ALARA RESOURCES LIMITED
ABN 27 122 892 719
2012
ANNUAL REPORT
CONTENTS
CORPORATE DIRECTORY
Company Profile
Project Locations
Company Projects
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Statement of
Cash Flows
Notes to the Consolidated
Financial Statements
Directors’ Declaration
Independent Audit Report
Corporate Governance
Mineral Concessions
JORC Code Competent Persons’
Statements
Additional ASX Information
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BOARD
Ian J. Williams
H. Shanker Madan
Douglas H. Stewart
William M. Johnson
Non-Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
COMPANY SECRETARY
Victor P. H. Ho
REGISTERED AND PRINCIPAL OFFICE
Level 14, The Forrest Centre
221 St Georges Terrace
Perth, Western Australia 6000
Local Call:
Telephone:
Facsimile:
E-mail:
Website:
1300 762 678
+61 8 9214 9787
+61 8 9322 1515
info@alararesources.com
www.alararesources.com
SHARE REGISTRY
Advanced Share Registry Limited
Suite 2, 150 Stirling Highway
Nedlands, Western Australia 6009
Telephone:
Facsimile:
+61 8 9389 8033
+61 8 9389 7871
Level 6, 225 Clarence Street
Sydney, New South Wales 2000
Telephone:
+61 2 8096 3502
E-mail:
Website:
admin@advancedshare.com.au
www.advancedshare.com.au
STOCK EXCHANGE
Australian Securities Exchange (ASX)
Perth, Western Australia
ASX CODE
AUQ
AUDITORS
Grant Thornton Audit Pty Ltd
Level 1, 10 Kings Park Road
West Perth, Western Australia 6005
Telephone:
Facsimile:
Website:
+61 8 9480 2000
+61 8 9322 7787
www.grantthornton.com.au
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
COMPANY PROFILE
Alara Resources Limited (ASX Code: AUQ) is an Australian-based minerals exploration and development
company. Alara has a current portfolio of advanced development and early stage exploration projects in Saudi
Arabia, Oman and Chile as follows:
PROJECTS
(1)
(2)
(3)
(4)
(5)
(6)
Khnaiguiyah Zinc-Copper1
Washihi-Mullaq- Al Ajal Copper-Gold Project2
Daris Copper-Gold Project3
Awtad Copper-Gold Project4
Piedrecillas Copper-Silver Project
Marjan Precious and Base Metals5
LOCATION
Saudi Arabia
Oman
Oman
Oman
Chile
Saudi Arabia
STATUS
DFS
Exploration
Exploration
Exploration
Exploration
Exploration
Alara is moving towards establishing itself as a base metals development company with a strong pipeline of
advanced and early stage projects.
Khnaiguiyah (50%)
Zinc-Copper, Saudi Arabia
Washihi (75% Earn In)
Copper-Gold, Oman
Daris (50%-70%+)
Copper-Gold, Oman
Khnaiguiyah &
Marjan Projects
(Saudi Arabia)
Washihi, Daris &
Awtad Projects
(Oman)
Piedrecillas Project
(Chile)
Perth
Marjan (50%)
Zinc-Gold-Silver, Saudi Arabia
Awtad (50-70% Earn In)
Copper-Gold, Oman
Piedrecillas (50-100% Option)
Copper-Gold, Chile
1 Refer Alara market announcements dated 5 October 2010 and entitled “Project Acquisition - Khnaiguiyah Zinc Copper Project in Saudi
Arabia” and dated 25 October 2010 and entitled “Execution of Joint Venture Agreement - Khnaiguiyah Zinc Copper Project in Saudi Arabia”
2 Refer Alara market announcement dated 8 December 2011 and entitled “Project Acquisition - Al Ajal-Washihi-Mullaq Copper-Gold Project in
Oman”
3 Refer Alara market announcement dated 30 August 2010 and entitled “Project Acquisition - Daris Copper Project in Oman”
4 Refer Alara market announcement dated 27 April 2011 and entitled “Project Acquisition- Awtad Copper-Gold Project in Oman”
5 Refer Alara market announcement dated 18 April 2011 and entitled “Acquisition of Interest in Marjan Project in Saudi Arabia”
ANNUAL REPORT | 1
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
PROJECT LOCATIONS
SAUDI ARABIA
is
located adjacent
The Khnaiguiyah Zinc Copper Project
(Alara 50%)
to a
bitumen road ~200km west of Riyadh, the
capital of Saudi Arabia, near the major
Riyadh to Jeddah highway. The project
comprises
the Khnaiguiyah Mining
Licence, 3 Exploration Licences and 5
Exploration Licence applications pending
grant, totalling ~380km2. Alara has a 50%
company,
joint
interest
Khnaiguiyah Mining Company
(KMC),
which will hold these mineral licences (after
transfers have been processed by relevant
authorities).
venture
in
The Marjan Precious and Base Metals
Project (Alara 50%) is located ~30km
the Khnaiguiyah
south south-west of
Project. The project,
comprising 3
Exploration Licences (totalling 260km2), is
prospective for gold, silver, copper and
zinc. Alara will have a 50% interest in a
new joint venture company to be formed
(Marjan Mining Company), which will hold
these licences (after Alara has completed a
minimum US$1 million
funding and
transfers have been processed by relevant
authorities).
Figure 1
OMAN
The Daris Copper Gold Project (Alara 50%)
is located ~150km west of Muscat, the capital
of Oman, and comprises a mineral excavation
licence of ~587km2. Alara has a 50% interest
(with a right to increase this to 70%+) in a joint
venture company, Daris Resources LLC,
which holds the exclusive right to manage,
the
commercially
operate
exploration licence.
exploit
and
The Awtad Copper Gold Project (Alara -
right to earn-in 70%) is located immediately
adjacent to the Daris Project and comprises a
mineral excavation licence of ~497km2. Alara
has a right to earn an initial 10% interest
(increasing to 50-70%+) in the concession
owner, Awtad Copper LLC.
The Washihi-Mullaq-Al Ajal Copper-Gold
Project (Alara – right to earn-in up to 75%) is
located ~80-160km east and southeast of
Alara’s Daris Copper-Gold Project and Awtad
comprises 3
Copper-Gold Project and
exploration licences of ~80km2. Alara has a
right to earn an initial 10% interest (increasing
to 60-75%) in the concession owner, Pilatus
Resources Oman LLC.
Figure 2
ANNUAL REPORT | 2
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
PROJECT LOCATIONS
Figure 3
CHILE
The Piedrecillas Copper-Silver Project
(Alara – option to acquire 50 to 100%) is
located ~190km south of Santiago and
7km west of Santa Cruz. The project
comprises 19 concessions covering a total
area of ~40km2.
Figure 4
ANNUAL REPORT | 3
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
COMPANY PROJECTS
1. Khnaiguiyah Zinc-Copper Project (Saudi Arabia)
(Alara - 50%, United Arabian Mining Company (Manajem) - 50%, of Khnaiguiyah for Mining Company LLC (KMC))
Alara has a 50% interest in the advanced Khnaiguiyah Zinc-Copper Project located in Saudi Arabia via a 50%
shareholding interest in a local joint venture company, KMC.
The Khnaiguiyah Project is an advanced near production project having (at the time of acquisition by Alara) a
historical non–JORC Code compliant estimated mineralisation6 assessed by BRGM7, the French Office of
Geological and Mining Research, prepared for the Saudi Arabian Directorate General of Mineral Resources, in
1993, as reported in Alara’s ASX market announcement dated 5 October 2010 and entitled “Project Acquisition -
Khnaiguiyah Zinc Copper Project in Saudi Arabia”.
The project is located ~200km west of Riyadh (the capital of Saudi Arabia) and is the second most advanced
base metals project in the country after the Jabal Sayid Copper-Gold Project, previously held by Citadel
Resources Group Limited (ASX: CGG), which was taken over by Equinox Minerals Limited (TSX and ASX: EQN)
in January 2011, which itself was taken over by Barrick Gold Corporation (TSX and NYSE: ABX) in July 2011.
Previous drilling (of in excess of 45,000 metres in ~345 RC and diamond drill holes) at Khnaiguiyah by BRGM and
Ma’aden (Saudi Arabian Mining Company) had outlined a substantial Zinc-Copper mineralisation in two zones -
Zone 2 and Zone 3 - and significant additional mineralisation in Zone 1 and Zone 4 (refer Figure 5).
Alara’s focus, upon securing the grant of a 30 year Mining Licence in December 2010, has been to delineate and
extend the mineralisation from historical work, define a JORC Code compliant resource and complete a definitive
feasibility study.
Figure 5: Khnaiguiyah Project Location, Licence Areas and Mineralised Zones
6 Source: BRGM Geoscientists, 1993, Khnaiguiyah zinc-copper deposit – prefeasibility study – 1,2, and 3: Saudi Arabian Directorate General of
Mineral Resources Technical BRGM-TR-13-4, 651p., 209 figs., 171 tables, 78 appendixes, 23 photo plates
7 Bureau de Recherches Géologiques et Minières (‘’Office of Geological and Mining Research’’) (www.brgm.fr)
ANNUAL REPORT | 4
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
COMPANY PROJECTS
Project Development Achievements
Khnaiguiyah Mining Licence issued in December 20108 with 30 year exclusive term and no mineral
royalties payable.
Maiden JORC Resource Statement announced in February 20129:
Measured and Indicated Resource of 20.09 Mt at 4.24% Zinc and 0.15% Copper10 within a global
resource of 26.4 Mt at 3.9% Zinc and 0.12% Copper11; and
7.0 Mt at 0.8% Copper12.
Grant of approvals in July 201215 from the Presidency of Meteorology and Environment in Saudi Arabia for
construction and mining operations at the Khnaiguiyah Project.
Draft Definitive Feasibility Study (DFS) from lead consultant, Ausenco, received in June 201213; Alara
identifies further work required to be completed (eg. finalising operating costs using local Saudi quotes and
revising costs based on a focus on lower initial strip ratios that are likely to be available in adding
mineralisation (from more recent drilling) from Zone 1 and Zone 2 extensions to the mining schedules).14
Parameters of the DFS have also been upgraded to reflect an increase in the production profile from an
annual throughput of 1.5 to 2 million tonnes per annum.15
DFS for a 2Mtpa plant scheduled for completion in Q4 2012.
Upgrade to JORC Resource Statement announced in October 201216:
Measured and Indicated Zinc and Zinc/Copper Resource of 25.32 Mt at 4.03% Zn and 0.17% Cu;
and17
Measured and Indicated Copper Resource of 8.53Mt at 0.64% Copper18.
Since the commencement of the Khnaiguiyah drilling programme in February 2011, a total of 315 holes to
~36,961 metres has been completed.
Khnaiguiyah Exploration Base (on left)
8 Refer Alara market announcements dated 21 December 2010 and entitled “Award of Mining License – Khnaiguiyah Zinc Copper Project,
Saudi Arabia”
9 Refer ASX market announcement dated 21 February 2012: Maiden JORC Resource – Khnaiguiyah Zinc-Copper Project.
10 Comprising a Measured Resource of 11.63Mt at 4.72% Zn and 0.20% Cu and an Indicated Resource of 8.46Mt at 3.57% Zn and 0.08% Cu,
as reported in the 21 February 2012 announcement (above)
11 Comprising a Measured and Indicated Resource of 20.09 Mt at 4.24% Zinc and 0.15% Copper (in Zones 2 and 3), an Inferred Resource of
4.32Mt at 2.90% Zn and 0.03% Cu (in Zone 4) and an Inferred Resource of 1.95Mt at 2.97% Zn and 0.07% Cu (in Zones 2 and 3), as
reported in the 21 February 2012 announcement (above)
12 Comprising a Measured Resource of 1.93Mt at 0.78% Cu, an Indicated Resource of 3.00Mt at 0.77% Cu and an Inferred Resource of 2.03Mt
at 0.92% Cu, as reported in the 21 February 2012 announcement (above)
13 Refer ASX market announcement dated 10 July 2012: Definitive Feasibility Study Update – Khnaiguiyah Zinc-Copper Project.
14 Refer ASX market announcements dated 30 July 2012: Update – Khnaiguiyah Zinc-Copper Project and dated 3 September 2012: Definitive
Feasibility Study Update - Khnaiguiyah Zinc-Copper Project
15 Refer ASX market announcement dated 12 October 2012: JORC Resource Upgrade for Khnaiguiyah Zinc-Copper Project
16 Refer ASX market announcements dated 12 October 2012: JORC Resource Upgrade for Khnaiguiyah Zinc-Copper Project and 30 October
2012: JORC Resource Upgrade and Update for Khnaiguiyah Zinc-Copper Project
17 Comprising a Measured Resource of 9.65Mt at 3.37% Zn and 0.16% Cu (in Zones 1 and 2), a Measured Resource of 6.37Mt at 5.28% Zn and
0.25% Cu (in Zone 3), an Indicated Resource of 3.12Mt at 4.45% Zn and 0.30% Cu (in Zones 1 and 2) and an Indicated Resource of 6.18Mt
at 3.55% Zn and 0.05% Cu (in Zone 3), as reported in the 30 October 2012 announcement (above)
18 Comprising a Measured Resource of 4.70Mt at 0.72% Cu (in Zones 1 and 2), a Measured Resource of 1.07Mt at 0.63% Cu (in Zone 3), an
Indicated Resource of 1.59Mt at 0.54% Cu (in Zones 1 and 2) and an Indicated Resource of 1.16Mt at 0.43% Cu (in Zone 3), as reported in
the 30 October 2012 announcement (above)
ANNUAL REPORT | 5
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
COMPANY PROJECTS
Looking North from Khnaiguiyah Site Office Gate
Attributes – Country
Tax – 20% corporate tax (nil personal tax rate)
Royalties – nil
Saudi Industrial Development Fund (SIDF) – supports local projects with financing (up to 75%) at sub-
LIBOR rates and long 10 year tenure
Foreign ownership – 100% permitted
Profits and Capital – 100% repatriation. Nil import duties for CAPEX
Tenure certainty – from exploration to mining
Roads – bitumen highway and road to mine gate
Power – 33KVA power line to site
Water – 15km to aquifer (low salinity)
Fuel –
ANNUAL REPORT | 34
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
Douglas H. Stewart
Non-Executive Director
Appointed
30 November 2010
Qualifications BSc, FAusIMM, FAIG
Experience Mr Stewart has 40 years technical and commercial experience in the resources sector in a broad
range of consulting, senior technical and operational roles in Australia and overseas.
Mr Stewart was the Founding Managing Director of Territory Resources Limited where he played a
principal role in managing the company through IPO and into iron ore production at its Frances
Creek Iron Ore project in the Northern Territory. Mr Stewart was also a director of Grange
Resources Limited prior to its takeover by Chinese steel interests.
Mr Stewart has worked as a senior mining and geological consultant focused largely on mine
planning and optimisation. He was Chief Engineer, Open Pit Mines, for Cassiar Mining and Teck
Corporation in Canada. As Senior Planning Officer, he headed an underground mine design team
for block caving operations in Africa and has been Chief Geologist for several mines where he was
responsible for ore resources and reserves estimations.
As well as acting as an independent consultant for various banks and fund managers on
potential investments in Australian and international mining projects, Doug spent eight years as
an Associate Director with NM Rothschild & Sons Australia.
Special Responsibilities Chairman of the Audit Committee and Member of the Remuneration and Nomination Committee
Relevant interest in
securities
Nil
Other current
directorships in listed
entities
Former directorships in
other listed entities in
past 3 years
Non-Executive Director of Vital Metals Ltd (ASX Code: VML) (since 30 May 2011)
(1)
(2)
Conquest Mining Limited (ASX Code: CQT) (30 November 2007 to 18 October 2011)
Grange Resources Limited (ASX Code: GRR) (1 November 2007 to 2 January 2009)
William M. Johnson Non-Executive Director
Appointed
26 October 2009 (as Executive Director); Non- Executive Director since 1 July 2011
Qualifications MA (Oxon), MBA
Experience Mr Johnson commenced his career in resource exploration and has most recently held senior
management and executive roles in a number of public companies in Australia, New Zealand
and Asia. Mr Johnson brings a considerable depth of experience in business strategy,
investment analysis, finance and execution.
Special
Responsibilities
Relevant interest in
securities
Member of the Audit Committee
Shares – 27,00026
Unlisted $0.60 (25 October 2014) Options – 1,000,000
Unlisted $0.35 (25 October 2014) Options – 2,000,000
Other current
directorships in listed
entities
Current Executive Director of:
(1)
(2)
Orion Equities Limited (ASX Code: OEQ) (since 28 February 2003)
Bentley Capital Limited (ASX Code: BEL) (since 13 March 2009)
Current Non-Executive Director of:
(3)
Strike Resources Limited (ASX Code: SRK) (14 July 2006)
Former directorships
in other listed entities
in past 3 years
None
26 Held jointly: Mr William M. Johnson & Mrs Joanne D. Johnson
ANNUAL REPORT | 35
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
Mr Farooq Khan resigned as a Director of the Company with effect on 31 August 2012.
Farooq Khan
Former Non-Executive Director
Period of Office
18 May 2007 (appointed as Executive Director); Non-Executive Director between 1 July 2011 and
31 August 2012
Qualifications BJuris , LLB. (UWA)
Experience Mr Khan is a qualified lawyer having previously practised principally in the field of corporate law.
Mr Khan has extensive experience in the securities industry, capital markets and the executive
management of ASX listed companies. In particular, Mr Khan has guided the establishment and
growth of a number of public listed companies in the investment, mining and financial services
sectors. He has considerable experience in the fields of capital raisings, mergers and
acquisitions and investments.
Special
Responsibilities during
Office
Member of the Remuneration and Nomination Committee
Relevant interest in
securities
Shares – 98,242
Unlisted $0.35 (16 September 2013) Options – 8,200,000
Other current
directorships in listed
entities
Current Executive Chairman and Managing Director of:
(1)
Queste Communications Ltd (ASX Code: QUE) (since 10 March 1998)
Current Executive Chairman of:
(2)
(3)
(1)
(2)
Former directorships
in other listed entities
in past 3 years
Orion Equities Limited (ASX Code: OEQ) (since 23 October 2006)
Bentley Capital Limited (ASX Code: BEL) (director since 2 December 2003)
Yellow Brick Road Holdings Limited (ASX Code: YBR) (27 April 2006 to 18 March 2011)
Strike Resources Limited (ASX Code: SRK) (3 September 1999 to 3 February 2011)
COMPANY SECRETARY
Victor P. H. Ho
Company Secretary
Appointed
4 April 2007
Qualifications BCom, LLB (UWA)
Experience Mr Ho has been in company secretarial/executive roles with a number of public listed companies
since 2000. Previously, Mr Ho had 9 years’ experience in the taxation profession with the
Australian Tax Office and in a specialist tax law firm. Mr Ho has extensive experience in the
structuring and execution of commercial and corporate transactions, capital raisings, capital
management matters, public company administration, corporations law and stock exchange
compliance and shareholder relations.
Special
Responsibilities
Relevant interest in
securities
Secretary of Audit Committee and Secretary of Remuneration and Nomination Committee
Unlisted $0.35 (16 September 2013) Options – 700,000
Unlisted $0.60 (25 October 2014) Options – 1,000,000
Unlisted $0.35 (25 October 2014) Options – 1,650,000
Other positions held in
listed entities
Current Executive Director and Company Secretary of:
(1)
Orion Equities Limited (ASX Code: OEQ) (Secretary since 2 August 2000 and Director
since 4 July 2003)
Current Company Secretary of:
(2)
(3)
Bentley Capital Limited (ASX Code: BEL) (since 5 February 2004)
Queste Communications Ltd (ASX Code: QUE) (since 30 August 2000)
Former positions in
other listed entities in
past 3 years
Strike Resources Limited (ASX Code: SRK) (secretary between 9 March 2000 and 30 April
2010 and director between 12 October 2000 and 25 September 2009)
ANNUAL REPORT | 36
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
DIRECTORS' MEETINGS
The following table sets out the numbers of meetings of the Company's Directors held during the financial year
(excluding Directors’ circulatory resolutions), and the numbers of meetings attended by each Director of the
Company:
Board
Audit Committee
Meetings
Attended
Maximum
Possible
Meetings
Meetings
Attended
Maximum
Possible
Meetings
Remuneration Committee
Maximum
Meetings
Possible
Attended
Meetings
10
10
10
10
10
10
10
10
10
10
-
3
3
3
-
-
3
3
3
-
-
-
1
1
1
-
-
1
1
1
Name of Director
H. Shanker Madan
William Johnson
Ian Williams
Douglas Stewart
Farooq Khan
Board Committees
Audit Committee
The Audit Committee was established on 9 December 2010 and comprises Non-Executive Directors,
Messrs Douglas Stewart (as Chairman), Ian Williams and William Johnson.
The Audit Committee has a formal charter to prescribe its objectives, duties and responsibilities, access
and authority, composition, membership requirements of the Committee and other administrative matters.
Its function includes reviewing and approving the audited annual and reviewed half-yearly financial reports,
ensuring a risk management framework is in place, reviewing and monitoring compliance issues, reviewing
reports from management and matters related to the external auditor. The Audit Committee Charter may
be viewed and downloaded from the Company’s website.
Remuneration and Nomination Committee
The Remuneration and Nomination Committee was established on 9 December 2010 and comprises Non-
Executive Directors, Messrs Ian Williams (as Chairman), Douglas Stewart and Farooq Khan (until his
resignation as a Director on 31 August 2012).
The Remuneration and Nomination Committee has a formal charter to prescribe its purpose, key
responsibilities, composition, membership requirements, powers and other administrative matters. The
Committee has a remuneration function (with key responsibilities to make recommendations to the Board
on policy governing the remuneration benefits of the Managing Director and Executive Directors, including
equity-based remuneration and assist the Managing Director to determine the remuneration benefits of
senior management and advise on those determinations) and a nomination function (with key
responsibilities to make recommendations to the Board as to various Board matters including the
necessary and desirable qualifications, experience and competencies of Directors and the extent to which
these are reflected in the Board, the appointment of the Chairman and Managing Director, the
development and review of Board succession plans and addressing Board diversity). The Remuneration
and Nomination Committee Charter may be viewed and downloaded from the Company’s website.
ANNUAL REPORT | 37
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
REMUNERATION REPORT (Audited)
This report details the nature and amount of remuneration for each Director and Company Executive (being a
company secretary or senior managers with authority and responsibility for planning, directing and controlling the
major activities of the Company or Consolidated entity, directly or indirectly) (Key Management Personnel) of
the Consolidated Entity.
The information provided under headings (1) to (8) below has been audited as required under section 308(3)(c) of
the Corporations Act 2001.
(1) Remuneration Policy
The Board (with guidance from the Remuneration and Nomination Committee) determines the
remuneration structure of all Directors and Company Executives (being a company secretary or senior
manager specified below) (Key Management Personnel) having regard to the Consolidated Entity’s
strategic objectives, scale and scope of operations and other relevant factors, including experience and
qualifications, length of service, market practice (including available data concerning remuneration paid by
other listed companies in particular companies of comparable size and nature within the resources sector
in which the Company operates), the duties and accountability of Key Management Personnel and the
objective of maintaining a balanced Board which has appropriate expertise and experience, at a
reasonable cost to the Company.
Fixed Remuneration: The Key Management Personnel of the Company are paid a fixed amount per
annum plus applicable employer superannuation contributions. The Non-Executive Directors of the
Company are paid within a shareholder approved maximum aggregate base remuneration of $275,000 per
annum inclusive of minimum employer superannuation contributions where applicable.
During the financial year, the applicable fixed annual remuneration for Key Management Personnel was as
follows:
(a) Mr Ian Williams (Non-Executive Chairman – a base Director’s fee of $75,000 plus employer
superannuation contributions;
(b) Mr H. Shanker Madan (Managing Director) – a base salary of $375,000 plus employer
superannuation contributions; in addition, Mr Madan is entitled to receive a travel allowance of up to
$25,000 per annum;
(c)
Mr Farooq Khan ((Non-Executive Director and General Manager, Corporate and Finance) - a base
Director’s fee of $50,000 and a base salary of $125,000 plus employer superannuation
contributions; Mr Khan resigned as Director on 31 August 2012; Mr Khan’s base salary was
amended to $155,000 with effect from 1 September 2012;
(d) Mr William Johnson (Non-Executive Director and General Manager, Commercial and Joint
Ventures) - a base Director’s fee of $50,000 and a base salary of $65,000 plus employer
superannuation contributions;
(e) Mr Douglas Stewart (Non-Executive Director) - a base Director’s fee of $50,000 plus employer
superannuation contributions; and
(f)
Mr Victor Ho (Company Secretary) – a base salary of $90,000 plus employer superannuation
contributions.
Where applicable, Key Management Personnel may also (subject to reaching agreement with the
Company) “sacrifice” their base fees/salary and have them paid wholly or partly as further employer
superannuation contributions, benefits exempt from fringe benefits tax or other benefits subject to fringe
benefits tax (with an appropriate adjustment to reflect any fringe benefits tax payable by the Company).
Special Exertions and Reimbursements: Pursuant to the Company’s Constitution, each Director is
entitled to receive:
(a)
(b)
Payment for the performance of extra services or the undertaking of special exertions at the request
of the Board and for the purposes of the Company.
Payment for reimbursement of all reasonable expenses (including traveling and accommodation
expenses) incurred by a Director for the purpose of attending meetings of the Company or the
Board, on the business of the Company, or in carrying out duties as a Director.
ANNUAL REPORT | 38
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
Long Term Benefits: Other than early termination benefits disclosed in “Service Agreements” (Section
(4)) below, Key Management Personnel have no right to termination payments save for payment of
accrued unused leave (where applicable).
Post Employment Benefits: Other than employer contributions to nominated complying superannuation
funds of Key Management Personnel (where applicable), the Company does not presently provide
retirement benefits to Key Management Personnel.
Performance Related Benefits/Variable Remuneration: Other
related
benefits/variable remuneration disclosed in “Service Agreements” (Section (4)) below, the Company does
not presently provide short or long incentive/performance based benefits related to the Company’s
performance to Key Management Personnel, including payment of cash bonuses and the current
remuneration of Key Management Personnel is fixed, is not dependent on the satisfaction of a
performance condition and is unrelated to the Company’s performance. No performance related
benefits/variable remuneration were paid to Key Management Personnel during the year.
than performance
Financial Performance of Company: There is no relationship between the Company’s current
remuneration policy and the Company’s performance save that options are granted to Key Management
Personnel as equity based benefits and their value is linked to the Company’s share price performance.
Equity Based Benefits: The Company has not provided any equity based benefits (eg. grant of shares or
options) to Key Management Personnel during the financial year. The Company has previously granted
unlisted options to Key Management Personnel; these options were issued without any vesting conditions
or performance hurdles on these options as, in the Company’s view at the time, the setting of the exercise
price at a significant premium to the Company’s ASX volume weighted average share price at the time of
issue, together with the (relatively short) 3 year term, acted as an appropriate performance incentive for
the Key Management Personnel. The Company expects that unlisted options that may be issued to Key
Management Personnel in the future will have defined performance hurdles attached to the options.
Disclosure of Consequences of Company Performance on Shareholder Wealth: In considering the
Company’s performance and benefits for shareholder wealth, the Board have regard to the following
information in relation to the current financial year and the previous four financial years:
Basic loss per share (cents)
Dividend (cents per share)
Net Profit/(Loss) attributable to
members ($'000)
Volume weighted average share
price (VWAP) (cents)
2012
(1.5)
-
2011
(3.84)
-
2010
(2.24)
-
2009
(11.01)
-
2008
(4.81)
-
(3,151,331)
(4,450,971)
(2,100,889)
(8,864,354)
(3,872,045)
32
36
8
5
8
ANNUAL REPORT | 39
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
(2) Details of Remuneration of Key Management Personnel
Details of the nature and amount of each element of remuneration of each Key Management Personnel of
the Company paid or payable by the Consolidated Entity during the financial year are as follows:
Key
Management
Person
2012
Perform
-ance
related
%
Options
related
%
Short-term Benefits
Cash payments
Director’
s fees
Salary and
allowances
$
Non-
cash
benefit
$
Executive Director:
Shanker Madan
-
Non-Executive Directors:
-
Ian Williams
-
Douglas
Stewart
Farooq Khan
William
Johnson
Company Secretary
Victor Ho
-
-
-
-
-
-
-
-
-
-
367,250
37,467
44,230
49,326
50,000
-
-
124,326
65,537
-
90,000
-
-
-
-
-
-
Key
Management
Person
2011
Perform
-ance
related
%
Option
s
related
%
Short-term Benefits
Cash payments
-
-
-
Executive Directors:
Shanker
Madan
Farooq Khan
William
Johnson
Non-Executive Directors:
Ian Williams
-
(appointed 30
November 2010)
Douglas
Stewart
(appointed 30
November 2010)
Company Secretary
Victor Ho
-
-
Director’
s fees
Salary and
allowances
$
-
-
-
-
-
-
251,720
161,538
87,892
52.6%
30,865
52.6%
37,712
-
-
-
-
93,462
Non-
cash
benefi
t
$
-
-
-
-
-
-
Post
Employment
Benefits
Superannuatio
n
Other
Long-
term
Benefits
Long
service
leave
Equity
Based
Benefits
Options
Total
$
50,000
44,282
10,270
15,628
10,398
8,100
$
-
-
-
-
-
-
$
-
-
-
-
-
-
$
417,250
81,749
54,500
189,280
125,935
98,100
Post
Employment
Benefits
Superannuatio
n
Other
Long-
term
Benefit
s
Long
service
leave
Equity
Based
Benefit
s
Options
Total
$
$
50,995
16,355
7,910
2,778
3,394
8,411
-
-
-
-
-
-
$
-
-
-
$
302,715
177,893
95,802
37,300
70,943
37,300
78,406
-
101,873
The value of Equity Based Benefits are based on the fair value of options vested as at balance date; this is
described in further detail in the Remuneration Report for the previous financial year ended 30 June
2011.27
27 Refer Section (3) of the Remuneration Report at pages 53 and 54 of the Company’s Annual Report 2011
ANNUAL REPORT | 40
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
(3) Equity Based Benefits - Options
The Company has not provided any equity based benefits (eg. grant of shares or options) to Key
Management Personnel during the financial year.
There were no shares issued as a result of the exercise of options previously issued to Key Management
Personnel during the financial year (2011: Nil shares).
The Company granted unlisted options to Key Management Personnel during the previous financial year
(as approved by shareholders at a general meeting), as follows:
Name of Key
Management
Personnel
H. Shanker Madan
Ian Williams
Douglas Stewart
Farooq Khan
William Johnson
Victor Ho
No. options granted during the
year
2012
-
-
-
-
-
-
2011
-
250,000
$0.60 (26 May 2014)
Directors’ Options28,29
250,000
$0.60 (26 May 2014)
Directors’ Options28, 29
-
-
-
No. options cancelled
during the year
2011
2012
-
-
-
-
-
-
-
-
-
-
-
-
No. options vested during the
year
2012
-
-
-
-
-
-
2011
-
250,000
$0.60 (26 May 2014)
Directors’ Options28
250,000
$0.60 (26 May 2014)
Directors’ Options28
-
-
-
The Company has also issued unlisted options to other personnel (not regarded as a Company
Executives/Key Management Personnel) during the financial year, as detailed in the Directors’ Report
under Securities in the Company - Summary of Unlisted Options Issued/Lapsed.
During the financial year, unlisted options (previously issued to other personnel (not regarded as a
Company Executives/Key Management Personnel)) lapsed without being exercised, as detailed in the
Directors’ Report under Securities in the Company - Summary of Unlisted Options Issued/Lapsed.
(4) Service Agreements
Details of the material terms of service agreements entered by the Company with Key Management
Personnel are as follows:
Key Management
Personnel and
Position(s) Held
Relevant Date(s)
Base Salary/Fees per
annum
Other Terms
H. Shanker Madan
(as Managing
Director)
28 June 2011 (date
of employment
agreement);
18 May 2007
(commencement date,
being the date of
appointment as
Managing Director);
11 May 2011 (date of
effect of remuneration)
$375,000
plus 9% employer
superannuation
contributions
Term of employment agreement expires on
30 June 2013; the parties may agree to
further and subsequent terms of 1 year
duration on the same terms and conditions.
Entitlement to long service leave of 60 days
after 7 years of service with an additional 5
days after each year of service thereafter.
for
than
If employment is terminated by the Company
(other
serious
termination
misconduct as defined in the agreement)
before the end of the term or before the end
of any subsequent extension of the term, the
Company shall, subject to compliance with
the Corporations Act 2001, pay out an
amount equivalent
the balance of
entitlements due for the term.
to
28 Terms and conditions of issue are set out in a terms and conditions of issue are set out in a Notice of General Meeting and Explanatory
Statement dated 15 April 2011 for a General Meeting held on 26 May 2011 and in an ASX Appendix 3B New Issue Announcement lodged on
27 May 2011
29 Granted to a nominee of the Key Management Personnel
ANNUAL REPORT | 41
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
Key Management
Personnel and
Position(s) Held
Relevant Date(s)
Base Salary/Fees per
annum
Other Terms
$125,000
(in addition to $50,000
Non-Executive Director
fees payable with effect
from 1 July 2011 until
his resignation as
Director on 31 August
2012) (amended to
$155,000 from 1
September 2012)
plus 9% employer
superannuation
contributions
$65,000
(in addition to $50,000
Non-Executive Director
fees payable with effect
from 1 July 2011)
plus 9% employer
superannuation
contributions
$90,000
plus 9% employer
superannuation
contributions
Farooq Khan
(as General
Manager, Corporate
and Finance)
(in addition to his
role as Non-
Executive Director
until his resignation
as Director on 31
August 2012)
28 June 2011 (date
of employment
agreement);
18 May 2007
(commencement date,
being the date of
appointment as
Director);
1 July 2011 (date of
effect of remuneration)
William Johnson
(as General
Manager,
Commercial and
Joint Ventures)
(in addition to his
role as Non-
Executive Director)
Victor Ho
(as Company
Secretary)
28 June 2011 (date
of employment
agreement);
26 October 2009
(commencement date,
being the date of
appointment as
Director);
1 July 2011 (date of
effect of remuneration)
28 June 2011 (date
of employment
agreement);
4 April 2007
(commencement date,
being the date of
appointment as
Company Secretary);
1 July 2011 (date of
effect of remuneration)
Short-term incentive (STI) cash bonuses
payable on attainment of defined milestones
(related to completion of the Khnaiguiyah
feasibility
Zinc-Copper Project bankable
study and project
the
delineation of an economically minable
copper resource in Oman) have not been
triggered during the financial year. STI’s for
the 2012/2013 financial year have not yet
the
been set pending completion of
Khnaiguiyah bankable feasibility study.
financing and
Term of employment agreement expires on
30 June 2013; the parties may agree to
further and subsequent terms of 1 year
duration on the same terms and conditions.
Entitlement to long service leave of 60 days
after 7 years of service with an additional 5
days after each year of service thereafter.
for
than
If employment is terminated by the Company
(other
serious
termination
misconduct as defined in the agreement)
before the end of the term or before the end
of any subsequent extension of the term, the
Company shall, subject to compliance with
the Corporations Act 2001, pay out an
the balance of
amount equivalent
entitlements due for the term.
to
Not prohibited
from also concurrently
performing the role of director of any other
company or companies, to the extent that
that does not
the proper
performance of duties under the agreement.
interfere with
Entitlement
to performance related cash
bonuses as agreed with the Company from
time to time – as at the date of this report, no
bonus scheme has been established.
Term of employment agreement expires on
30 June 2013; the parties may agree to
further and subsequent terms of 1 year
duration on the same terms and conditions.
Entitlement to long service leave of 60 days
after 7 years of service with an additional 5
days after each year of service thereafter.
for
than
If employment is terminated by the Company
(other
serious
termination
misconduct as defined in the agreement)
before the end of the term or before the end
of any subsequent extension of the term, the
Company shall, subject to compliance with
the Corporations Act 2001, pay out an
amount equivalent
the balance of
entitlements due for the term.
to
Not prohibited
from also concurrently
performing the role of director or company
secretary of any other company or
companies, to the extent that that does not
interfere with the proper performance of
duties under the agreement.
Entitlement
to performance related cash
bonuses as agreed with the Company from
time to time – as at the date of this report, no
bonus scheme has been established.
ANNUAL REPORT | 42
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
The Company notes that under recent amendments to the Corporations Act 200130, shareholder approval
is required where a Company proposes to make a “termination payment” (for example, a payment in lieu of
notice, a payment for a post-employment restraint and payments made as a result of the automatic or
accelerated vesting of share based payments) in excess of one year’s “base salary” (defined as the
average base salary over the previous 3 years) to a director or any person who holds a managerial or
executive office.
(5) Employee Share Option Plan
The Company has an Employee Share Option Plan (the ESOP) which was approved by shareholders at
the 2008 annual general meeting held on 6 November 2008. The ESOP was developed to assist in the
recruitment, reward, retention and motivation of employees (excluding Directors) of Alara. Under the
ESOP, the Board will nominate personnel to participate and will offer options to subscribe for shares to
those personnel. A summary of the terms of ESOP is set out in Annexure A to Alara’s Notice of Annual
General Meeting and Explanatory Statement dated 1 October 2008. The Company will seek shareholder
approval at the 2012 AGM for the re-adoption of the ESOP pursuant to the ASX Listing Rules (which
requires approval every 3 years).
(6) Other Benefits Provided to Key Management Personnel
No Key Management Personnel has during or since the end of the financial year, received or become
entitled to receive a benefit, other than a remuneration benefit as disclosed above, by reason of a contract
made by the Company or a related entity with the Director or with a firm of which he is a member, or with a
Company in which he has a substantial interest.
(7) Securities Trading Policy
The Company has a Securities Trading Policy (dated 31 December 2010), a copy of which is available for
viewing and downloading from the Company’s website.
(8) Voting and Comments on the Remuneration Report at the 2011 Annual General Meeting
(AGM)
At the Company’s most recent (2011) AGM, a resolution to adopt the prior year (2011) Remuneration
Report was passed by a majority (72.4%) of votes cast but 27.6% “no” votes were received. As the “no”
votes exceed 25%, this constitutes a “first strike” under the new executive remuneration related provisions
of the Corporations Act.
The Board has considered feedback from relevant stakeholders and reviewed and updated the Company’s
remuneration policy (as outlined in (1) above). In particular, the Board notes that the Company has
previously granted unlisted options to Key Management Personnel without any vesting conditions or
performance hurdles on these options. The Company has not granted any equity based benefits during
the financial year to Key Management Personnel but the Board expects that unlisted options that may be
issued to Key Management Personnel in the future will now have defined performance hurdles attached to
the options.
The Board believes that the Company’s remuneration structure and practices are appropriate as detailed
in this Remuneration Report.
(9) Engagement of Remuneration Consultants
The Company has not engaged any remuneration consultants during the year. The Board has established
a policy that Ian Williams and Doug Stewart (as Non-Executive Directors and Members of the
Remuneration and Nomination Committee) be responsible for approving all engagements of and executing
contracts to engage remuneration consultants and for receiving remuneration recommendations from
remuneration consultants regarding Key Management Personnel. Furthermore, the Company has a policy
that remuneration advice provided by remuneration consultants be quarantined from Management.
This concludes the audited Remuneration Report.
30 Corporations Amendment (Improving Accountability on Termination Payments) Act 2009 (Act), which came into effect on 24 November 2009
ANNUAL REPORT | 43
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
DIRECTORS’ AND OFFICERS’ INSURANCE
The Directors have not included details of the nature of the liabilities covered or the amount of premiums paid in
respect of a Directors and Officers liability and legal expenses’ insurance contract, as such disclosure is
prohibited under the terms of the contract.
DIRECTORS’ DEEDS
In addition to the rights of indemnity provided under the Company’s Constitution (to the extent permitted by the
Corporations Act), the Company has also entered into a deed with each of the Directors and the Company
Secretary (Officer) to regulate certain matters between the Company and each Officer, both during the time the
Officer holds office and after the Officer ceases to be an officer of the Company, including the following matters:
(a)
(b)
The Company’s obligation to indemnify an Officer for liabilities or legal costs incurred as an officer of the
Company (to the extent permitted by the Corporations Act); and
Subject to the terms of the deed and the Corporations Act, the Company may advance monies to the
Officer to meet any costs or expenses of the Officer incurred in circumstances relating to the indemnities
provided under the deed and prior to the outcome of any legal proceedings brought against the Officer.
AUDITOR
Details of the amounts paid or payable to the Company’s auditors (Grant Thornton Audit Pty Ltd) for audit and
non-audit services (paid to a related party of Grant Thornton Audit Pty Ltd) provided during the financial year are
set out below:
Audit and Review Fees
$
36,000
Fees for Other Non-Audit Services
$
10,950
Total
$
46,950
The Board is satisfied that the provision of non audit services by the auditors during the year is compatible with
the general standard of independence for auditors imposed by the Corporations Act 2001. The Board is satisfied
that the nature of the non-audit services disclosed above did not compromise the general principles relating to
auditor independence as set out in the Institute of Chartered Accountants in Australia and APES 110 Code of
Ethics for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a
management or decision making capacity for the Company, acting as advocate for the Company or jointly sharing
economic risk and rewards.
Grant Thornton Audit Pty Ltd continues in office in accordance with section 327B of the Corporations Act 2001.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001
forms part of this Directors Report and is set out on page 46. This relates to the Audit Report, where the Auditors
state that they have issued an independence declaration.
LEGAL PROCEEDINGS ON BEHALF OF CONSOLIDATED ENTITY (DERIVATIVE ACTIONS)
No person has applied for leave of a court to bring proceedings on behalf of the Consolidated Entity or intervene
in any proceedings to which the Consolidated Entity is a party for the purpose of taking responsibility on behalf of
the Consolidated Entity for all or any part of such proceedings. The Consolidated Entity was not a party to any
such proceedings during and since the financial year.
ANNUAL REPORT | 44
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ REPORT
EVENTS SUBSEQUENT TO BALANCE DATE
The Directors are not aware of any matters or circumstances at the date of this Directors’ Report, other than those
referred to in this Directors’ Report (in particular, in Review of Operations) or the financial statements or notes
thereto (in particular Subsequent Events Note 24), that have significantly affected or may significantly affect the
operations, the results of operations or the state of affairs of the Company and Consolidated Entity in subsequent
financial years.
Signed for and on behalf of the Directors in accordance with a resolution of the Board.
Shanker Madan
Managing Director
Perth, Western Australia
28 September 2012
Douglas Stewart
Director
ANNUAL REPORT | 45
Grant Thornton Audit Pty Ltd
ABN 91 130 913 594
ACN 130 913 594
10 Kings Park Road
West Perth WA 6005
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of Alara Resources Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead
auditor for the audit of Alara Resources Limited for the year ended 30 June 2012, I declare
that, to the best of my knowledge and belief, there have been:
a
b
no contraventions of the auditor independence requirements of the Corporations Act
2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M J Hillgrove
Partner - Audit & Assurance
Perth, 28 September 2012
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together
with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
for the year ended 30 June 2012
Revenue
Net loss on financial assets held at fair value through profit or loss
Impairment of exploration expenditure
Personnel
- Options remuneration (non-cash)
Occupancy costs
Foreign exchange movement
Finance expenses
Borrowing costs
Corporate expenses
Administration expenses
LOSS BEFORE INCOME TAX
Income tax benefit
LOSS FOR THE YEAR
Other comprehensive income
Note
(a)
3
3
3
3
3
3
3
3
3
3
3
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
(b)
2012
$
1,725,912
(482,475)
(432,610)
(2,076,140)
(117,217)
(480,089)
-
(21,573)
(30,293)
(87,736)
(1,247,316)
2011
$
299,516
(910,657)
(41,469)
(1,443,877)
(299,629)
(222,808)
(363,550)
(12,652)
(443)
(118,810)
(1,375,328)
(3,249,537)
(4,489,707)
4
-
-
(3,249,537)
(4,489,707)
Exchange differences on translation of foreign operations
Income tax relating to components of other comprehensive income
Total other comprehensive income
(36,908)
-
56,094
-
(36,908)
56,094
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
(3,286,445)
(4,433,613)
Loss attributable to:
Owners of Alara Resources Limited
Non-controlling interest
Total comprehensive loss for the year attributable to:
Owners of Alara Resources Limited
Non-controlling interest
(3,151,331)
(98,206)
(3,249,537)
(4,450,971)
(38,736)
(4,489,707)
(3,188,239)
(98,206)
(3,286,445)
(4,394,877)
(38,736)
(4,433,613)
Basic and diluted loss per share (cents)
7
(1.50)
(3.84)
The accompanying notes form part of this consolidated financial statements
ANNUAL REPORT | 47
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
as at 30 June 2012
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other current assets
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Financial assets held at fair value through profit and loss
Property, plant and equipment
Resource projects
Other non-current asset
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
NON CURRENT LIABILITIES
Trade and other payables
TOTAL NON CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Parent interest
Non-controlling interest
TOTAL EQUITY
Note
2012
$
2011
$
8
9
10
11
12
13
14
10,950,432
982,484
108,726
32,240,581
506,182
20,846
12,041,642
32,767,609
393,128
314,390
25,666,040
3,265,060
875,603
181,833
7,200,540
1,662,381
29,638,618
9,920,357
41,680,260
42,687,966
15
16
2,356,612
293,398
628,695
114,663
2,650,010
743,358
15
1,508,795
1,508,795
1,508,795
1,508,795
4,158,805
2,252,152
37,521,455
40,435,814
17
18
53,477,409
1,859,695
(18,061,494)
37,275,610
245,845
53,477,409
1,847,665
(14,978,442)
40,346,632
89,182
37,521,455
40,435,814
The accompanying notes form part of this consolidated financial statements
ANNUAL REPORT | 48
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
for the year ended 30 June 2012
Note
Issued
Capital
Options
Reserve
Foreign
Currency
Translation
Reserve
Accumulated
Losses
Non-
Controlling
Interest
Balance as at 1 July 2010
14,754,059
1,510,655
12,516
(10,558,701)
Foreign currency translation reserve
Net income and expense
recognised directly in equity
Loss for the year
Total comprehensive
loss for the year
Transactions with owners in
their capacity as owners:
Share placement
Share placement costs
Options lapsed during the year
Options issued during the year
Non-controlling interests of
the new subsidiary
Total
5,718,529
56,094
56,094
-
-
-
56,094
56,094
-
-
-
-
-
-
-
-
-
-
-
(4,450,971)
(38,736)
(4,489,707)
56,094
(4,450,971)
(38,736)
(4,433,613)
40,820,000
(2,096,650)
-
-
-
-
(31,230)
299,630
-
-
-
-
-
-
-
-
-
-
31,230
-
-
-
-
-
-
-
127,918
40,820,000
(2,096,650)
-
299,630
-
127,918
Balance as at 30 June 2011
53,477,409
1,779,055
68,610
(14,978,442)
89,182
40,435,814
Balance as at 1 July 2011
53,477,409
1,779,055
68,610
(14,978,442)
89,182
40,435,814
Foreign currency translation reserve
Net income and expense
recognised directly in equity
Loss for the year
Total comprehensive
loss for the year
Transactions with owners in
their capacity as owners:
Options lapsed during the year
Options issued during the year
Non-controlling interests of
the new subsidiary
18
18
-
-
-
-
-
-
-
-
-
-
-
(36,908)
(36,908)
-
-
-
(36,908)
(36,908)
-
(3,151,331)
(98,206)
(3,249,537)
(36,908)
(3,151,331)
(98,206)
(3,286,445)
(68,279)
117,217
-
-
-
-
68,279
-
-
-
-
117,217
-
254,869
254,869
Balance as at 30 June 2012
53,477,409
1,827,993
31,702
(18,061,494)
245,845
37,521,455
The accompanying notes form part of this consolidated financial statements
ANNUAL REPORT | 49
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CONSOLIDATED STATEMENT
OF CASH FLOWS
for the year ended 30 June 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (inclusive of GST)
Interest received
Interest paid
Note
2012
$
2011
$
(2,828,510)
1,331,701
-
(3,275,114)
229,443
(443)
NET CASHFLOWS USED IN OPERATING ACTIVITIES
8 b
(1,496,809)
(3,046,114)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for exploration and evaluation activities
Payments for plant and equipment
Proceeds from disposal of plant and equipment
(19,668,054)
(251,262)
-
(7,253,916)
(185,153)
100
NET CASHFLOWS USED IN INVESTING ACTIVITIES
(19,919,316)
(7,438,969)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuing ordinary shares
Costs of issuing ordinary shares
NET CASHFLOWS PROVIDED BY INVESTING ACTIVITIES
-
-
40,820,000
(2,096,650)
-
38,723,350
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS HELD
(21,416,125)
28,238,267
Cash and cash equivalents at beginning of the financial year
Effect of exchange rate changes on cash
32,240,581
125,976
4,309,770
(307,456)
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
8
10,950,432
32,240,581
The accompanying notes form part of this consolidated financial statements
ANNUAL REPORT | 50
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
1. SUMMARY OF ACCOUNTING POLICIES
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless
otherwise stated
The financial report includes the financial statements for the
Consolidated Entity consisting of Alara Resources Limited and its
controlled and jointly controlled entities. Alara Resources Limited
is a company limited by shares, incorporated in Western Australia,
Australia and whose shares are publicly traded on the Australian
Securities Exchange (ASX).
1.1.
Basis of preparation
These general purpose financial statements have been prepared
in accordance with Australian Accounting Standards, Australian
Accounting Interpretation, other authoritative pronouncements of
the Australian Accounting Standards Board and the Corporations
Act 2001. Alara Resources Limited is a for-profit entity for the
purposes of preparing the financial statements.
Compliance with IFRS
The consolidated financial statements of the Consolidated Entity,
Alara Resources Limited, also comply with International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB).
Reporting Basis and Conventions
The financial report has been prepared on an accruals basis and
is based on historical costs modified by the revaluation of
selected non-current assets, and financial assets and financial
liabilities for which the fair value basis of accounting has been
applied.
Going Concern Assumption
The going concern of
The financial report has been prepared on the going concern
basis, which contemplates continuity of normal business activities
and realisation of assets and settlement of liabilities in the
ordinary course of business.
the
Consolidated Entity is dependent upon it maintaining sufficient
funds for its operations and commitments. The Directors continue
to monitor the ongoing funding requirements of the Consolidated
Entity. The Directors are confident that sufficient funding can be
secured if required to enable the Consolidated Entity to continue
as a going concern and as such are of the opinion that the
financial report has been appropriately prepared on a going
concern basis.
1.2.
Principles of Consolidation
The consolidated financial statements incorporate the assets and
liabilities of the subsidiaries of Alara Resources Limited as at 30
June 2012 and the results of its subsidiaries for the year then
ended. Alara Resources Limited and its subsidiaries are referred
to in this financial report as the Consolidated Entity.
Subsidiaries are all entities over which the Consolidated Entity
has the power to govern the financial and operating policies,
generally accompanying a shareholding of more than one-half of
the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered
when assessing whether the Consolidated Entity controls another
entity. Information on the controlled entities is contained in Note 2
to the financial statements.
Subsidiaries are fully consolidated from the date on which control
is
the Consolidated Entity. They are de-
consolidated from the date that control ceases.
transferred
to
All inter-company balances and transactions between entities in
the Consolidated Entity, including any unrealised profits or losses,
have been eliminated on consolidation.
1.3. Mineral Exploration and Evaluation Expenditure
Exploration, evaluation and development expenditure incurred is
accumulated (i.e. capitalised) in respect of each identifiable area
of interest. These costs are only carried forward to the extent that
they are expected to be recouped through the successful
development of the area or where activities in the area have not
yet reached a stage that permits reasonable assessment of the
existence or otherwise of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written
off in full against profit in the year in which the decision to
abandon the area is made.
Under AASB 6 “Exploration for and Evaluation of Mineral
Resources”, if facts and circumstances suggest that the carrying
amount of any recognised exploration and evaluation assets may
be impaired, the Consolidated Entity must perform impairment
tests on those assets and measure any impairment in accordance
with AASB 136 “Impairment of Assets”. Any impairment loss is to
be recognised as an expense. 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.
1.4.
Operating Segments
The Consolidated Entity has applied AASB 8: Operating
Segments which requires that segment information be presented
on the same basis as that used for internal reporting purposes.
An operating segment is a component of the Consolidated Entity
that engages in business activities from which it may earn
revenues and incur expenses. An operating segment's operating
results are reviewed regularly by the management to make
decisions on allocation of resources to the relevant segments and
assess performance. Unallocated items comprise mainly share
investments, corporate and office expenses. The Consolidated
Entity’s segment reporting is contained in Note 20 of the notes to
the financial statements.
1.5.
Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Consolidated Entity and the
revenue can be reliably measured. All revenue is stated net of
the amount of goods and services tax (“GST”) except where the
amount of GST incurred is not recoverable from the Australian
Tax Office. The following specific recognition criteria must also be
met before revenue is recognised:
Interest Revenue -
is recognised on a
Interest revenue
proportional basis taking into account the interest rates applicable
to the financial assets.
Other Revenues - Other revenues are recognised on a receipts
basis.
ANNUAL REPORT | 51
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
1.6.
Income Tax
The income tax expense or revenue for the period is the tax
payable on the current period’s taxable income based on the
notional income tax rate for each taxing jurisdiction adjusted by
changes in deferred tax assets and liabilities attributable to
temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the financial statements,
and to unused tax losses (if applicable).
Deferred tax assets and liabilities are recognised for temporary
differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates which
are enacted or substantively enacted for each taxing jurisdiction.
The relevant tax rates are applied to the cumulative amounts of
deductible and taxable temporary differences to measure the
deferred tax asset or liability. An exception is made for certain
temporary differences arising from the initial recognition of an
asset or a liability. No deferred tax asset or liability is recognised
in relation to these temporary differences if they arose in a
transaction, other than a business combination, that at the time of
the transaction did not affect either accounting profit or taxable
profit or loss.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary
differences and losses. The amount of deferred tax assets
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
the
Consolidated Entity will derive sufficient future assessable income
to enable the benefit to be realised and comply with the conditions
of deductibility imposed by the law.
the anticipation
legislation and
taxation
that
tax
liabilities and assets are not recognised
Deferred
for
temporary differences between the carrying amount and tax
bases of investments in controlled entities where the Company is
able to control the timing of the reversal of the temporary
differences and it is probable that the differences will not reverse
in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation
authority. Current tax assets and tax liabilities are offset where the
entity has a legally enforceable right to offset and intends either to
settle on a net basis, or to realise the asset and settle the liability
simultaneously.
Current and deferred tax balances attributable to amounts
recognised directly in other comprehensive income or equity are
also recognised directly in other comprehensive income or equity.
Tax consolidation legislation
The Consolidated Entity implemented the tax consolidation
legislation. The head entity, Alara Resources Limited, and the
controlled entities in the tax consolidated group continue to
account for their own current and deferred tax amounts. These
tax amounts are measured as
tax
consolidated group continues to be a stand-alone taxpayer in its
own right.
if each entity
the
in
Assets or liabilities arising under tax funding agreements within
the
tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the Consolidated
Entity.
Any differences between the amounts assumed and amounts
receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly-owned
tax consolidated entities.
1.7.
Goods and Services Tax (GST)
from
the Australian Tax Office.
Revenues, expenses and assets are recognised net of the
amount of GST, except where the amount of GST incurred is not
recoverable
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 balance sheet 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.
In
1.8.
Employee Benefits
Short term obligations - Provision is made for the Consolidated
Entity’s liability for employee benefits arising from services
rendered by employees to balance date. Employee benefits that
are expected to be settled within one year have been measured
at the amounts expected to be paid when the liability is settled,
plus related on-costs. Employee benefits payable later than one
year have been measured at the present value of the estimated
future cash outflows to be made for those benefits. Employer
superannuation contributions are made by the Consolidated Entity
in accordance with statutory obligations and are charged as an
expense when incurred.
Other long term employee benefit obligations - The liability for
long service leave is recognised in the provision for employee
benefits and measured as the present value of expected future
payments to be made in respect of services provided by
employees up to the reporting date. Consideration is given to
expected future wage and salary levels, experience of employee
departures and periods of service.
1.9.
Director/Employee Options
The fair value of options granted by the Company to directors and
employees is recognised as an employee benefit expense with a
corresponding increase in equity. The fair value is measured as at
grant date and is expensed in full as at their date of issue where
they are 100% vested on grant and otherwise over their vesting
period (where applicable). The fair value at grant date is
determined using the Black-Scholes valuation model that takes
into account the exercise price, the term of the option, the vesting
criteria, the unlisted nature of the option, the share price at grant
date and the expected price volatility of the underlying shares in
the Company, and the risk-free interest rate for the term of the
option. Upon the exercise of options, the balance of the reserve
relating to those options is transferred to share capital.
1.10. Cash and Cash Equivalents
In addition to its own current and deferred tax amounts, the
Company also recognises the current tax liabilities (or assets) and
the deferred tax assets (as appropriate) arising from unused tax
losses and unused tax credits assumed from controlled entities in
the tax consolidated group.
Cash and cash equivalents includes cash on hand, deposits held
at call with banks, other short-term highly liquid investments and
bank overdrafts. Bank overdrafts (if any) are shown within short-
term borrowings in current liabilities on the balance sheet.
ANNUAL REPORT | 52
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
1.11. Receivables
Trade and other receivables are recorded at amounts due less
any provision for doubtful debts. An estimate for doubtful debts is
made when collection of the full amount is no longer probable.
Bad debts are written off when considered non-recoverable.
1.12. Financial Instruments
Financial assets and financial liabilities are recognised when the
entity becomes a party to the contractual provisions to the
instrument. For financial assets, this is equivalent to the date that
the entity commits itself to either the purchase or sale of the asset
(i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value plus
transaction costs, except where the instrument is classified ‘at fair
value through profit or loss’, in which case transaction costs are
expensed to profit or loss immediately.
Subsequent to initial recognition, these instruments are measured
as set out below
Financial assets at fair value through profit and loss - A
financial asset is classified in this category if acquired principally
for the purpose of selling in the short term or if so designated by
the requirements of AASB 139:
management and within
Recognition and Measurement of Financial Instruments. Realised
and unrealised gains and losses arising from changes in the fair
value of these assets are included in the profit or loss in the
period in which they arise.
Loans and receivables - Loans and receivables are non-
derivative financial assets with fixed or determinable payments
that are not quoted in an active market and are stated at
amortised cost using the effective interest rate method.
Financial liabilities - Non-derivative financial liabilities are
recognised at amortised cost, comprising original debt less
principal payments and amortisation.
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.
At each reporting date, the Consolidated Entity assesses whether
there is objective evidence that a financial instrument has been
impaired. Impairment losses are recognised in the profit or loss.
The Consolidated Entity’s investment portfolio (comprising listed
and unlisted securities) is accounted for as “financial assets at fair
value through profit and loss”.
1.13. Fair value Estimation
The fair value of financial assets and financial liabilities must be
estimated for recognition and measurement or for disclosure
purposes. The fair value of financial instruments traded in active
markets (such as publicly traded derivatives, and trading and
available-for-sale securities) is based on quoted market prices at
the balance sheet date. The quoted market price used for
financial assets held by the Consolidated Entity is the current bid
price; the appropriate quoted market price for financial liabilities is
the current ask price.
The fair value of financial instruments that are not traded in an
active market (for example over-the-counter derivatives)
is
determined using valuation techniques, including but not limited to
recent arm’s length transactions, reference to similar instruments
and option pricing models. The Consolidated Entity may use a
variety of methods and makes assumptions that are based on
market conditions existing at each balance date. Other
techniques, such as estimated discounted cash flows, are used to
determine fair value for other financial instruments.
The nominal value less estimated credit adjustments of trade
receivables and payables are assumed to approximate their fair
values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash
flows at the current market interest rate that is available to the
Consolidated Entity for similar financial instruments.
The Consolidated Entity’s investment portfolio (comprising listed
and unlisted securities) is accounted for as a “financial assets at
fair value through profit and loss” and is carried at fair value
based on the quoted last bid prices at reporting date (refer to
Note 11).
1.14. Property, Plant and Equipment
All plant and equipment are stated at historical cost less
accumulated depreciation and impairment losses. Historical cost
includes expenditure that is directly attributable to the acquisition
of the items.
The carrying amount of plant and equipment is reviewed annually
by directors to ensure it is not in excess of the recoverable
amount from these assets. The recoverable amount is assessed
on the basis of the expected net cash flows that will be received
from the assets employment and subsequent disposal. The
expected net cash flows have been discounted to their present
value in determining recoverable amount.
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the Consolidated Entity and the cost of the item can be
measured reliably. All other repairs and maintenance are
charged to the income statement during the financial period in
which they are incurred.
The depreciable amount of all fixed assets is depreciated on a
diminishing value basis over the asset's useful life to the
Consolidated Entity commencing from the time the asset is held
ready for use. The depreciation rates used for each class of
depreciable assets are:
Class of Fixed Asset
Depreciation Rate
Office Equipment
Motor Vehicles
Plant and Equipment
15-37.5%
33.3%
15-33.3%
The assets’ residual values and useful lives are reviewed, and
adjusted if appropriate, at each balance sheet date. An asset’s
carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing
proceeds with carrying amount. These are included in the
statement of comprehensive income. When revalued assets are
sold, amounts included in the revaluation reserve relating to that
asset are transferred to retained earnings.
ANNUAL REPORT | 53
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
1.15.
Impairment of Non Financial Assets
Consolidated entity
At each reporting date, the Consolidated Entity reviews the
carrying values of its tangible and intangible assets to determine
whether there is any indication that those assets have been
impaired. If such an indication exists, the recoverable amount of
the asset, being the higher of the asset’s fair value less costs to
sell and value in use, is compared to the asset’s carrying value.
Any excess of the asset’s carrying value over its recoverable
amount is expensed to the profit or loss. Impairment testing is
performed annually for goodwill and intangible assets with
indefinite lives. Where it is not possible to estimate the
recoverable amount of an individual asset, the Consolidated
Entity estimates the recoverable amount of the cash-generating
unit to which the asset belongs.
1.16. Payables
These amounts represent liabilities for goods and services
provided to the Consolidated Entity prior to the end of financial
year which are unpaid. The amounts are unsecured and are
usually paid within 30 days of recognition.
1.17.
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.
1.18. Earnings Per Share
Basic Earnings per share is determined by dividing the
operating result after income tax by the weighted average number
of ordinary shares on issue during the financial period.
Diluted Earnings per share adjusts the figures used in the
determination of basic earnings per share by taking into account
amounts unpaid on ordinary shares and any reduction in earnings
per share that will probably arise from the exercise of options
outstanding during the financial period.
1.19. Foreign Currency Translation and Balances
Functional and presentation currency
The functional currency of each entity within the Consolidated
Entity is measured using the currency of the primary economic
environment in which that entity operates. The consolidated
financial statements are presented in Australian dollars which is
the parent entity’s functional and presentation currency.
Transaction and balances
Foreign currency transactions are translated into functional
currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the
year-end exchange rate. Exchange differences arising on the
translation of monetary items are recognised in the income
statement, except where deferred in equity as a qualifying cash
flow or net investment hedge. Exchange differences arising on
the translation of non-monetary items are recognised directly in
equity to the extent that the gain or loss is directly recognised in
equity, otherwise the exchange difference is recognised in the
income statement.
The financial results and position of foreign operations whose
functional currency is different from the group’s presentation
currency are translated as follows:
(a)
assets and liabilities are translated at year-end exchange
rates prevailing at that reporting date;
income and expenses are
exchange rates for the period; and
retained earnings are translated at the exchange rates
prevailing at the date of the transaction.
translated at average
(b)
(c)
Exchange differences arising on translation of foreign operations
are transferred directly to the Consolidated Entity’s foreign
currency translation reserve in the balance sheet. These
differences are recognised in the income statement in the period
in which the operation is disposed.
1.20.
Investments in Joint Ventures
The Company undertakes a number of business activities through
joint ventures. Joint ventures are those arrangements over
whose activities
joint control,
established by contractual agreement and requiring unanimous
consent for strategic financial and operating decisions.
the Consolidated Entity has
Alara Oman Operations Pty Limited (a wholly owned Australian
subsidiary) gained a 50% shareholding interest in a joint venture
entity, Daris Resources LLC (Oman), on 1 December 2010. Alara
Saudi Operations Pty Limited (a wholly owned Australian
subsidiary) gained a 50% shareholding interest in a joint venture
entity, Khnaiguiyah Mining Company LLC (Saudi Arabia), on 10
January 2011. The principal activity of these joint venture entities
is exploration, evaluation and development of mineral licences in
their respective countries.
liabilities,
income and expenses of
The Consolidated Entity has applied AASB131 "Interests in Joint
Ventures" from 1 July 2010 under which interests in jointly
controlled entities are accounted for using the proportionate
consolidation method whereby the Company’s share of each of
the assets,
jointly
controlled entity is combined line by line with like items within the
(or reported as
Consolidated Entity’s
separate line items where combination is not applicable or
appropriate). Thus, the Consolidated Entity's statement of
financial position includes its share of the assets controlled jointly
and its share of the liabilities that it is jointly responsible for and
the Consolidated Entity's statement of comprehensive income will
include its share of the income and expenses of each joint
venture entity.
financial statements
the
1.21. Leases
Leases in which a significant portion of the risks and rewards of
ownership are not transferred to the Consolidated Entity as lessee
are classified as operating leases. Payments made under
operating leases (net of any incentives received from the lessor)
are charged to the profit or loss on a straight-line basis over the
period of the lease.
1.22. Comparative Figures
Certain comparative figures have been adjusted to conform to
changes in presentation for the current financial year.
ANNUAL REPORT | 54
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
1.24. Critical accounting judgements and estimates
The preparation of
the Consolidated Financial Statements
requires Directors to make judgements and estimates and form
assumptions that affect how certain assets, liabilities, revenue,
expenses and equity are reported. At each reporting period, the
Directors evaluate their judgements and estimates based on
historical experience and on other various factors they believe to
be reasonable under the circumstances, the results of which form
the basis of the carrying values of assets and liabilities (that are
not readily apparent from other sources, such as independent
valuations). Actual results may differ from these estimates under
different assumptions and conditions.
Exploration and evaluation expenditure
The Consolidated Entity’s accounting policy for exploration and
evaluation expenditure being capitalised for an area of interest
where it is considered likely to be recoverable by future
exploitation or sale or where the activities have not reached a
stage which permits a reasonable assessment of the existence of
reserves. This policy requires management to make certain
estimates to future events and circumstances, in particular
whether an economically viable extraction operation can be
established. Any such estimates and assumptions may change as
new information becomes available. If, after having capitalised the
expenditure under the policy, a judgement is made that recovery
of the expenditure is unlikely, the relevant capitalised amount will
be written off to the statement of comprehensive income.
Impairment of goodwill and intangibles
The Consolidated Entity determines whether goodwill and
intangibles with indefinite useful lives are impaired at least on an
annual basis. At this balance date there has been no requirement
to impair goodwill.
Share-based payments transactions
The Consolidated Entity measures the cost of equity-settled
transactions with Directors and employees by reference to the fair
value of the equity instruments at the date at which they are
granted. The fair value is determined using a Black-Scholes
options valuation model, taking into account the terms and
conditions upon which the instruments were granted. The related
assumptions are detailed in Note 19. The accounting estimates
have no impact on the carrying amounts of assets and liabilities
but will impact expenses and equity.
ANNUAL REPORT | 55
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
1.25. Summary Of Accounting Standards Issued Not Yet Adopted
Management anticipates that all of the relevant pronouncements will be adopted in the Consolidated Entity's accounting policies for the
first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that
are expected to be relevant to the Consolidated Entity's financial statements is provided below. Certain other new standards
and interpretations have been issued but are not expected to have a material impact on the Consolidated Entity's financial statements.
New/revised
pronouncement
Superceded
pronouncement
Explanation of amendments
AASB 9
Financial Instruments
(December 2010)
AASB 139
Financial
Instruments:
Recognition and
Measurement (in
part)
AASB 9 introduces new requirements
for the classification and measurement
of financial assets and liabilities.
improve
requirements
These
and
simplify the approach for classification
and measurement of financial assets
compared with
the requirements of
AASB 139. The main changes are:
(a) Financial assets
that are debt
instruments will be classified based
on (1) the objective of the entity’s
business model for managing the
financial assets; and
the
(2)
characteristics of
the contractual
cash flows.
Effective date
(i.e. annual
reporting
periods ending
on or after)
31 December
2015
Note that the
IASB deferred
the mandatory
effective date
from annual
periods
beginning on or
after 1 January
2013 to annual
periods
beginning on or
after 1 January
2015.
Impact on Financial Statements
AASB 9 amends the classification
and measurement of
financial
assets. The effect on the entity will
be that more assets may be held at
fair value and
for
impairment testing has been limited
to financial assets held at amortised
cost only.
the need
Minimal changes have been made
in relation to the classification and
measurement of financial liabilities,
except that the effects of ‘own
credit risk’ are recognised in other
comprehensive income.
(b) Allows an irrevocable election on
initial recognition to present gains
and losses on investments in equity
instruments that are not held for
trading
in other comprehensive
income (instead of in profit or loss).
Dividends
these
investments that are a return on
investment can be recognised in
profit or
is no
impairment or recycling on disposal
of the instrument.
respect of
loss and
there
in
(c) Financial assets can be designated
and measured at fair value through
profit or loss at initial recognition if
doing so eliminates or significantly
reduces
or
recognition inconsistency that would
arise
from measuring assets or
liabilities, or recognising the gains
and losses on them, on different
bases.
a measurement
(d) Where the fair value option is used
for financial liabilities the change in
fair value is to be accounted for as
follows:
(i) The change attributable
in credit
to
risk are
changes
other
presented
comprehensive income (OCI);
and
in
(ii) The
remaining
change
presented in profit or loss.
is
If this approach creates or enlarges an
accounting mismatch in the profit or
loss, the effect of the changes in credit
risk are also presented in profit or loss.
Otherwise, the following requirements
have generally been carried forward
unchanged from AASB 139 into AASB
9:
(a) Classification and measurement of
financial liabilities; and
(b) Derecognition
requirements
financial assets and liabilities.
for
ANNUAL REPORT | 56
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
New/revised
pronouncement
Superceded
pronouncement
Explanation of amendments
AASB 10
Consolidated
Financial Statements
AASB 127
AASB Int 112
Consequential amendments were also
made to other standards as a result of
AASB 9, introduced by AASB 2009-11
and superseded by AASB 2010-7 and
AASB 2010-10.
AASB 10 establishes a revised control
model that applies to all entities. It
replaces the consolidation requirements
in AASB 127 Consolidated and
Separate Financial Statements and
AASB Interpretation 112 Consolidation –
Special Purpose Entities.
to
specific
The revised control model broadens the
situations when an entity is considered
to be controlled by another entity and
includes additional guidance for applying
the model
situations,
including when acting as an agent may
give control, the impact of potential
voting rights and when holding less than
a majority voting rights may give ‘de
facto’ control. This is likely to lead to
more entities being consolidated into the
group.
AASB 11
AASB 131
Joint Arrangements
AASB Int 113
AASB 12
Disclosure of
Interests in Other
Entities
AASB 127
AASB 128
AASB 131
for
(JCEs)
AASB 11 replaces AASB 131 Interests
Joint Ventures and AASB
in
Interpretation 113 Jointly- controlled
Entities – Non-monetary Contributions
by Ventures. AASB 11 uses the principle
of control in AASB 10 to define joint
control, and therefore the determination
of whether
joint control exists may
change. In addition, AASB 11 removes
jointly-
to account
the option
using
controlled
entities
proportionate consolidation.
Instead,
accounting for a joint arrangement is
dependent on the nature of the rights
the
and obligations arising
arrangement. Joint operations that give
the venturers a right to the underlying
assets and obligations themselves are
accounted for by recognising the share
of those assets and liabilities. Joint
ventures that give the venturers a right
to the net assets are accounted for
using the equity method. This may result
in a change in the accounting for the
joint arrangements held by the group.
from
to an entity’s
includes all disclosures
AASB 12
in
interests
relating
subsidiaries,
arrangements,
joint
associates and structures entities. New
introduced by AASB 12
disclosures
include
the
judgements made by management to
determine whether control exists, and to
require summarised information about
joint arrangements, associates and
structured entities and subsidiaries with
non-controlling interests.
disclosures
about
Effective date
(i.e. annual
reporting
periods ending
on or after)
31 December
2013
31 December
2013
31 December
2013
AASB 13
Fair Value
Measurement
None
AASB 13 establishes a single source of
guidance for determining the fair value
of assets and liabilities. AASB 13 does
not change when an entity is required to
fair value, but rather, provides
use
31 December
2013
Impact on Financial Statements
It introduces a revised definition of
control which will apply
to all
investees to determine the scope of
consolidation.
Traditional control assessments
based on majority ownership of
voting rights will rarely be affected.
However, 'borderline' consolidation
decisions will need to be reviewed
and some will need to be changed
taking into consideration potential
voting rights and substantive rights.
with
existing
Entities
joint
arrangements or that plan to enter
into new joint arrangements will be
affected by
the new standard.
These entities will need to assess
their arrangements
to determine
whether they have interests in a
joint operation or a joint venture
upon adoption of the new standard
or
the
entering
arrangement.
upon
into
Entities that have been accounting
for their interest in a joint venture
using proportionate consolidation
will no longer be allowed to use this
method; instead they will account
for the joint venture using the equity
method. In addition, there may be
some entities that previously equity-
accounted for investments that may
need to account for their share of
assets and liabilities now that there
is less focus on the structure of the
arrangement.
AASB 12 combines the disclosure
requirements for subsidiaries, joint
and
arrangements,
within
structured
a
comprehensive
disclosure
standard.
associates
entities
to
on
decisions
provide more
aims
It
'borderline'
transparency
and
consolidation
enhance
about
unconsolidated structured entities
in which an investor or sponsor has
involvement.
disclosures
AASB 13 has been issued to:
(a) establish a single source of
fair value
for all
guidance
measurements;
ANNUAL REPORT | 57
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
New/revised
pronouncement
Superceded
pronouncement
Explanation of amendments
Effective date
(i.e. annual
reporting
periods ending
on or after)
Impact on Financial Statements
guidance on how to determine fair value
when fair value is required or permitted
by other Standards. Application of this
definition may result in different fair
values being determined for the relevant
assets.
fair value. This
AASB 13 also expands the disclosure
requirements for all assets or liabilities
carried at
includes
the assumptions
information about
made and the qualitative impact of those
assumptions
value
determined.
the
fair
on
AASB 127
Separate Financial
Statements
AASB 127
(Consolidated
and Separate
Financial
Statements)
AASB 2010-8
AASB Int 121
Amendments to
Australian
Accounting
Standards –Deferred
Tax: Recovery of
Underlying Assets
[AASB 112]
As a result of the issuance of AASB 10,
AASB 127 has been restructured and
reissued to only deal with separate
financial statements.
31 December
2013
31 December
2012
address
amendments
the
These
determination of deferred
tax on
investment property measured at fair
rebuttable
introduce a
value and
presumption
tax on
that deferred
investment property measured at fair
value should be determined on the basis
the carrying amount will be
that
The
recoverable
sale.
incorporate AASB
amendments also
Interpretation 121
Income Taxes –
Recovery of Revalued Non-Depreciable
Assets into AASB 112.
through
.
AASB 2011-4
None
Amendments to
Australian
Accounting
Standards to
Remove Individual
Key Management
Personnel Disclosure
Requirements [AASB
124]
AASB 2011-7
None
Amendments to
Australian
Accounting
Standards arising
from the
Consolidation and
Joint Arrangements
Standards
The Standard deletes from AASB 124
individual key management personnel
disclosure requirements for disclosing
entities that are not companies.
30 June 2014
This Standard makes consequential
amendments
to various Australian
Accounting Standards arising from the
issuance of AASB 10, AASB 11, AASB
12, AASB 127 (August 2011) and AASB
128 (August 2011).
31 December
2013
(b) clarify
the definition of
fair
value and related guidance;
and
(c) enhance disclosures about fair
(new
value measurements
disclosures
increase
transparency about fair value
measurements, including the
valuation
and
inputs used to measure fair
value).
techniques
AASB 127 (August 2011) will now
solely address separate financial
statements, the requirements for
which are substantially unchanged
from the previous version of the
Standard.
The amendments brought in by this
Standard introduce a more practical
approach for measuring deferred
tax
tax
liabilities and deferred
assets when investment property is
measured using
fair value
model under AASB 140 Investment
Property.
the
that an
introduce
it or by selling
Under the current AASB 112, the
measurement of deferred
tax
liabilities and deferred tax assets
depends on whether an entity
expects to recover an asset by
it. The
using
a
amendments
investment
presumption
property
recovered entirely
is
through sale. This presumption is
rebutted if the investment property
is held within a business model
to consume
whose objective
substantially all of the economic
the
benefits
in
embodied
investment property over
time,
rather than through sale.
is
the
remove
The Standard makes amendments
individual key
to
management personnel disclosure
requirements,
are
as
considered to be more in the nature
of corporate governance and are
generally
the
covered
Corporations Act and disclosed
within
and/or
the Directors
Remuneration Report.
these
in
This Standard gives effect to many
consequential changes arising from
the issuance of the new Standards.
For example, references to AASB
127 Consolidated and Separate
Financial Statements are amended
to AASB 10 Consolidated Financial
Statements or AASB 127 Separate
Financial
and
references to AASB 131 Interests in
Joint Ventures are deleted as that
Standard has been superseded by
AASB 11 and AASB 128 (August
2011).
Statements,
ANNUAL REPORT | 58
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
New/revised
pronouncement
Superceded
pronouncement
Explanation of amendments
AASB 2011-9
None
Amendments to
Australian
Accounting
Standards –
Presentation of Other
Comprehensive
Income [AASB 101]
None
AASB 2012-2
Amendments to
Australian
Accounting
Standards –
Disclosures –
Offsetting Financial
Assets and Financial
Liabilities
None
AASB 2012-3
Amendments to
Australian
Accounting
Standards –
Offsetting Financial
Assets and Financial
Liabilities
AASB 2012-5
Amendments to
None
Australian
Accounting
Standards arising
from Annual
Improvements 2009–
2011 Cycle
Amendments to group items presented
in other comprehensive income on the
basis of whether they are potentially
in
reclassifiable
(reclassification
subsequent periods
foreign currency
adjustments, e.g.
those
translation reserves) and
that
cannot subsequently be
reclassified
(e.g. fixed asset revaluation surpluses).
to profit or
loss
Name changes of statements in AASB
101 as follows:
(a) One statement of comprehensive
income – to be referred to as
‘statement of profit or loss and other
comprehensive income’
(b) Two statements – to be referred to
as ‘statement of profit or loss’ and
‘statement
comprehensive
income’.
of
to
the required
This Standard amends
include
in AASB 7
disclosures
information that will enable users of an
entity’s financial statements to evaluate
the effect or potential effect of netting
arrangements, including rights of set-off
associated with the entity’s recognised
financial assets and recognised financial
liabilities, on
financial
position.
the entity’s
This Standard also amends AASB 132
to refer to the additional disclosures
added to AASB 7 by this Standard.
Standard
adds
to AASB 132
identified
application
This
to address
guidance
inconsistencies
in applying
some of the offsetting criteria of AASB
132, including clarifying the meaning of
“currently has a legally enforceable right
that some gross
of set-off” and
settlement systems may be considered
equivalent to net settlement.
Effective date
(i.e. annual
reporting
periods ending
on or after)
30 June 2013
Impact on Financial Statements
The main change will be
the
separation and classification of
within
components
other
income between
comprehensive
reclassification adjustments to profit
or loss and those that will not be
reclassified.
31 December
2013
31 December
2014
AASB 2012-2 principally amends
AASB 7 to require disclosure of
information that will enable users of
an entity’s financial statements to
evaluate
the effect or potential
effect of netting arrangements,
including rights of set-off associated
with
recognised
entity’s
financial assets and recognised
financial liabilities, on the entity’s
financial position.
the
identified
AASB 2012-3 adds application
guidance to AASB 132 to address
inconsistencies
in
the offsetting
applying some of
criteria of AASB 132,
including
clarifying the meaning of “currently
has a legally enforceable right of
that some gross
set-off” and
be
settlement
considered
net
settlement.
systems may
to
equivalent
These amendments are a consequence
of the annual improvements process,
which provides a vehicle for making
non-urgent but necessary amendments
to Standards.
31 December
2013
These amendments follow the issuance
of Annual
IFRSs
Improvements
the
2009–2011 Cycle
International Accounting Standards
Board in May 2012.
issued by
to
from
AASB 2012-5 makes amendments
the 2009-2011
resulting
Annual Improvements Cycle. The
Standard addresses a range of
improvements,
the
following:
including
(a) repeat application of AASB 1 is
permitted (AASB 1); and
(b) clarification of the comparative
information requirements when
third
an entity provides a
balance
(AASB
sheet
101 Presentation of Financial
Statements).
ANNUAL REPORT | 59
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
2.
PARENT ENTITY INFORMATION
The following information provided relates to the Company, Alara Resources Limited as at 30 June 2012.
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
Statement of Financial Position
Current assets
Non current assets
Total assets
Current liabilities
Non current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Accumulated losses
Total equity
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Notes to the Statement of Financial Position
(a) Current assets
(i) Cash and cash equivalents
Cash at bank
Term Deposits
(b) Non-current assets
(i) Loan to controlled entities
2012
$
2011
$
7,570,744
31,425,573
38,996,317
479,930
-
479,930
38,516,387
53,477,409
1,827,993
(16,789,015)
38,516,387
(2,509,370)
-
(2,509,370)
30,129,714
11,272,090
41,401,804
493,263
-
493,263
40,908,541
53,477,409
1,779,056
(14,347,924)
40,908,541
(4,147,959)
-
(4,147,959)
1,033,994
6,417,677
7,451,671
2,665,038
27,136,984
29,802,022
Details of the percentage of ordinary shares held in controlled entities are disclosed in (b)(ii) below. The amounts owed
remain outstanding at balance date. Provision for impairment on amounts receivable has been raised in relation to any
outstanding balances amounts owed by controlled entities. Interest is not charged on such outstanding amounts.
g
g
g
y
Amounts owed by controlled entities
Provision for impairment
Movement in loans to controlled entities
Opening balance
Loans advanced
Closing balance
Movement in provision for impairment of receivables
Opening balance
Provision for impairment recognised during the year
Provision for impairment on amounts receivable
2012
$
34,209,799
(3,352,651)
30,857,148
13,654,524
20,555,275
34,209,799
2011
$
13,654,524
(3,352,651)
10,301,873
2,825,020
10,829,504
13,654,524
(3,352,651)
-
(3,352,651)
(2,695,125)
(657,526)
(3,352,651)
ANNUAL REPORT | 60
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
2.
PARENT ENTITY INFORMATION (continued)
Percentage of Ownership
(b) Non-current assets
(ii) Investment in Controlled Entities
Hume Mining Pty Ltd
Alara Operations Pty Ltd (AOP)
Alara Peru Operations Pty Ltd (APO)
Alara Saudi Operations Pty Ltd (ASO)
Alara Chile Operations Pty Ltd (ACO)
Alara Saudi Marjan Operations Pty Limited
Alara Oman Operations Pty Limited (AOO)
Alara Kingdom Operations Pty Limited (AKO)
Alara Resources LLC (controlled entity of AOO)
Daris Resources LLC (jointly controlled entity of AOO)
Pilatus Resources Oman LLC (controlled entity of AOO)
Awtad Copper LLC (controlled entity of AOO)
Khnaiguiyah Mining Company LLC (KMC)
(jointly controlled entity of ASO)
Sita Mining LLC (controlled entity of AKO)
Inversiones Alara Chile Limitada (IAC)
(subsidiary of ACO)
El Quillay SpA (controlled entity of IAC)
Alara Resources Ghana Limited
Alara Peru S.A.C (subsidiary of APO)
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Oman
Oman
Oman
Oman
Saudi Arabia
Date of
Incorporation
29-Mar-94
5-Feb-07
9-Mar-07
4-Aug-10
28-Oct-09
14-Feb-11
28-Jun-10
5-Sep-11
2-Oct-10
1-Dec-10
6-Feb-07
24-Sep-09
10-Jan-11
Saudi Arabia
Chile
16-May-11
31-Aug-11
Chile
Ghana
Peru
21-Oct-11
8-Dec-09
1-Mar-07
2012
100%
100%
100%
100%
100%
100%
100%
100%
70%
50%
75%
70%
50%
70%
100%
70%
100%
100%
3.
LOSS FOR THE YEAR
The operating loss before income tax includes the following items of revenue and expense:
(a) Revenue
Interest
Foreign exchange movement
(b) Expenses
Net loss on financial assets held at fair value through profit or loss
Impairment of exploration expenditure
Personnel
- cash remuneration
- options remuneration (non-cash)
- employee benefits
Occupancy expenses
Foreign exchange movement
Finance expenses
Borrowing cost - interest paid
Corporate expenses
Administration expenses
- Communications
- Consultancy fees
- Travel, accommodation and incidentals
- Professional fees
- Insurance
- Depreciation
- Fixed assets written down
- Net loss on disposal of fixed assets
- Other administration expenses
2012
$
1,265,530
460,382
1,725,912
482,475
432,610
1,853,046
117,217
223,094
480,089
-
21,573
30,293
87,736
73,613
90,793
485,633
247,722
29,384
118,705
-
-
201,466
4,975,449
Ownership
2011
100%
100%
100%
100%
100%
100%
100%
-
70%
50%
-
-
50%
-
-
-
-
-
100%
100%
2011
$
299,516
-
299,516
910,657
41,469
1,396,016
299,629
47,861
222,808
363,550
12,652
443
118,810
99,642
168,233
396,768
380,804
21,687
39,009
4,339
156
264,690
4,789,223
ANNUAL REPORT | 61
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
4.
INCOME TAX EXPENSE
(a) Income tax expense
Current tax
Current year
Total income tax expense/(benefit) per statement of comprehensive income
(b)
Numerical reconciliation of income tax expense to prima facie tax
payable
Loss before income tax
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
2012
$
2011
$
-
-
-
-
-
-
(3,249,537)
(4,489,707)
Tax at the Australian tax rate of 30% (2011: 30%)
(974,861)
(1,346,912)
Tax effect of amounts which are not deductible/(taxable) in calculating
taxable income:
Non-deductible expenses
Other deductible expenses
Other non assessable income
Tax losses not brought to account
Income tax expense/(benefit) attributable to operating profit
Under/(over) provision in respect to prior years
Income tax expense/(benefit)
(c) Deferred tax liabilities not brought to account at 30%
Other
Potential tax liability at 30%
(d) Deferred tax assets not brought to account at 30%
Revenue losses
Other
Potential tax benefit at 30%
311,923
-
(128,834)
791,772
-
-
275,270
-
-
1,071,642
-
-
-
(8,690,783)
(8,690,783)
(2,690,181)
(2,690,181)
12,895,219
502,163
13,397,382
5,066,879
312,800
5,379,679
The Deferred Tax Asset not brought to account for the period will only be obtained if:
(i)
the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit to be
realised;
(ii)
(iii)
the Company continues to comply with the conditions for deductibility imposed by tax legislation; and
the Company is able to meet the continuity of ownership and/or continuity of business tests under tax legislation.
The Consolidated Entity has elected to consolidate for taxation purposes and has entered into a tax sharing and funding
agreement in respect of such arrangements.
5.
KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Key management personnel compensation
Directors
Short-term employee benefits - cash fees and bonus and allowance
Post-employment benefits - superannuation
Equity based payments
Other key management personnel
Short-term employee benefits - cash fees, bonus and allowance
Post-employment benefits - superannuation
2012
$
2011
$
738,136
130,578
-
868,714
90,000
8,100
98,100
569,727
81,432
74,600
725,759
93,462
8,411
101,873
ANNUAL REPORT | 62
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
5.
KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
Detailed remuneration disclosures are provided in the Remuneration Report section of the Directors' Report for the year ended 30
June 2012.
Balance at
start of the year
Balance at
appointment/
cessation
(b) Shareholdings of key management personnel
2012
Directors
Ian Williams
H. Shanker Madan
Farooq Khan
William Johnson
Douglas Stewart
Other key management personnel
Victor Ho (Company Secretary)
2011
Ian Williams (appointed 30/11/10)
H. Shanker Madan
Farooq Khan
William Johnson (appointed 26/10/09)
Douglas Stewart (appointed 30/11/10)
Other key management personnel
Victor Ho (Company Secretary)
-
508,257
98,242
27,000
-
189,503
508,257
939,168
27,000
-
-
-
-
(840,926)
-
-
-
508,257
98,242
27,000
-
189,503
189,503
-
Net
Changes
-
-
-
-
-
Balance at
end of the year
-
508,257
98,242
27,000
-
(171,090)
18,413
The disclosures of equity holdings above are in accordance with the accounting standards which requires a disclosure of shares
held directly, indirectly or beneficially by each key management person, a close member of the family of that person, or an entity
over which either of these persons have, directly or indirectly, control, joint control or significant influence (as defined under
Accounting Standard AASB 124 Related Party Disclosures).
(c) Options, rights and equity instruments provided as remuneration
Details of options provided as remuneration are disclosed in the Remuneration Report section of the Directors' Report. There
were no shares issued on the exercise of these options during the financial year. There were no options issued to Key
Management Personnel during the year.
(d) Unlisted option holdings of key management personnel
2012
Directors
Ian Williams
H. Shanker Madan
Farooq Khan
William Johnson
Douglas Stewart
Other key management personnel
Victor Ho (Company Secretary)
2011
Directors
Ian Williams
H. Shanker Madan
Farooq Khan
William Johnson
Douglas Stewart
Other key management personnel
Victor Ho (Company Secretary)
Balance at
appointment/
start of the year
250,000
8,200,000
8,200,000
3,000,000
250,000
3,350,000
Granted as
compensation
Net
Changes
Balance at
cessation/
end of the year
Vested &
Exercisable
-
-
-
-
-
-
-
-
-
-
-
250,000
8,200,000
8,200,000
3,000,000
250,000
250,000
8,200,000
8,200,000
3,000,000
250,000
-
3,350,000
3,350,000
8,200,000
8,200,000
3,000,000
250,000
-
-
-
250,000
-
-
-
-
-
250,000
8,200,000
8,200,000
3,000,000
250,000
250,000
8,200,000
8,200,000
3,000,000
250,000
3,350,000
-
-
3,350,000
3,350,000
* Net Change Other refers to net options that have been cancelled, forfeited or transferred during the year
Details of options held by Key Management Personnel are disclosed in the Remuneration Report section of the Directors' Report.
ANNUAL REPORT | 63
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
5.
KEY MANAGEMENT PERSONNEL DISCLOSURES (continued)
(e) Loans to key management personnel
There were no loans to key management personnel during the financial year.
(f) Other transactions with key management personnel
There were no other transactions with key management personnel during the financial year.
6.
AUDITOR'S REMUNERATION
During the year the following fees were paid or payable for services provided by the auditors
to the Consolidated Entity, their related practices and non-audit related firms:
Grant Thornton Audit Pty Ltd - Auditors of the Consolidated Entity
Audit and review of financial reports
Grant Thornton Australia Limited - related practice of Grant Thornton Audit Pty Ltd
Taxation services
Moore Stephens Chartered Accountants - Auditors of Oman controlled entities
Audit and review of financial reports
Aldar Audit Bureau, Abdullah Al Bas & Co - Auditors of Saudi Arabian controlled entity
Audit and review of financial reports
2012
$
36,000
2011
$
30,500
10,950
10,754
4,459
2,573
-
51,409
4,403
48,230
7.
LOSS PER SHARE
Basic loss per share (cents)
Diluted loss per share (cents)
Loss used to calculate earnings per share ($)
Weighted average number of ordinary shares during the period used in calculation
of basic loss per share
2012
(1.50)
n/a
(3,151,331)
2011
(3.84)
n/a
(4,450,971)
210,507,500
116,058,185
Under AASB 133 "Earnings per share", potential ordinary shares such as options will only be treated as dilutive when their conversion to
ordinary shares would increase loss per share from continuing operations.
Diluted loss per share is not calculated as it does not increase the loss per share.
8.
CASH AND CASH EQUIVALENTS
Cash in hand
Cash at bank
Term Deposits
2012
$
41,296
2,431,796
8,477,340
10,950,432
2011
$
41,107
5,048,490
27,150,984
32,240,581
Cash at bank includes USD$1.830 million (AUD$1.814 million) held in at call accounts.
The Consolidated Entity has granted a term deposit security bond to the value of $130,600 (2011: $130,600) which has not been called
up as at balance date. A total of $32,000 of the security bond is in relation to its Australian tenements.
The effective interest rate on short-term bank deposits was 5.22% (2011: 6.05%) with an average maturity of 85 days.
ANNUAL REPORT | 64
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
8.
CASH AND CASH EQUIVALENTS (continued)
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
(a) Risk exposure
The Consolidated Entity’s exposure to interest rate and foreign exchange risk is discussed in Note 21. The maximum exposure to
credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.
(b) Reconciliation of Net Profit/(Loss) after Tax to Net Cash Flow from Operations
Loss after income tax
Net gain/(loss) on financial assets held at fair value through profit or loss
Impairment of exploration expenditure
Directors' and Employee options
Foreign exchange movement
Depreciation
Write off/down-Fixed assets
Net reversal of prior year unrealised loss/unrealised loss on financial assets
fair value through profit or loss
(Increase)/Decrease in Assets:
Trade and other receivables
Resource projects
Other current assets
Increase/(Decrease) in Liabilities:
Trade and other payables
Provisions
Net cashflows used in from operating activities
(c) Non-cash financing and investing activities
Share based payments (Refer to Note 19)
9.
TRADE AND OTHER RECEIVABLES
Current
Amounts receivable from
Sundry debtors
Goods and services tax recoverable
Other receivables
(a) Risk exposure
2012
$
(3,249,537)
482,475
432,610
117,217
(460,382)
118,705
-
-
(719,762)
-
(87,880)
1,691,013
178,732
(1,496,809)
2011
$
(4,489,707)
910,657
299,629
363,550
39,009
4,339
156
(361,054)
27,707
(18,955)
131,893
46,662
(3,046,114)
48,938
268,400
2012
$
2011
$
881,370
62,936
38,178
982,484
212,046
189,787
104,349
506,182
Information about the Consolidated Entity's exposure to credit risk, foreign exchange risk and interest rate risk is in Note 21.
(b)
Impaired receivables
None of the above receivables are impaired or past due.
10. OTHER CURRENT ASSETS
Prepayments
2012
$
2011
$
108,726
20,846
ANNUAL REPORT | 65
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
11. FINANCIAL ASSETS HELD AT FAIR VALUE THROUGH PROFIT AND LOSS
Listed investments at fair value
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
2012
$
393,128
2011
$
875,603
Net gains in the fair value of "financial assets at held fair value through profit and loss" are recorded as Income (refer to Note 3(a) where
applicable) and net loss on the "fair value of financial assets held at fair value through profit and loss" are recorded as an Expense
(refer to Note 3(b) where applicable). The fair value of listed shares has been determined directly by reference to published price
quotations in an active market.
Risk exposure
Information about the Consolidated Entity's exposure to price risk is in Note 21.
12. PROPERTY, PLANT AND EQUIPMENT
At 1 July 2010
Cost or fair value
Accumulated depreciation
Net carrying amount
Year ended 30 June 2011
Carrying amount at beginning
Additions
Disposal
Depreciation expense
At 30 June 2011
Cost or fair value
Accumulated depreciation
Net carrying amount
Year ended 30 June 2012
Carrying amount at beginning
Additions
Disposal
Depreciation expense
Closing amount at balance date
Year ended 30 June 2012
Cost or fair value
Accumulated depreciation
Net carrying amount
Motor
Vehicles
$
Office
Equipment
$
Plant and
Equipment
$
Total
$
-
-
-
61,495
-
(5,083)
56,412
61,495
(5,083)
3,008
(569)
2,439
2,439
72,726
(3,090)
(14,995)
57,080
72,644
(15,564)
76,496
(38,651)
37,845
37,845
50,932
(1,505)
(18,931)
68,341
125,923
(57,582)
56,412
57,080
68,341
56,412
36,367
-
(42,211)
-
50,568
57,080
140,793
-
(45,112)
68,341
74,101
(31,381)
152,761
111,061
98,010
(47,442)
213,016
(60,255)
173,854
(62,793)
50,568
152,761
111,061
79,504
(39,220)
40,284
40,284
185,153
(4,595)
(39,009)
181,833
260,062
(78,229)
-
181,833
181,833
251,261
-
(118,704)
-
314,390
484,880
(170,490)
-
314,390
ANNUAL REPORT | 66
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
13. RESOURCE PROJECTS
Opening balance
Excess of consideration of resource projects acquired
Exploration and evaluation expenditure
Impairment of exploration and evaluation expenditure
Closing balance
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
2012
$
7,200,540
-
18,898,110
(432,610)
25,666,040
2011
$
-
3,582,558
3,659,451
(41,469)
7,200,540
The excess of consideration for resource projects acquired relate to the Consolidated Entity's investment in jointly controlled joint
venture entity Khnaiguiyah Mining Company LLC (KMC) (Saudi Arabia) (50%) whereby the Consolidated Entity contributed 100% of the
initial share capital on incorporation. The excess value comprises 50% of the value of the initial share capital invested in KMC plus
100% of the vendor payments made to Manajem (refer Note 23(a)) for details of the vendor payments pursuant to a joint venture
shareholders' agreement).
In accordance with AASB 136: Impairment of Assets, an impairment loss of $432,610 (2011: $41,469) has been recognised for the year
in relation to the Consolidated Entity's capitalised exploration and evaluation expenditure that have been written-off.
The Consolidated Entity has granted a security bond to the value of $32,000 (2011: $14,000), which has not been called up as at
balance date.
14. OTHER NON-CURRENT ASSETS
Excess of consideration of resource projects acquired
Costs incurred in relation to resource projects
2012
$
341,112
2,923,948
3,265,060
2011
$
321,167
1,341,214
1,662,381
The excess of consideration for resource projects acquired relates to the Consolidated Entity's investment in jointly controlled joint
venture entity, Daris Resources LLC (Oman) (50%) and controlled joint venture entity, Alara Resources LLC (Oman) (70%) whereby the
Consolidated Entity contributed 100% of the initial share capital on incorporation. The excess value comprises 50% and 30% of the
value of the initial share capital invested in Daris Resources LLC and Alara Resources LLC respectively. The amounts incurred in
relation to resource projects have been classified as Other Non-Current Assets and not as Non-Current Assets (Resource Projects) as,
at balance date, the conditions precedent under the shareholder's agreements for the above entities were still outstanding.
15. TRADE AND OTHER PAYABLES
15 TRADE AND OTHER PAYABLES
Current
Trade payables
Other payables
Non Current
Loan owed to joint venture partner
2012
$
1,929,197
427,415
2,356,612
2011
$
394,953
233,741
628,694
1,508,795
1,508,795
3,865,407
2,137,489
Due to the short term nature of the trade and other payables, their carrying value is assumed to approximate their fair value.
Loan owed to joint venture partner comprise a loan owed by Khnaiguiyah Mining Company LLC (KMC) to 50% shareholder, United
Arabian Mining Company LLC (Manajem). The loan to KMC from Manajem amounts to USD$3 million. At 30 June 2012, an amount of
$1,508,795 has been recognised representing the element of this liability (50%) which has not been eliminated on consolidation.
(a) Risk exposure
Details of the Consolidated Entity's exposure to risks arising from current payables are set out in Note 21.
ANNUAL REPORT | 67
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
16. PROVISIONS
Current
Employee benefits - annual leave
Non Current
Employee benefits - long service leave
(a) Movement in provision for employee benefits - annual leave
Opening balance
Additional/(Reversal) of provision
Closing balance
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
2012
$
293,398
-
293,398
114,663
178,735
293,398
2011
$
114,663
-
114,663
56,034
58,629
114,663
Amounts not expected to be settled within the next 12 months
The entire annual leave obligation is presented as current, since the Consolidated Entity does not have an unconditional right to
defer settlement. However based on past experience, the Consolidated Entity does not expect all employees to take the full
amount of the accrued leave within the next 12 months. The non-current provision for long service leave is a provision towards the
future entitlements of employees who have completed the required period of long service. The following amounts reflect a
provision for leave that is not expected to be taken or paid within the next 12 months.
(b) Movement in provision for employee benefits - long service leave
Opening balance
Additional/(Reversal) of provision
Closing balance
2012
$
2011
$
-
-
-
11,967
(11,967)
-
The Consolidated Entity has provided for pro-rata long service leave notwithstanding no employee has an entitlement in this
regard. Accordingly, the entire provision is presented as non-current as no payments are expected to be made within the next 12
months.
17.
ISSUED CAPITAL
Fully paid ordinary shares
30 Jun 11
At 1 July 2011
Number of Shares
2012
2011
2012
$
210,507,500
210,507,500
53,477,409
Date of
issue
Number of
shares
210,507,500
2011
$
53,477,409
$
53,477,409
At 30 June 2012
No share movement during the 30 June 2012 financial year
210,507,500
53,477,409
30 June 11
At 1 July 2011
At 30 June 2012
210,507,500
53,477,409
210,507,500
53,477,409
Each fully paid ordinary share carries one vote per share and the right to participate in dividends. Ordinary shares have no par value
and the Company does not have a limit on the amount of its capital.
ANNUAL REPORT | 68
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
17.
ISSUED CAPITAL (continued)
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
Capital risk management
The Consolidated Entity's objective when managing its capital is to safeguard its ability to continue as a going concern, so that it can
continue to provide returns for shareholders and benefits for other stakeholders and to maintain a capital structure balancing the
interests of all shareholders. The Board will consider capital management initiatives as is appropriate and in the best interests of the
Consolidated Entity and shareholders from time to time, including undertaking capital raisings to fund its commitments and working
capital requirements. The Consolidated Entity has no external borrowings. The Consolidated Entity's non-cash investments can be
realised to meet accounts payable arising in the normal course of business.
The Directors contemplate that Consolidated Entity may undertake a capital raising within the next 12 months to fund the Consolidated
Entity’s share of equity/project financing obligations in relation to its resource projects and for general working capital purposes.
18. RESERVES
Foreign currency translation reserve
Options reserve
2012
$
31,702
1,827,993
1,859,695
2011
$
68,610
1,779,055
1,847,665
Foreign currency translation reserve
Exchange differences arising on translation of a foreign controlled entity's financial results and position are taken to the foreign currency
translation reserve. The reserve is recognised when the investment is disposed of.
Options Reserve
The number of unlisted options outstanding over unissued ordinary shares at balance date is as follows:
;
p
p
$
Directors' Options
Unlisted options exercisable at $0.35; expiring 16 Sep 2013
Unlisted options exercisable at $0.35; expiring 25 Oct 2014
Unlisted options exercisable at $0.60; expiring 25 Oct 2014
Unlisted options exercisable at $0.60; expiring 25 May 2014
Employees' Options
Unlisted options exercisable at $0.55; expiring 27 Jul 2012
Unlisted options exercisable at $0.35; expiring 16 Sep 2013
Unlisted options exercisable at $0.35; expiring 25 Oct 2014
Unlisted options exercisable at $0.60; expiring 25 Oct 2014
Unlisted options exercisable at $0.35; expiring 22 Aug 2015
Unlisted options exercisable at $0.50; expiring 25 May 2014
Unlisted options exercisable at $0.60; expiring 25 May 2014
Unlisted options exercisable at $0.70; expiring 25 May 2014
Unlisted options exercisable at $0.50; expiring 25 May 2014
Unlisted options exercisable at $0.60; expiring 25 May 2014
Unlisted options exercisable at $0.70; expiring 25 May 2014
Unlisted options exercisable at $0.50; expiring 25 May 2014
Unlisted options exercisable at $0.60; expiring 25 May 2014
Unlisted options exercisable at $0.70; expiring 25 May 2014
p
g
Grant date
17-Sep-08
30-Nov-09
30-Nov-09
26-May-11
27-Jul-07
p
17-Sep-08
26-Oct-09
26-Oct-09
23-Aug-10
26-May-11
26-May-11
26-May-11
02-Sep-11
02-Sep-11
02-Sep-11
23-Dec-11
23-Dec-11
23-Dec-11
Number of
options
16,400,000
2,000,000
1,000,000
500,000
500,000
,
,
1,000,000
1,650,000
1,000,000
400,000
300,000
300,000
300,000
200,000
125,000
125,000
200,000
125,000
125,000
26,250,000
2012
$
569,080
247,317
106,698
74,601
89,500
,
43,159
276,365
147,306
21,913
48,395
44,757
41,687
33,072
19,001
17,594
22,887
12,908
11,753
1,827,993
2011
$
569,080
247,317
106,698
74,601
89,500
,
43,159
276,365
147,306
21,913
80,643
63,411
59,062
-
-
-
-
-
-
1,779,055
During the year, the following cancelled and lapsed option were transferred from the Options Reserve to Accumulated Losses pursuant
to AASB 2 "Share based payments":
(i)
(ii)
(iii)
200,000 lapsed unlisted $0.50 (25 May 2014) Options amounted to $32,249.
125,000 lapsed unlisted $0.60 (25 May 2014) Options amounted to $18,655.
125,000 lapsed unlisted $0.70 (25 May 2014) Options amounted to $17,375.
The Option Reserve records the consideration (net of expenses) received by the Company on the issue of listed options and the fair
value of unlisted Directors' and Employees' options which were issued for nil consideration.
ANNUAL REPORT | 69
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
18.
RESERVES (Continued)
Equity based remuneration (Refer to Note 19)
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
On 2 September 2011, the following unlisted options were granted to a nominee of an employee as part of his remuneration package:
200,000 $0.50 (25 May 2014) options, 125,000 $0.60 (25 May 2014) options and 125,000 $0.70 (25 May 2014) options. On 23
December 2011, the following unlisted options were granted to a nominee of an employee as part of his remuneration package: 200,000
$0.50 (25 May 2014) options, 125,000 $0.60 (25 May 2014) options and 125,000 $0.70 (25 May 2014) options.
19. SHARE BASED PAYMENTS
A total of 900,000 unlisted options (all expiring on 25 May 2014) were issued to nominees of employees as part of their remuneration
package during the year (Refer to Note 18).
A total of 450,000 unlisted (25 May 2014) options lapsed during the year.
The reasons for the grant of these options to employees are as follows:
(i)
(ii)
(iii)
(iv)
(v)
The number of options issued have been determined having regard to the level of salaries/fees being paid and is a cash free,
effective and efficient way of providing an appropriate level of remuneration as well as providing ongoing equity based incentives
for them to remain with the Company with a view to improving the future growth of the Company.
The options issue was designed to act as an incentive to strive to achieve the Company’s goals with the aim of enhancing
shareholder value.
The options provide an equity holding opportunity which is linked to the Company’s share price performance.
Based on the option exercise price and the rate at which the options vest, the exercise of the options is potentially only likely to
occur if there is sustained upward movement in the Company’s share price.
As an exploration company with much of its available funds dedicated or committed to its resource projects and in financing its day
to day working capital requirements, the Company is not always in a position to maintain competitive cash salary ranges within the
industry in which it operates.
Options granted to Directors and employees carry no dividend or voting rights.
Grant date Expiry date
Exercise
price
Opening
balance
Movement during the year
Granted
Exercised
Lapsed
17-Sep-08
16-Sep-13
30-Nov-09
30-Nov-09
26-May-11
27-Jul-07
17-Sep-08
26-Oct-09
26-Oct-09
23-Aug-10
26-May-11
26-May-11
25-Oct-14
25-Oct-14
26-May-14
16-Sep-12
16-Sep-13
25-Oct-14
25-Oct-14
22-Aug-15
25-May-14
25-May-14
26-May-11
25-May-14
02-Sep-11
02-Sep-11
25-May-14
25-May-14
02-Sep-11
25-May-14
23-Dec-11
23-Dec-11
25-May-14
25-May-14
23-Dec-11
25-May-14
$0.35
$0.35
$0.60
$0.60
$0.55
$0.35
$0.35
$0.60
$0.35
$0.50
$0.60
$0.70
$0.50
$0.60
$0.70
$0.50
$0.60
$0.70
16,400,000
2,000,000
1,000,000
500,000
500,000
1,000,000
1,650,000
1,000,000
400,000
500,000
425,000
425,000
-
-
-
-
-
-
-
-
200,000
125,000
125,000
200,000
125,000
125,000
(200,000)
(125,000)
(125,000)
-
-
-
-
-
-
Closing
balance
16,400,000
2,000,000
1,000,000
500,000
500,000
1,000,000
1,650,000
1,000,000
400,000
300,000
300,000
300,000
-
200,000
125,000
125,000
-
200,000
125,000
125,000
As at 30 June 2012
Vested and
exercisable
Fair value
$
16,400,000
2,000,000
1,000,000
500,000
500,000
1,000,000
1,650,000
1,000,000
400,000
300,000
300,000
300,000
-
200,000
125,000
125,000
-
200,000
125,000
125,000
569,080
247,317
106,698
74,601
89,500
43,159
276,365
147,306
21,913
48,395
44,757
41,687
33,072
19,001
17,594
22,887
12,908
11,753
Weighted average exercise price
0.39
0.58
0.58
0.39
0.39
1,827,993
25,800,000
900,000
-
(450,000)
26,250,000
26,250,000
1,827,993
ANNUAL REPORT | 70
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
19. SHARE BASED PAYMENTS (continued)
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
The weighted average balance of the contractual term of the options outstanding at the balance date was 1.9 years.
There were no shares issued as a result of the exercise of any options during the year (2011: nil).
The fair value of these options are expensed, from their date of grant, over their vesting period; fair values are determined as at date of
grant using the Black-Scholes options valuation model that takes into account the exercise price, the term of the option, the underlying
share price as at date of grant, the expected price volatility of the underlying shares and the risk-free interest rate for the term of the
option. The Company is required to expense the fair value of options granted, on the basis that the fair value cost at date of grant is
apportioned over the vesting period applicable to each option. The model inputs for assessing the fair value of options granted during
the period are as follows:
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
options are granted for no consideration and vest as detailed in the table below;
exercise price is as detailed in the table above;
grant or issue date is as detailed in the table above;
expiry date is as detailed in the table above;
share price is based on the last bid price on ASX as at date of grant, as detailed in the table below;
expected price volatility of the Company’s shares has been assessed independently as described in the table below;
expected dividend yield is nil; and
risk-free interest rate is based on the 3/5 year Commonwealth bond yield, as detailed in the table below.
ANNUAL REPORT | 71
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
19. SHARE BASED PAYMENTS (continued)
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
Date of issue
27-Jul-07
Description of
Unlisted Options
$0.55 (26 July 2012) Options
Vesting Criteria
1/3 on 26 January 2008, 1/3 on 26 July 2008
and 1/3 on 26 January 2009
Share
Price at
Grant Date
$0.27
Risk free
rate
6.29%
Price
volatility
95%
17-Sep-08
$0.35 (16 September 2013)
Options
75% on grant and 25% on 16 September 2009
$0.07
5.46%
95%
17-Sep-08
$0.35 (16 September 2013)
Options
50% on 16 March 2009, 25% on 16
September 2009 and 16 March 2010
$0.07
5.46%
95%
vested at the date of the issue of the options
$0.24
5.57%
95%
26-Oct-09
$0.60 (24 October 2014)
Options
26-Oct-09
30-Nov-09
30-Nov-09
30-Nov-09
23-Aug-10
26-May-11
$0.35 (24 October 2014)
Options
$0.60 (24 October 2014)
Options
$0.35 (24 October 2014)
Options
$0.35 (24 October 2014)
Options
$0.35 (22 August 2015)
Options
$0.60 (25 May 2014) Options
vested at the date of the issue of the options
$0.24
5.57%
vested at the date of the issue of the options
$0.19
4.95%
vested at the date of the issue of the options
$0.19
4.95%
vested at the date of the issue of the options
$0.19
4.95%
vested at the date of the issue of the options
$0.10
4.50%
vested at the date of the issue of the options
$0.31
4.96%
26-May-11
$0.50 (25 May 2014) Options
vested at the date of the issue of the options
$0.31
4.96%
26-May-11
$0.60 (25 May 2014) Options
vested at the date of the issue of the options
$0.31
4.96%
26-May-11
$0.70 (25 May 2014) Options
vested at the date of the issue of the options
$0.31
4.96%
02-Sep-11
$0.60 (25 May 2014) Options
vested at the date of the issue of the options
$0.27
3.12%
02-Sep-11
$0.70 (25 May 2014) Options
vested at the date of the issue of the options
$0.27
3.12%
02-Sep-11
$0.50 (25 May 2014) Options
vested at the date of the issue of the options
$0.27
3.12%
23-Dec-11
$0.50 (25 May 2014) Options
vested at the date of the issue of the options
$0.27
3.12%
23-Dec-11
$0.60 (25 May 2014) Options
vested at the date of the issue of the options
$0.27
3.12%
23-Dec-11
$0.70 (25 May 2014) Options
vested at the date of the issue of the options
$0.27
3.12%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
ANNUAL REPORT | 72
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
20. SEGMENT INFORMATION
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
Management has considered the activities/operations and geographical perspective within the operating results and have determined
that the Consolidated Entity operates in Australia, Saudi Arabia, Oman and Chile within one major segment - the resource exploration,
evaluation and development sector. Unallocated items comprise share investments, corporate assets, office expenses and income tax
assets and liabilities.
Year ended 30 June 2012
Total segment revenues
Total segment loss before tax
Total segment assets
Total segment liabilities
Year ended 30 June 2011
Total segment revenues
Total segment loss before tax
Total segment assets
Total segment liabilities
Australia
$
-
(3,348,613)
13,676,474
(485,649)
Resource Projects
Oman
$
Saudi Arabia
$
Peru
$
Chile
$
Unallocated
$
Total
$
-
(285,407)
3,586,572
(120,507)
-
(338,613)
21,778,557
(3,158,009)
-
(458,031)
69,749
(19,682)
-
(62,310)
2,175,781
(124,958)
-
-
-
(4,492,974)
41,287,133
(3,908,805)
-
(3,095,898)
32,513,393
(499,690)
-
(151,297)
1,529,291
(16,819)
-
(260,495)
7,659,673
(1,727,278)
-
(48,373)
110,006
(8,365)
-
-
-
-
-
-
-
-
-
(3,556,063)
41,812,363
(2,252,152)
(a) Reconciliation of segment information
(i) Total segment revenues
Interest
Foreign exchange movement
Total Revenue as per Statement of Comprehensive Income
(ii) Total segment loss before tax
Interest
Net loss on financial assets held at fair value through profit or loss
Foreign exchange movement
Total Net Loss before Tax as per Statement of Comprehensive Income
(iii) Total segment assets
Financial assets at held fair value through profit and loss
Total Assets as per Statement of Financial Position
21. FINANCIAL RISK MANAGEMENT
2012
$
-
1,265,530
460,382
1,725,912
(4,492,974)
1,265,530
(482,475)
460,382
(3,249,537)
41,287,132
393,128
41,680,260
2011
$
-
299,516
-
299,516
(3,556,063)
299,516
(910,657)
(322,503)
(4,489,707)
41,812,363
875,603
42,687,966
The Consolidated Entity's financial
instruments mainly consist of deposits with banks, accounts receivable and payable, and
investments in a listed security. The principal activity of the Consolidated Entity is resource exploration and evaluation. The main risks
arising from the Consolidated Entity's financial
instruments are price (which includes interest rate and market risk), credit, foreign
currency and liquidity risks.
Risk management is carried out by the Board of Directors. The Board evaluates, monitors and manages the Consolidated Entity's
financial risk in close co-operation with its operating units.
The financial receivables and payables of the Consolidated Entity in the table below are due or payable within 30 days. The financial
investments are held for trading and are realised at the discretion of the Board.
The Consolidated Entity holds the following financial instruments:
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial assets at fair value through profit or loss
Financial liabilities at amortised cost
Trade and other payables
Net Financial Assets
2012
$
10,950,432
982,484
393,128
12,326,044
2011
$
32,240,581
506,182
875,603
33,622,366
(3,865,407)
(3,865,407)
(2,137,489)
(2,137,489)
8,460,637
31,484,877
ANNUAL REPORT | 73
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
21. FINANCIAL RISK MANAGEMENT (continued)
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
(a) Market Risk
(i)
Price risk
The Consolidated Entity is exposed to equity securities price risk. This arises from investments held by the Consolidated Entity
and classified in the statement of financial position at fair value through profit or loss. The Consolidated Entity is not directly
exposed to commodity price risk.
The value of a financial instrument will fluctuate as a result of changes in market prices, whether those changes are caused by
factors specific to the individual instrument or its issuer or factors affecting all instruments in the market. The Consolidated Entity
does not manage this risk through entering into derivative contracts, futures, options or swaps. Market risk is minimised through
ensuring that investment activities are undertaken in accordance with Board established mandate limits and investment strategies.
The Consolidated Entity has performed a sensitivity analysis on its exposure to equity securities price risk which comprise shares
in Strike Resources Limited (ASX code: SRK) at balance date. The analysis demonstrates the effect on the current year results
and equity which could result from a change in these risks. The SRK shares was utilised as the benchmark for the portfolio at fair
value through profit or loss.
Change in profit
Increase by 15%
Decrease by 15%
Change in equity
Increase by 15%
Decrease by 15%
2012
$
58,969
(58,969)
58,969
(58,969)
2011
$
131,340
(131,340)
131,340
(131,340)
(ii)
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The
Consolidated Entity's exposure to market risk for changes in interest rates relate primarily to investments held in interest bearing
instruments. The average interest rate applicable to funds held on deposit during the year was 5.22% (2011: 6.05%).
Cash at bank
Term deposits
2012
$
2,431,796
8,477,340
10,909,136
2011
$
5,048,490
27,150,984
32,199,474
The Consolidated Entity has no borrowings and no liability exposure to interest rate risk. It has therefore not been included in the
sensitivity analysis. However the revenue exposure to interest rate risk is material in terms of the possible impact on profit or loss
or total equity. It has therefore been included in the sensitivity analysis below:
Change in profit
Increase by 3%
Decrease by 3%
Change in equity
Increase by 3%
Decrease by 3%
2012
$
328,513
(328,513)
328,513
(328,513)
2011
$
967,217
(967,217)
967,217
(967,217)
ANNUAL REPORT | 74
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
21. FINANCIAL RISK MANAGEMENT (continued)
(iii) Foreign exchange risk
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
The Consolidated Entity is not materially exposed to foreign currency risk in cash held in Omani Rials (OMR) and Saudi Riyals
(SAR) by the Consolidated Entity's foreign controlled entity, foreign resource project investment commitments and exploration and
evaluation expenditure on foreign resource projects. The primary currency giving rise to this risk is US dollars (USD). The
Consolidated Entity has not entered into any forward exchange contracts as at balance date and is currently fully exposed to
foreign exchange risk. The Consolidated Entity's exposure to foreign currency risk at reporting date was as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
2012
USD
1,833,716
-
(32,448)
1,801,268
2011
USD
3,681,288
85,546
(8,849)
3,757,985
The Consolidated Entity's exposure to foreign exchange risk is mitigated by having comparable asset and liability balances in US
dollars. Therefore a sensitivity analysis has not been performed.
(b) Credit risk
Credit risk refers to the risk that a counterparty under a financial instrument will default (in whole or in part) on its contractual
obligations resulting in financial
loss to the Consolidated Entity. Concentrations of credit risk are minimised primarily by
undertaking appropriate due diligence on potential investments, carrying out all market transactions through approved brokers,
settling non-market transactions with the involvement of suitably qualified legal and accounting personnel (both internal and
external), and obtaining sufficient collateral or other security (where appropriate) as a means of mitigating the risk of financial loss
from defaults. This financial year there was no necessity to obtain collateral.
The credit quality of the financial assets are neither past due nor impaired and can be assessed by reference to external credit
ratings (if available with Standard & Poor's) or to historical information about counterparty default rates. The maximum exposure to
credit risk at reporting date is the carrying amount of the financial assets as summarised below:
Cash and cash equivalents
AA
A
BBB
C+
No external credit rating available
Trade and other receivables (due within 30 days)
No external credit rating available
2012
$
10,909,135
-
-
-
41,296
10,950,431
2011
$
32,182,124
27,847
-
-
41,107
32,251,078
982,484
506,182
The Consolidated Entity measures credit risk on a fair value basis. The carrying amount of financial assets recorded in the
financial statements, net of any provision for losses, represents the Consolidated Entity’s maximum exposure to credit risk. All
receivables noted above are due within 30 days. None of the above receivables are past due.
ANNUAL REPORT | 75
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
21. FINANCIAL RISK MANAGEMENT (continued)
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
(c)
Liquidity risk
Liquidity risk is the risk that the Consolidated Entity will encounter difficulty in meeting obligations associated with financial
liabilities. The Consolidated Entity has no borrowings. There is sufficient cash and cash equivalents and the non-cash
investments can be realised to meet accounts payable arising in the normal course of business. The financial liabilities maturity
obligation is disclosed below:
2012
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net inflow/(outflow)
2011
Financial assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
Net inflow/(outflow)
less than 6
months
$
6 - 12
months
$
1 - 5
years
$
10,950,431
982,484
11,932,915
2,356,612
14,289,527
-
-
-
-
-
-
-
1,508,795
1,508,795
22,240,581
506,182
22,746,763
10,000,000
-
10,000,000
(628,694)
22,118,069
-
10,000,000
-
-
-
-
-
Total
$
10,950,431
982,484
11,932,916
3,865,407
15,798,323
32,240,581
506,182
32,746,763
(628,694)
32,118,069
(d) Net Fair Value of Financial Assets and Liabilities
instruments recorded in the financial statements represent their fair value determined in
The carrying amount of
accordance with the accounting policies disclosed in Note 1. The aggregate fair value and carrying amount of financial assets at
balance date are set out in Note 9 and Note 11. The financial liabilities at balance date are set out in Note 15.
financial
(e)
Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure
purposes.
purposes
(i)
(ii)
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as
prices) or indirectly (derived from prices), and
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
(iii)
The following tables present the Consolidated Entity’s assets and liabilities measured and recognised at fair value at 30 June
2012.
2012
Financial assets held at fair value through profit or loss
- Listed investments at fair value
2011
Financial assets held at fair value through profit or loss
- Listed investments at fair value
Level 1
Level 2
Level 3
Total
393,128
875,603
-
-
-
-
393,128
875,603
ANNUAL REPORT | 76
30 JUNE 2012
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
22. COMMITMENTS
(a) Lease Commitments
Non-cancellable operating lease commitments:
Not longer than one year
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
2012
$
2011
$
-
112,512
(b)
A condition of the Mining Licence pertaining to the Khnaiguiyah Zinc-Copper Project in Saudi Arabia issued by the Ministry of
Petroleum and Mineral Resources in January 2011 is the implementation of training programmes for Saudi nationals at a
minimum cost of 20 million Saudi Riyals (SAR) (approximately A$5.1 million based on a current exchange rate of A$1.00/3.90
SAR)) over the 30 year term of the licence. KMC has not yet submitted a training programme and plan to the Ministry for approval
and it is not possible to establish a time frame around this commitment as at the date of this report. The Mining Licence is also
pending transfer from United Arabian Mining Company LLC (Saudi Arabia) (Manajem) to the joint venture company, Khnaiguiyah
Mining Company LLC (Saudi Arabia) (KMC) (Alara: 50% and Manajem: 50%).
(c)
A condition of the Khnaiguiyah Mining Licence is the payment of a nominal annual surface rental based on the area of the mining
licence.
ANNUAL REPORT | 77
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
23.
CONTINGENT ASSETS AND LIABILITIES
Contingent assets and liabilities exist in relation to certain resource projects of the Consolidated Entity subject to the continued
development and advancement of the same, as described below.
(a)
(b)
(c)
Shareholders’ Agreement - Khnaiguiyah Mining Company - Khnaiguiyah Zinc-Copper Project (Saudi Arabia) -
On 21 October 2010, Alara Saudi Operations Pty Limited, a wholly owned subsidiary of the Company, entered into a
shareholders’ agreement with mineral licences holder, United Arabian Mining (“Manajem” in Arabic) Company
(Manajem) pursuant to which Alara will pay a total of US$7.5 million to Manajem in stages subject to completion of
project milestones and the parties forming a new joint venture company, Khnaiguiyah Mining Company LLC (KMC),
which will hold the Khnaiguiyah Zinc-Copper Project mineral licences. KMC was incorporated in Saudi Arabia on 10
January 2010. Alara has paid Manajem a total of US$3.558 million (including advance payments of US$2.042 million in
respect of the tranches payable Under the Shareholders Agreement with US$3.942 million payable (US$1.932 million
payable in cash and US$2.01 million to be satisfied by the issue of 6,700,000 shares in Alara, at an issue price of
US$0.30 per share (equivalent to A$0.287 per share based on the current A$1.00/US$1.045 exchange rate) upon KMC
receiving the grant of an Environmental Permit for the commencement of mining under the Khnaiguiyah Mining Licence
(subject to completion of the transfer of the Mining Licence from Manajem to KMC). A ‘Resource Bonus’ is also payable
to Manajem (based on Manajem’s shareholding interest in KMC at the relevant time) calculated at the rate of US 0.5
cent per pound of contained zinc equivalent (within a JORC Indicated Resource at a minimum average grade of 7%
zinc) discovered within the Project, in excess of a threshold Indicated Resource of 11 million tons (at the same minimum
average 7% zinc grade). Alara is entitled to fund (as loan capital to KMC) all exploration, evaluation and development
costs in relation to the Project up to completion of a bankable feasibility study (BFS). Upon Alara having made a
“decision to mine” following completion of a BFS, KMC will seek project financing to fund development of the Project.
The difference between the amount of project financing raised and the capital costs of the Project (shortfall) shall be
met by the parties as follows; Alara is entitled firstly to provide funding (which at Alara’s election can be applied as debt
and/or equity) to make up the shortfall, up to a maximum of US$15 million plus 25% of the project capital costs. That is,
if the Project is financed as to 50% debt from external financiers with a 50% shortfall to be met by KMC shareholders,
Alara is entitled to contribute its half share of the shortfall (being 25% of the project capital costs) and will also fund a
maximum of US$15 million of Manajem's contribution towards the shortfall. The balance of the shortfall (and
subsequent funding calls by KMC) shall be satisfied by each shareholder (pro-rata to their respective shareholding
interests) providing additional capital contributions in return for new shares issued in KMC. The new shares issued shall
be issued at a price equal to the sum of the capital cost of the Project as defined in the BFS, plus cumulative capital
contributions made by the shareholders, divided by the number of shares on issue in KMC at that time. Where a
shareholder declines to subscribe for its shares, the other shareholder may elect to subscribe for these shares in its
place at the same issue price. Any loan funds advanced by Alara to KMC, together with an existing (deemed) loan of
US$3 million from Manajem, shall be repayable from KMC’s net profits. KMC is currently managed by a Board of
Directors with 2 nominees from each of Alara and Manajem.
Introduction Fee - Net Profit Royalty Obligation - Khnaiguiyah Zinc-Copper Project (Saudi Arabia) - A 0.5% net
profit royalty is due and payable to the individual who introduced the Khnaiguiyah Zinc Copper Project (Saudi Arabia) to
Alara, based on Alara’s share of net profits from KMC.
Shareholders’ Agreement - Daris Resources LLC - Daris Copper-Gold Project (Oman) - On 28 August 2010, Alara
Oman Operations Pty Limited, a wholly owned subsidiary of the Company, entered into a shareholders’ agreement with
Daris Copper Project concession holder, Al Tamman Trading Establishment LLC (ATTE) pursuant to which Alara will
invest up to a total of US$7 million into a new joint venture company (“Daris Resources LLC” (DarisCo)) to gain up to a
70% shareholding. DarisCo was incorporated in Oman on 1 December 2010 (Alara 50%:ATTE 50%). Alara is entitled
to advance US$3 million as equity during a 3 year period. Thereafter, Alara is entitled to advance a further US$4 million
to DarisCo as a loan (on commercial terms and repayable as a priority before distribution of dividends) - convertible into
equity in DarisCo to take Alara’s interest to 70%. DarisCo has exclusive rights (to be further formalised under a
management agreement with ATTE) to manage, operate and commercially exploit the concession. The shareholders’
agreement is subject to conditions precedent, including, amongst other matters, the execution of a management
agreement and ancillary loan agreement (which are currently pending execution by the parties). DarisCo is governed by
a 6 member board of directors with 3 nominees from Alara and 3 nominees from ATTE. Alara’s Managing Director is
currently the Chairman of DarisCo.
ANNUAL REPORT | 78
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
23.
CONTINGENT ASSETS AND LIABILITIES (continued)
(d)
(e)
(f)
Shareholders’ Agreement - Alara Resources LLC (Oman) – On 8 August 2010, Alara Oman Operations Pty Limited,
a wholly owned subsidiary of the Company, entered into a shareholders’ agreement with Sur United International Co.
LLC (SUR) pursuant to which a new joint venture company (“Alara Resources LLC” (AlaraCo)) will be established to
identify, secure and commercially exploit other resource projects in Oman introduced to AlaraCo by SUR. AlaraCo was
incorporated in Oman in 2 October 2010. Alara contributed 100% of the initial capital of 150,000 Omani Rials (RO)
(equivalent to ~A$425,000 at that time) for its 70% shareholding interest in AlaraCo with SUR holding the balance of
30%. Alara is entitled to advance funds to AlaraCo as a loan (on commercial terms and repayable as a priority before
distribution of dividends). SUR is entitled to receive a priority payment out of net profits equivalent to 2% NSR (Net
Smelter Return) – which amount is deducted from the dividend entitlement of SUR. There is a mechanism for the
dilution of SUR’s profit interest (ie. 30%) if SUR fails to meet capital calls after a ‘Decision to Mine’ has been made by
Alara in respect of a proposed ‘Mine’ (supported by the results of any feasibility study confirming the commercial viability
of the exploitation of a ‘Mine’). If SUR's entitlement to dividends is diluted below 10% as above, SUR has an option to
assign its dividend rights to Alara in return for a 2% NSR payment from AlaraCo, subject to AlaraCo making a net profit.
The shareholders agreement is subject to conditions precedent including, amongst other matters, the execution of an
ancillary loan agreement (which is currently pending execution by the parties) and an exploration licence being granted
to AlaraCo – AlaraCo has lodged several applications for exploration licences over open areas prospective for base and
precious metals introduced by SUR (which are currently pending grant by the Oman Government). AlaraCo is governed
by a 5 member board of directors with 3 nominees from Alara and 2 nominee from SUR. Alara’s Managing Director is
currently the Chairman of AlaraCo.
Introduction Fees - Net Smelter Return Royalty and Bonus Obligation – Oman Projects - A 0.5% Net Smelter
Return (NSR) royalty is due and payable to the individual who introduced the prospects the subject of exploration
licence applications by Alara Resources LLC (Oman). A US$25,000 cash bonus is also due and payable to the same
individual upon commencement of production from the Daris Copper-Gold Project (Oman).
Option and Shareholders’ Agreements - El Quillay Copper-Gold Project (Chile) – On 21 October 2011, a series of
agreements were entered into giving Alara the right to secure a 70% interest in the El Quillay Copper-Gold Project in
Chile. Inversiones Alara Chile Limitada (IAC), a Chilean subsidiary entity of Alara Chile Operations Pty Ltd (a wholly
owned subsidiary of the Company), entered into a shareholders’ agreement with the vendors in relation to a newly
formed Chilean joint venture company, El Quillay SpA (ELQ), in which IAC has a 70% shareholding interest with the
vendors holding the balance of 30%. ELQ also entered into an option agreement with the vendors to acquire 100% of
the shares in a Chilean mining company, SCM Antares. SCM Antares holds the mining rights and mineral concessions
in relation to the project. The option fee of US$10 million is payable by ELQ to the vendors in tranches over 3 years
(also the option term). US$0.5 million has been paid upon execution of the option agreement with $1 million, $3 million
and $5.5 million payable on the first, second and third anniversaries thereafter. ELQ has an obligation to pay the
vendors a variable ‘Resource Bonus’ payment, calculated at the rate of US$0.03 for each pound of ‘Copper Resource’
(grading, on average, at or above 0.7% and being economically mineable) discovered in the project attributable to
Alara’s pro-rata economic share in the project (70%), in excess of a threshold 250,000 tonnes of ‘Copper Resource’.
Alara is entitled to fund payment of the option fee and manage and sole fund the project’s planned exploration
programme up to and including the completion of one or more definitive bankable feasibility studies (in respect of each
mine proposed to be developed within the project area), including a minimum 20,000 metres of drilling over 2 years
(with a minimum of 10,000 metres of drilling in the first year). Future funding into ELQ may take the form of shareholder
loans (at LIBOR plus 2% interest per annum) or shareholders will be asked to contribute cash calls in proportion to their
respective interests or be diluted in accordance with an agreed or independently determined price. Alara has agreed to
advance loan funds of up to US$10 million to the vendors (at LIBOR plus 2% interest per annum) to fund the vendors’
share of equity cash calls into ELQ – this loan will be repaid to Alara out of the vendors’ share of dividends from ELQ.
ELQ is governed by a 3 member board of directors with 2 nominees from Alara and one nominee from the vendors.
Alara’s Managing Director is currently the Chairman of ELQ.
(g)
Shareholders’ Agreement – “Marjan Mining Company LLC” (pending formation) – Marjan Base and Precious
Metals Project (Saudi Arabia) – On 17 April 2011, Alara Saudi Marjan Operations Pty Limited (a wholly owned
subsidiary of the Company) entered into a shareholders agreement with United Arabian Mining Company (Manajem) for
Alara to acquire a 50% interest in the Marjan Project licences via the formation of a new joint venture company (“Marjan
Mining Company” LLC (MMC)), which will receive transfer of the project licences from Manajem and in which Alara will
have a 50% shareholding interest. Alara is entitled to fund (as loan capital to MMC repayable out of MMC’s net profits)
all exploration, evaluation and development costs up to a “decision to mine” (supported by a BFS). Thereafter, the
parties will contribute to all cash calls in proportion to their respective interests in MMC or be diluted in accordance with
an industry standard dilution formula whereby the initial base value shall be set at the capital costs defined under the
DFS.
ANNUAL REPORT | 79
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
23.
CONTINGENT ASSETS AND LIABILITIES (continued)
(h)
(i)
(j)
The Marjan Project exploration licences will be transferred from Manajem into MMC upon Alara completing a minimum
US$1 million funding into MMC (within a 2 year term). A ‘Resource Bonus’ is also payable to Manajem calculated at
the rate of US$0.50 per ounce of contained gold (or gold equivalent of copper, zinc and silver) within a JORC Code
compliant Indicated Resource determined at a cut-off grade of 0.5g/t gold (or equivalent) and with a minimum average
grade of 3g/t gold (or equivalent) delineated within the project area. MMC will be managed by a board of directors with
2 nominees from each of Alara and Manajem and with a Saudi Arabian independent Director to be appointed by
agreement of the parties. A condition precedent to the shareholders agreement is the incorporation and registration of
MMC (currently pending completion) and the execution of ancillary agreements arising therein (currently pending
execution upon the incorporation of MMC). MMC will be governed by a 4 member board of directors with 2 nominees
from Alara and 2 nominees from Manajem. Alara’s Managing Director will be the Chairman of MMC.
Shareholders’ Agreement - Awtad Copper LLC (Oman) - On 24 April 2011, Alara Oman Operations Pty Limited (a
wholly owned subsidiary of the Company) entered into a shareholders agreement with holder on 3 mineral exploration
licences, Awtad Copper LLC (Awtad), and the local shareholders of Awtad (Awtad Shareholders). Alara is entitled to
earn-in up to a 70% shareholding interest in Awtad by funding exploration and evaluation and completion of a definitive
bank feasibility study (DFS) over a 5 year term. Alara is entitled to secure an initial 10% shareholding interest in Awtad
by contributing US$0.5 million equity capital into Awtad (which has been contributed progressively in stages). Alara is
entitled to fund all on-going exploration, evaluation and development costs. Upon Alara advancing a further US$2.5
million into Awtad during the first 3 years, it will increase its shareholding interest in Awtad to 51%. This will increase to
70% upon the completion of a DFS (funded by Alara) within the balance of the term. Post completion of DFS, the Awtad
shareholders have to contribute any required equity funding or dilute in accordance with an industry standard dilution
formula. If a shareholder’s interest falls below 10%, that party shall assign its dividend and voting rights to the other
shareholders in exchange for a 2% net smelter return. Awtad Shareholders are entitled to a once-off election to
maintain their interest at 49% (with Alara holding 51%) if a threshold resource of 20,000 or more tonnes of contained
Copper has been delineated within the Project area (within a JORC Measured Copper Resource with a cut-off grade
above 0.5% and an average grade above 2%) as at the date Alara has completed its 51% earn-in (prior to completion of
a DFS). If the Awtad Shareholders exercise this election, on-going funding of Awtad (including completing the DFS) will
be pro-rata to Awtad’s shareholding interest (ie. Alara 51% and Awtad Shareholders 49%). Awtad is governed by a 4
member board of directors with 2 nominees appointed by Alara and the Awtad Shareholders. Alara’s Managing Director
is the Chairman and Managing Director of Awtad.
Shareholders Agreement - Al Ajal-Washihi-Mullaq Copper-Gold Project (Oman) – On 23 November 2011, Alara
Oman Operations Pty Limited (a wholly owned subsidiary of the Company) entered into a shareholders agreement with
the concession holder, Pilatus Resources Oman LLC (Pilatus) and the existing shareholders of Pilatus (Pilatus
Shareholders). Alara is entitled to secure an initial 10% shareholding interest in Pilatus by contributing US$1 million
equity capital into Pilatus (which has been contributed progressively in stages). Alara is entitled to fund on-going
exploration, evaluation and development costs. Upon Alara advancing a further US$3 million into Pilatus during a
period of up to four years, it will be entitled to increase its shareholding in Pilatus to 60%. Post completion of a
definitive feasibility study, the Pilatus Board may issue shareholders with payment notices requiring them to contribute
equity funding in proportion to their shareholding. If the existing Pilatus Shareholders decline to make the required
capital contribution to develop the Project’s first mine, then Alara may elect to pay Pilatus the amount which the Pilatus
Shareholders were required to contribute under their payment notice and Alara shall increase its economic interest in
Pilatus to 75%. This payment shall be treated as a loan and Alara shall be entitled to 60% of all dividends in favour of
the Pilatus Shareholders until such time that 25% of the total amount required under the payment notices is repaid to
Alara. If a Pilatus shareholder’s interest falls below 10%, that party shall assign its dividend and voting rights to the
other shareholder(s) in exchange for a 2% net smelter return on production payable by Pilatus. Pilatus is governed by a
4 member board of directors with 2 nominees appointed by Alara and, for so long as the existing Pilatus Shareholders
own at least 40% of the issued share capital of Pilatus, 2 nominees jointly appointed by the Pilatus Shareholders.
Alara’s Managing Director is the Chairman and Managing Director of Pilatus. The Shareholders Agreement is subject to
conditions precedent, including, amongst other matters, Pilatus settling all liabilities with the Pilatus Shareholders (which
is currently pending completion).
Option and Shareholders’ Agreements - Piedrecillas Copper-Silver Project (Chile) – On 8 May 2012, a series of
agreements were entered into giving Alara the right to secure up to a 100% interest in the Piedrecillas Copper-Silver
Project in Chile. Inversiones Alara Chile Limitada (IAC), a Chilean subsidiary entity of Alara Chile Operations Pty Ltd (a
wholly owned subsidiary of the Company), entered into a shareholders’ agreement with the vendors in relation to a
newly formed Chilean joint venture company, Alara Piedrecillas SCM (Piedrecillas), in which IAC has an initial 0.01%
shareholding interest with the vendors holding the balance of 99.99%. IAC has also entered into an option agreement
with the vendors to acquire up to 100% of Piedrecillas. Piedrecillas will hold the mining rights and mineral concessions
in relation to the project (after transfer from the vendors). IAC is entitled to purchase an initial 50% interest in
Piedrecillas through the payment of option fees totalling US$500,000 over a 3 year period (US$75,000 has been paid
upon execution of the option agreement with $100,000, $100,000 and $225,000 payable on the first, second and third
anniversaries respectively thereafter) and undertaking exploration and evaluation works, including a minimum of 15,000
metres of drilling. IAC may increase its interest in Piedrecillas from 50% up to and including 100%, in 12.5%
increments, by making further option payments to the vendors, such payments being calculated according to a
prescribed formula.
ANNUAL REPORT | 80
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
for the year ended 30 June 2012
23.
CONTINGENT ASSETS AND LIABILITIES (continued)
(k)
(l)
Royalty Obligation to Orion Equities Limited – The Consolidated Entity is liable to pay a royalty of 2% of gross
revenues (exclusive of goods and services tax) to Orion Equities Limited from any commercial exploitation of any
minerals from various Australian tenements - EL 24879, 24928 and 24929 and ELA 24927 (the Bigrlyi South Project
tenements in the Northern Territory), and a right to earn and acquire a 85% interest in ELA 46/585 (excluding all
manganese mineral rights) (the remaining Canning Well Project tenement in Western Australia), pursuant to the
acquisition of these tenements.
Directors' Deeds - The Company has entered into deeds of indemnity with each of its Directors indemnifying them
against liability incurred in discharging their duties as directors/officers of the Consolidated Entity. As at balance date,
no claims have been made under any such indemnities and accordingly, it is not possible to quantify the potential
financial obligation of the Consolidated Entity under these indemnities.
24.
SUBSEQUENT EVENTS
No matter or circumstance has arisen since the end of the financial period that significantly affected, or may significantly affect,
the operations of the Consolidated Entity, the results of those operations, or the state of affairs of the Consolidated Entity in
future financial periods.
ANNUAL REPORT | 81
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
DIRECTORS’ DECLARATION
The Directors of the Company declare that:
1.
2.
3.
4.
5.
The financial statements, comprising the Consolidated Statement of Comprehensive Income,
Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity
and Consolidated Statement of Cash Flows and accompanying notes as set out on pages 47 to
81, are in accordance with the Corporations Act 2001 and:
(a)
(b)
comply with Accounting Standards and the Corporations Regulations 2001; and
give a true and fair view of the Consolidated Entity’s financial position as at 30 June 2012
and of their performance for the year 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;
The Remuneration Report disclosures set out (within the Directors’ Report) on pages 38 to 43
(as the audited Remuneration Report) comply with section 300A of the Corporations Act 2001;
The Directors have been given the declarations by the Managing Director (the person who
performs the chief executive function) and the Company Secretary (the person who, in the
opinion of the Directors, performs the chief financial officer equivalent function); and
The Company has included in the notes to the Financial Statements an explicit and unreserved
statement of compliance with the International Financial Reporting Standards.
This declaration is made in accordance with a resolution of the Directors made pursuant to section
295(5) of the Corporations Act 2001.
Shanker Madan
Managing Director
Perth, Western Australia
28 September 2012
Douglas Stewart
Director
ANNUAL REPORT | 82
Grant Thornton Audit Pty Ltd
ABN 91 130 913 594
ACN 130 913 594
10 Kings Park Road
West Perth WA 6005
PO Box 570
West Perth WA 6872
T +61 8 9480 2000
F +61 8 9322 7787
E info.wa@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of Alara Resources Limited
Report on the financial report
We have audited the accompanying financial report of Alara Resources Limited (the
“Company”), which comprises the consolidated statement of financial position as at 30 June
2012, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes
comprising a summary of significant accounting policies and other explanatory information
and the directors’ declaration of the consolidated entity comprising 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 determines 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. The Directors also state,
in the notes to the financial report, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, 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 us to comply with relevant ethical requirements relating to audit engagements and
plan and perform the audit to obtain reasonable assurance whether the financial report is
free from material misstatement.
Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together
with its subsidiaries and related entities, delivers its services independently in Australia.
Liability limited by a scheme approved under Professional Standards Legislation
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
Company’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 Company’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.
Auditor’s opinion
In our opinion:
a
the financial report of Alara Resources Limited is in accordance with the
Corporations Act 2001, including:
i
ii
giving a true and fair view of the consolidated entity’s financial position as at 30
June 2012 and of its performance for the year ended on that date; and
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 the notes to the financial statements.
Report on the remuneration report
We have audited the remuneration report included in pages 16 to 21 of the directors’ report
for the year ended 30 June 2012. 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.
Auditor’s opinion on the remuneration report
In our opinion, the remuneration report of Alara Resources Limited for the year ended 30
June 2012, complies with section 300A of the Corporations Act 2001.
GRANT THORNTON AUDIT PTY LTD
Chartered Accountants
M J Hillgrove
Partner - Audit & Assurance
Perth, 28 September 2012
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CORPORATE GOVERNANCE
Compliance with Corporate Governance Council’s
Principles
The extent to which the Company has followed the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations with 2010 Amendments (2nd Edition, August 2007) is as follows:
Principle
Compliance
CGS References /
Comments
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
Companies should establish and disclose the respective roles and responsibilities of board and management
1.1 Companies should establish the functions reserved to the board and those delegated to
senior executives and disclose those functions.
Yes
2, 3.3, 4.1, 4.2
1.2 Companies should disclose the process for evaluating the performance of senior
executives.
1.3 Companies should provide the information indicated in the Guide to Reporting on
Principle 1.
The following material should be included in the corporate governance section of the annual
report:
an explanation of any departure from Recommendations 1.1, 1.2 or 1.3; and
whether a performance evaluation for senior executives has taken place in the reporting
period and whether it was in accordance with the process disclosed.
A statement of matters reserved for the board or the board charter or the statement of areas of
delegate authority to senior executives should be made publicly available, ideally by posting it
to the company’s website in a clearly marked corporate governance section.
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
Yes
Yes
3.13
Annual Reports
(as applicable)
Website
CGS
Companies should have a board of an effective composition size and commitment to adequately discharge its responsibilities and duties
2.1 A majority of the board should be independent directors.
2.2 The chair should be an independent director.
2.3 The roles of chair and chief executive officer should not be exercised by the same
individual.
3.5, 3.7
No
(Note: the
majority of the
Board are Non-
Executive
Directors)
Yes
Yes
3.2, 3.7
3.2, 3.3
Note: the Company has a Managing
Director but not a Chief Executive
Officer
2.4 The board should establish a nomination committee.
Yes
4.2
2.5 Companies should disclose the process for evaluating the performance of the board, its
committees and individual directors.
2.6 Companies should provide the information indicated in the Guide to Reporting on
Principle 2.
The following material should be included in the corporate governance statement in the annual
report:
the skills, experience and expertise relevant to the position of director held by each
director in office at the date of the annual report;
the names of the directors considered by the board to constitute independent directors
and the company’s materiality thresholds;
the existence of any of the relationships listed in Box 2.1 and an explanation of why the
board considers a director to be independent, notwithstanding the existence of these
relationships;
Remuneration and
Nomination
Committee Charter
Website
3.13
Annual Reports
Yes
Yes
(as applicable)
Website
CGS
ANNUAL REPORT | 86
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CORPORATE GOVERNANCE
Principle
Compliance
CGS References /
Comments
a statement as to whether there is a procedure agreed by the board for directors to take
independent professional advice at the expense of the company;
the period of office held by each director in office at the date of the annual report;
the names of members of the nomination committee and their attendance at meetings of
the committee, or where a company does not have a nomination committee, how the
functions of a nomination committee are carried out;
whether a performance evaluation for the board, its committees and directors has taken
place in the reporting period and whether it was in accordance with the process
disclosed; and
an explanation of any departure from Recommendations 2.1, 2.2, 2.3, 2.4, 2.5 or 2.6.
The following material should be made publicly available, ideally by posting it to the company’s
website in a clearly-marked corporate governance section:
a description of the procedure for the selection and appointment of new directors and
the re-election of incumbent directors;
the charter of the nomination committee or a summary of the role, rights, responsibilities
and membership requirements for that committee; and
the board’s policy for the nomination and appointment of directors.
PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION MAKING
Companies should actively promote ethical and responsible decision-making
3.1 Companies should establish a code of conduct and disclose the code or a summary of the
code as to:
Yes
3.1.1 the practices necessary to maintain confidence in the company’s integrity;
3.1.2 the practices necessary to take into account their legal obligations and the reasonable
expectations of their stakeholders; and
3.1.3 the responsibility and accountability of individuals for reporting and investigating reports
of unethical practices.
6
Code of Conduct
Website
3.2 Companies should establish a policy concerning diversity and disclose the policy or a
summary of that policy. The policy should include requirements for the board to establish
measurable objectives for achieving gender diversity for the board to assess annually both the
objectives and progress in achieving them.
Yes (in part)
3.18
3.3 Companies should disclose in each annual report the measurable objectives for achieving
gender diversity set by the board in accordance with the diversity policy and progress towards
achieving them.
3.4 Companies should disclose in each annual report the proportion of women employees in
the whole organisation, women in senior executive positions and women on the board.
3.5 Companies should provide the information indicated in the Guide to Reporting on
Principle 3.
No
Yes
Yes
An explanation of any departures from Recommendations 3.1, 3.2,3.3, 3.4 or 3.5 should be
included in the corporate governance statement in the annual report.
The following material should be made publicly available, ideally by posting it to the company’s
website in a clearly marked corporate governance section:
any applicable code of conduct or a summary; and
the diversity policy or a summary of its main provisions.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
Annual Reports
Website
CGS
Companies should have a structure to independently verify and safeguard the integrity of their financial reporting
4.1 The board should establish an audit committee.
4.2 Structure the audit committee so that it:
Yes
Yes
4.2
4.2
consists only of non-executive directors;
consists of a majority of independent directors;
is chaired by an independent chair, who is not chair of the board; and
has at least three members.
ANNUAL REPORT | 87
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CORPORATE GOVERNANCE
Principle
4.3 The audit committee should have a formal charter.
Compliance
Yes
4.4 Companies should provide the information indicated in the Guide to Reporting on
Principle 4.
Yes
CGS References /
Comments
Audit Committee
Charter
Website
Annual Reports
(as applicable)
Website
CGS
The following material should be included in the corporate governance statement in the annual
report:
details of the names and qualifications of those appointed to the audit committee and
their attendance at meetings of the committee or, where a company does not have an
audit committee, how the functions of an audit committee are carried out;
the number of meetings of the audit committee and the names of the attendees; and
explanation of any departures from Recommendations 4.1, 4.2, 4.3 or 4.4.
The following material should be made publicly available, ideally by posting it to the company’s
website in a clearly marked corporate governance section:
the audit committee charter; and
information on procedures for the selection and appointment of the external auditor and
for the rotation of external audit engagement partners.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
Companies should promote timely and balanced disclosure of all material matters concerning the company
5.1 Companies should establish written policies designed to ensure compliance with ASX
Listing Rule disclosure requirements and to ensure accountability at a senior executive level
for that compliance and disclose those policies or a summary of those policies.
Yes
7.1, 8.2
5.2 Companies should provide the information indicated in the Guide to Reporting on
Principle 5.
Yes
An explanation of any departures from Recommendations 5.1 or 5.2 should be included in the
corporate governance statement in the annual report.
The policies or a summary of those policies designed to guide compliance with Listing Rule
disclosure requirements should be made publicly available, ideally by posting them to the
company's website in a clearly marked corporate governance section.
PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS
Companies should respect the rights of shareholders and facilitate the effective exercise of those rights
Annual Reports
Website
CGS
6.1 Companies should design a communications policy for promoting effective communication
with shareholders and encouraging their participation at general meetings and disclose their
policy or a summary of that policy.
Yes
8.1
6.2 Companies should provide the information indicated in Guide to Reporting on Principle 6.
Yes
Annual Reports
An explanation of any departures from best practice Recommendations 6.1 or 6.2 should be
included in the corporate governance statement in the annual report.
The company should describe how it will communicate with its shareholders publicly, ideally
by posting the information on the company’s website in a clearly marked corporate
governance section.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
Companies should establish a sound system of risk oversight and management and internal control
Website
CGS
7.1 Companies should establish policies for oversight and management of material business
risks and disclose a summary of those policies.
7.2 The board should require management to design and implement the risk management and
internal control system to manage the company's material business risks and report to it on
whether those risks are being managed effectively. The board should disclose that
management has reported to it as to the effectiveness of the company's management of its
material business risks.
7.3 The board should disclose whether it has received assurance from the chief executive
officer (or equivalent) and the chief financial officer (or equivalent) that the declaration
provided in accordance with section 295A of the Corporations Act is founded on a sound
system of risk management and internal control and that the system is operating effectively in
all material respects in relation to financial reporting risks.
Yes
Yes
7.1
7.1
Yes
7.1
ANNUAL REPORT | 88
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CORPORATE GOVERNANCE
Principle
Compliance
7.4 Companies should provide the information indicated in the Guide to Reporting on
Principle 7.
Yes
The following material should be included in the corporate governance section of the annual
report:
an explanation of any departures from best practice recommendations 7.1, 7.2, 7.3 or
7.4;
whether
Recommendation 7.2; and
the board has
received
the
report
from management under
whether the board has received assurances from the chief executive officer (or
equivalent) and the chief financial officer (or equivalent) under Recommendation 7.3.
A summary of the company’s policies on risk oversight and management of material business
risks should be made publicly available, ideally by posting it to the company’s website in a
clearly marked corporate governance section.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
CGS References /
Comments
Annual Reports
Website
CGS
Companies should ensure that the level and composition of remuneration is sufficient and reasonable and that its relationship to
performance is clear
8.1 The board should establish a remuneration committee.
8.2 The remuneration committee should be structured so that it:
Yes
Yes
4.2
4.2
consists of a majority of independent directors
is chaired by an independent chair
has at least three members
8.3 Companies should clearly distinguish
remuneration from that of executive directors and senior executives.
the structure of non-executive directors’
Yes
Remuneration and
Nomination
Committee Charter
Website
in
Remuneration
Report
the
Directors’ Report
Annual
(within
Reports)
8.4 Companies should provide the information indicated in the Guide to Reporting on
Principle 8.
Yes
Annual Reports
(as applicable)
Website
The following material or a clear cross-reference to the location of the material should be
included in the corporate governance statement in the annual report:
CGS
the names of the members of the remuneration committee and their attendance at
meetings of the committee or, where a company does not have a remuneration
committee, how the functions of a remuneration committee are carried out;
the existence and
terms of any schemes
superannuation, for non-executive directors; and
for retirement benefits, other
than
an explanation of any departure from Recommendations 8.1, 8.2 or 8.3.
The following material should be made publicly available, ideally by posting it to the company’s
website in a clearly marked corporate governance section:
the charter of the remuneration committee or a summary of the role, rights,
responsibilities and membership requirements for that committee; and
a summary of the company’s policy on prohibiting entering into transactions in
associated products which limit the economic risk of participating in unvested
entitlements under any equity-based remuneration schemes.
ANNUAL REPORT | 89
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE STATEMENT (CGS)
1.
Framework and Approach
Governance and Responsibility
to Corporate
The Board is committed to maintaining high standards
of corporate governance. Good corporate governance
is about having a set of core values and behaviours that
underpin
the Company’s activities and ensure
transparency, fair dealing and protection of the interests
of stakeholders.
the Corporate
The Board of Directors supports
Governance
Recommendations
developed by the ASX Corporate Governance Council
(“Council”).
Principles
and
The Company’s practices are largely consistent with the
Council’s guidelines - the Board considers that the
implementation of some recommendations are not
appropriate having regard to the nature and scale of the
Company’s activities and size of the Board.
its best endeavours
The Board uses
to ensure
exceptions to the Council’s guidelines do not have a
negative impact on the Company and the best interests
of shareholders as a whole.
Details of the Council’s recommendations can be found
on the ASX website at:
http://www.asx.com.au/governance/corporate-governance.htm
2.
Board of Directors - Role and
Responsibilities
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. The Board is also responsible for the overall
corporate governance of the Company, and recognises
the need for the highest standards of behaviour and
accountability in acting in the best interests of the
Company as a whole.
for
the
The Board has
the successful operations of
The Board also ensures that the Company complies
with all of its contractual, statutory and any other legal or
regulatory obligations.
final
the
responsibility
Company. Where the Board considers that particular
expertise or information is required, which is not
available from within their number, appropriate external
advice may be taken and reviewed prior to a final
decision being made by the Board.
Without intending to limit the general role of the Board,
the principal functions and responsibilities of the Board
include the matters set out below, subject to delegation
as specified elsewhere in this Statement or as otherwise
appropriate:
(1)
(2)
(3)
formulation and approval of
direction, objectives and goals of the Company;
the strategic
the prudential control of the Company’s finances
and operations and monitoring the financial
performance of the Company;
the
resourcing,
executive management;
review and monitoring of
(4)
(5)
(6)
(7)
(8)
ensuring that adequate internal control systems
and procedures exist and that compliance with
these systems and procedures is maintained;
the identification of significant business risks and
ensuring
risks are adequately
managed;
that such
the timeliness, accuracy and effectiveness of
communications and reporting to shareholders
and the market;
establishment
the
appropriate ethical standards; and
and maintenance
of
from
takes advice
and
the Audit
the Board
Committee
and
Nomination Committee on matters within their
respective Charters, however the Board retains
final decision-making authority on those matters.
the Remuneration
3.
Board of Directors – Composition, Structure
and Process
The Board has been formed so that it has effective
composition, size and commitment
to adequately
discharge its responsibilities and duties given the
current size and the scale and nature of the Company’s
activities. The names of the Directors currently in office
and their qualifications and experience are stated in the
Directors’ Report for the financial year ended 30 June
2012.
3.1.
Skills, Knowledge and Experience
Directors are appointed based on the specific corporate
and governance skills and experience required by the
Company. The Board recognises its need to contain
Directors with a relevant blend of personal experience in
accounting and finance, law, financial and investment
markets, financial management and public company
administration and Director-level business or corporate
experience, having regard to the scale and nature of the
Company’s activities. A Director is initially appointed by
the Board and retires (and may stand for re-election) at
the next Annual General Meeting after
their
appointment.
3.2. Chairman
The Chairman leads the Board and has responsibility for
ensuring that the Board receives accurate, timely and
clear information to enable Directors to perform their
duties as a Board. The Non-Executive Chairman of the
Company is Mr Ian Williams, whose qualifications and
experience are stated in the Directors’ Report for the
financial year ended 30 June 2012.
3.3. Managing Director
The Managing Director is responsible and accountable
to the Board for the Company’s management. The
Managing Director of the Company is Mr H. Shanker
Madan, whose qualifications and experience are stated
in the Directors’ Report for the financial year ended 30
June 2012.
ANNUAL REPORT | 90
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CORPORATE GOVERNANCE
3.4.
Executive Directors
The Company does not have any Executive Directors
(other than the Managing Director).
3.5. Non-Executive Directors
The Company recognises the importance of Non-
Executive Directors and the external perspective and
advice that Non-Executive Directors can offer. Messrs
Ian Williams, Douglas Stewart and William Johnson are
Non-Executive Directors of
the Company, whose
qualifications and experience are stated in the Directors’
Report for the financial year ended 30 June 2012.
Mr Farooq Khan was a Non-Executive Director until his
resignation on 31 August 2012.
3.6. Company Secretary
The Company Secretary is appointed by the Board and
is responsible for developing and maintaining the
information systems and processes that are appropriate
for the Board to fulfil its role and is responsible to the
Board for ensuring compliance with Board procedures
and governance matters. The Company Secretary is
also
for overseeing and coordinating
disclosure of information to the ASX as well as
communicating with the ASX. The Company Secretary
is Mr Victor Ho, whose qualifications and experience are
stated in the Directors’ Report for the financial year
ended 30 June 2012.
responsible
3.7.
Independence
An independent Director, in the view of the Company, is
a Non-Executive Director who:
(1)
(2)
(3)
(4)
(5)
(6)
is not a substantial shareholder of the Company
or an officer of, or otherwise associated directly
with, a substantial shareholder of the Company;
within the last 3 years has not been employed in
an Executive capacity by the Company or
another group member;
within the last 3 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 provision of material professional or
consulting services;
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;
has no material contractual relationship with the
Company other than as a Director of the
Company; and
is free from any interest and any business or
relationship which could, or could
other
reasonably be perceived to, materially interfere
with the Director’s ability to act in the best
interests of the Company.
Mr William Johnson is not regarded as an independent
Non-Executive Director as he has held an Executive
position in the Company within the last 3 years. Mr
Farooq Khan (until his resignation as a Director on 31
August 2012) was not regarded as an independent Non-
Executive Director for the same reason.
3.8. Conflicts of Interest
To ensure that Directors are at all times acting in the
interests of the Company, Directors must:
(1)
(2)
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 or his duties to any other parties and the
interests of the Company in carrying out the
activities of the Company; and
if requested by the Board, within 7 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, absent himself
the room when Board
discussion and/or voting occurs on matters to which the
conflict relates (save with the approval of the remaining
Directors and subject to the Corporations Act).
from
3.9. Related-Party Transactions
transactions
include any
Related party
financial
transaction between a Director and the Company as
defined in the Corporations Act or the ASX Listing
Rules. Unless there is an exemption under the
Corporations Act
to obtain
shareholder approval for the related party transaction,
the Board cannot approve
The
Company also discloses related party transactions in its
financial report as required under relevant Accounting
Standards.
the requirement
transaction.
from
the
3.10. Share Dealings and Disclosures
The Company has adopted a Securities Trading Policy
(dated 31 December 2010), a copy of which is available
for viewing and downloading from the Company’s
website.
3.11. Board Nominations
The Board (on recommendations received from the
Remuneration and Nomination Committee) will consider
nominations for appointment or election of Directors that
may arise from time to time having regard to the
corporate and governance skills required by
the
Company and procedures outlined in the Constitution
and the Corporations Act.
3.12. Terms of Appointment as a Director
Mr Shanker Madan, as Managing Director, has a formal
employment agreement with the Company (dated 28
June 2011) with a term expiring on 30 June 2013.
Messrs Ian Williams and Douglas Stewart are regarded
as independent Non-Executive Directors.
The other current Directors of the Company have not
been appointed for fixed terms (as Directors).
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A.B.N. 27 122 892 719
CORPORATE GOVERNANCE
The constitution of the Company provides that a
Director (other than any Managing Director) may not
retain office for more than three calendar years or
beyond the third Annual General Meeting following their
election, whichever is longer, without submitting himself
or herself for re-election. One third of the Directors
(save for any Managing Director) must retire each year
and are eligible for re-election. The Directors who retire
by rotation at each Annual General Meeting are those
with the longest length of time in office since their
appointment or last election.
The initial appointment and last re-election dates of
each current Director are listed below.
Director
H. Shanker
Madan
William
Johnson
Ian Williams
Douglas
Stewart
Appointed
18 May 2007
26 October
2009
30 November
2010
30 November
2010
the Managing
AGM Last Re-elected
N/A (being
Director)
4 November 2011 (will stand
for re-election at the 2012
AGM)
26 May 2011 (will stand for
re-election at the 2012 AGM)
26 May 2011 (will stand for
re-election at the 2012 AGM)
standards, Directors and Executives of the Company
have agreed
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.
to keep confidential all
3.17. Directors’ and Officer’s Deeds
The Company has also entered into a deed with each of
the current Directors and the Company Secretary to
regulate certain matters between the Company and
each officer, both during the time the officer holds office
and after the officer ceases to be an officer of the
Company (or of any of its wholly-owned subsidiaries). A
summary of the terms of such deeds is contained within
the Remuneration Report in the Directors’ Report for the
financial year ended 30 June 2012 and in the 2009
Notice of AGM dated 26 October 2009 (where
shareholder approval was obtained to enter into deeds
with each of Messrs Madan, Khan and Johnson) and
Notice of Meeting for a 26 May 2011 general meeting
(where shareholder approval was obtained to enter into
the same deeds with each of Messrs Ian Williams and
Douglas Stewart).
3.13. Performance Review and Evaluation
3.18. Board Diversity
It is the policy of the Board to ensure that the Directors
and Executives of the Company be equipped with the
knowledge and information they need to discharge their
responsibilities effectively and
individual and
collective performance is regularly and fairly reviewed.
Directors are encouraged to attend director training and
professional development courses, as required, at the
Company’s expense. New Directors will have access to
all employees to gain full background on the Company’s
operations.
that
for
is
The Remuneration and Nomination Committee
the performance and
responsible
remuneration of the Managing Director and Executive
Directors and reporting to the Board on the results of
their review and their recommendations arising therein.
reviewing
3.14. Meetings of the Board
The Board holds
regular meetings approximately
monthly and holds additional Board meetings whenever
necessary
to deal with specific matters requiring
attention. Directors’ Circulatory Resolutions are also
utilised where appropriate either in place of or in
addition to formal Board meetings. 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. It is recognised and accepted that Board
members may also concurrently serve on other boards,
either in an executive or non-executive capacity.
3.15.
Independent Professional Advice
Subject to prior approval by the Chairman, each Director
has the right to seek independent legal and other
professional advice at
the Company’s expense
concerning any aspect of the Company’s operations or
undertakings
their duties and
to
responsibilities as Directors.
in order
fulfil
The Board, senior management and workforce of the
Company currently comprises
that are
multiculturally diverse together with an appropriate
blend of qualifications and skills.
individuals
The Company recognises the positive advantages of a
diverse workplace and is committed to:
(1)
(2)
creating a working environment conducive to the
appointment of well qualified employees senior
management and Board candidates; and
identifying ways to promote a corporate culture
which embraces diversity.
The Board has delegated
responsibility of
monitoring and ensuring workplace diversity to the
Managing Director.
the
the relatively small size of
Given
the Company
workforce and the current nature and scale of the
Company’s activities at
the Board has
this
determined that it is not practicable to set measurable
objectives for achieving gender diversity.
time,
The Board will monitor the progress and assess the
effectiveness of diversity within the Company on an
ongoing basis. The Board will further consider the
for achieving gender
establishment of objectives
its
diversity as
circumstances change.
the Company develops and
The Company does not currently have any women in
senior executive roles or on the Board. 29% of the
Company’s current employees are female.
4.
Management
4.1.
Executives
3.16. Company Information and Confidentiality
All Directors have the right of access to all relevant
Company books and to Company Executives. In
accordance with legal requirements and agreed ethical
The Company’s executive team comprise the Managing
Director (Shanker Madan), General Manager, Corporate
and Finance (Farooq Khan) (also a Non-Executive
Director until his resignation as Director on 31 August
2012), General Manager, Commercial and Joint
ANNUAL REPORT | 92
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ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CORPORATE GOVERNANCE
Ventures (William Johnson) (also a Non-Executive
Director), the Company Secretary (Victor Ho), General
Counsel (Justin Richard) and the Chief Financial Officer
(Elvio Ruggiero).
The Board has determined that the Managing Director is
the appropriate person to make the Chief Executive
Officer equivalent declaration
the
Company’s accounts, as required under section 295A of
the Corporations Act and recommended by the Council.
respect of
in
4.2. Board Committees
Audit Committee: On 9 December 2010, the Board
established a 3 member Audit Committee comprised of
the
independent Non-Executive Directors, Messrs
Douglas Stewart (appointed Chairman of the Audit
Committee) and
Ian Williams and Non-Executive
Director, William Johnson. Their qualifications and
experience are stated in the Directors’ Report for the
financial year ended 30 June 2012.
The Audit Committee has a formal charter to prescribe
its objectives, duties and responsibilities, access and
authority, composition, membership requirements of the
Committee and other administrative matters.
Its
function includes reviewing and approving the audited
annual and reviewed half-yearly
financial reports,
ensuring a risk management framework is in place,
reviewing and monitoring compliance issues, reviewing
reports from management and matters related to the
external auditor. The Audit Committee Charter may be
viewed and downloaded from the Company’s website.
Remuneration and Nomination Committee: On 9
December 2010, the Board established a 3 member
Remuneration and Nomination Committee which
currently comprises the independent Non-Executive
Directors, Messrs Ian Williams (appointed Chairman of
the Remuneration and Nomination Committee) and
Douglas Stewart and Non-Executive Director, William
Johnson. Their qualifications and experience are stated
in the Directors’ Report for the financial year ended 30
June 2012.
charter
its purpose,
to prescribe
The Remuneration and Nomination Committee has a
formal
key
responsibilities, composition, membership requirements,
powers and other administrative matters.
The
Committee has a remuneration function (with key
responsibilities to make recommendations to the Board
on policy governing the remuneration benefits of the
Managing Director and Executive Directors, including
equity-based remuneration and assist the Managing
Director to determine the remuneration benefits of
senior management
those
and
determinations) and a nomination function (with key
responsibilities to make recommendations to the Board
as to various Board matters including the necessary and
desirable qualifications, experience and competencies
of Directors and the extent to which these are reflected
in the Board, the appointment of the Chairman and
Managing Director, the development and review of
Board succession plans and addressing Board
The Remuneration and Nomination
diversity).
Committee Charter may be viewed and downloaded
from the Company’s website.
advise
on
5.
Remuneration Policy
in
the Remuneration Report within
Details of the Company’s remuneration policy are
the
contained
Directors’ Report for the financial year ended 30 June
2012. The Company currently does not have any
unvested options on issue to Directors. If any options
are issued to Directors in future that do not vest
immediately, the Company’s policy is to require the
Director option holders not to enter into transactions in
associated products which limit the economic risk of
holding unvested options.
6.
Code of Conduct and Ethical Standards
The Company has developed a
formal Code of
Conduct, which may be viewed and downloaded from
the Company’s website. The Code sets and creates
awareness of the standard of conduct expected of
in
Directors, officers, employees and contractors
carrying out their roles.
The Company seeks to encourage and develop a
culture which will maintain and enhance its reputation as
a valued corporate citizen of the countries where it
operates and an employer which personnel enjoy
working for.
The Code sets out policies in relation to various
corporate and personal behaviour including safety,
discrimination,
the environment, communities and
heritage issues, respecting the law, anti-corruption,
interpersonal conduct, conflicts of interest and alcohol
and drugs.
7.
Internal Control, Risk Management and Audit
7.1.
Internal Control and Risk Management
The Board of Directors is responsible for (but takes
advice from the Audit Committee in relation thereto) the
overall internal control framework (which includes risk
management) and oversight of the Company’s policies
on and management of risks that have the potential to
impact significantly on operations, financial performance
or reputation.
The effectiveness of
The Board recognises that no cost-effective internal
control system will preclude all errors and irregularities.
The system is based, in part, on the appointment of
suitably- qualified and experienced service providers
and suitably-qualified and experienced management
personnel.
is
continually reviewed by management and at least
annually by
the Board. On a day-to-day basis,
managing the various risks inherent in the Company’s
operations is the responsibility of the Managing Director
and the Company Secretary/General Counsel/Chief
Financial Officer. Risks facing the Company can be
divided into the broad categories of health and safety,
operations, compliance and market risks.
the system
Health and safety risk is one of the most important risks
faced by a resources company. Apart from the inherent
unacceptability of threats to life or health, safety
incidents have the potential to seriously damage the
its
Company’s
business. The Company takes a “zero tolerance”
approach to any situation that might compromise the
health or safety of staff, contractors or members of the
community. This risk is addressed by comprehensive
reputation and ability
to operate
ANNUAL REPORT | 93
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CORPORATE GOVERNANCE
safety policies and training and a requirement that any
safety incident or “near miss” is reported to the Board.
8.
Communications
8.1. Market and Shareholder Communications
loss
from
failed
inadequate or
Operations risk refers to risks arising from day to day
operational activities which may result in direct or
indirect
internal
processes, decision-making, exercise of
judgment,
people or systems or external events. The Executive
Directors have delegated responsibility from the Board
for identification of operations risks generally, for putting
processes in place to mitigate them and monitoring
compliance with those processes. The Company has
clear accounting and
to
manage risks to the accuracy of financial information
and other financial risks.
internal control systems
regulatory
legal and
Compliance risk is the risk of failure to comply with all
applicable
requirements and
industry standards and the corresponding impact on the
Company’s business, reputation and financial condition.
The Company’s compliance risk management strategy
ensures compliance with key legislation affecting the
Company’s activities. A key principle of the Company’s
compliance risk management strategy is to foster an
integrated approach where
line managers are
responsible and accountable for compliance, within their
job descriptions and within overall guidance developed
by the Company Secretary assisted by the General
Counsel. The Company’s compliance strategy is kept
current with advice from senior external professionals
and the ongoing training of Executives and other senior
personnel involved in compliance management. The
Company has policies on
responsible business
practices and ethical behaviour including conflict of
to maintain
interest and share
confidence in the Company’s integrity and ensure legal
compliance.
trading policies
Market risk encompasses risks to the Company’s
performance from changes in resource prices, currency
exchange
rates, capital markets and economic
conditions generally. The Audit Committee regularly
assesses the Company’s exposure to these risks and
the Board (taking advice from the Audit Committee) sets
the strategic direction for managing them.
in
response
it evolves constantly
The Company’s approach to risk management is not
stationary;
to
in operations and changing market
developments
the
The Board has determined
conditions.
Managing Director is the appropriate person to make
the Chief Executive Officer equivalent declaration, on
the risk management and internal compliance and
control systems
the Council.
Management has reported to the Board as to the
effectiveness of the Company's management of its
material business risks.
recommended by
that
7.2. Audit
The Company's external auditor (Auditor) is selected
for its professional competence, reputation and the
provision of value for professional fees. Within the audit
firm, the partner responsible for the conduct of the
Company’s audits is rotated every three years. The
Auditor is invited to attend annual general meetings (in
person or by teleconference) to answer shareholder
questions about the conduct of the audit and the
preparation and content of the Auditor’s report.
require an understanding of
The Company is owned by shareholders. Increasing
shareholder value is the Company’s key mission.
Shareholders
the
Company’s operations and performance to enable them
to see how that mission is being fulfilled. The Directors
are the shareholders’ representatives. In order to
properly perform their role, the Directors need to be able
to ascertain the shareholders’ views on matters affecting
the Company.
therefore considers it
paramount to ensure that shareholders are informed of
all major developments affecting the Company and have
the opportunity to communicate their views on the
Company to the Board. Information is communicated to
shareholders and the market through various means
including:
The Board
(1)
(2)
(3)
(4)
(5)
is distributed
the Annual Report which
to
shareholders if they have elected to receive a
printed version and is otherwise available for
viewing and downloading from the Company’s
website;
the Annual General Meeting (AGM) and other
general meetings called in accordance with the
Corporations Act and to obtain shareholder
approvals as appropriate.
The Managing
Director and Chairman (as appropriate) gives an
address at the AGM updating shareholders on
the Company's activities;
Half-Yearly Directors’ and Financial Reports
which are posted on the Company’s website;
Quarterly Activities and Cash Flow Reports
which are posted on to the Company’s website;
and
to ASX as
other announcements released
required under
the continuous disclosure
requirements of the ASX Listing Rules and other
information that may be mailed to shareholders,
which is also posted on the Company’s website.
Shareholders communicate with Directors
various means including:
through
(1)
(2)
(3)
(4)
having the opportunity to ask questions of
Directors at all general meetings;
the presence of the Auditor at Annual General
Meetings to take shareholder questions on any
issue relevant to their capacity as auditor;
the Company’s policy of expecting Directors to
be available to meet shareholders at Annual
General Meetings; and
the Company making Directors and selected
senior
answer
shareholder questions.
employees
available
to
The Company actively promotes communication with
shareholders through a variety of measures, including
the use of the Company’s website and email. The
Company’s reports and ASX announcements may be
its website:
viewed
http://www.alararesources.com or the ASX website:
asx.com.au under ASX code “AUQ”.
downloaded
from
and
ANNUAL REPORT | 94
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ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
CORPORATE GOVERNANCE
The Company also maintains an email list for the
distribution of the Company’s announcements via email
in a timely manner.
8.2. Continuous Disclosure to ASX
The Board has designated the Company Secretary as
the person responsible for overseeing and coordinating
to ASX as well as
disclosure of
communicating with ASX.
information
the Company
information concerning
In accordance with the Corporations Act and ASX
Listing Rule 3.1 the Company immediately notifies ASX
of
that a
reasonable person would expect to have a material
effect on the price or value of the Company’s securities,
subject
A
reasonable person is taken to expect information to
have a material effect on the price or value of the
Company’s securities if the information would, or would
be likely to, influence persons who commonly invest in
securities in deciding whether to acquire or dispose of
the Company’s securities.
to exceptions permitted by
that rule.
All staff are required to inform their reporting manager of
any potentially price-sensitive information concerning
the Company as soon as they become aware of it.
Reporting managers are in turn required to inform the
Executive Director to whom they report or, in their
absence, another Executive Director of any potentially
price-sensitive information.
In general, the Company will not respond to market
speculation or rumours unless required to do so by law
or by the ASX Listing Rules.
The Managing Director has general responsibility to
speak to the media, investors and analysts on the
Company’s behalf. Other Directors or senior Executives
may be given a brief to do so on particular occasions. .
The Company may request a trading halt from ASX to
prevent trading in its securities if the market appears to
be uninformed. The Executive Directors are authorised
to determine whether to seek a trading halt.
31 October 2012
ANNUAL REPORT | 95
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
MINERAL CONCESSIONS
KHNAIGUIYAH ZINC COPPER PROJECT IN SAUDI ARABIA
The Khnaiguiyah Zinc Copper Project is located adjacent to a bitumen road ~170km west of Riyadh, the capital of Saudi Arabia
near the major Riyadh to Jeddah highway. The project comprises one Mining Licence (granted in December 2010), 3
Exploration Licences and 5 Exploration Licence applications pending grant totalling ~380km2.
Alara Saudi Operations Pty Limited has a 50% interest in a joint venture company, Khnaiguiyah Mining Company LLC (Saudi
Arabia) (incorporated on 10 January 2011), which will hold these mineral licences (after transfers have been processed by
relevant authorities).
Refer to Alara market announcements dated 5 October 2010 entitled “Project Acquisition - Khnaiguiyah Zinc Copper Project in
Saudi Arabia” and dated 25 October 2010 entitled “Execution of Joint Venture Agreement - Khnaiguiyah Zinc Copper Project in
Saudi Arabia.” Also refer to page 78 of the Company’s 2012 Annual Report for further information on the joint venture terms.
WASHIHI-MULLAQ-AL AJAL COPPER-GOLD PROJECT (OMAN)
The Washihi-Mullaq-Al Ajal Copper-Gold Project is located approximately 80-160km east and southeast of Alara’s Daris Project
and Awtad Project and comprises 3 exploration licences totalling 80km2.
Alara Oman Operations Pty Limited has the right to subscribe for an initial 10% interest (with a right to increase this to 60% and
subsequently to 75%+) in the concession owner, Pilatus Resources Oman LLC (Oman).
Refer to Alara market announcement dated 8 December 2011 and entitled “Project Acquisition - Al Ajal-Washihi-Mullaq Copper-
Gold Project in Oman.” Also refer to page 80 of the Company’s 2012 Annual Report for further information on the joint venture
terms.
DARIS COPPER-GOLD PROJECT IN OMAN
The Daris Copper Project is located ~150km west of Muscat, the capital of Oman and comprises a mineral excavation licence of
~587km2. Alara Oman Operations Pty Limited has a 50% interest (with a right to increase this to 70%+) in a new joint venture
company, Daris Resources LLC (Oman) (incorporated on 1 December 2010), which holds the exclusive right to manage,
operate and commercially exploit the exploration licence.
Alara Oman Operations Pty Limited also has a 70% interest in a separate joint venture company in Oman, Alara Resources LLC
(Oman) (incorporated on 2 October 2010), which has lodged applications for exploration licences over several prospects.
Refer to Alara market announcements dated 30 August 2010 and entitled “Project Acquisition - Daris Copper Project in Oman.”
Also refer to page 80 of the Company’s 2012 Annual Report for further information on the Daris Resources LLC and Alara
Resources LLC joint venture terms.
AWTAD COPPER-GOLD PROJECT IN OMAN
The Awtad Copper Gold Project is located immediately adjacent to the Daris Project and comprises a mineral excavation
licence of ~497km2.
Alara Oman Operations Pty Limited has the right to subscribe for an initial 10% interest (with a right to increase this to 51% and
subsequently to 70%+) in the concession owner, Awtad Copper LLC (Oman).
Refer to Alara market announcement dated 27 April 2011 and entitled “Project Acquisition - Awtad Copper-Gold Project in
Oman”. Also refer to page 80 of the Company’s 2012 Annual Report for further information on the joint venture terms.
MARJAN PRECIOUS AND BASE METALS PROJECT IN SAUDI ARABIA
The Marjan Precious and Base Metals Project (Alara 50%) is located ~30km south south-west of the Khnaiguiyah Project. The
project comprising 3 Exploration Licences (totalling 260km2) prospective for gold, silver, copper and zinc.
Alara Marjan Operations Pty Limited will have a 50% interest in a new joint venture company to be formed in Saudi Arabia
(“Marjan Mining Company”), which will hold these licences (after Alara has completed a minimum US$1 million funding and
transfers have been processed by relevant authorities).
Refer to Alara market announcement dated 18 April 2011 and entitled “Acquisition of Interest in Marjan Project in Saudi Arabia”.
Also refer to pages 79 and 80 of the Company’s 2012 Annual Report for further information on the joint venture terms.
ANNUAL REPORT | 96
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
MINERAL CONCESSIONS
PIEDRECILLAS COPPER-SILVER PROJECT IN CHILE
The Piedrecillas Copper-Silver Project in Chile is located ~190km south of Santiago and ~7km west of Santa Cruz. The project
comprises 19 concessions covering a total area of 29km2 and 7 applications for concessions covering total area of ~11km2.
Alara Chile Operations Pty Ltd (through Alara Chile Limitada, a wholly owned Chilean subsidiary) has a 0.01% interest Alara
Piedrecillas SCM, a Chilean mining company which holds mining rights and concessions in relation to the project, with an option
to acquire 50% and subsequently up to 100%.
Refer to Alara’s 30 June 2012 Quarterly Report dated 31 July 2012. Also refer to page 81 of the Company’s 2012 Annual
Report for further information on the joint venture terms.
EL QUILLAY COPPER-GOLD PROJECT IN CHILE
The El Quillay Copper-Gold Project in Chile is located south of the town of El Quillay, ~350km north of Santiago, the capital of
Chile. The project comprises 66 granted concessions covering a total area of ~140km2 and 22 applications for concessions
covering a total area of 65km2 across four sub-project areas (El Quillay (North, Central and South prospects), Lana-Corina,
Vaca Muerta and La Florida).
Alara Chile Operations Pty Ltd (through Alara Chile Limitada, a wholly owned Chilean subsidiary) has a 70% interest in a
Chilean joint venture company, El Quillay SpA (ELQ). ELQ had an option to acquire SCM Antares, a Chilean mining company
which holds mining rights and concessions in relation to the project. Refer to Alara market announcement dated 24 October
2011 and entitled “Project Acquisition – El Quillay Copper Gold Project in Chile”. Also refer to page 79 of the Company’s 2012
Annual Report for further information on the joint venture terms.
On 22 October 2012, the Company announced that it has elected not to progress further with the El Quillay joint venture. The
decision was made in advance of a US$1 million option payment which was due to be paid to Alara’s joint venture partner
before 21 October 2012. As a consequence of not paying the option payment, the Company has relinquished all rights to the
project. Whilst the project initially showed good prospects, with old artisanal workings, prospective geology and clear walk up
drill targets, the 5,000 metres of targeted drilling undertaken in 2012 failed to confirm the presence of the mineralisation that the
Company was expecting. Given these results, the Company considered that the project did not warrant paying the US$1 million
option fee, together with a commitment to a further 15,000 metres of drilling, to maintain its rights to the project for a further 12
months (until the next option payment). The Company’s attempts to renegotiate the October 2012 tranche of option payment
were not successful. Refer to Alara market announcement dated 22 October 2012 and entitled Relinquishment of Interest in El
Quillay Project, Chile.
AUSTRALIAN MINERAL TENEMENTS
Status Tenement
Grant /
Application
Date
Expiry
Date
Area
(Blocks)
Area
(km²)
Area
(hectares)
Granted EL 24879 15/08/06 14/08/12
27
85
8,500
Application EL 24927 12/09/05
N/A
338
998.7
99,870
Granted EL 24928 24/08/06 23/08/12
6
14
1,400
Granted EL 24929 24/08/06 23/08/12
13
28.4
2,840
Application E 46/585 17/10/03
N/A
69
207
20,700
Location/
Property
Name
Mount
Doreen
Haasts
Bluff
Mount
Doreen
Mount
Doreen
Canning
Well
State Company’s Interest
NT
NT
NT
NT
100% (75% held by
Alara Operations Pty
Ltd and 25% held by
Hume Mining NL);
Thundelarra
Exploration Ltd has a
right under a joint
venture with Alara to
earn a 70% interest23
WA Right to earn 85%
(excluding all
manganese mineral
rights) (63.75% held
by Alara Operations
Pty Ltd and 21.25%
held by Hume Mining
NL)
Project
Bigrlyi
South
Uranium
Project,
Northern
Territory
Canning
Well
Base
Metals /
Uranium
Project,
Western
Australia
23 Under a joint venture agreement, ASX listed Thundelarra Exploration Ltd (ASX Code: THX) is earning-in a 70% interest in Exploration
Licenses EL 24879, EL 24928 and EL 24929 by incurring $750,000 of expenditure on these tenements over a period of 5 years from the date
of the agreement on 12 May 2009 and a 70% interest in Exploration License application EL 24927 by incurring $750,000 of expenditure on
this tenement over a period of 5 years from the date of grant. Refer Alara market announcement dated 14 May 2010 and entitled “Bigrlyi
South Uranium Joint Venture with Thundelarra Exploration”
ANNUAL REPORT | 97
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
JORC CODE COMPETENT PERSONS’
STATEMENTS
(1)
(2)
(3)
(4)
The information in this report that relates to Zinc and Copper Mineral Resources within Mineralised Zones
1, 2 and 4 in relation to the Khnaiguiyah Project (Saudi Arabia) is based on information compiled by Mr
Ravindra Sharma, who is a Chartered Professional Member of The Australasian Institute of Mining and
Metallurgy and Registered Member of The Society for Mining, Metallurgy and Exploration. Mr Sharma is a
principal consultant to Alara Resources Limited. Mr Sharma has sufficient experience which is relevant to
the style of mineralisation and type of deposit under consideration, and to the activity they are undertaking
to qualify as Competent Persons in terms of the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (JORC Code, 2004 edition). Mr Sharma consents to the inclusion in
the report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to Zinc and Copper Mineral Resources within Mineralised Zone 3
in relation to the Khnaiguiyah Project (Saudi Arabia) is based on information compiled by Mr Daniel
Guibal, an employee of SRK Consulting (Australasia) Pty Ltd, who is a Fellow of The Australasian Institute
of Mining and Metallurgy. Mr Guibal has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration, and to the activity they are undertaking to qualify
as Competent Persons in terms of the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (JORC Code, 2004 edition). Mr Guibal consents to the inclusion in the
report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to Mineral Resources in relation to the Daris Project (Oman) and
the Washihi prospect (Oman) is based on information compiled by Mr. Ravindra Sharma, who is a
Chartered Professional Member of The Australasian Institute of Mining and Metallurgy and Registered
Member of The Society for Mining, Metallurgy and Exploration. Mr. Sharma is a principal consultant to
Alara Resources Limited. Mr. Sharma has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration, and to the activity they are undertaking to qualify
as Competent Persons in terms of the Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves (JORC Code, 2004 edition). Mr. Sharma has given his consent to the
inclusion in the report of the matters based on his information in the form and context in which it appears.
The information in this report that relates to other Exploration Results is based on information compiled by
Mr Hem Shanker Madan who is a Member of The Australian Institute of Mining and Metallurgy. Mr Madan
is the Managing Director of Alara Resources Limited. Mr Madan 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 Mineral Resources and Ore Reserves (the JORC Code).” Mr Madan consents to the
inclusion in this report of the matters based on his information in the form and context in which it appears.
ANNUAL REPORT | 98
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
ADDITIONAL ASX INFORMATION
as at 31 October 2012
ISSUED SECURITIES
Fully paid ordinary shares
$0.35 (16 September 2013) Unlisted Options24
$0.35 (16 September 2013) Unlisted Options24
$0.35 (25 October 2014) Unlisted Options25
25
$0.60 (25 October 2014) Unlisted Options
$0.50 (25 May 2014) Unlisted Options26
$0.60 (25 May 2014) Unlisted Directors’ Options27
$0.60 (25 May 2014) Unlisted Options26
$0.70 (25 May 2014) Unlisted Options26
$0.35 (22 August 2015) Unlisted Options28
Total
Quoted
on ASX
242,007,500
-
-
-
-
-
-
-
-
-
Unlisted
-
1,000,000
16,400,000
3,650,000
2,000,000
400,000
500,000
250,000
250,000
400,000
Total
242,007,500
1,000,000
16,400,000
3,650,000
2,000,000
400,000
500,000
250,000
250,000
400,000
242,007,500
24,850,000
266,857,500
SUMMARY OF UNLISTED DIRECTORS’ AND EMPLOYEES’ OPTIONS
Date of Issue Description of
17 Sep 2008
17 Sep 2008
26 Oct 2009
30 Nov 2009
26 Oct 2009
30 Nov 2009
23 Aug 2010
26 May 2011
2 Sept 2011
23 Dec 2011
2 Sept 2011
23 Dec 2011
2 Sept 2011
23 Dec 2011
Unlisted Options
$0.35 (16 September
2013) Options
$0.35 (16 September
2013) Options
$0.60 (25 October
2014) Options
$0.35 (25 October
2014) Options
$0.35 (22 August
2015) Options
$0.60 (25 May 2014)
Directors’ Options
$0.50 (25 May 2014)
Options
$0.60 (25 May 2014)
Options
$0.70 (25 May 2014)
Options
Exercise
Price
Expiry Date
Vesting Criteria29
$0.35
16 Sep 2013
$0.35
16 Sep 2013
75% on grant, 25% on 17 September
2009
50% on 17 March 2009, 25% on 17
September 2009, 25% on 17 March
2010
$0.60
25 Oct 2014
100% on date of issue
$0.35
25 Oct 2014
100% on date of issue
$0.35
22 Aug 2015
100% on date of issue
$0.60
25 May 2014
100% on date of issue
$0.50
25 May 2014
100% on date of issue
$0.60
25 May 2014
100% on date of issue
$0.70
25 May 2014
100% on date of issue
No. of
Options
16,400,000
1,000,000
1,000,000
1,000,000
1,650,000
2,000,000
400,000
500,000
400,000
250,000
250,000
24 Terms and conditions of issue are set out in a Notice of General Meeting and Explanatory Statement dated 18 August 2008 for a General
Meeting held on 17 September 2008 and in an ASX Appendix 3B New Issue Announcement lodged on 24 September 2008
25 Terms and conditions of issue are set out in a Notice of Annual General Meeting and Explanatory Statement dated 26 October 2009 for an
Annual General Meeting held on 30 November 2009 and in ASX Appendix 3B New Issue Announcements lodged on 26 October 2009 and 1
December 2009
26 Terms and conditions of issue are set out in an ASX Appendix 3B New Issue Announcement lodged on 27 May 2011
27 Terms and conditions of issue are set out in a terms and conditions of issue are set out in a Notice of General Meeting and Explanatory
Statement dated 15 April 2011 for a General Meeting held on 26 May 2011 and in an ASX Appendix 3B New Issue Announcement lodged on
27 May 2011
28 Terms and conditions of issue are set out in an ASX Appendix 3B New Issue Announcement lodged on 23 August 2010
29 Options which have vested may be exercised at any time thereafter, up to their expiry date
ANNUAL REPORT | 99
30 JUNE 2012
ALARA RESOURCES LIMITED
A.B.N. 27 122 892 719
ADDITIONAL ASX INFORMATION
as at 31 October 2012
DISTRIBUTION OF LISTED ORDINARY FULLY PAID SHARES
Spread
of
Holdings
Number of Holders
Number of Units
% of Total Issue Capital
1
1,001
5,001
10,001
100,001
Total
-
-
-
-
-
1,000
5,000
10,000
100,000
and over
UNMARKETABLE PARCELS
1,103
350
209
383
127
2,172
413,260
860,126
1,800,579
13,488,601
225,444,934
242,007,500
0.17%
0.36%
0.74%
5.57%
93.16%
100.00%
Spread of Holdings
Number of Holders
Number of Shares
% of Total Issued Capital
1 - 1,999
1,269
658,094
0.27%
An unmarketable parcel is considered, for the purposes of the above table, to be a shareholding of 1,999 or less, being a value of $500
or less in total, based upon the Company’s closing share price on 31 October 2012 of $0.25 per share.
Total
Shares
% Issued
Capital
62,380,422
40,060,129
25.776
16.553
34,663,320
14.323
15,602,665
6.447
TOP 20 LISTED ORDINARY FULLY PAID SHAREHOLDERS
Rank Shareholder
1 *
JP MORGAN NOMINEES AUSTRALIA LIMITED
JP MORGAN NOMINEES AUSTRALIA LIMITED - CASH INCOME A/C
2*
3*
NATIONAL NOMINEES LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
–
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - GSCO ECA
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
4*
CITICORP NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
5
6
7
8
9
10
11
12
13
14
15
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED - NMSMT A/C
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED - BKCUST A/C
RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED - PISELECT A/C
MR PETER KELVIN RODWELL
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMS PTY LTD
GWYNVILL TRADING PTY LTD
DEEP INVESTMENTS PTY LTD
UBS NOMINEES PTY LTD
UBS NOMINEES PTY LTD
FLANNERY FOUNDATION PTY LTD
SANDHURST TRUSTEES LTD
THORPE ROAD NOMINEES PTY LTD
BRISPOT NOMINEES PTY LTD
SURFLODGE PTY LTD
16 MR BRIAN JOSEPH FLANNERY & MRS PEGGY ANN FLANNERY
17
HGT INVESTMENTS PTY LTD
18 MR ANDREW BRUCE RICHARDS
19 MR IAN EDWARD TREGONING & MRS LISA ANTONIETTA TREGONING
20
BLUEFLAG HOLDINGS PTY LTD
Total
* Substantial shareholders
48,829,077
13,551,345
Sub-total
21,305,255
3,172,000
8,385,984
1,800,081
Sub-total
2,377,801
13,224,864
Sub-total
3,365
2,455,329
4,841,204
Sub-total
1,938,972
1,875,970
Sub-total
1,762
3,200,000
7,299,898
4,000,000
3,814,942
3,682,021
3,300,000
Sub-total
3,201,762
3,148,500
2,758,136
2,344,814
1,973,719
1,629,000
1,420,000
1,250,000
1,200,000
1,192,991
1,053,000
3.016
1.653
1.576
1.521
1.364
1.323
1.301
1.140
0.969
0.816
0.673
0.587
0.517
0.496
0.493
0.435
195,975,319
81.797%
ANNUAL REPORT | 100
THIS IS A BLANK PAGE
ALARA RESOURCES LIMITED
A.C.N. 122 892 719
ASX Code: AUQ
www.alararesources.com
PRINCIPAL & REGISTERED OFFICE:
Level 14, The Forrest Centre
221 St Georges Terrace
Perth, Western Australia 6000
Local T | 1300 762 678
T | +61 8 9214 9787
F | +61 8 9322 1515
E | info@alararesources.com
ShARE REGISTRy:
Advanced Share Registry Services
Suite 2, 150 Stirling Highway
Nedlands, Western Australia 6009
PO Box 1156, Nedlands, Western Australia 6909
T | +61 8 9389 8033
F | +61 8 9389 7871
Level 6, 225 Clarence Street
Sydney, New South Wales 2000
PO Box Q1736, Queen Victoria Building,
New South Wales 1230
T | +61 2 8096 3502
E | admin@advancedshare.com.au
W | www.advancedshare.com.au