 |
| 2010 – 5 | Amendments to Australian AccountingStandards[AASB 1, 3, 4, 5, 101, 107, 112, 118,119, 121, 132, 133, 134, 137, 139, 140,1023 & 1038 and Interpretations 112,115, 127, 132 & 1042] | Oct 2010 | 1 Jan 2011 |
| 2010 – 6 | Amendments to Australian AccountingStandards – Disclosures on Transfers ofFinancial Assets[AASB 1 & AASB 7] | Nov 2010 | 1 Jul 2011 |
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (CONT)
(p) New standards and interpretations not yet adopted (con't)
| AASB NO. | TITLE | ISSUEDATE | OPERATIVE DATE(ANNUAL REPORTINGPERIODS BEGINNINGON OR AFTER) |
|---|---|---|---|
| 2010 – 7 | Amendments to Australian AccountingStandards arising from AASB 9(December 2010)[AASB 1, 3, 4, 5, 7, 101, 102, 108, 112,118, 120, 121, 127, 128, 131, 132, 136,137, 139, 1023 & 1038 andInterpretations 2, 5, 10, 12, 19 & 127] | Dec 2010 | 1 Jan 2013 |
| 2010 – 8 | Amendments to Australian AccountingStandards – Deferred Tax: Recovery ofUnderlying Assets[AASB 112] | Dec 2010 | 1 Jan 2012 |
| 2010 – 9 | Amendments to Australian AccountingStandards – Severe Hyperinflation andRemoval of Fixed Dates for First-timeAdopters[AASB 1] | Dec 2010 | 1 Jul 2011 |
| 2010 – 10 | Further Amendments to AustralianAccounting Standards – Removal ofFixed Dates for First-time Adopters[AASB 2009-11 & AASB 2010-7] | Dec 2010 | 1 Jan 2013 |
| 2011 - 1 | Amendments to Australian AccountingStandards arising from the TransTasman Convergence Project[AASB 1, AASB 5, AASB 101, AASB107, AASB 108, AASB 121, AASB 128,AASB 132 & AASB 134 and | May 2011 | 1 Jul 2011 |
| 2011 - 2 | Amendments to Australian AccountingStandards arising from the TransTasman Convergence Project – ReducedDisclosure Requirements[AASB 101 & AASB 1054] | May 2011 | 1 Jul 2013 |
| 2011 - 4 | Amendments to Australian AccountingStandards to Remove Individual KeyManagement Personnel DisclosureRequirements[AASB 124] | Jul 2011 | 1 Jul 2013 |
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
| Consolidated2011$ | Parent2011$ | Parent2010$ | ||
|---|---|---|---|---|
| NOTE 2: LOSS FROM ORDINARY ACTIVITIES | ||||
| (a) Other revenue | ||||
| Bank Interest | 114,151 | 114,151 | 748 | |
| (b) Expenses | ||||
| Remuneration of Auditor - audit fees | 38,650 | 38,650 | 5,500 | |
| Depreciation | 2,056 | 2,056 | - | |
| Exploration expenditure written off | 271,061 | 272,756 | - | |
| Share based payments expense | 120,000 | 120,000 | - | |
| Bank fees | 1,846 | 1,846 | 23 | |
| (a) | NOTE 3: INCOME TAX EXPENSEIncome tax expense | |||
| Current tax | - | - | - | |
| Prior year under provision | 77 | 77 | - | |
| Deferred tax | - | - | - | |
| 77 | 77 | - | ||
| (b) | The prima facie income tax expense on pre-taxaccounting profit from operations reconciles tothe income tax expense in the financialstatements as follows: | |||
| Prima facie tax benefit on loss at 30% | (266,312) | (266,312) | (1,433) | |
| Add:Tax effect of: | ||||
| - Share based payments | 36,000 | 36,000 | - | |
| - Other non-allowable items | 23,212 | 100,521 | - | |
| - Provisions and accruals | 9,287 | 9,287 | 1,650 | |
| - Revenue losses not recognised | 1,947,394 | 166,057 | - | |
| - Prior year under provision | 77 | 77 | - | |
| 2,015,970 | 311,942 | 1,650 | ||
| Less: | ||||
| Tax effect of: | ||||
| - Exploration and evaluation expenditure | 1,704,086 | - | - | |
| - Capital raising costs | 32,466 | 32,466 | - | |
| - Accrued income | 13,029 | 13,029 | 140 | |
| - Other | - | - | 77 | |
| 1,749,581 | 45,495 | 217 | ||
| Income tax expense/(benefit) | 77 | 77 | - | |
| The applicable weighted average effective tax | ||||
| rate is as follows: | 0% | 0% | 0% |
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
| Consolidated2011 | Parent2011 | Parent2010 | ||
|---|---|---|---|---|
| $ | $ | $ | ||
| NOTE 3: INCOME TAX EXPENSE(CONT) | ||||
| (c) | The following deferred tax balances at 30%have not been recognised: | |||
| Deferred Tax Assets: | ||||
| - Carry forward revenue losses | 1,947,394 | 166,057 | - | |
| - Capital raising costs | 129,864 | 129,864 | - | |
| - Provisions and accruals | 10,936 | 10,936 | 1,650 | |
| 2,088,194 | 306,857 | 1,650 | ||
The tax benefits of the above deferred tax assets will only be obtained if:
- (a) The Company derives future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised;
- (b) The Company continues to comply with the conditions for deductibility imposed by law; and
- (c) No change in income tax legislation adversely affect the Company in utilising the benefits.
Deferred tax liabilities:
| At 30% (2010: 30%) | |||
|---|---|---|---|
| - Exploration and evaluation expenditure | 1,704,086 | - | - |
| - Accrued income | 13,169 | 13,169 | - |
| 1,717,255 | 13,169 | - | |
The above deferred tax liabilities have not been recognised as they have given rise to the carry forward revenue losses for which the deferred tax asset has not been recognised.
| Consolidated2011 | Parent2011 | Parent2010 | |
|---|---|---|---|
| NOTE 4: AUDITORS' REMUNERATIONRemuneration of the auditor of the parent entity for: | $ | $ | $ |
| -Auditing or reviewing the financial report | 31,000 | 31,000 | 5,500 |
| -Tax compliance | 1,350 | 1,350 | - |
| 32,350 | 32,350 | 5,500 | |
| Remuneration of firms other than the auditor | |||
| -Tax compliance | 9,050 | 9,050 | - |
| -Other non-audit services | 8,322 | 8,322 | - |
| 17,372 | 17,372 | - | |
| NOTE 5: CASH AND CASH EQUIVALENTS | |||
| Cash on hand | 11,949 | 11,949 | 100 |
| Cash at bank | 4,305,774 | 4,304,668 | 115,255 |
| 4,317,723 | 4,316,617 | 115,355 |
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
| Consolidated2011 | Parent2011 | Parent2010 | |
|---|---|---|---|
| NOTE 6: TRADE AND OTHER RECEIVABLES | $ | $ | $ |
| CURRENT | |||
| Accrued interest | 43,895 | 43,895 | 470 |
| Option subscription funds held by share registry | 168,211 | 168,211 | - |
| GST refundable | 26,094 | 19,034 | - |
| Prepayments | 19,999 | 19,999 | - |
| 258,199 | 251,139 | 470 | |
| NON CURRENT | |||
| Loan to subsidiary | - | 673,886 | - |
| - | 673,886 | - | |
| NOTE 7: PROPERTY, PLANT & EQUIPMENT | |||
| Office Equipment | |||
| At cost | 14,032 | 14,032 | - |
| Accumulated amortisation | (2,056) | (2,056) | - |
| Total office equipment | 11,976 | 11,976 | - |
| Total Office equipmentCarrying amount at beginning of periodAdditionsDepreciation | -14,032(2,056) | -14,032(2,056) | --- |
| Carrying amount at end of period | 11,976 | 11,976 | - |
| NOTE 8: EXPLORATION AND DEVELOPMENTEXPENDITURE | |||
| Explorationanddevelopmentexpenditurereconciliation | |||
| Opening balanceTenement and application fees – at costMonies spent on exploration and development during | -5,421,004 | -- | -- |
| financial year | 259,281 | - | - |
| Closing balance | 5,680,285 | - | - |
| NOTE 9: TRADE AND OTHER PAYABLES | |||
| Trade creditors | 74,374 | 61,116 | - |
| Accruals | 297,160 | 295,969 | 5,500 |
| Payroll liabilitiesShare applications not yet allocated | 39,853- | 39,853- | -115,000 |
| 411,387 | 396,938 | 120,500 |
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
| Consolidated2011$ | Parent2011$ | Parent2010$ | |||
|---|---|---|---|---|---|
| NOTE 10: PROVISIONS | |||||
| Employee entitlements | 7,712 | 7,712 | - | ||
| 2010Shares | 2010$ | ||||
| (a) | NOTE 11: ISSUED CAPITALShare capitalOrdinary shares | ||||
| Less: cost of issue | Issued and paid up capital – consisting of ordinary shares | 100- | 100- | ||
| Closing balance at 30 June 2010 | 100 | 100 | |||
| 2011Shares | 2011$ | ||||
| Less: cost of issue | Issued and paid up capital – consisting of ordinary shares | 58,208,100- | 10,991,700(541,098) | ||
| Closing balance at 30 June 2011 | 58,208,100 | 10,450,602 | |||
| (b) | Movement in ordinary shares capital | ||||
| Date | Details | No ofShares | $ | ||
| 9 April 20109 April 2010 | Opening balanceIncorporation shares – Bruce Franzen | -100 | -100 | ||
| 30 June 2010 | Closing balance | 100 | 100 | ||
| 1 July 2010 | Opening balance | 100 | 100 | ||
| 30 September 201020 January 2011 | Seed CapitalSharesissuedunderProspectus | dated12 | 6,500,000 | 650,000 | |
| November 2010 | 26,708,000 | 5,341,600 | |||
| 20 January 2011 | Shares issue as consideration for the acquisitionof AuDAX Minerals Pty LtdCosts of issue | 25,000,000- | 5,000,000(541,098) | ||
| 30 June 2011 | Closing balance | 58,208,100 | 10,450,602 | ||
(c) Terms and conditions of contributed equity
Ordinary shares have the right to receive dividends as declared and, in the event of winding up the company, to participate in proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.
Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the company.
(d) Capital management
The Company is not subject to any externally imposed capital requirements.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
| 2011Options | 2011$ | |||
|---|---|---|---|---|
| NOTE 12: OPTION RESERVE | ||||
| Opening balance at 1 July 2010 | - | - | ||
| Director options (30c exercise, 30 June 2014 expiry) | (i) | 8,000,000 | - | |
| Entitlement options (20c exercise, 30 November 2012 expiry) | (ii) | 29,104,050 | 291,041 | |
| Closing balance at 30 June 2011 | 37,104,050 | 291,041 | ||
| Movements in options | No of | |||
| Date | Details | Options | $ | |
| 1 July 2010 | Opening balance | - | - | |
| 29 September 2010 | Director options | (i) | 8,000,000 | - |
| 9 June 2011 | Entitlement options | (ii) | 12,282,939 | 122,830 |
| 30 June 2011 | Entitlement options – shortfall | (ii) | 16,821,111 | 168,211 |
| 30 June 2011 | Closing balance | 37,104,050 | 291,041 |
(i) The value of options granted during the period was calculated using the Black-Scholes Option Pricing Model and totalled $0. The values and inputs are as follows;
| Director | |
|---|---|
| Options | |
| Options issued | 8,000,000 |
| Underlying share value | $0.00 |
| Exercise price | $0.30 |
| Risk free interest rate | 4.88% |
| Share price volatility | 80% |
| Expiration period | 29/06/2014 |
| Valuation per option | $0.00 |
The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.
(ii) The option premium represents amounts paid by subscribers to the Company's Entitlement Option issue under Prospectus dated 6 May 2011.
| Consolidated2011$ | Parent2011$ | Parent2010$ | |
|---|---|---|---|
| NOTE 13: ACCUMULTED LOSSES | |||
| Accumulated losses at the beginning of the year | 4,775 | 4,775 | - |
| Net loss for the year | 887,784 | 887,900 | 4,775 |
| Accumulated losses at the end of the year | 892,559 | 892,675 | 4,775 |
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
| Consolidated2011$ | Parent2011$ | Parent2010$ | |
|---|---|---|---|
| NOTE 14: NOTES TO THE STATEMENT OF CASH | |||
| FLOWSReconciliation of cash flow from operating activities toprofit | |||
| Loss from ordinary activities after income tax | (887,784) | (887,900) | (4,775) |
| Add: non cash items: | |||
| Share based payments | 120,000 | 120,000 | - |
| Depreciation | 2,056 | 2,056 | - |
| Changes in assets and liabilities: | |||
| Decrease/(increase) in receivables | (46,093) | (39,033) | - |
| Decrease/(increase) in accrued income | (43,425) | (43,425) | (470) |
| Increase/(decrease) in payables | 141,214 | 133,738 | 5,500 |
| Increase/(decrease) in provisions | 7,712 | 7,712 | - |
| Other items: | |||
| Acquisition costs expensed | 61,258 | 61,258 | - |
| Exploration and evaluation costs expensed | 264,324 | 272,756 | - |
| (380,738) | (372,838) | 255 | |
| NOTE 15: EARNINGS PER SHARE | |||
| Loss from operations attributable to ordinary equityholders of Riedel Resources Limited used to calculate | |||
| basic earnings per share | (887,784) | (887,900) | (4,775) |
| 2011 | 2011 | 2010 | |
| Number | Number | Number |
Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 27,829,404 27,829,404 100
The Company has not disclosed diluted earnings per share as the effect of potential ordinary shares is to decrease the loss per share.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 16: SEGMENT REPORTING
The Company has identified its operating segments based on the internal reports that are reviewed and used by the chief operating decision maker to make decisions about resources to be allocated to the segments and assess their performance.
Operating segments are identified by Management based on the mineral resource and exploration activities in Australia. Discrete financial information about each project is reported to the chief operating decision maker on a regular basis.
The reportable segments are based on aggregated operating segments determined by the similarity of the economic characteristics, the nature of the activities and the regulatory environment in which those segments operate.
Operating segments are identified by management based on exploration activities in Australia.
| Consolidated2011$ | Parent2011$ | Parent2010$ | ||
|---|---|---|---|---|
| Revenue from external sources | 114,151 | 114,151 | 748 | |
| Net loss before tax | 887,707 | 887,823 | 4,775 | |
| Reportable segment assets | 10,268,183 | 10,253,618 | 115,825 | |
| Reportable segment liabilities | 419,099 | 404,650 | 120,500 |
NOTE 17: FINANCIAL INSTRUMENTS
The economic entity's principal financial instruments comprise cash and short term deposits. The main purpose of the financial instruments is to earn the maximum amount of interest at a low risk to the economic entity. The economic entity also has other financial instruments such as trade debtors and creditors which arise directly from its operations. For the period under review, it has been the economic entity's policy not to trade in financial instruments
The main risks arising from the economic entity's financial instruments are interest rate risk and credit risk. The board reviews and agrees policies for managing each of these risks and they are summarised below:
(a) Interest Rate Risk
The economic entity is exposed to movements in market interest rates on short term deposits. The policy is to monitor the interest rate yield curve out to 180 days to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The economic entity does not have short or long term debt, and therefore this risk is minimal.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 17: FINANCIAL INSTRUMENTS (CONT)
(b) Credit Risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the economic entity. The economic entity has adopted the policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial loss from defaults.
The economic entity does not have any significant credit risk exposure to any single counterparty or any economic entity of counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the economic entity's maximum exposure to credit risk.
(a) Exposure to credit risk
The carrying amount of the group's financial assets represents the maximum credit exposure. The group's maximum exposure to credit risk at the reporting date was:
| ConsolidatedCarryingAmount2011$ | CompanyCarryingAmount2011$ | CompanyCarryingAmount2010$ | |
|---|---|---|---|
| Financial assets | |||
| Cash and cash equivalents | 4,317,723 | 4,316,617 | 115,355 |
| Other receivables | 258,199 | 251,139 | 470 |
| 4,575,922 | 4,567,756 | 115,825 |
(b) Impairment losses
None of the group's other receivables are past due hence no impairment were provided for.
(c) Liquidity risk
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The consolidated entity's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the consolidated entity's reputation.
The group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows. The consolidated entity does not have any external borrowings.
The Company does anticipate a need to raise additional capital in the next 12 months to meet forecasted operational and exploration activities.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 17: FINANCIAL INSTRUMENTS (CONT)
(d) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the group's income or the value of its holdings of financial instruments.
The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
(e) Currency risk
The consolidated entity is not exposed to currency risk and at balance sheet date the Company and the consolidated entity hold no financial assets or liabilities which are exposed to foreign currency risk.
(f) Interest rate risk
The consolidated entity is exposed to interest rate risk (primarily on its cash and cash equivalents), which is the risk that a financial instrument's value will fluctuate as a result of changes in the market interest rates on interest-bearing financial instruments. The consolidated entity does not use derivatives to mitigate these exposures.
The consolidated entity adopts a policy of ensuring that as far as possible it maintains excess cash and cash equivalents in short terms deposit at interest rates maturing over 30-180 day rolling periods.
Interest Rate Risk Exposure Analysis
| WeightedAverage | Fixed Interest RateMaturing | ||||
|---|---|---|---|---|---|
| FINANCIAL ASSETS | EffectiveInterest Rate2011% | FloatingInterestRate2011$ | Within 1year2011$ | Over 1year2011$ | NonInterestBearing2011$ |
| Cash and cash equivalentsTrade and other receivablesTotal Financial Assets | 5.55%0% | 200,101-200,101 | 4,103,260-4,103,260 | --- | 14,362258,199272,561 |
| FINANCIAL LIABILITIESTrade and other payablesTotal Financial Liabilities | 0% | -- | -- | -- | 411,387411,387 |
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 17: FINANCIAL INSTRUMENTS (CONT)
| WeightedAverage | Floating | Fixed Interest RateMaturing | Non | ||
|---|---|---|---|---|---|
| FINANCIAL ASSETS | EffectiveInterest Rate2010% | InterestRate2010$ | Within 1year2010$ | Over 1year2010$ | InterestBearing2010$ |
| Cash and Cash Equivalents | 5.00 | 115,355 | - | - | - |
| Total Financial Assets | 115,355 | - | - | - | |
| FINANCIAL LIABILITIES | |||||
| Trade and Other Payables | - | - | - | 120,500 | |
| Total Financial Liabilities | - | - | - | 120,500 |
(h) Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. The analysis is performed on the same basis for 2010.
| 2011$ | 2010$ | |
|---|---|---|
| Change in profit | ||
| Increase in interest rate by 1%(100 basis points)Decrease in interest rate by 1% | 43,033 | 1,154 |
| (100 basis points) | (43,033) | (1,154) |
| Change in equityIncrease in interest rate by 1% | ||
| (100 basis points) | 43,033 | 1,154 |
| Decrease in interest rate by 1%(100 basis points) | (43,033) | (1,154) |
(j) Other market price risk
Other Equity price risk is the risk that the value of the instrument will fluctuate as a result of changes in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market.
Investments are managed on an individual basis and material buy and sell decisions are approved by the Board of Directors. The primary goal of the consolidated entity's investment strategy is to maximise investment returns.
The consolidated entity's investments are solely in equity instruments. These instruments are classified as available-for-sale or at fair value through profit or loss and are carried at fair value, with fair value changes recognised directly in equity or profit and loss until derecognised.
(k) Commodity price risk
The consolidated entity operates primarily in the exploration and evaluation phase and accordingly the consolidated entity's financial assets and liabilities are subject to minimal commodity price risk.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 18: BUSINESS COMBINATION
Acquisition of AuDAX Minerals Pty Ltd
On 20 January 2011, Riedel Resources Limited acquired 100% of the voting shares of AuDAX Minerals Pty Ltd.
The total cost of the combination was $5,000,000 and comprised an issue of equity instruments. The Group issued 25,000,000 ordinary shares with a fair value of $0.20 each, based on the price of the shares of Riedel Resources Limited in the Prospectus dated 12 November 2011.
The Group has provisionally recognised the fair values of the identifiable assets and liabilities of AuDax Minerals Pty Ltd based upon the best information available as of the reporting date.
| Fair value atacquisition date$ | |
|---|---|
| Cash and cash equivalents | 6,739 |
| Exploration expenditure | 163,109 |
| Fair value adjustment to exploration expenditure | 5,257,895 |
| Trade and other payables | (427,743) |
| Total | 5,000,000 |
| 2011$ | |
| Acquisition date fair value of consideration transferred:Shares issued, at fair valueConsideration transferred | 5,000,000- |
| Direct costs relating to the acquisition | 61,258 |
| Consolidated$ | |
| The cash inflow on acquisition is as follows:Cash paid | - |
| Net cash acquired with the subsidiary | 6,739 |
| Net cash inflow | 6,739 |
Acquisition related costs of $61,258 are included in other expenses in the statement of comprehensive income. Directly attributable costs of raising equity have been included as a deduction from equity.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 19: COMMITMENTS AND CONTINGENCIES
Operating lease commitments
Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:
| 2011$ | 2010$ | |
|---|---|---|
| Within one year | 123,790 | - |
| After one year but not more than five years | 229,712 | - |
| More than five years | - | - |
| 353,502 | - |
Exploration commitments
Future minimum commitments in relation to exploration and mining tenements as at 30 June are as follows:
| 2011$ | 2010$ | |
|---|---|---|
| Within one year | 504,438 | - |
| After one year but not more than five years | 1,369,323 | - |
| More than five years | - | - |
| 1,873,761 | - |
NOTE 20: INTERESTS IN CONTROLLED ENTITIES
The consolidated financial statements include the financial statements of Riedel Resources Limited and the subsidiary listed in the following table.
| Country of | Equity Interest % | Investment $ | |||
|---|---|---|---|---|---|
| Name | Incorporation | 2011 | 2010 | 2011 | 2010 |
| AuDAX Minerals Pty Ltd | Australia | 100 | - | 5,000,000 | - |
Riedel Resources Limited is the ultimate Australian parent entity and ultimate parent of the Group.
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 21: RELATED PARTY DISCLOSURE
Entity with significant influence over the Group
ADX Energy Limited owns 43% of the ordinary shares in Riedel Resources Limited (2010: 0%).
Terms and conditions of transactions with related parties
Sales to and purchases from related parties are made in arm's length transactions both at normal market prices and on normal commercial terms.
Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash.
(a) Key management personnel compensation
| 2011 | 2010 | |
|---|---|---|
| $ | $ | |
| The key management personnel compensation comprised: | ||
| Short term employment benefits | 224,327 | - |
| Post employment benefits | 19,053 | - |
| Share based payments | 120,000 | - |
| 363,380 | - |
Detailed remuneration disclosures are provided in the Remuneration Report on pages 12 to 16.
(b) Individual directors' and executives' compensation disclosure
Information regarding individual directors' and executives' compensation and some equity instruments disclosures as required by Corporation Regulation 2M.3.03 is provided in the remuneration report section of the directors' report.
Apart from the details disclosed in this note, no director has entered into a material contract with the group since the end of the previous financial year and there were no material contracts involving directors' interest existing at year end.
(c) Loans to key management personnel
There were no loans to key management personnel at the end of the year.
(d) Shareholdings of key management personnel
The movement during the reporting period in the number of shares in Riedel Resources Limited held, directly, indirectly or beneficially, by each key management person, including related parties, is as follows:
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 21: RELATED PARTY DISCLOSURE (con't)
(a) Ordinary shares held in Riedel Resources Limited (number)
| Balance atbeginning | Granted as | Exercise | Net change | Balance at | |
|---|---|---|---|---|---|
| 2011 | of period | remuneration | of options | other | end of period |
| Directors | |||||
| Ian Tchacos | - | - | - | 300,000 | 300,000 |
| Jeffrey Moore | - | - | - | 200,000 | 200,000 |
| Bruce Franzen | 100 | 120,000 | - | 480,000 | 600,100 |
| Andrew Childs | - | - | - | 650,000 | 650,000 |
| Wolfgang Zimmer | - | - | - | 300,000 | 300,000 |
| 100 | 120,000 | - | 1,930,000 | 2,050,100 | |
| 2010 | |||||
| Directors | |||||
| Ian Tchacos | - | - | - | - | - |
| Bruce Franzen | - | - | - | 100 | 100 |
| Andrew Childs | - | - | - | - | - |
| Wolfgang Zimmer | - | - | - | - | - |
| - | - | - | 100 | 100 |
(b) Option holdings of Key Management Personnel
| 2011Directors | Balance atbeginningof period | Granted asremuneration | Exercised | Net changeother | Balance atend of period |
|---|---|---|---|---|---|
| Ian Tchacos | - | 2,000,000 | - | 150,000 | 2,150,000 |
| Jeffrey Moore | - | - | - | 100,000 | 100,000 |
| Bruce Franzen | - | 2,000,000 | - | 300,049 | 2,300,049 |
| Andrew Childs | - | 2,000,000 | - | 325,000 | 2,325,000 |
| Wolfgang Zimmer | - | 2,000,000 | - | - | 2,000,000 |
| Total | - | 8,000,000 | - | 875,049 | 8,875,049 |
All equity transactions with key management personnel other than those arising from the exercise of remuneration options have been entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arm's length.
The fair value of the equity-settled share options granted is estimated as at the date of grant using a Black Scholes Model taking into account the terms and conditions upon which the options were granted.
(c) Other transactions and balances with Key Management Personnel
During the year the Company paid Zen Magnolia Pty Ltd, a company associated with Bruce Franzen, a total of $96,060 for services provided in relation to the Company's Initial Public Offering and listing on the ASX under a consulting agreement. Zen Magnolia Pty Ltd was also issued 600,000 fully paid ordinary shares in the Company pursuant to that consulting agreement.
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2011
NOTE 22: EVENTS AFTER THE BALANCE SHEET DATE
On 13 April 2011, Riedel announced that it had entered through its wholly owned subsidiary AuDAX Minerals Pty Ltd, into a conditional agreement for the disposal of a 100% interest in Cheritons East Tenement EL77/1223 to Silverstone Minerals Pty Ltd, a wholly owned subsidiary of Silver Stone Resources Limited. The Agreement is conditional upon ASX granting Silver Stone conditional approval to be admitted to the Official List of the ASX, subject only to completion of the Agreement occurring and the satisfaction of such other conditions as may reasonably be within Silver Stone's control. This transaction was completed on 11 August 2011.
Pursuant to a General Meeting of Shareholders held on 14 July, 2011 and the Company Performance Rights Plan, the following issues of securities to related parties were approved by shareholders as follows:
| Holder | Number of PerformanceRights | Exercise Price |
|---|---|---|
| Jeffrey Moore | 2,000,0002,000,0002,000,000 | 27 cents36 cents45 cents |
| Bruce Franzen | 666,667666,667666,666 | 27 cents36 cents45 cents |
Bruce Franzen 86,660 ordinary shares
There are no other matters or circumstances that have arisen since the end of the financial period that have significantly affected or may significantly affect the operations of the company, the results of those operations or the state of affairs of the company, in future years.
NOTE 23: CONTINGENT ASSETS AND LIABILITIES
The company is not aware of any contingent assets or liabilities.
NOTE 24: DIVIDENDS
No dividends were paid or declared during the year.
NOTE 25: COMPANY DETAILS
The registered office and principal place of business of the company is Suite 1, 45 Ord Street, West Perth, WA 6005.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF RIEDEL RESOURCES LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Riedel Resources Limited, which comprises the statements of financial position as at 30 June 2011, the statements of comprehensive income, the statements of changes in equity and the statements of cash flows for the year then ended, notes comprising a summary of significant accounting policies, other explanatory information, and the directors' declaration of Riedel Resources Limited (the company) and the consolidated entity. The consolidated entity 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 of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about 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 of the financial report that gives a true and fair view 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 the 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.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Opinion
In our opinion:
- (a) the financial report of Riedel Resources Limited and the consolidated entity is in accordance with the Corporations Act 2001, including:
- (i) giving a true and fair view of the company's and consolidated entity's financial position as at 30 June 2011 and of their performance for the year ended on that date; and
- (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
- (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 16 of the directors' report for the year ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Riedel Resources Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001.
PKF MACK & CO
N A CALDER PARTNER
8 SEPTEMBER 2011 WEST PERTH, WESTERN AUSTRALIA
CORPORATE GOVERNANCE
The Company is committed to implementing the highest standards of corporate governance.
This Statement reports on the Company's key governance principles and practices. These principles and practices are reviewed regularly and revised as appropriate by the Company to ensure they comply with changes in the law and reflect developments in Corporate Governance.
The ASX Listing Rules require the Company to report on the extent to which it has followed the Corporate Governance Recommendations published by the ASX Corporate Governance Council (ASXCGC). In August 2007 the ASXCGC issued a second edition of its Corporate Governance Principles and Recommendations which were amended in 2010 ("ASX Recommendations").
The Company is pleased to advise that the Company's practices are largely consistent with the revised ASX Recommendations. As consistency with the guidelines has been a gradual process, where the Company did not have certain policies or committees recommended by the ASXCGC in place during the reporting period, we have identified such policies or committees.
Where the Company's corporate governance practices do not correlate with the practices recommended by the ASXCGC, the Company is working towards compliance however it does not consider that all the practices are appropriate for the Company due to the size and scale of Company operations.
To illustrate where the Company has addressed each of the ASXCGC Recommendations, the following table cross-references each recommendation with sections of this report. The table does not provide the full text of each recommendation but rather the topic covered. Details of all of the recommendations can be found on the ASX Corporate Governance Council's website at http://www.asx.com.au/supervision/governance/index.htm.
CORPORATE GOVERNANCE (CONT)
| Recommendation | Section of thisReport |
|---|---|
| Recommendation 1.1 Functions of the Board and Management | 1.1, 1.3, 1.4 and1.5 |
| Recommendation 1.2 Evaluating the Performance of SeniorExecutives | 1.6.11 |
| Recommendation 1.3 Reporting on Principle 1 | 1.1 and 1.6.11 |
| Recommendation 2.1 Independent Directors | 1.2, |
| Recommendation 2.2 Independent Chairman | 1.3 |
| Recommendation 2.3 Role of the Chairman and CEO | 1.3 and 1.4 |
| Recommendation 2.4 Establishment of Nomination Committee | 2.3 |
| Recommendation 2.5 Evaluation of Board, Directors andCommittees | 1.6.11 |
| Recommendation 2.6 Reporting on Principle 2 | 1.2, 1.3 1.4, 1.6.11and 2.3.1 |
| Recommendation 3.1 Code of Conduct | 1.6.1 |
| Recommendation 3.2 Company Diversity Policy | 1.6.13 |
| Recommendation 3.3 Gender Diversity Objectives | 1.6.13 |
| Recommendation 3.4 Gender Breakdown of Company Structure | 1.6.13 |
| Recommendation 3.5 Reporting on Principle 3 | 1.6.13 |
| Recommendation 4.1 Establishment of Audit Committee | 2.1 |
| Recommendation 4.2 Structure of Audit Committee | 2.1 |
| Recommendation 4.3 Audit Committee Charter | 2.1 |
| Recommendation 4.4 Reporting on Principle 4 | 2.1 |
| Recommendation 5.1 Policy for Compliance with ContinuousDisclosure | 1.6.5 |
| Recommendation 5.2 Reporting on Principle 5 | 1.6.5 |
| Recommendation 6.1 Communications Strategy | 1.6.9 |
| Recommendation 6.2 Reporting on Principle 6 | 1.6.9 |
| Recommendation 7.1 Policies on Risk Oversight and Management | 1.6.14 and 2.1.3 |
| Recommendation 7.2 Risk Management and Internal ControlSystem | 1.6.14 and 2.1.3 |
| Recommendation 7.3 Attestations by CEO and CFO | 1.6.12 |
| Recommendation 7.4 Reporting on Principle 7 | 1.6.12, 1.6.14 and2.1.3 |
| Recommendation 8.1 Establishment of Remuneration Committee | 2.2.1 |
| Recommendation 8.2 Remuneration Committee Structure | 2.2.1 |
| Recommendation 8.3 Executive and Non-Executive DirectorRemuneration | 2.2.3 and 2.2.4 |
| Recommendation 8.4 Reporting on Principle 8 | 2.2.1 to 2.2.5 |
1. Board of Directors of the Company
1.1. Role of the Board
The Board's role is to govern the Company rather than to manage it. It is the role of senior management to manage the Company in accordance with the direction and delegations of the Board and the responsibility of the Board to oversee the activities of management in carrying out these delegated duties.
CORPORATE GOVERNANCE (CONT)
In carrying out its governance role, the main task of the Board is to drive the performance of the Company. The Board must also ensure that the Company complies with all of its contractual, statutory and any other legal obligations, including the requirements of any regulatory body. The Board has the final responsibility for the successful operations of the Company.
To assist the Board carry out its functions, it has developed and approved a Board Charter which details the Board's role, powers, duties and functions to guide the Directors and its senior executives in the performance of their roles.
Other than as reserved to the Board in the Charter, responsibility for the management of the Company's business activities is delegated to the Company's executive Directors (and other key executives) who are accountable to the Board. The Charter and the delegation of Board authority are reviewed regularly.
1.2. Composition of the Board
To add value to the Company the Board has been formed so that it has effective composition, size and commitment to adequately discharge its responsibilities and duties given its current size and scale of operations. Directors are appointed based on the specific skills required by the Company and on their decision-making and judgment skills.
As at the date of this report, the Board is comprised of five (5) Directors, three (3) non-executive Directors and two (2) executive Directors.
The Company recognises the importance of Non-Executive Directors and the external perspective and advice that Non-Executive Directors can offer. The following criteria has been adopted by the Company as a non-prescriptive guide for independence:
An Independent Director is a Non-Executive Director and:
- (a) is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with, a substantial shareholder of the Company;
- (b) within the last three years has not been employed in an executive capacity by the Company or another group member, or been a Director after ceasing to hold any such employment;
- (c) within the last three years has not been a principal of a material professional adviser or a material consultant to the Company or another group member. Or an employee materially associated with the service provided;
- (d) is not a material supplier or customer of the Company or another group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer;
- (e) has no material contractual relationship with the Company or other group member other than as a Director of the Company;
- (f) has not served on the Board for a period which could, or could reasonably be perceived to, materially interfere with the Director's ability to act in the best interests of the Company; and
- (g) is free from any interest and any business or other relationship which could, or could reasonably be perceived to, materially interfere with the Director's ability to act in the best interests of the Company.
1.3. The Chairman
The Chairman is responsible for leadership and effective performance of the Board. Mr Ian Tchacos is Non Executive Chairman of the Company. The Chairman's responsibilities are set out in more detail in the Board Charter which is available in the corporate governance section of the Company's website.
CORPORATE GOVERNANCE (CONT)
1.4. The Managing Director/CEO
The Managing Director of the Company is Jeffrey Moore. The Managing Director is responsible for running the affairs of the Company under delegated authority from the Board and to implement the policies and strategy set by the Board. In carrying out his/her responsibilities the Managing Director must report to the Board in a timely manner and ensure all reports to the Board present a true and fair view of the Company's financial condition and operational results. The Managing Director is also responsible for overall shareholder communication in conjunction with the Chairman.
1.5. Responsibilities of the Board
In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies, practices, management and operations of the Company. It is required to do all things that may be necessary to be done in order to carry out the objectives of the Company. On appointment to the Board, all new Directors are required to sign a formal letter of appointment setting out the key terms and conditions relevant to their position.
Without intending to limit this general role of the Board, the principal functions and responsibilities of the Board include the following.
- (a) Leadership of the Organisation: overseeing the Company and establishing codes that reflect the values of the Company and guide the conduct of the Board.
- (b) Strategy Formulation: to set and review the overall strategy and goals for the Company and ensuring that there are policies in place to govern the operation of the Company.
- (c) Overseeing Planning Activities: the development of the Company's strategic plan.
- (d) Shareholder Liaison: ensuring effective communications with shareholders through an appropriate communications policy and promoting participation at general meetings of the Company.
- (e) Monitoring, Compliance and Risk Management: the development of the Company's risk management, compliance, control and accountability systems and monitoring and directing the financial and operational performance of the Company.
- (f) Company Finances: approving expenses and approving and monitoring acquisitions, divestitures and financial and other reporting.
- (g) Human Resources: appointing, and, where appropriate, removing the Chief Executive Officer or Managing Director (CEO / MD) and Chief Financial Officer (CFO) as well as reviewing the performance of the CEO and monitoring the performance of senior management in their implementation of the Company's strategy.
- (h) Ensuring the Health, Safety and Well-Being of Employees: in conjunction with the senior management team, developing, overseeing and reviewing the effectiveness of the Company's occupational health and safety systems to ensure the well-being of all employees.
- (i) Delegation of Authority: delegating appropriate powers to the Company's executives to ensure the effective day-to-day management of the Company and establishing and determining the powers and functions of the Committees of the Board.
Full details of the Board's role and responsibilities are contained in the Board Charter, a copy of which is available in the corporate governance section of the Company's website.
CORPORATE GOVERNANCE (CONT)
1.6. Code of Conduct and Other Board Policies
1.6.1. Code of Conduct
The Board has adopted a Code of Conduct which details the Company's commitment to ethical and responsible decision marking and corporate practices.
The Code of Conduct sets out the Company's principles, practices and standards of personal and corporate behaviour. The Company expects everyone who works for or with the Company to adopt in their daily business activities. The code covers matters such as compliance with laws regulations, responsibility to shareholders and the community, confidentiality, privacy, conflicts of interest and the protection and proper use of the Company's assets.
1.6.2. Conflicts of Interest
Directors must:
- (a) disclose to the Board actual or potential conflicts of interest that may or might reasonably be thought to exist between the interests of the Director and the interests of any other parties in carrying out the activities of the Company; and
- (b) if requested by the Board, within seven days or such further period as may be permitted, take such necessary and reasonable steps to remove any conflict of interest.
If a Director cannot or is unwilling to remove a conflict of interest then the Director must, as per the Corporations Act 2001, absent himself or herself from the room when discussion and/or voting occurs on matters about which the conflict relates.
1.6.3. Commitments
Each member of the Board is committed to spending sufficient time to enable them to carry out their duties as a Director of the Company.
1.6.4. Confidentiality
In accordance with legal requirements and agreed ethical standards, Directors and key executives of the Company have agreed to keep confidential, information received in the course of the exercise of their duties and will not disclose non-public information except where disclosure is authorised or legally mandated.
1.6.5. Continuous Disclosure
The Company is committed to ensuring that shareholders and the market are provided with full and timely information and that all stakeholders have equal opportunities to receive externally available information issued by the Company's Continuous Disclosure Policy reinforces the Company's commitment to continuous disclosure and outlines individual responsibilities, accountabilities and the processes to be followed for ensuring compliance.
A copy of the Continuous or Market Disclosure Policy is available in the corporate governance section of the Company's website.
CORPORATE GOVERNANCE (CONT)
1.6.6. Education and Induction
It is the policy of the Company that all new Directors and senior executives undergo an induction process in which they are given a full briefing on the Company. Where possible this includes meetings with key executives, tours of the premises, an induction package and presentations. Information conveyed to new Directors and senior executives include:
- (a) details of the respective rights, duties, roles and responsibilities of a Director and senior executives of the Company;
- (b) formal policies on Director appointment as well as conduct and contribution expectations;
- (c) formal policies on director interaction with each other, senior executives and other stakeholders;
- (d) access to a copy of the Board Charter and all corporate governance documents;
- (e) guidelines on how the Board processes function;
- (f) details of past, recent and likely future developments relating to the Board;
- (g) background information on and contact information for key people in the organisation;
- (h) an analysis of the Company (including the Company's financial position, operations and risk management policies);
- (i) a synopsis of the current strategic direction of the Company;
- (j) a copy of the Constitution of the Company;
- (k) meeting arrangements; and
- (l) details on the culture and values of the Company.
In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo continual professional development. These are paid for by the Company where appropriate. Specifically, Directors are provided with the resources and training to address skills gaps where they are identified.
1.6.7. Independent Professional Advice
The Board collectively and each Director has the right to seek independent professional advice at the Company's expense, up to specified limits, to assist them to carry out their responsibilities.
1.6.8. Related Party Transactions
Related party transactions include any financial transaction between a Director and the Company. Unless there is an exemption under the Corporations Act from the requirement to obtain shareholder approval for the related party transaction, the Board cannot approve the transaction.
CORPORATE GOVERNANCE (CONT)
1.6.9. Shareholder Communication
The Board recognizes that Shareholders, as the ultimate owners of the Company, are entitled to receive timely and relevant, high quality information about their investment. Similarly, prospective new investors are entitled to be able to make informed investment decisions when considering the purchase of shares in the Company.
The Company respects the rights of its Shareholders and to facilitate the effective exercise of those rights the Company is committed to:
- (a) communicating effectively with Shareholders through releases to the market via ASX, information mailed to shareholders, information posted on the company's website or sent directly to Shareholders and Stakeholders via Email alerts, and the general meetings of the Company;
- (b) giving Shareholders ready access to balanced and understandable information about the Company and corporate proposals;
- (c) making it easy for Shareholders to participate in general meetings of the Company; and
- (d) requesting the external auditor to attend the annual general meeting and be available to answer Shareholder questions about the conduct of the audit and the preparation and content of the auditor's report.
The Company also makes available a telephone number and email address for shareholders to make enquiries of the Company.
The Board is committed to monitoring ongoing developments that may enhance communications with Shareholders, including technological developments, regulatory changes and the continuing development of "best practice" in the market, and to implementing changes to the Company's communication strategies whenever reasonable practicable to reflect any such development.
A copy of the Shareholder Communication Policy is available in the corporate governance section of the Company's website.
1.6.10. Trading in Company Shares
The Company's share trading policy applies to all Directors and employees of the Company and their associates (including spouses, children, family trusts and family companies), contractors, consultants, advisers and auditors of the Company.
This policy provides a brief summary of the law on insider trading and other relevant laws, sets out the restrictions on dealing in securities by people who work for, or are associated with the Company and is intended to assist in maintaining market confidence in the integrity of dealings in the Company's securities.
The policy stipulates that the only appropriate time for a Director or employee to deal in the Company's securities is when they are not in possession of price sensitive information that is not generally available to the market. As a general rule, any Director, employee, or contractor is not permitted to deal in Company securities in the two (2) week period prior to and forty eight (48) hours after the:
- a) date of the Company's Annual General Meeting;
- b) release of the quarterly results announcement to the Australian Securities Exchange (ASX);
- c) release of the half yearly results announcement to the ASX;
- d) release of the preliminary final results announcement to the ASX; or
- e) release of a disclosure document offering securities in the Company.
CORPORATE GOVERNANCE (CONT)
The Company may at its discretion vary this rule in relation to a particular period by general announcement to all employees either before or during the period. The Company may also impose any other restriction periods that the Board declares from time to time when it is considering matters which are subject to the exceptions to the continuous disclosure requirements set out in Listing Rule 3.1A.
Any dealing in Company securities by Directors is notified to the ASX within five business days of the dealing.
The Company does not condone short term or speculative trading in its securities by directors or employees, nor does it permit directors or employees to enter into any price protection arrangements with third parties to pledge such securities.
This policy is separate from and additional to the legal constraints imposed by common law, the Corporations Act, and the ASX Listing Rules.
A copy of the Company's share trading policy is available in the corporate governance section of the Company's website.
1.6.11. Performance Review/Evaluation
It is the policy of the Board to conduct an annual evaluation of its performance and that of its senior executives. The objective of this evaluation will be to provide best practice corporate governance to the Company.
A copy of the Company's Board Performance Evaluation Policy is available in the corporate governance section of the Company's website.
1.6.12. Attestations by MD/CEO and CFO
The Board receives regular reports on the Company's financial position and business operations from the Company's senior executives.
It is the Board's policy, that the MD/CEO and the CFO (or their equivalents) make the attestations recommended by the ASX Corporate Governance Council as to the Company's financial condition prior to the Board signing the Annual Report.
The Board also requires the MD/CEO and CFO to attest to the implementation and compliance to the company's internal control and risk management policies and to ensure that these policies are being managed effectively.
Other specific policies have been developed to support the Code. These policies include:
- (a) Criminal Convictions;
- (b) Indigenous Affairs;
- (c) Environment;and
- (d) Diversity.
CORPORATE GOVERNANCE (CONT)
1.6.13. Diversity
The Board has adopted a Diversity Policy to encourage employee and board diversity, including a broader pool of high quality employees, improving employee retention, accessing different perspectives and ideas and benefiting from all available talent.
Diversity includes, but is not limited to, gender, age, ethnicity and cultural background.
This Diversity Policy does not form part of an employee's contract of employment with the Company, nor gives rise to contractual obligations. However, to the extent that the Diversity Policy requires an employee to do or refrain from doing something and at all times subject to legal obligations, this Diversity Policy forms a direction of the Company with which an employee is expected to comply.
The Company's measureable objectives for achieving gender diversity are:
- (a) recruiting from a diverse pool of candidates for all positions, including senior management and the Board;
- (b) identifying specific factors to take account of in recruitment and selection processes to encourage gender diversity;
- (c) developing programs to develop a broader pool of skilled and experienced senior management and board candidates, including, workplace development programs, mentoring programs and targeted training and development; and
- (d) developing a culture which takes account of domestic responsibilities of employees.
The Company's employee gender structure is set out in the Company's annual report.
1.6.14. Risk Management Policy
The Company has a Risk Management Policy which sets out the manner in which the Company identifies, assesses, monitors and manages business risk. All high level strategies and new initiative risks are reviewed annually by the Board at its annual strategy and planning meeting.
In relation to risk management, monitoring the status of each risk and any necessary action plans relating to their treatment takes place on a regular basis by controlled self assessment as well as by management's regular review of risk action plans, with respect to the effectiveness and suitability of each risk action plan.
The overall results of these assessments are presented to the Board at least annually and updated as necessary.
Any action or recommendations by senior management arising out of these review processes are approved by the Board and implemented by management.
A copy of the Risk Management Policy is available on the Company's website in the corporate governance section.
CORPORATE GOVERNANCE (CONT)
2. Board Committees
2.1. Audit Committee
Due to the size and scale of its operations (the Board only consists of five (5) members) the Company does not have a separate audit committee. It is the Boards view that an Audit Committee would not be a more efficient mechanism than the full Board for focusing the Company on specific issues and it cannot be justified based on a cost benefit analysis. The Audit Committee is chaired by an independent director (who is not the Chairman) and is responsible for assisting the Board in fulfilling its financial reporting, risk management and compliance responsibilities, compliance with legal and regulatory requirements, internal control structure and the internal and external audit functions (the responsibilities of the Risk Management Committee have also been delegated to the Audit Committee). Other members of the Audit Committee include are the Chairman, and Chief Financial Officer. The Audit Committee meets at least twice per year and at such other times as the Audit Committee deems necessary.
The functions and responsibilities of the Audit Committee are set out in the Audit Committee Charter and include:
- (a) overseeing the Company's system of financial reporting and safeguarding its integrity;
- (b) overseeing risk management and compliance systems and the internal control framework;
- (c) monitoring the activities and effectiveness of the internal audit function and the activities and performance of the external auditor and coordinating both operations; and
- (d) providing reports to the Board on all matters relevant to the Committees responsibilities
A copy of the Company's Audit Committee Charter is available on the Company's website in the corporate governance section.
2.1.1. Role
The Audit Committee is responsible for reviewing the integrity of the Company's financial reporting and overseeing the independence of the external auditors.
2.1.2. Responsibilities
The Audit Committee reviews the audited annual and half-yearly financial statements and any reports which accompany published financial statements and recommends their approval to the members.
The Audit Committee each year reviews the appointment of the external auditor, their independence, the audit fee, and any questions of resignation or dismissal.
The Audit Committee is also responsible for establishing policies on risk oversight and management.
CORPORATE GOVERNANCE (CONT)
2.1.3. Risk Management Policies
The Board recognizes that risk management and internal compliance and control are key elements of good corporate governance.
The Audit Committee is responsible for reviewing, approving and monitoring the Company's risk management strategy, policy and key risk parameters. It is also responsible for ensuring that management has developed and implemented a sound system of risk management and internal control.
The Company's Risk Management Policy sets out the manner in which the Company identifies, assesses, monitors and manages business risk. All high level strategies and new initiative risks are reviewed annually by the Board at its annual strategy and planning meeting.
A copy of the Risk Management Policy is available on the Company's website in the corporate governance section.
2.2. Remuneration Committee
2.2.1. Role
The role of a Remuneration Committee is to assist the Board in fulfilling its responsibilities in respect of establishing appropriate remuneration levels and incentive policies and practices which:
- (a) enable the Company to attract, retain and reward talented Directors and employees; and
- (b) reward Directors and employees fairly and responsibility.
As the whole Board only consists of five (5) members, the Company does not have a remuneration committee because it would not be a more efficient mechanism than the full Board for focusing the Company on specific issues. However, in accordance with the ASX Listing Rules, the Company is moving towards establishing a remuneration committee consisting primarily of Independent Directors, chaired by an independent director and consisting of at least 3 members.
2.2.2. Responsibilities
The responsibilities of a Remuneration Committee, or the full Board include setting policies for senior officers' remuneration, setting the terms and conditions of employment for the CEO/ Managing Director, reviewing and making recommendations to the Board on the Company's incentive schemes and superannuation arrangements, reviewing the remuneration of both Executive and Non-Executive Directors and making recommendations on any proposed changes and undertaking reviews of the CEO/ Managing Director's performance, including, setting with the goals and reviewing progress in achieving those goals.
CORPORATE GOVERNANCE (CONT)
2.2.3. Senior Executive Remuneration Policy
The Company is committed to remunerating its senior executives in a manner that is market-competitive and consistent with best practice as well as supporting the interests of shareholders. Consequently, under the Senior Executive Remuneration Policy the remuneration of senior executive may be comprised of the following:
- (a) fixed salary that is determined from a review of the market and reflects core performance requirements and expectations;
- (a) a performance bonus designed to reward actual achievement by the individual of performance objectives and for materially improved Company performance;
- (b) participation in any share/option scheme with thresholds approved by shareholders; and
- (c) statutory superannuation.
By remunerating senior executives through performance and long-term incentive plans in addition to their fixed remuneration the Company aims to align the interests of senior executives with those of shareholders and increase Company performance. The value of shares and options were they to be granted to senior executives would be calculated using the Black and Scholes method.
The objective behind using this remuneration structure is to drive improved Company performance and thereby increase shareholder value as well as aligning the interests of executives and shareholders.
The Board may use its discretion with respect to the payment of bonuses, stock options and other incentive payments.
2.2.4. Non-Executive Director Remuneration Policy
Non-Executive Directors are to be paid their fees out of the maximum aggregate amount approved by shareholders for the remuneration of Non-Executive Directors. Non-Executive Directors do not receive performance based bonuses, but are able to participate in equity schemes of the Company.
Non-Executive Directors are entitled to but not necessarily paid statutory superannuation.
2.2.5. Current Director Remuneration
Full details regarding the remuneration of Directors, is included in the Directors' Report.
2.3. Nomination Committee
2.3.1. Role
The role of a Nomination Committee is to help achieve a structured Board that adds value to the Company by ensuring an appropriate mix of skills are present in Directors on the Board at all times.
As the whole Board only consists of five (5) members, the Company does not have a nomination committee because it would not be a more efficient mechanism than the full Board for focusing the Company on specific issues.
CORPORATE GOVERNANCE (CONT)
2.3.2. Responsibilities
The responsibilities of a Nomination Committee would include devising criteria for Board membership, regularly reviewing the need for various skills and experience on the Board and identifying specific individuals for nomination as Directors for review by the Board. The Nomination Committee would also oversee management succession plans including the CEO/ MD and his/her direct reports and evaluate the Board's performance and make recommendations for the appointment and removal of Directors. Currently the Board as a whole performs this role.
2.3.3. Criteria for selection of Directors
Directors are appointed based on the specific governance skills required by the Company. Given the size of the Company and the business that it operates, the Company aims at all times to have at least two Directors with experience appropriate to the Company's target market. In addition, Directors should have the relevant blend of personal experience in accounting and financial management and Director-level business experience.
A copy of the Company's Director Selection Policy is available in the corporate governance section of the Company's website.
SHAREHOLDER INFORMATION
Additional information required by the Australian Securities Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below. The information is as at 30 August 2011.
Shareholdings as at 30 August 2011
Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act are:
| Shareholder Name | Number of Shares | Percentage |
|---|---|---|
| ADX Energy Limited | 25,000,000 | 42.88% |
Unmarketable parcels
The number of shareholders holding less than a marketable parcel is 5. There is only one class of share and all ordinary shareholders have equal voting rights.
Voting rights
All ordinary shares carry one vote per share without restriction.
Unquoted securities
| Securities | Number ofOptions | Number ofHolders | Holders withmore than 20% |
|---|---|---|---|
| Options exercisable at $0.30 on or before30 June 2014 | 9,500,000 | 5 | 4, refer note 21 |
| Performance Rights | 8,000,000 | 2 |
On-market buyback
There is no current on-market buy-back
Stock Exchange listing
Quotation has been granted for the Company's Ordinary Shares and for the Option series exercisable at $0.20, expiring on 30 November 2012.
Securities subject to escrow
The following securities are currently subject to escrow:
| Securities | Escrow Period | ReleaseDate | Number |
|---|---|---|---|
| Fully Paid Shares | 12 months from issue | 30/09/2011 | 2,950,000 |
| Fully Paid Shares | 24 months from quotation | 31/01/2013 | 25,900,000 |
| Unlisted Options, 30c,exp 30/6/14 | 24 months from quotation | 31/01/2013 | 8,000,000 |
SHAREHOLDER INFORMATION
Distribution of security holders
| Category | Number of Holders | Number of Shares |
|---|---|---|
| 1 – 1,000 | 1 | 1 |
| 1,001 – 5,000 | 5 | 19,500 |
| 5,001 – 10,000 | 141 | 1,404,124 |
| 10,001 – 100,000 | 206 | 8,792,135 |
| 100,001 and over | 63 | 48,089,000 |
| 416 | 58,304,760 |
Twenty largest shareholders – Ordinary Shares
| Number of | ||
|---|---|---|
| Name | ordinary sharesheld | Percentage ofcapital held |
| ADX ENERGY LIMITED | 25,000,000 | 42.88 |
| HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED | 2,805,000 | 4.81 |
| NEFCO NOMINEES PTY LTD | 2,250,000 | 3.86 |
| RIVERVIEW CORPORATION PTY LTD | 1,324,000 | 2.27 |
| ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD | 1,194,000 | 2.05 |
| MR WILLIAM RICHARD BROWN | 1,100,000 | 1.89 |
| MS PENELOPE ZUPPAR | 760,000 | 1.30 |
| JP MORGAN NOMINEES AUSTRALIA LIMITED | 750,500 | 1.29 |
| MR BRUCE ROBERT ERROL FRANZEN | 686,760 | 1.18 |
| BRAZELL PTY LTD <a &="" a="" c="" fund="" m="" super=""> | 650,000 | 1.11 |
| MR GIUSEPPE PAOLO GRAZIANO | 600,000 | 1.03 |
| EUROGOLD LIMITED | 500,000 | 0.86 |
| FGL ASSET MANAGEMENT LIMITED | 500,000 | 0.86 |
| CADEX PETROLEUM PTY LIMITED | 475,000 | 0.81 |
| IRONSIDE PTY LTD | 350,000 | 0.60 |
| QUEENSLAND M M PTY LTD | 320,000 | 0.55 |
| MOOSEHEAD PTY LIMITED | 310,500 | 0.53 |
| AUSTMART PTY LTD | 300,000 | 0.51 |
| MS ELIZABETH MARY CRAWFORD | 300,000 | 0.51 |
| HUMBOLDT CAPITAL CORPORATION | 300,000 | 0.51 |
TOTAL 40,475,760 69.42
SHAREHOLDER INFORMATION
Distribution of option holders
| Category | Number of Holders | Number of Options |
|---|---|---|
| 1 – 1,000 | 0 | 0 |
| 1,001 – 5,000 | 89 | 433,250 |
| 5,001 – 10,000 | 24 | 195,500 |
| 10,001 – 100,000 | 133 | 4,675,689 |
| 100,001 and over | 51 | 23,789,611 |
| 297 | 29,094,050 |
Twenty largest option holders – Options exercisable at 20c, expiring 31 November 2012
| Name | Number ofoptions held | Percentage ofcapital held |
|---|---|---|
| TALEX INVESTMENTS PTY LTD | 1,500,000 | 5.16 |
| MS PENELOPE ZUPPAR | 1,480,000 | 5.09 |
| HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED | 1,397,500 | 4.80 |
| JAEK HOLDINGS PTY LTD | 1,310,000 | 4.50 |
| NEFCO NOMINEES PTY LTD | 1,125,000 | 3.87 |
| MR JAYSON BENNETT MEYERS + MRS JANET LYNN MEYERS <meyersFAMILY A/C></meyers | 1,000,000 | 3.44 |
| MR WILLIAM RICHARD BROWN | 921,562 | 3.17 |
| RIVERVIEW CORPORATION PTY LTD | 654,500 | 2.25 |
| ALOUISUS PTY LTD | 650,000 | 2.23 |
| BANSKIN PTY LTD | 575,000 | 1.98 |
| MR LAWRENCE ANGELO BUONO + MRS VALERIE JEAN BUONO | 505,000 | 1.74 |
| JUST WALK INVESTMENTS PTY LTD | 505,000 | 1.74 |
| DASMAC (WA) PTY LTD | 500,000 | 1.72 |
| GOFFACAN PTY LTD | 500,000 | 1.72 |
| MR TERENCE GRAY + MRS ELIZABETH GRAY <the &="" a="" c="" e="" f="" gray="" s="" t=""> | 500,000 | 1.72 |
| MR GIUSEPPE PAOLO GRAZIANO | 500,000 | 1.72 |
| GULIV NO 2 PTY LTD | 500,000 | 1.72 |
| MR MOHAMMED MUNKAILAH | 500,000 | 1.72 |
| NINETEEN NINETEEN PTY LTD | 500,000 | 1.72 |
| MR RICHARD TAUNTON SAUNDERS <rt &="" fam="" gm="" no2<br="" saunders="">A/C> | 500,000 | 1.72 |
| TOTAL | 15,623,562 | 56.70 |
|---|
SCHEDULE OF MINING TENEMENTS
| Tenement | |||
|---|---|---|---|
| Area of Interest | reference | Nature of interest | Interest |
| Western Australia | |||
| Bronzewing South | E36/215 | Indirect | 80% |
| Bronzewing South | E36/623 | Indirect | 80% |
| Bronzewing South | M36/670 | Indirect | 80% |
| Delaney Well | E36/734 | Direct | 100% |
| West Yandal | E36/404 | Royalty | 0% |
| West Yandal | M36/615 | Royalty | 0% |
| Kara | E36/509 | Direct | 100% |
| Marymia | E52/2394 | Direct | 100% |
| Marymia | E52/2395 | Direct | 100% |
| Milrose | E53/1304 | Direct | 100% |
| Milrose | E53/1305 | Direct | 100% |
| Mt Webb | E80/4165 | Direct | 100% |
| Mt Webb | E80/4166 | Direct | 100% |
| Mt Webb | E80/4167 | Direct | 100% |
| Mt Webb | E80/4429 | Direct | 100% |
| Porphyry | M31/145 | Royalty | 0% |
| Porphyry | M31/157 | Royalty | 0% |
| Dulcie | P77/3727 | Direct | 20% |
| Dulcie | P77/3728 | Direct | 20% |
| Dulcie | P773729 | Direct | 20% |