A L K A N E E X P L O R A T I O N L T D
ACN 000 689 216
A l k a n e E x p l o r a t i o n L t d
Registered Office
129 Edward Street Perth WA 6000
Telephone: 61 8 9227 5677 Facsimile: 61 8 9227 8178
Technical Office
96 Parry Street Perth WA 6000
Telephone: 61 8 9328 9411 Facsimile: 61 8 9227 6011
www.alkane.com.au mail@alkane.com.au
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C O M P A N Y I N F O R M A T I O N
ACN 000 689 216 ABN 35 000 689 216
D I R E C T O R S
I.R. Cornelius
D.I. Chalmers
L.A. Colless
H. D. Kennedy
A. D. Lethlean
S E C R E TA RY
L.A. Colless
R E G I S T E R E D O F F I C E
129 Edward Street
PERTH WA 6000
Tel: 61 8 9227 5677 Fax: 61 8 9227 8178
T E C H N I C A L O F F I C E
96 Parry Street
Perth WA 6000
AU D I T O R S
Rothsay
Chartered Accountants
2 Barrack Street
SYDNEY NSW 2000
Tel: 61 2 9299 0091 Fax: 61 2 9299 2595
S T O C K E XC H A N G E
Australian Stock Exchange Limited
H O M E E XC H A N G E
Perth
A S X C O D E
ALK
I N T E R N E T
Internet home page: www.alkane.com.au
E-mail address: mail@alkane.com.au
Share registry investor services:
Tel: 61 8 9328 9411 Fax: 61 8 9227 6011
www.asrshareholders.com
S H A R E R E G I S T RY
Advanced Share Registry Services
110 Stirling Highway
NEDLANDS WA 6009
Tel: 61 8 9389 8033 Fax: 61 8 9389 7871
C O N T E N T S
Chairman's Report
Review of Operations
Tenement Schedule
Directors' Report
Statements of Financial Performance
Statements of Financial Position
Statements of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Auditors' Report
Corporate Governance
Shareholder Information
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C H A I R M A N ' S R E P O R T
The year 2004 has been mixed with some very positive developments interspersed with some frustrations. At the Wyoming prospect
near Tomingley, north of Alkane’s Peak Hill gold mine, following the definition of the initial resource target of 500,000 ounces late in
2003, the Board took the view that the deposits should be progressed towards development as soon as practical. The pre-feasibility
study used a base case conceptual development of two open pits delivering 1 million tonnes of ore to a conventional carbon-in-leach
treatment plant to recover 60-70,000 ounces of gold a year. While this model generated estimated positive cash flows, given the
geometry of the deposit and the 30 metres of clay cover at Wyoming One, the open pits were unable to deliver ore feed for five years
at manageable waste to ore ratios and with an acceptable financial return.
A number of options to improve the financials are being considered. Three dimensional modelling of the ore bodies is ongoing with
the aim of providing higher open pittable grades and determining the potential of an underground development, as either an addition
to the open pit mining or as a stand alone option. These scenarios may include lower treatment and production rates. Drilling late
in the year targeted high grade ore shoots within the Wyoming One orebody, resulting in some significant intersections and the
addition of a further 100,000 ounces in the Inferred category, raising the total resource inventory to plus 600,000 ounces of gold. This
addition came from an extension to the high grade shoot in the Hangingwall Zone and it could form the basis for an underground
mining operation. The discovery of further open pittable resources within economic trucking distance of the plant is also regarded
as a priority, and a significant exploration effort was directed on achieving this goal. Numerous encouraging intersections were
generated at Tomingley One and Two, Patons East and McLeans, and large areas of this very prospective belt remain untested.
The negative reaction of the stock market to the decision to delay the development at Wyoming was disappointing given that the
deposit remains one of the best recent “greenfield” gold discoveries in Australia and still has significant upside potential. This was
highlighted by Alkane being awarded the inaugural “NSW Explorer of the Year” by Mr Kerry Hickey, the NSW Minister for Mineral
Resources.
The Company is maintaining its focus on Wyoming to achieve the optimum development scenario and maximise the return to
shareholders. To date the total project cost of discovery is around $9 per resource ounce, well inside the industry average of $20-
25. The time taken from discovery to today is under 4 years, again inside the industry norm of 6-7 years to bring a new mining
operation on stream.
“
The deposit remains one of the best
recent “greenfield” gold discoveries in Australia
and still has significant upside potential.
This was highlighted by Alkane being awarded the
inaugural “NSW Explorer of the Year”
by Mr Kerry Hickey, the NSW Minister
for Mineral Resources.
”
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Drilling at the Galwadgere copper-gold prospect with the Wellington Project returned numerous ore grade intercepts and an initial
open pit resource is being compiled to determine the potential for an early development of this deposit. The deposit has very
favourable infrastructure being located adjacent to a major railway, power, water and the town of Wellington. The exploration and
development of Wyoming and Galwadgere could form the cornerstone to our strategy of building a resource and production base in
the Central West Region of NSW to generate cash flows.
While maintaining its focus in the Central West Region the Company retains its interest in Western Australia with the nickel sulphide
joint venture with Jubilee Mines in the Cosmos area of the Eastern Goldfields, and the diamond exploration tenements near Nullagine
in the East Pilbara. Interestingly, as a result of the substantial technical database developed at Nullagine in the mid 90’s as part of the
diamond exploration program, the Company has identified a potential 150-200 million tonne Channel Iron Deposit. Given the current
escalation of prices for iron ore, alternatives to achieve the best return for this substantial asset are currently being considered.
The major frustration for the year has been the lack of progress with the Dubbo Zirconia Project. The agreement with Astron
Limited, signed in October 2003, should have seen the construction and operation of a Demonstration Pilot Plant and a review and
update of the feasibility study for this strategic resource by the end of the year. Unfortunately very little has been achieved and Alkane
is reviewing options to progress the Project, including floating Australian Zirconia Ltd (the holding company and wholly owned
subsidiary of Alkane) as a public company with its own dedicated management and funding.
The Peak Hill operation has moved into rehabilitation mode, and while a small cash flow was generated by clean up of the heaps, the
major effort is now directed to preparing the site for closure. The Mining Leases will be retained however to allow for future
evaluation of the substantial sulphide gold-copper resource identified below the oxide mines.
I would like, once again, to thank my fellow directors, and our consultants, exploration team and gold operations management and
staff for their continued efforts during the year.
I.R. Cornelius
Chairman
2
Gossanous outcrop
of ore body at Galwadgere
51345_JKL_Alkane AR 2004 5c 21/4/05 5:50 PM Page 3
R E V I E W O F O P E R A T I O N S
T O M I N G L E Y G O L D P R O J E C T
Gold – New South Wales
Alkane Exploration Ltd 100% (subject to separate royalty
agreements with Compass Resources NL, Golden Cross Operations
Pty Ltd and Climax Mining Ltd)
The Tomingley Gold Project (TGP) extends over 60
kilometres from near Parkes in the south, to north of Tomingley
in the Central West of New South Wales and covers a narrow
sequence of Ordovician volcanic rocks. The Wyoming
Prospect, within the TGP, is situated about 14 kilometres north
of the Company’s Peak Hill Gold Mine and immediately north
of the historic 70,000 ounce gold producing Myalls United Mine
(McPhails).
Wyoming is one of a number of prospects and gold occurrences
located along this volcanic belt. Gold mineralisation at
Wyoming has a close spatial relationship to a feldspar porphyry
which intrudes into andesitic volcaniclastic rocks near their
western contact with a more pelitic sequence. Mineralisation is
associated with extensive alteration and quartz veining of the
porphyry and volcanic rocks. Several distinct target areas have
been identified to date within a 3 kilometre corridor extending
from McLeans in the south, through Wyoming One to Wyoming
Three in the north.
Peak Hill Gold Mine –
pit and heap leach pads
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Geology
At Wyoming One the main porphyry intrusive appears to be a near vertical, pinnacle shaped body with its long axis
aligned north-north-west and dimensions of 40 metres by 100 metres near surface (200mRL), broadening to 80
metres by 225 metres at depth (000mRL). The northern extent of the porphyry is truncated by a vertical, east-west
structure (‘376’) which is strongly mineralised where in contact with the porphyry. The main zone of mineralisation is
overlain by approximately 30 metres of unmineralised transported clay cover.
The carapace (top) of the porphyry is strongly altered and veined, and is mineralised throughout. The contact of the
porphyry with the host volcaniclastic rocks is also altered, veined and mineralised, particularly on the eastern contact.
At depth the mineralisation appears to be controlled by specific structures, but the drilling is not yet extensive enough
to accurately determine the orientation of these. An apparently stratigraphically controlled zone (the “hangingwall” -
HWZ) is located 20-30 metres east of the porphyry contact and this zone has been traced over a strike length of 300
metres. Individual shoot like bodies control high grade mineralisation within the HWZ.
Wyoming Three is currently interpreted to be a structurally controlled west-north-west trending sheeted quartz vein
system associated with major regional dislocation. The mineralisation is largely within the host volcaniclastic rocks and
although porphyry bodies are present they are not extensively altered or mineralised as at Wyoming One. Overall the
mineralised system is near vertical and has plus 1g/t gold intercepts over a strike length of 300 metres with variable
widths, but grades and widths can be substantial in linking structures. The clay cover at Wyoming Three is generally
less than 10 metres.
“
This new intercept added significant
potential to the total resources at
Wyoming One and demonstrated that
the Hangingwall ore shoot has the
tonnage/grade potential to support an
underground development.
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Resources
At Wyoming One resource definition drilling in 2003 on a 25
metre by 20 metre pattern covered an area of 150 metres by
250 metres down to a depth of 250 metres on the north north-
west trending porphyry associated veining and alteration
system. Deeper RC and core drilling during 2004 targeted high
grade zones within the porphyry, ‘376’ structure and HWZ.
Results include:
WY 789D
including
WY 791D
and
WY 811D
including
WY 812
including
WY 816
and
WY 817
and
WY 821D
including
and
also
78.0 metres grading 2.60g/t gold
from 58.0 metres in porphyry/‘376’
9.0 metres grading 12.45g/t gold
from 100.0 metres
14.0 metres grading 1.08g/t gold
from 194.0 metres in porphyry/‘376’
12.5 metres grading 7.88g/t gold
from 265 metres in ‘376’
10 metres grading 5.39g/t gold
from 521 metres in the HWZ
4.6 metres grading 9.85g/t gold
from 522 metres
17 metres grading 4.72g/t gold
from 297 metres in the HWZ
9 metres grading 6.70g/t gold
from 300 metres
39 metres grading 4.36g/t gold
from 45 metres in porphyry/‘376’ structure
6 metres grading 5.93g/t gold
from 183 metres
6 metres grading 5.12g/t gold
from 165 metres in porphyry/‘376’ structure
3 metres grading 7.54g/t gold
from 270 metres
18.40 metres grading 5.74g/t gold
from 292.8 metres in porphyry/‘376’
7.20 metres grading 11.06g/t gold
from 292.8 metres
1.35 metres grading 13.66g/t gold
from 305.35 metres
4.59 metres grading 4.59g/t gold
from 336.9 metres
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Free gold in Wyoming drill core.
Deep core hole WY 811D targeted an apparent north plunging
high grade shoot within the linear north north-west striking
HWZ and intersected a zone of alteration and mineralisation,
with quartz veining and sulphides prominent in the section
between 520 metres and 540 metres. The intersection at
-180mRL
is 200 metres below the previous deepest
intersection in the HWZ (WY 812 17m @ 4.72g/t Au, including
9m @ 6.70g/t Au) and is approximately 450 metres below
ground surface. This new intercept added significant potential
to the total resources at Wyoming One and demonstrated that
the Hangingwall ore shoot has the tonnage/grade potential to
support an underground development.
WY 821D targeted mineralisation within the porphyry host and
the cross cutting ‘376’ structure, 50 metres below the previous
deepest intercept at -010mRL. Alteration, veining and
mineralisation were intersected in several zones within the
porphyry and the distinctive east-west mineralised and near
vertical ‘376’ structure was intercepted between 336 and 341
metres (300m below ground surface). The porphyry exhibits a
complex vein array with several orientations measured which
makes estimates of true widths difficult and variable
throughout. Resource modelling is also difficult in this
environment.
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At Wyoming Three the resource drilling on the same pattern covered a more linear east-west system over an area of 300 metres by
75 metres, with most holes being less than 150 metres vertical depth.
At 31 December 2004, Identified Mineral Resources stood at:
WYOMING RESOURCES (>0.75g/t Au cut off)
Measured
Indicated
Inferred
Total
DEPOSIT
Tonnage
(t)
Grade
(g/t)
Tonnage
(t)
Grade
(g/t)
Tonnage
(t)
Grade
(g/t)
Tonnage
(t)
Grade
(g/t)
Ounces
Wyoming One
4,020,000
Wyoming Three
815,000
TOTAL
4,835,000
2.25
2.20
2.24
1,010,000
15,000
1,025,000
2.77
2.32
2.76
1,270,000
4.09
6,300,000
1,270,000
4.09
7,130,000
830,000
2.70
2.20
2.70
547,700
58,700
606,400
These Mineral Resources are based upon information compiled by Mr Terry Ransted MAusIMM (Principal, Multi Metal Consultants Pty Ltd) who is a competent
person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Terry Ransted
consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology are
given in attached Note 1.
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Pre-feasibility Study
Pre-feasibility studies initially focussed on the conceptual model
of open pit mining and conventional CIL gold recovery circuit.
All processing plant and associated services would be sited
adjacent to the mine at Wyoming, about 2 kilometres south of
the town of Tomingley. The base case assumed a 1 million tonne
per annum open pit throughput, but given the geometry of the
deposits and the 30 metres of clay cover at Wyoming One, the
open pit shells were unable to deliver ore feed for five years at
manageable waste to ore ratios. This impacted on the overall
financial model and, while generating positive cash flows, the
base case scenario did not achieve an acceptable financial
return.
A number of options are being considered. Modelling of the ore
bodies is ongoing with the aim of providing higher open pitable
grades and determining the potential of an underground
development, as either an addition to the open pit mining or as
a stand alone option. These scenarios may include lower
treatment rates. The addition of further open pitable resources
within economic trucking distance of the plant is also regarded
as a priority, and a significant exploration effort focussed on
achieving this goal.
The TGP is located in an area of substantial existing
infrastructure with the major Newell Highway transecting the
project area linking a number of towns with a regional
population base exceeding 150,000. No camp facilities are
required and the workforce can be sourced locally. A natural
gas pipeline and railway are located five kilometres west of
Tomingley, and power is available from the New South Wales
state grid.
Exploration
A major reconnaissance drilling program commenced early
2004 to advance target development on the many regional
anomalies located within 10 kilometres of Wyoming. Of
immediate interest is the 5 kilometres long north-south
structural corridor that includes the historic workings at
Tomingley (located 1.5 kilometres north-east of Wyoming
Three), the partially tested Tomingley One target and another
area of mineralisation located by earlier reconnaissance drilling
at the north end of the corridor. Numerous plus 0.5g/t gold
intersections have been recorded in this drilling, identifying a
new 800 metre long zone designated Tomingley Two. Other
encouraging intercepts were generated at Patons East, located
1.2 kilometres north-east of Wyoming Three.
Drilling also tested the McLeans target located 400 metres to
the south of the Myall’s United mine where earlier drilling had
located at least two mineralised zones over a strike length of
1kilometre, and while several ore grade intercepts were
recorded, further work is required to understand the
controlling structures.
Ground checking of other geological and aeromagnetic targets
within the belt has also commenced.
Wyoming core and drilling at WY 812.
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D U B B O Z I R C O N I A P R O J E C T ( D Z P )
Zirconia, niobium-tantalum, yttria-rare earths – NSW
Australian Zirconia Ltd (AZL) 100%
The Dubbo Zirconia Project (DZP) is located 20 kilometres
south of the large regional centre of Dubbo, approximately 400
kilometres north west of Sydney in the Central West Region of
New South Wales. The DZP is based upon one of the world’s
largest in-ground resources of the metals zirconium, niobium,
tantalum, yttrium and rare earth elements. The project is
capable of generating a suite of zirconium chemicals, zirconia
(ZrO2), a niobium-tantalum concentrate and a yttrium-rare
earth concentrate which are used in the expanding ceramic,
electronics, engineering ceramic and specialty glasses and alloys
industries.
The Company has carefully evaluated the commercial viability
of the DZP since the discovery of the orebody and remains
convinced that the Project will become an important
contributor to the zirconium chemicals industry over many
years.
In October 2003, AZL entered into a joint venture with Astron
Limited, an Australian public industrial company. Recent
discussions with Astron have focussed on the status of the Joint
Venture and a proposed work program. Unfortunately the slow
progress of the DZP during the year has meant that other
strategies to accelerate the Project are being explored. One of
the options is to float AZL as a public company with its own
dedicated management and funding.
Identified Mineral Resources as at 31 December remained at:
MEASURED RESOURCES (0-55m, 340mRL)
35.7 million tonnes
1.96% ZrO2, 0.04% HfO2, 0.46% Nb2O5,
0.03% Ta2O5, 0,14% Y2O3, 0.745% Total REO
INFERRED RESOURCES (55-100m, 295mRL)
TOTAL
37.5 million tonnes
Similar grade
73.2 million tonnes
Similar grade
These Mineral Resources are based upon information compiled by Mr Terry Ransted MAusIMM (Principal, Multi Metal Consultants Pty Ltd) who is a competent
person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Terry Ransted
consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology are
given in attached Note 2.
P E A K H I L L G O L D M I N E
Gold – New South Wales
Alkane Exploration Ltd 100%
Reticulation of existing heap leach pads continued at the Peak Hill Gold Mine throughout the year with production of 1969 ounces of
gold, generating a small cash flow, but the operation is now in rehabilitation mode with closure anticipated by mid year. The large gold-
copper sulphide body below the current open pits remains a major resource but with the Wyoming discovery the evaluation of this
complex mineralisation remains a lower priority.
As at December 31, 2004, Mineral Resources remained as:
Sulphide (Proprietary orebody only) 0.5g/t gold cut off
INDICATED RESOURCES
INFERRED RESOURCES
TOTAL
9.44 million tonnes
1.35g/t Au 0.11% Cu
1.83 million tonnes
0.98g/t Au 0.10% Cu
11.27 million tonnes
1.29g/t Au 0.11% Cu
467,570 ounces
Sulphide (Proprietary orebody only) 1.0g/t gold cut off
INDICATED RESOURCES
INFERRED RESOURCES
TOTAL
4.46 million tonnes
2.06g/t Au 0.16% Cu
0.45 million tonnes
1.95g/t Au 0.23% Cu
4.91 million tonnes
2.05g/t Au 0.17% Cu
360,000 ounces
Sulphide (Proprietary orebody only) 3.0g/t gold cut off
INFERRED RESOURCES
0.81 million tonnes
4.40g/t Au
114,000 ounces
These Mineral Resources are based upon information compiled by Mr Terry Ransted MAusIMM (Principal, Multi Metal Consultants Pty Ltd) who is a competent
person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Terry Ransted
consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The full details of methodology are
given in attached Note 3.
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W E L L I N GT O N
Gold – NSW
Alkane exploration Ltd 100%
The Wellington Project is centred 15 kilometres to the south east of the town of Wellington. The project hosts several
targets, including the Federal gold and Galwadgere copper-gold prospects. Most previous work by Alkane had
focussed on Federal but the improving copper price in 2004 prompted a reassessment of the potential of Galwadgere.
At Galwadgere exploration by other companies has taken place intermittently since 1967, with the bulk of the work
comprising 41 diamond core holes completed during the 1970’s. This drilling located an extensively altered felsic to
intermediate volcanic sequence hosting base metal sulphide and gold mineralisation. Eleven shallow RC holes were
drilled in 1989 to test for a possible supergene oxide gold deposit in the near surface environment but the depth of
oxidation was shallower than anticipated and there was no enrichment of gold values. In 1997 two additional core
holes were also drilled for metallurgical testing, while one RC hole was drilled to check the mineralised sequence
below the Permian cover. Several resource calculations were completed by other companies but these do not comply
with current JORC guidelines.
During the year 26 RC holes and 1 diamond core hole were completed (4030m) by Alkane. The drilling was designed
to test the known copper-gold mineralisation over a strike length of 400 metres on 50 metre sections down to depths
ranging from 25 metres to 175 metres. The results have confirmed that the mineralisation has an open strike length
of at least 400 metres and appears to be comprised of a number of disseminated and stringer pyrite-chalcopyrite
lenses which can reach widths of 40 metres within altered felsic volcanic rocks. The system is structurally overturned
and dips to the east at about 60º. There is an apparent plunge to the north at 45-50º although this may be a function
of lack of drilling on the southern end of the deposit where topography limits drill access. The stringer mineralisation
appears to be capped by a lead-zinc-silver-gold rich bedded massive sulphide, but to date this has rarely exceeded 2
to 3 metres in width. There is potential for this horizon to increase in thickness to the north and down plunge.
“
A preliminary resource is being
calculated to determine the scope
for an economic development of the
deposit with a conceptual open pit mine
and flotation circuit to produce
a copper-gold concentrate.
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Results included:
GAL 008
including
GAL 010
including
and
GAL 022
including
and
GAL 029
including
and
plus
47 metres grading 0.90% copper and 1.58g/t gold from 122 metres
9 metres grading 0.97% copper and 6.94g/t gold from 160 metres
13 metres grading 1.07% copper and 0.26g/t gold from 17 metres
6 metres grading 1.87% copper and 0.49g/t gold from 24 metres
5 metres grading 2.17% copper and 0.50g/t gold from 46 metres
39 metres grading @ 0.94% copper and 0.45g/t gold from 57metres
13 metres grading @ 1.54% copper and 0.65g/t gold from 59 metres
9 metres grading @ 1.32% copper and 0.54g/t gold from 79 metres
29 metres grading @ 1.02% copper and 0.35g/t gold from 108 metres
11 metres grading @ 1.82% copper and 0.19g/t gold from 108 metres
6 metres grading @ 2.28% copper and 0.28g/t gold from 108 metres
1 metres grading @ 0.71% copper 1.40g/t gold, 4.27% zinc, 1.24% lead, 63g/t silver from 136m
A preliminary resource is being calculated to determine the scope for an economic development of the deposit with a conceptual
open pit mine and flotation circuit to produce a copper-gold concentrate. The deposit is located adjacent to favourable infrastructure,
being 3 kilometres from the main Western Railway, near to power and water, and has the town of Wellington 20 road kilometres away.
11
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B O DA N G O R A
Gold, Copper – NSW
Alkane Exploration Ltd 100% (subject to 2%NSR and buy back option to Rio Tinto Exploration Pty Limited)
Bodangora is located 15 kilometres north-east of Wellington, and about 25 kilometres north of Alkane’s Wellington
(Galwadgere) prospect. The tenement includes part of the northern end of the Ordovician aged Molong Volcanic Belt
(MVB) before it is covered by younger sediments of the Great Australian Basin.
Within the tenement area, the geology is dominated by an andesitic volcanic and volcaniclastic sequence with sporadic
monzonitic intrusives. This sequence is covered by Silurian-Devonian sediments and volcanics while the Nindethana
Fault, a major crustal suture, separates the Bodangora area from the Siluro-Devonian Hill End Trough sediments and
Carboniferous Wuuluman Granite to the east.
Over several years, Rio Tinto and partners identified a number of geochemical anomalies associated with monzonitic
intrusives and have targeted these as Northparkes type porphyry copper-gold models. Surface geochemistry, shallow
aircore and RC drilling have defined several zones of low grade copper-gold mineralisation.
Alkane’s primary target in the area is structurally controlled gold deposits, exemplified by the historic Bodangora
workings, which cover an area of about 2 by 2 kilometres. The main mineralised structure at Bodangora strikes north-
west and has been mined over a distance of 1,300 metres, to a depth of 300 metres. The structure is generally evident
as narrow high grade quartz veins dipping at 45º to the north-east. Historically Bodangora produced nearly 200,000
ounces of gold from 300,000 tonnes of ore in the years 1876 to 1917.
“
Historically Bodangora
produced nearly 200,000 ounces
of gold from 300,000 tonnes of ore
in the years 1876 to 1917.
”
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During 2004 a reconnaissance RC drilling program tested
several targets in the general Bodangora mine area, but not the
depth extensions of the main vein system. The RC holes
intersected a folded and faulted sequence of basalt, andesitic
volcaniclastics and other sediments with variable levels of
alteration and veining. While many veins returned gold values
up to 1g/t gold, no high grade intercepts were recorded
confirming the view that the high grade shoots are probably
controlled by specific structures within the vein sets. Further
testing of the shallow environment will await a more detailed
assessment of the structural interpretation of the area. This will
also provide targeting for the deeper drill testing of the main
Bodangora vein set.
To the north of the Bodangora mine area, Rio Tinto outlined
several other targets which include skarn mineralisation and an
extensive zone of alteration at Comobella where RC drilling has
indicated broad intercepts of gold-copper, with narrower high
grade values. Intervals included 18 metres at 0.95g/t gold and
0.15% copper from 64 metres in NKRC 003, with 2 metres
grading 5.7g/t gold and 0.44% copper.
C U DA L
Gold, Copper – NSW
Alkane Exploration Ltd 100% (subject to 2% NSR and buy back
option to Rio Tinto Exploration Pty Limited)
Cudal is centred 25 kilometres west of the city of Orange,
adjacent to Alkane’s Molong prospect and the Cadia Valley
Operations of Newcrest. The tenements are located on an
outlier of MVB andesitic volcanics, separated from the main belt
to the east by the Columbine Mountain Fault, another major
crustal structure. Remnants of a Tertiary basalt sheet are
scattered throughout the tenements.
Since 1991 Rio Tinto and partners have completed several
exploration phases targeting Cadia-Ridgeway type monzonite
hosted porphyry copper-gold systems. This work included
ground geophysics, surface geochemistry and 45 RC and 2 core
drill holes. The best results were returned from the Dairy Hill
prospect where RC drilling of a quartz stockwork breccia in a
dacite porphyry, with dimensions of 550 metres by 150 metres,
generated broad low grade intercepts such as 48 metres
grading 0.35% copper and 0.31 g/t gold. Much of the target
area and its extensions remain undrilled.
Several other targets have been partially tested, including
Bowen Park where a large surface geochemical anomaly (3.7
kilometres by 100-500 metres) returned high grade rock chip
values within a broad alteration zone. RC drilling generated
intercepts such as 33 metres at 0.21g/t gold and 0.31% copper;
6 metres grading 0.99g/t gold and 0.06% copper; and 2 metres
at 2.73g/t gold and 0.66% copper. Other skarn targets and
magnetic anomalies have not been tested.
Outcrop of Bodangora ore body.
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M O LO N G ( O R A N G E - M O LO N G )
Gold, Copper – NSW
LFB Resources NL 100% (subject to 3% NSR to Royalco)
The Molong prospect is centred immediately to the north and
west of the city of Orange and lies within the central part of the
Molong Volcanic Belt (MVB), immediately to the north of the
Cadia Valley Operations (~30Moz) of Newcrest Mining. The
MVB includes andesitic volcanic and volcaniclastic sequences,
limestones and intrusive monzonitic and dacitic rocks.
A number of prospective targets exist within the project area
and these have been partially tested by various programs
including geological mapping; auger soil geochemistry; Induced
Polarisation; detailed aeromagnetics; and RC and diamond core
drilling.
This work identified a monzonite intrusive complex with
associated hydrothermal alteration and brecciation, with
silicified (decalcified?) fine grained sediments at Charlies over a
strike length of at least 1 kilometre. Drilling has partly tested
this zone with intercepts of:
• MDD 10
1 metre @ 3.36g/t gold and 0.65% zinc
from 40 metres
and
1 metre @ 9.60g/t gold and 0.20% zinc
from 179 metres
At the Galloway prospect, drill holes intersected strong pyrite
mineralisation in silicified volcaniclastic sediments overlying
hematite-pyrite altered diorite and monzo-diorite intrusives.
Overall weakly anomalous values were returned, however
some higher grades were intersected:
• MRC 023
1 metre @ 9.91g/t gold and 0.56 copper
from 39 metres
At Mt Keenan, holes targeted the historic copper mine and
associated aeromagnetic lows. All holes intersected significant
magnetite-hematite altered monzonite intrusives, with minor
sediments and volcanics. Weakly anomalous results were also
returned for these holes.
Auger soil geochemical survey tested structural targets
identified on aeromagnetic images covering the Borenore area
immediately to the south of the Charlies zone. Several discrete
gold anomalies, up to 150ppb, have been recorded associated
with aeromagnetic targets.
The drilling has confirmed the potential of the Molong Project
area to host a major dioritic to monzonitic intrusive complex, of
the same age and composition as those rocks that host the giant
Cadia-Ridgeway deposits.
M O O R I L DA
Gold, Copper – NSW
LFB Resources NL 100%
Moorilda straddles the structural contact between the
Ordovician aged Molong Volcanic Belt in the west and the
Siluro-Devonian sediments and volcanics of the Hill End Trough
to the east. Numerous historical gold workings are scattered
along 60 kilometres of the structure of which about 30
kilometres is held by the Company. An intrusive monzonite
complex (Moorilda Complex) is covered in the south.
“
The drilling has confirmed
the potential of the Molong Project area
to host a major dioritic to monzonitic
intrusive complex, of the same age and
composition as those rocks that host the
giant Cadia-Ridgeway deposits.
”
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L E I N S T E R R E G I O N J O I N T V E N T U R E
Nickel, gold – WA
Alkane Exploration Ltd - 49% Jubilee Mines NL 51%
Three prospects – LEINSTER DOWNS, MIRANDA and
McDONOUGH LOOKOUT – are subject to a farm-in
agreement with Jubilee Mines NL (Jubilee) where Jubilee can
earn a 75% interest in the properties by spending $4.5 million
before March 2006 (MT KEITH was dropped from the Joint
Venture late 2004)
Jubilee have completed extensive programmes of ground
electromagnetic surveys, aeromagnetic surveys, diamond core
and RC drilling and geological mapping. Jubilee are specifically
targeting komatiite channel facies hosted nickel sulphide
mineralisation at Miranda, McDonough Lookout and Leinster
Downs.
Encouraging environments
for massive nickel sulphide
accumulation were observed at all three locations, particularly
at the Taurus prospect within the Miranda tenement where the
following intercepts were reported:
TAD004
and
TAD005
9.0 metres @ 0.57% nickel
from 351.0 metres
0.15 metres @ 2.90% nickel
from 324.85 metres
0.2 metres @ 8.1 % nickel
from 245.3 metres
At Leinster Downs disseminated sulphides were also
intersected in four holes which tested channel facies ultramafic
flow sequences with 0.5% to 1.0% nickel recorded over
several metres.
Early in 2002 Jubilee advised Alkane that it had reached the
51% earning level and remained enthusiastic and would
proceed to earn an additional 24% interest by the further
expenditure of $2.5 million. Early in 2005 Alkane agreed to
extend the final earn-in period to March 2006. Further
exploration and drilling has been scheduled.
The giant Cadia-Ridgeway gold-copper monzonite associated
orebodies of Newcrest Mining are located 30 kilometres to the
west while the major historic producer at Lucknow (~500,000
ounces of gold) is 5 kilometres to the northwest.
The project can be considered prospective for two distinctive
deposit styles:
•
Large scale porphyry related gold-copper mineralisation
(Cadia-Ridgeway) hosted within Ordovician volcanics and
intrusives. The Moorilda magnetic complex represents the
most immediate target with dimensions of 7 x 4.5
kilometres where monzonitic intrusives and gold-copper
mineralisation have been mapped. Limited drill testing has
generated the following:
MORCD028 19 metres @ 1.23g/t gold
including
and
and 0.20% copper from 100 metres
9 metres @ 2.35g/t gold
and 0.20% copper from 100 metres
3 metres @ 4.52g/t gold
and 0.31% copper from 105 metres
•
Structurally controlled gold mineralisation associated with
the faulted contact between the Ordovician volcanics and
Silurian sediments/volcanics.
Recent exploration of the area has been sporadic with limited,
shallow drill testing of some historic prospects during the
1980’s and regional surface sampling in the 1990’s. Data
compilation and review identified several prospects which had
potential for gold resources and three areas - two historic
producers (Bright Star and Last Chance) and a previously
untested magnetic anomaly - were selected for reconnaissance
drill testing during this program. The holes were designed to
test and confirm the geological controls and down dip extent of
the gold mineralisation at the Bright Star and Last Chance
mines, and to identify the source of the magnetic anomaly.
•
KP 001
incl
•
•
KP 003
KP 005
and
incl
Bright Star
Last Chance
Last Chance
21 metres @ 1.62g/t gold
from 108 metres
9 metres @ 2.19g/t gold
from 118 metres
12 metres @ 1.83g/t gold
from 99 metres
3 metres @ 1.56g/t gold
from 96 metres
11 metres @ 1.26g/t gold
from 158 metres
3 metres @ 3.29g/t gold
from 166 metres
Many other prospects remain partially or not tested including
the Confidence Mine and the McPhillamy’s Prospect where
regoleach soil sampling has identified a broad gold-tellurium
anomaly covering some 2-3 kilometres strike and up to 1
kilometres in width. The anomaly is coincident with the
Godolphin Fault where it is cut by north-east trending
structures.
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N U L L AG I N E
Diamonds, gold, iron – WA
Alkane Exploration Ltd - 60% Randolph Resources Syndicate 40%
Alkane holds three exploration licence applications near Nullagine in the East Pilbara of northwest Western Australia.
Alkane had previously undertaken a major exploration program aimed at locating the source rocks for alluvial
diamonds found at the base of Tertiary palaeochannels at Nullagine. During that time Alkane discovered three new
alluvial diamond locations and several alkaline and kimberlite-like bodies.
Alkane’s diamond exploration programs have combined traditional exploration techniques such as air photo and
satellite image interpretation, high quality stream sediment sampling, studies of bedrock-derived kimberlitic indicator
minerals, aerial and ground geophysics, reconnaissance drilling and costeaning with a strong geological approach.
Exploration also included mapping of both Archaean and Tertiary-aged rocks, the development of a comprehensive
bedrock geochemical data base, studies of alteration and weathering, and stratigraphic drilling of Tertiary channel
deposits.
This detailed background geological data base has enabled Alkane to review the potential for other minerals in the
area from time to time.
On 1 December 2004, Alkane signed a Heads of Agreement with a private company, Vaalbara Resources Pty Ltd
(Vaalbara) granting Vaalbara a six month option to execute a joint venture document. Under the terms of that joint
venture Vaalbara will have the right to 80% of gold, silver and uranium (Witwatersrand type mineralisation) by:
-
reimbursement of $100,000 cash to Alkane for exploration data;
- will issue $300,000 worth of vendor Vaalbara shares to the Alkane/Randolph JV at initial listing;
-
and will fund all exploration expenditures to the completion of a Bankable Feasibility Study on any gold-silver-
uranium deposits discovered of the Witwatersrand type.
“
A cumulative total
for the CID’s ranges from
150 to 220 million tonnes.
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Given the increasing demand and prices for iron ore, Alkane-
Randolph reviewed its database on the Tertiary palaeochannels
and concluded that significant potential exists within the
tenements. This work was assisted by the two palaeochannel
traverses drilled during the diamond exploration program. The
drilling demonstrated that the tops of the palaeochannels were
generally composed of pisolitic channel iron deposits (CID) up
to 15 metres thick overlying clays, carbonates and other detrital
units within a total channel depth of up to 35 metres. The iron
content of the CID was not checked at that time.
Review work completed comprised:
•
•
Examination of geological mapping of Archean-aged
bedrock and Tertiary-aged deposits originally completed
on 1:40,000 and 1:25,000 scale aerial photos respectively
and compiled at a scale of 1:100,000 on topographic base
maps. This work detailed the nature of the Archean
bedrock and the presence of numerous Tertiary deposits
largely found within palaeochannels, dominated by the
ancestral Bonnie Creek;
The 1:100,000 scale Tertiary photo geology map was
scanned and geopositioned. The Bonnie Creek system was
estimated to be about 26 kilometres in length within the
Alkane tenements;
•
•
•
Each Tertiary outcrop on the scanned image was digitised
and polygonal areas transferred to a spread sheet;
Thickness of the CID was assumed but was supported by
data from the drill traverses and outcrop where recent
erosion has exposed the CID as residual mesas; and
Specific Gravity was assigned as 2.6 tonnes per cubic metre
based upon experience with similar deposits, and a
tonnage determined for each Tertiary outcrop area. A
cumulative total for the CID’s ranges from 150 to 220
million tonnes.
No systematic sampling of the CID’s has been completed and
hence it is not possible to assign an iron grade, nor identify
potential contaminants to the CID volumes measured to date.
However experience elsewhere suggests that these deposits
could grade above 55% iron.
While the potential quantity and grade referred to above is
conceptual, there has been insufficient exploration to define a
Mineral Resource and it is uncertain if further exploration will
result in the determination of a Mineral Resource, the Bonnie
Creek palaeochannel does host potentially significant Channel
Iron Deposits.
Discussions have been initiated with parties interested in
advancing the potential of the iron deposits with the Alkane-
Randolph joint venture.
Bonnie Creek palaeochannel.
Unless otherwise stated this report is based on information compiled by Mr D I Chalmers, FAusIMM, FAIG, (director of the Company) who 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
Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ian
Chalmers consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
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NOTE 1 - Specification to Accompany Wyoming One Resource
Statement for Tomingley Gold Project
NOTE 2 - Specifications for Resource Statement for Toongi
deposit of the Dubbo Zirconia Project
•
•
•
•
•
•
•
•
•
•
drilling technique – the resource is based on reverse circulation
and air core drill holes completed by Alkane between May 2001
and December 2004. Several diamond drill holes have been
completed during this time to assist
in the geological
interpretation. Two PQ diamond drill holes have been completed
at Wyoming One as a preliminary geotechnical assessment;
drilling density – drill holes were completed on both EW and NS
sections depending on the ore zone being evaluated. Sections
spaced 25m apart with drill holes at a nominal 20m intervals along
these sections;
drill locations – all drill hole collars were surveyed by DGPS to
obtain X Y Z position to ±0.1m;
down hole surveys – most holes were surveyed down hole using
a single shot camera. Air core holes were surveyed at bottom of
hole only however RC and diamond holes were surveyed at a
nominal 50m down hole interval;
sampling technique – RC and air core hole samples were
collected at one metre intervals and composited to 3m for initial
assay. All composites returning grades of 0.2g/t Au were
subsequently riffle split and appropriate sized samples bagged for
despatch to the laboratory. Diamond drill core was halved;
sample density – all analyses used in the resource calculation are
from sampling on a 1m interval;
sample recovery – RC sample recovery was usually very good
(>80%). Samples were usually dry. Core recovery was usually >
90%;
assay technique – samples were submitted to commercial
laboratories for preparation by drying, grinding and sub-setting
and then analysed by industry standard Fire Assay techniques. 3m
composite RC and air core samples were analysed from a 30g
charge whilst the 1m RC and AC resplits and half diamond core
were analysed from a 50g charge,
cutting factors – no top cuts have been applied to the resource
calculation but will be incorporated into the reserve assessments
specific gravity – specific gravity measurements were completed
by commercial laboratories on core samples. Values recorded
were:
2.75 t/m3 fresh
2.18 t/m3 oxide
1.72 t/m3 saprolite
1.96 t/m3 alluvials
estimation techniques - estimations used a 3D pseudo-wireframe
geological model as a basis for inverse distance squared grade
extrapolation into a block model. Block size was 2.5m x 2.5m x
5.0m. Wireframes/ore zones were constrained by boundaries
defined by geology, structure and a 0.25 g/t Au grade envelope.
•
•
•
•
•
Resource estimation using a computer based, 3D geological model
as a basis for inverse distance squared grade estimation (using a
100m x 100m x 5m ellipse) into a block model having individual
cell size of 10m x 10m x 5m.
Sampling by riffle split RC chips or half core, generally at one
metre intervals.
Reference and duplicate samples submitted at regular intervals as
laboratory and sampling method checks.
Bulk density estimates based on 10 actual determinations of
surface samples (2.37) and drill core (2.54).
Analyses completed by pressed powder XRF at Amdel (Adelaide)
for Zr, Hf, Y, Nb, Ta, Ce, La, U, Th. Checks by fusion XRF, ICP and
neutron activation completed at external laboratories.
• Other REE were analysed by neutron activation from PHD007 and
show a very consistent ratio between Ce + La and Total REE
content. This ratio (constant) was used to calculate the Total REO
values quoted.
NOTE 3 - Specification to Accompany Sulphide Resource
Statement for Peak Hill
•
•
•
•
•
•
•
•
•
drilling technique – The resource is based on 11 diamond drill
holes completed by Alkane between 1996 & 1997, 5 diamond drill
holes completed by Goldfields in 1983-84 and, 11 RC holes drilled
by Geopeko (1987). Grade control drilling and oxide RC drill holes
were also used for the resource zone immediately below the
Proprietary Pit.
drilling density – RC and Goldfields drill holes completed on EW
sections spaced 25m apart. Alkane holes drilled on NE-SW
sections spaced 40-50m apart.
drill locations – All drill hole collars are surveyed to the mine grid.
Alkane diamond drill holes are surveyed down hole at
approximately 20 metre intervals by single shot camera.
sampling technique – RC chip samples are riffle split at the rig and
appropriate sized samples bagged for despatch to the laboratory.
Diamond drill core was halved.
sample density – RC sample interval is 2 metres downhole.
Alkane diamond drill core was sampled at 1m intervals and
Goldfield’s core at 2m intervals.
sample recovery – RC sample recovery is usually very good
(>80%). Samples are usually dry. Core recovery was usually very
good.
assay technique – Drill samples were submitted to commercial
laboratories for preparation by drying, grinding and sub-setting
and then analysed by industry standard Fire Assay techniques.
specific gravity – A SG of 3.0t/m3 is used based on numerous
measurements from throughout the ore zones.
estimation techniques – Estimations used a 3D wireframe
geological model as a basis for inverse distance squared grade
extrapolation into a block model. Block size is 2.5m x 5.0m x
5.0m.
• Wireframes/ore zones are constrained by boundaries defined by
geology, structure and grade.
grade cuts – 22g/t gold assay cut was used.
•
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E N V I R O N M E N TA L A N D O C C U PAT I O N A L H E A LT H A N D S A F E T Y R E V I E W
Alkane is committed in all its activities to compliance with all laws and regulations in relation to environment and occupational health
and safety. The Company strives to improve its standards in parallel with industry best practice for both the Peak Hill Gold Mine
operations and exploration.
PEAK HILL GOLD MINE
Occupational Health and Safety
The number of personnel employed at the Peak Hill Gold Mine has contracted with mine closure. Exploration personnel continue to
access the Peak Hill Gold Mine facilities to support their activities on the Tomingley Gold Project 15 kilometres to the north of Peak
Hill.
There were no lost time injuries in 2004.
OH&S Results 2004
Man
Hours
32,959
51,166
84,125
2002
LTIs
1
0
1
Minor
Injuries
0
0
0
Man
Hours
21,554
2,326
23,880
2003
LTIs
1
1
2
Minor
Injuries
0
0
1
1
Man
Hours
17,241
80
17,321
2004
LTIs
0
0
0
0
Minor
Injuries
2
0
0
2
Alkane
Contractors
Visitors
Total
Environmental Management in 2004
There are currently in place 19 Approvals and Licences for the mining and processing operation, access to water and for pipeline
routes.
During 2004, the mine was in compliance with all consent conditions and approvals.
There were no complaints received by the Company in 2004.
Government Agencies and educational institutions continue to include the Peak Hill Gold Mine in tour programmes focussed on
industry ‘best practice’. The mine hosted three NSW Minerals Council School Teacher Mining Seminar tours during 2004. The Open
Cut Experience (tourist mine) also hosted several school excursion groups during the year.
The Peak Hill Gold Mine, despite undergoing closure, is still a contributor to the local economy and community. The mine employed
on average 7 personnel in 2004, 83% being original local residents. Eighteen local organizations and charities were assisted by the
Peak Hill Gold Mine in 2004.
The area of the open cuts and haul roads, including the Open Cut Experience tourist attraction, has reached the status of final
rehabilitation and has been “signed off” by the regulatory authorities.
Decommissioning of the heap leach pad continued. The addition of cyanide was discontinued mid-year and a rinsing cycle is now
underway. Cyanide levels have since been reduced to acceptable levels, however, rinsing progressed to the end of the year as
economic levels of gold continued to be won.
It is expected that final rehabilitation of the heap leach pad and the process plant area will commence mid 2005.
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T E N E M E N T S C H E D U L E
Tenement
Number
Registered
Title Holder
Alkane
Interest %
Project
Name
GL 5884 (Act 1904)
Alkane Exploration Ltd (“ALK”)
ML 6036
ML 6042
ML 6277
ML 6310
ML 6389
ML 6406
ML 1351
ML 1364
MLA 79 Or
ML 1479
EL 6319
EL 5548
MLA 183 Or
EL 6025
EL 6091
EL 6320
EL 5760
EL 6111
EL 5675
EL 5830
EL 5942
EL 6085
NSW
EL 4155
EL 5851
EL 4022
E (A) 46/522
E (A) 46/523
E (A) 46/524
M 36/303
M 36/329
M 36/330
E 53/367
M (A) 53/705
M (A) 53/790
M (A) 53/791
E 36/201
M (A) 36/477
M (A) 36/478
M (A) 36/479
M (A) 36/480
M (A) 36/550
M (A) 36/571
M (A) 36/572
P 36/1371
P 36/1372
ALK
ALK
ALK
ALK
ALK
ALK
ALK
ALK
ALK
ALK
ALK
ALK
ALK
LFB Resources NL (“LFB”)
LFB
ALK
LFB
LFB
ALK
ALK
ALK
ALK
ALK
ALK
ALK
ALK
ALK
ALK
Mingcourt Holdings Ltd
ALK
ALK
ALK, Associated Gold Fields NL (“AGF”),
Hot Holdings Pty Ltd (“Hot”)
ALK, AGF, Hot
ALK, AGF, Hot
ALK, AGF, Hot
ALK, Kiwi Australian Resources Pty Ltd (“Kiwi”), Hot
ALK, Kiwi, Hot
ALK, Kiwi, Hot
ALK, Kiwi, Hot
ALK, Kiwi, Hot
ALK, Kiwi
ALK, Kiwi, Hot
ALK, Kiwi, Hot
ALK, Kiwi
ALK, Kiwi
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
60
60
60
49
49
49
100
100
100
100
49
49
49
49
49
49
49
49
49
49
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Peak Hill, NSW
Dubbo, NSW
Dubbo, NSW
Orange-Molong, NSW
Orange-Molong, NSW
Wellington, NSW
Moorilda, NSW
Moorilda, NSW
Tomingley, NSW
Tomingley, NSW
Tomingley, NSW
Tomingley-Wyanga,
Cudal, NSW
Cudal, NSW
Bodangora, NSW
Nullagine, WA
Nullagine, WA
Nullagine, WA
Miranda Well, WA
McDonough, WA
McDonough, WA
Mt Keith, WA
Mt Keith, WA
Mt Keith, WA
Mt Keith, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 21
D I R E C T O R S ' R E P O R T
The Directors present their report on the consolidated entity
consisting of Alkane Exploration Ltd (ACN 000 689 216) and
the entities it controlled at the end of, or during, the year ended
31 December 2004.
D I R E C T O R S
The following persons were Directors of Alkane Exploration
Ltd during the whole year and up to the date of this report:
I.R. Cornelius (Chairman)
D.I. Chalmers
L.A. Colless
H.D. Kennedy
A.D. Lethlean
E V E N T S S U B S E Q U E N T T O B A L A N C E DAT E
On 16 March 2005, the Company announced that it had
completed a placement of shares with institutional and
sophisticated investors to raise funds to complete feasibility
studies on the Company’s Wyoming and Galwadgere projects,
to continue exploration on other existing projects, and for
working capital. This placement of approximately 17,825,000
ordinary fully paid shares was made at an issue price of A$0.18
per share to raise A$3.2 million less costs of the issue. The
financial effect of this capital raising has not been disclosed in the
financial statements. No other matters or circumstances have
arisen since 31 December 2004 that have or may significantly
affect the operations of the Company, the results of the
Company, or the state of affairs of the Company in the financial
year subsequent to the financial year ended 31 December 2004.
P R I N C I PA L AC T I V I T I E S
L I K E LY D E V E LO P M E N T S
The principal activities of the Company during the course of the
financial year were mining and exploration for gold, and other
minerals and metals. There has been no significant change in the
nature of these activities during the financial year.
The Company intends to continue exploration on its existing
tenements, to acquire further tenements for exploration of all
minerals, to seek other areas of investment in the resources
industry and to develop the resources on its tenements.
R E S U LT S
E N V I R O N M E N TA L R E G U L AT I O N
The net amount of consolidated loss of the economic entity for
the financial year after income tax was $1,759,369 (2003 loss
$3,138,299).
The consolidated entity is subject to significant environmental
regulation in respect of its development, construction and
mining activities as set out below.
D I V I D E N D S
Mining
No dividends have been paid by the Company during the
financial year ended 31 December 2004, nor have the Directors
recommended that any dividends be paid.
R E V I E W O F O P E R AT I O N S
The Company continued to leach the heaps at Peak Hill, NSW
and continued with its exploration programs, primarily on its
NSW mineral tenements. A more detailed review of operations
for the financial year, together with future prospects which
form part of this report are set out on pages 3 to 19 of the
Annual Report.
S I G N I F I C A N T C H A N G E S I N S TAT E O F
A F FA I R S
The state of affairs of the Company was not affected by any
significant changes during the year.
During the year there were no breaches of the requirements
relating to certain environmental restrictions at the Company’s
mine site operations at Peak Hill, NSW. Management is
constantly working with the New South Wales Environment
Protection Authority to monitor and rectify procedures to
ensure compliance with the regulatory requirements. The
Company employs a full time environmental manager at the
site.
Exploration
The Company is subject to environmental controls and
restrictions on all its mineral exploration tenements relating to
any exploration activity on those tenements. No breaches of
any environmental restrictions were recorded during the year.
General
The consolidated entity aspires to the highest standards of
environmental management and insists all its staff maintain that
standard.
21
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 22
A
L
K
A
N
E
E
X
A
L
P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
D I R E C T O R S ' R E P O R T
PA R T I C U L A R S O F D I R E C T O R S
Henry David (David) Kennedy (Non-executive Director)
Ian Raymond (Inky) Cornelius (Executive Chairman)
Mr Cornelius, 64, has had over 40 years experience in the
minerals and petroleum industry. He spent the first nine years
of his career with the Western Australian Department of Mines
before leaving to manage his own tenement consulting business.
Since 1976 he has held senior executive positions in a number
of public exploration and mining companies. In this capacity he
has had extensive experience and success in the selection,
management and development of deposits of many
commodities. Mr Cornelius is a director of Pancontinental Oil &
Gas NL and New World Alloys Ltd. Mr Cornelius is a member
of the Executive Committee.
David Ian (Ian) Chalmers (Technical Director)
Mr Chalmers, 56, is a geologist and graduate of the Western
Australian Institute of Technology. He also has a Master of
Science degree from the University of Leicester in the United
Kingdom and is a Fellow of the Australasian Institute of Mining
and Metallurgy, Fellow of the Institute of Mining, Metallurgy and
Materials (UK), Fellow of the Society of Economic Geologists
(US), Fellow of the Australian Institute of Geoscientists and a
Fellow of Australian Institute of Company Directors. He has
worked in the mining and exploration industry for over 30
years, during which time he has had experience in all facets of
exploration through feasibility and development to the
production phase. He is currently a principal in Multi Metal
Consultants Pty Ltd and is also a director of AuDAX Resources
Ltd and Northern Star Resources Ltd. Mr Chalmers is a
member of the Executive Committee.
Lindsay Arthur Colless (Finance Director)
Mr Colless, 59, is a Chartered Accountant with 15 years
experience in the profession and a further 26 years experience
in Commerce, most of which in the mineral and petroleum
exploration industry in the capacities of financial controller,
company secretary and director. He is a director of Newland
Resources Ltd Group, West Australian Metals Ltd Group,
Summit Resources Ltd Group, Yilgarn Gold Limited Group, an
alternate director of Pancontinental Oil & Gas Ltd. Mr Colless is
a member of the Executive Committee and is also secretary of
the Company.
Mr Kennedy, 69, has had a long association with Australian and
New Zealand resource companies and as a technical director
has been instrumental in the formation and/or development of
a number of successful listed companies, including Pan Pacific
Petroleum NL, New Zealand Oil and Gas Limited, Mineral
Resources (NZ) Ltd and Otter Exploration NL. As Chairman
and Chief Executive of Kiwi International Resources NL and
Associated Gold Fields NL, Mr Kennedy was involved in the
discovery and development of the Obotan gold project in
Ghana prior to the companies being merged with Resolute
Samantha Ltd in May/June 1996. He is also a director of
Olympus Pacific Minerals Ltd in Canada, Norwest Energy NL,
Pancontinental Oil & Gas NL and Sub-Sahara Resources NL in
Australia. Mr Kennedy is a member of the audit committee.
Anthony Dean Lethlean (Non-executive Director)
Mr Lethlean, 41, is a geologist with 10 years mining experience
including 4 years underground on the Golden Mile in Kalgoorlie.
In later years Mr Lethlean has been working as a resources
analyst with various stockbrokers and currently consults to
Cartesian Capital Pty Ltd. Mr Lethlean is Chairman of the audit
committee.
D I R E C T O R S ' B E N E F I T S
Since the end of the previous financial year no Director has
received or become entitled to receive any benefit (other than
a benefit included in the aggregate amount of emoluments
received or due and receivable by Directors shown in the
accounts of the Company) because of a contract made by the
Company or a related body corporate with the Director or
with a firm of which the Director is a member or with an entity
in which the Director has a substantial financial interest other
than:
a)
b)
c)
consulting fees of $150,000 (2003 $150,000) paid or due
and payable to Goldtrek Pty Ltd as trustee for the Lewis
Trust of which Mr Cornelius is a beneficiary for services
provided in the normal course of business and at normal
commercial rates.
geological consulting and management fees of $582,681
(2003 $541,292) paid or due and payable to companies in
which Mr Chalmers has a substantial financial interest for
services provided in the normal course of business and at
normal commercial rates.
administration, accounting and secretarial fees of $169,200
(2003 $170,700) paid or due and payable to a company in
which Mr Colless has a substantial financial interest for
services provided in the normal course of business and at
normal commercial rates.
4
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
22
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 23
d)
e)
f)
amounts of $Nil (2003 $206,160) paid or due and payable
to Goldseal Assets Pty Ltd, a company in which Mr
Kennedy has a substantial financial interest for royalty
payments from the Peak Hill Gold Mine in accordance with
a purchase contract.
amounts of $40,000 (2003 $40,000) paid or due and
payable to a company in which Mr Kennedy has a
substantial financial interest for directors fees provided in
the normal course of business and at normal commercial
rates.
amounts of $72,600 (2003 $88,200) paid or due and
payable to Rocky Rises Pty Ltd, a company in which Mr
Lethlean has a substantial financial interest, for consulting
services provided in the normal course of business and at
normal commercial rates.
Principles used to determine the nature and amount of
remuneration
The objective of the Company's executive reward framework is
to ensure reward for performance is competitive and
appropriate for the results delivered. The framework aligns
executive reward with achievement of strategic objectives and
the creation of value for shareholders, and conforms with
market best practice for delivery of reward. The Board ensures
that executive reward satisfies the following key criteria for
good reward corporate governance practices:
•
•
•
•
•
competitiveness and reasonableness
acceptability to shareholders
performance linkage/alignment of executive compensation
transparency
capital management
The Company has structured an executive remuneration
framework that is market competitive and complementary to
the reward strategy for the organisation.
Alignment to shareholders' interests:
•
•
has economic profit as a core component of plan design
focuses on sustained growth in share price and delivering
constant return on assets as well as focusing the executive
on key non-financial drivers of value
•
attracts and retains high calibre executives
Alignment to program participants interests:
•
•
•
•
rewards capability and experience
reflects competitive
shareholder growth
reward
for contribution
to
provides a clear structure for earning rewards
provides recognition for contribution
Non-executive directors
Fees and payments to non-executive directors reflect the
demands which are made on, and the responsibilities of, the
directors. Non-executive directors' fees and payments are
reviewed annually by the Board. The Chairman's fees are
determined independently to the fees of non-executive
directors based on comparative roles in the external market.
The Chairman is not present at any discussions relating to
determination of his own remuneration.
Directors’ fees
Directors' fees are determined within an aggregate directors'
fee pool limit, which is periodically recommended for approval
by shareholders. This amount is separate from any specific tasks
the directors may take on for the Company. For example, Mr
Colless undertakes all the financial, administration and
accounting functions for the Company as well as being
Company Secretary. His remuneration is set out earlier in this
report and is fully disclosed in the Notes to the Financial
Statements.
All remuneration of directors is further disclosed in Note 10 in
the Notes to the Financial Statements.
There are no executive officers of the Company other than
directors.
23
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 24
A
L
K
A
N
E
E
X
A
L
P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
4
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
D I R E C T O R S ' R E P O R T
Amounts paid to directors are as set out below:
Name
Service provided
Amount of fees
Options held
Exercise conditions
I R Cornelius
Chairman, consulting fees
150,000
H D Kennedy
Director, directors fees
A D Lethlean
Director, consulting fees
L A Colless
D I Chalmers
Director/Secretary, financial,
accounting and administration fees for
Parent, subsidiaries and gold operations
Director, geological and technical services
for Parent, subsidiaries and gold operations
Management fees
40,000
72,600
169,200
557,681
25,000
4,127
1,000,000
1,000,000
68,502
1,000,000
250,000
750,000
1,949
1,000,000
1,000,000
20,300
1,000,000
1,000,000
35c - 31 March 2005
35c - 31 May 2005
50c - 24 May 2006
35c - 31 March 2005
50c - 24 May 2006
40c - 24 May 2007
50c - 24 May 2006
35c - 31 March 2005
35c - 31 May 2005
50c - 24 May 2006
35c - 31 March 2005
35c - 31 May 2005
50c - 24 May 2006
D I R E C T O R S ' I N T E R E S T S
The interests of Directors in securities of the entity as at the date of this report are:
I R Cornelius
D I Chalmers
L A Colless
H D Kennedy
A D Lethlean
Direct
Indirect
Options
7,500
3,600
19,370
-
-
1,010,000
767,580
247,199
11,494,981
-
2,004,127
2,020,300
2,001,949
1,068,502
1,000,000
D I R E C T O R S ' M E E T I N G S
AU D I T O R S ' I N D E P E N D E N C E - S E C T I O N 3 0 7 C
The following is a copy of a letter received from the Company's
auditors:
"Dear Sirs,
In accordance with Section 307C of the Corporations Act 2001
(the "Act") I hereby declare that to the best of my knowledge
and belief there have been:
i)
ii)
independence
no contraventions of
requirements of the Act in relation to the audit of the 31
December 2004 annual financial statements; and
the auditor
no contraventions of any applicable code of professional
conduct in relation to the audit.
Graham Swan (Lead auditor)
Rothsay Chartered Accountants”
The following sets out the number of meetings of the
Company's directors held during the year ended 31 December
2004 and the number of meetings attended by each director.
Number of meetings held
Number of meetings attended by:
I.R. Cornelius
D.I. Chalmers
L.A. Colless
H.D. Kennedy
A.D. Lethlean
6
6
6
6
4
6
D I R E C T O R S ' I N D E M N I T I E S
During the financial year, Alkane Exploration Ltd paid a
premium to insure the directors and secretary of the Company
and its Australian based controlled entities. The liabilities
insured are costs and expenses that may be incurred in
defending civil or criminal proceedings that may be brought
against the officers in their capacity as officers of entities in the
controlled entity.
24
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 25
The following options are exercisable at 45 cents each on or
before 29 May 2008:
G Meates
S Allison
M Sutherland
G Morgan
M Morgan
R Kairaitis
S Woodham
D Meates
D Moyses
250,000
150,000
150,000
50,000
25,000
150,000
100,000
50,000
50,000
Other than the public issue options, none of the existing options
are listed on Australian Stock Exchange Limited. No person
entitled to exercise any option has or had, by virtue of the
option, a right to participate in any share issue of any other body
corporate.
Signed in accordance with a resolution of the Directors.
L.A. Colless
Director
Dated at Perth this 16th day of March 2005
C O R P O R AT E G OV E R N A N C E
The Company strives to comply with the ASX Principles of
Good Corporate Governance
Practice
Recommendations and is dealt with in the Supplementary
Information section of the Annual Report.
and Best
S H A R E O P T I O N S
Options to take up ordinary shares in the capital of Alkane
Exploration Ltd have been granted as follows:
Outstanding as at the date of this report:
Public issue
Exercised during year
9,790,425
179
The above options are exercisable at 35 cents each at any time
on or before 31 March 2005.
The following options are exercisable at 35 cents on or before
31 May 2005
Goldtrek Pty Ltd
Leefab Pty Ltd
Mineral Administration Services Pty Ltd
1,000,000
1,000,000
1,000,000
The following options are exercisable at 40 cents each on or
before 24 May 2007
TW & J Ransted
Rocky Rises Pty Ltd
250,000
250,000
The following are exercisable at 45 cents on or before 24 May
2004, or at 50 cents on or before 24 May 2006 or at 60 cents
on or before 24 May 2007
Leefab Pty Ltd
Mineral Administration Services Pty Ltd
Goldtrek Pty Ltd
Sundowner International Limited
Rocky Rises Pty Ltd
1,000,000
1,000,000
1,000,000
1,000,000
750,000
25
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 26
A
L
K
A
N
E
E
X
A
L
P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
4
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
S T A T E M E N T S O F F I N A N C I A L P E R F O R M A N C E
For The Year Ended 31 December 2004
CONSOLIDATED
PARENT ENTITY
Note
2004
$
2003
$
2004
$
2003
$
Revenue from ordinary activities
Rent received
Gold sales
Silver sales
Revenue from sale of shares
Interest received or due and receivable
from other corporations
Other revenue
Expenses from ordinary activities
Rent
Filing fees
Annual reports
Directors' consulting
Consulting, administration and secretarial
Public relations
Travel & entertainment
Insurances
Interest & finance costs
Directors fees
Provision for subsidiaries
Costs of Open Cut Experience
Administration expenses
Audit fees
Auditor - other services
Depreciation and amortisation
Cost of quoted shares sold
Gold production costs
Cost of assets sold
Exploration costs
Provision for quoted shares written back
Write down in value of tenements purchased
by way of takeover of subsidiary companies
in prior years
Profit (loss) from ordinary activities
before income tax
Income tax attributable
Profit (loss) after income tax
Minority interests
Profit (loss) after income tax attributable
12,245
19,877
12,245
19,877
1,187,331
3,190,123
1,187,331
3,190,123
679
903,675
170,212
78,234
3,515
297,756
169,696
42,532
679
903,675
164,335
51,519
3,515
297,756
162,857
42,532
2,352,376
3,723,499
2,319,784
3,716,660
(46,287)
(35,160)
(30,811)
(247,600)
(169,200)
(79,426)
(324,568)
(38,694)
-
(55,912)
(72,325)
(26,289)
(285,700)
(127,500)
(88,549)
(285,952)
(53,730)
(222)
(41,297)
(17,392)
(30,811)
(30,123)
(52,468)
(26,289)
(222,600)
(225,700)
(84,000)
(79,426)
(322,814)
(38,420)
-
(84,000)
(88,549)
(285,952)
(51,107)
-
(40,000)
(136,667)
(40,000)
(136,667)
-
(84,591)
(63,408)
(25,000)
(5,764)
39,765
(960,705)
-
(399,877)
(1,286,334)
(142,085)
(126,574)
(25,000)
(13,814)
(141,486)
(806,969)
(84,591)
(99,639)
(25,000)
(3,400)
(16,100)
(960,705)
(142,085)
(109,557)
(25,000)
(6,000)
(136,214)
(806,969)
(1,796,615)
(3,895,407)
(1,796,615)
(3,895,407)
(68,909)
(306,720)
171,948
-
(501,542)
923,924
(10,909)
(281,524)
171,948
-
(263,561)
923,924
(4,111,745)
(5,861,798)
(4,383,172)
(6,728,058)
-
(1,000,000)
-
-
(1,759,369)
(3,138,299)
(2,063,388)
(3,011,398)
2
-
-
-
-
(1,759,369)
(3,138,299)
(2,063,388)
(3,011,398)
556
487
-
-
to members of Alkane Exploration Ltd
14
(1,758,813)
(3,137,812)
(2,063,388)
(3,011,398)
Accumulated losses at beginning of financial year
(18,186,492)
(15,048,680)
(17,823,402)
(14,812,004)
Accumulated losses at end of financial year
(19,945,305)
(18,186,492)
(19,886,790)
(17,823,402)
Earnings per share
($0.01)
($0.02)
($0.01)
($0.02)
26
The accompanying notes form part of these financial statements
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 27
S T A T E M E N T S O F F I N A N C I A L P O S I T I O N
As At 31 December 2004
Current Assets
Cash
Receivables
Inventories
Investments
Total Current Assets
Non-Current Assets
Investments
Property, Plant & Equipment
Other
Total Non-Current Assets
Total Assets
Current Liabilities
Creditors and borrowings
Total Current Liabilities
Non-current Liabilities
Creditors and borrowings
Total Non-current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Accumulated losses
Note
15
3
4
5
5
6
7
8
8
CONSOLIDATED
PARENT ENTITY
2004
$
2003
$
2004
$
2003
$
556,453
345,861
-
1,229,042
2,131,356
3,566,204
278,324
635,485
1,961,794
6,441,807
544,142
266,207
-
1,131,489
1,941,838
3,550,705
261,607
635,485
1,814,892
6,262,689
-
-
8,058,550
7,924,109
995,647
924,523
675,800
622,541
14,421,330
11,416,321
6,788,246
4,140,000
15,416,977
12,340,844
15,522,596
12,686,650
17,548,333
18,782,651
17,464,434
18,949,339
794,368
794,368
680,902
680,902
769,817
769,817
602,919
602,919
187,874
187,874
982,242
176,352
176,352
857,254
187,874
187,874
957,691
176,352
176,352
779,271
16,566,091
17,925,397
16,506,743
18,170,068
9
36,393,533
35,993,470
36,393,533
35,993,470
(19,945,305)
(18,186,492)
(19,886,790)
(17,823,402)
Total parent entity interest
16,448,228
17,806,978
16,506,743
18,170,068
Outside equity interests in controlled entities
117,863
118,419
-
-
Total Equity
16,566,091
17,925,397
16,506,743
18,170,068
The accompanying notes form part of these financial statements
27
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 28
4
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
42,532
162,857
22,886
-
(70,104)
297,756
(159,660)
(385,902)
A
L
K
A
N
E
E
X
A
L
P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
S T A T E M E N T S O F C A S H F L O W S
For The Year Ended 31 December 2004
Note
CONSOLIDATED
PARENT ENTITY
2004
$
2003
$
2004
$
2003
$
Cash Flows from Operating Activities
Rent received
12,245
19,877
12,245
19,877
Proceeds from gold & silver sales
1,188,010
3,193,638
1,188,010
3,193,638
Payments to suppliers
Other income
Interest received
(2,292,015)
(3,475,551)
(2,074,498)
(3,396,018)
47,123
170,240
42,532
169,467
43,862
164,336
Net cash from operating activities
16
(874,397)
(50,035)
(666,045)
Cash Flows from Investing Activities
Proceeds of sale of plant, property & equipment
Purchase of plant, property & equipment
Proceeds from sale of investment securities
Payments for investment securities
Payments for loans to subsidiaries
Exploration expenditure
28,910
(100,269)
953,024
(105,355)
-
-
(91,326)
297,756
(141,559)
-
5,455
(80,269)
903,675
(105,355)
(403,341)
(2,911,727)
(3,065,895)
(2,660,746)
(2,731,148)
Net cash provided for investing activities
(2,135,417)
(3,001,024)
(2,340,581)
(3,049,058)
Cash Flows from Financing Activities
Proceeds from issue of shares and options
Cost of share issues
Net cash flow from financing activities
63
-
63
5,433,757
(207,151)
5,226,606
63
-
63
Net increase (decrease) in cash held
(3,009,751)
2,175,547
(3,006,563)
Cash at beginning of year
3,566,204
1,390,657
3,550,705
5,433,757
(207,151)
5,226,606
2,200,434
1,350,271
Cash at the end of the financial year
15
556,453
3,566,204
544,142
3,550,705
28
The accompanying notes form part of these financial statements
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 29
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
For The Year Ended 31 December 2004
1 . S TAT E M E N T O F AC C O U N T I N G P O L I C I E S
This general purpose financial report has been prepared in accordance with Accounting Standards, other authoritative
pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations
Act, 2001. It is prepared in accordance with the historical cost convention, except for certain assets, which, as noted, are at
valuation. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous year.
a) Consolidation
The consolidated accounts incorporate the assets and liabilities of all entities controlled by Alkane Exploration Ltd ("the
Company") as at 31 December 2004 and the results of all controlled entities for the year then ended. Alkane Exploration Ltd and
its controlled entities are referred to in this financial report as the economic entity. The effects of all transactions between entities
in the economic entity are eliminated in full. Outside equity interests in the results and equity of controlled entities are shown
separately in the consolidated profit and loss account and balance sheet respectively.
Where control of an entity is obtained during a financial year, its results are included in the consolidated profit and loss account
from the date on which control commences. Where control of an entity ceases during a financial year its results are included for
that part of the year during which control existed.
b)
Income Tax
Tax effect accounting procedures are followed whereby the income tax expense in the profit and loss account is matched with
the accounting profit after allowing for permanent differences. The future tax benefit relating to tax losses is not carried forward
as an asset unless the benefit is virtually certain of realisation. Income tax on cumulative timing differences is set aside to the
deferred income tax or the future income tax benefit accounts at the rates which are expected to apply when those timing
differences reverse. The current tax rates have been used for this purpose.
c)
Investments
Investments in corporations other than related corporations are valued at the lower of cost or directors' valuation. Marketable
securities held as inventory are valued at the lower of cost or net realisable value as determined in respect of each security
holding. Dividend income is recognised in the profit and loss account.
d) Cash
For the purposes of the statement of cash flows, cash includes cash on hand and at call deposits with banks or financial institutions,
net of bank overdrafts and investments in money market instruments maturing within less than twelve months.
e) Depreciation
Depreciation is provided on plant and equipment and is calculated on a straight line basis so as to write off the net cost of each
asset during their expected useful life of 3 to 5 years.
f)
Joint ventures
The economic entity's proportionate interests in the assets, liabilities and expenses of a joint venture have been incorporated in
the financial statements under the appropriate headings. Where part of a joint venture interest is farmed out in consideration of
the farminee undertaking to incur further expenditure on behalf of both the farminee and the economic entity in the joint venture
area of interest, exploration expenditure incurred and carried forward prior to farmout continues to be carried forward without
adjustment, unless the terms of the farmout indicate that the value of the exploration expenditure carried forward is excessive
based on the diluted interest retained or it is not thought appropriate to do so. A provision is made to reduce exploration
expenditure carried forward to its recoverable or appropriate amount. Any cash received in consideration for farming out part
of a joint venture interest is treated as a reduction in the carrying value of the related mineral property.
g) Mineral hedging and trading
Hedging is undertaken in order to avoid or minimise possible adverse financial or cash flow effects of movements in the gold
price. Premiums received or costs arising upon entering into forward sale, option and other derivative contracts intended to
hedge specific future production, together with subsequent realised and unrealised gains or losses, are deferred until the hedged
production is delivered. In those circumstances where a hedging transaction is terminated prior to maturity because the hedged
production is no longer expected to be produced, any previously deferred gains and losses are recognised in the profit and loss
account on the date of termination. If the hedging transaction is terminated prior to its maturity date and the hedged transaction
is still expected to occur, deferral of any gains and losses which arose prior to termination continues and those gains and losses
are included in the measurement of the hedged transaction. The gross values of the underlying derivative financial instruments
entered into for hedging are not recognised in the financial statements.
29
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 30
A
L
K
A
N
E
E
X
A
L
P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
For The Year Ended 31 December 2004
1 . S TAT E M E N T O F AC C O U N T I N G P O L I C I E S ( C O N T I N U E D )
h) Royalties and other mining imposts
Ad valorem royalties and other mining imposts are accrued and charged against earnings when the liability from production or
sale of the mineral crystallises. Profit based royalties are accrued on a basis which matches the annual royalty expense with the
profits on which the royalties are assessed (after allowing for permanent differences).
i)
Inventories
Inventories of broken ore, concentrate, work in progress and metal are physically measured or estimated and valued at the lower
of cost and recoverable amount (that is, net realisable value).
Cost comprises direct material, labour and transportation expenditure in bringing such inventories to their existing location and
condition.
Recoverable amount is the amount estimated to be obtained from the sale of the item of inventory in the normal course of
business, less any anticipated costs to be incurred prior to its sale.
j)
Exploration expenditure
Expenditure on acquisition, exploration and evaluation relating to an area of interest is carried forward where rights to tenure of
the area of interest are current and:
i)
ii)
the area has proven commercially recoverable reserves; or
exploration and evaluation activities are continuing in an area of interest but have not yet reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves.
At the end of each financial year the Directors assess the carrying value of the exploration expenditure carried forward in respect
of each area of interest and where the value is considered to be in excess of j(i) above the value of the area of interest is written
down or provided against.
k) Mine buildings, machinery and equipment
The cost of each item of buildings, machinery and equipment is written off over the expected economic life on a straight line
method. Each item’s economic life has due regard both to its own physical life limitations and to present assessments of
economically recoverable reserves of the mine property at which the item is located, and to possible future variations in these
assessments. Estimates of remaining useful lives are made on a regular basis for all assets, with annual reassessments of major
items and the current expected economic life is 4 years.
The total net carrying value of mine buildings, machinery and equipment at each mine property is reviewed regularly and, to the
extent to which these values exceed their recoverable amounts, that excess is fully provided against/written down in the financial
year in which this is determined.
l) Mine properties
Mine properties represent the accumulation of all acquisition, exploration, evaluation and development expenditure incurred by
or on behalf of the entity in relation to areas of interest in which mining of a mineral resource has commenced.
When further development expenditure is incurred in respect of a mine property after the commencement of production, such
expenditure is carried forward as part of the cost of that mine property only when substantial future economic benefits are
thereby established, otherwise such expenditure is provided for in the year in which it is incurred.
Costs are amortised proportional to the depletion of economically recoverable reserves. The net carrying value of each mine
property is reviewed regularly and, to the extent to which this value exceeds its recoverable amount that excess is fully provided
for/written off in the financial year in which this is determined.
m) Remaining mine life
In estimating the remaining life of a mine at a mining property for the purpose of amortisation/depreciation calculations, due
regard is given to the volume of remaining economically recoverable reserves.
4
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
30
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 31
n) Restoration, rehabilitation and environment expenditure
Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are accrued at the time
of those activities and treated as exploration and evaluation expenditure.
Restoration, rehabilitation and environmental expenditure necessitated by the development and production activities are accrued
on an ongoing basis over the production life of the mining activity and treated as costs of production.
Restoration, rehabilitation and environmental obligations recognised include the costs of reclamation, plant and waste site
closure, current and subsequent monitoring of the environment.
o) Earnings per share
Basic earnings per share is determined by dividing the operating profit after income tax attributable to members of Alkane
Exploration Ltd by the weighted average number of ordinary shares outstanding during the year.
p)
International Accounting Standards
The Australian Accounting Standards Board is adopting the Standards of the International Accounting Standards Board for
application to reporting periods beginning on or after 1 January 2005. Pending Accounting Standard AASB 1 ‘First-time Adoption
of Australian Equivalents to International Financial Reporting Standards’ prescribes transitional provision for first-time adopters.
AASB 1047 ‘Disclosing the Impacts of Adopting Australian Equivalents to International Financial Reporting Standards’ requires
financial reports to disclose information about the impacts of any changes in accounting policies in the transition period leading
up to the adoption date.
Taxation
Under the Australian equivalent to IAS 12 ‘Income Taxes’, a balance sheet approach will be adopted for calculating taxation,
replacing the ‘statement of financial performance approach’. This method recognises deferred tax balances for all temporary
differences arising between the carrying value of an asset or liability and its tax base. Whilst there will be enhanced disclosure of
the composition of the deferred tax assets and liabilities it is not expected that there will be any significant impact in terms of the
statement of financial position or performance.
Share based payments
The Company currently does not recognise an expense for options issued to directors and staff. Under AASB 2 ‘Share Based
Payments’, the Company will be required to recognise an expense for all share based remuneration, including options, and will
amortise those expenses over the relevant vesting periods.
Impairment of Assets
Under the Australian equivalent to IAS 36 ‘Impairment of Assets’ the recoverable amount of an asset is determined as the higher
of net selling price and value in use. This will change the Company’s current accounting policy which determines recoverable
amount of an asset on the basis of discounted (undiscounted) cashflows. Under the new policy it is likely that the impairment of
assets will be recognised sooner and the amount of write downs will be greater.
At present, the Company is not aware of any key differences in accounting policies that are expected to arise from adopting A-
IFRS. The Company is continuing to monitor the Standards and have a committee in place to evaluate the new Standards and
their impact on a continuing basis.
Capitalisation of Exploration and Evaluation Costs
The Company currently uses the ‘area of interest’ principles which are used commonly in Australia and in accordance with
Australian Accounting Standard AASB 1022 ‘Accounting for the Extractive Industries’. The AASB has recently released AASB 6
Exploration for and Evaluation of Mineral Resources which is not expected to cause significant changes to the Company’s
accounting for capitalised exploration and evaluation expenditure. AASB 6 continues to allow an area of interest approach to
impairment and the standard effectively permits the grandfathering of existing accounting treatments of exploration and
evaluation expenditure. Impairment tests of exploration and evaluation assets will be required once technical feasibility and
commercial viability is determinable.
31
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 32
A
L
K
A
N
E
E
X
A
L
P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
For The Year Ended 31 December 2004
1 . S TAT E M E N T O F AC C O U N T I N G P O L I C I E S ( C O N T I N U E D )
q) Employee benefits
Wages and salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled
within 12 months of the reporting date are recognised in creditors and borrowings in respect of employees' services up to the
reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-
accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.
Long service leave
The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision
for employee benefits and is measured in accordance with wages and salaries above. The liability for long service leave expected
to be settled more than 12 months from the reporting date is recognised in the provision for employee benefits only where there
is a reasonable expectation that a liability will be incurred.
Superannuation
The amounts charged to the statement of financial performance for superannuation represents the contributions to
superannuation funds in accordance with the statutory superannuation contributions requirements or an employee salary sacrifice
arrangement. No liability exists for any further contributions by the Company in respect to any superannuation scheme.
Equity based compensation benefits
The Company does not operate an employee option scheme as such. The amounts disclosed for remuneration of directors and
executives include the assessed fair values of options granted during the year at the date they were granted.
Redundancy
The liability for redundancy is provided in accordance with work place agreements.
4
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
32
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 33
CONSOLIDATED
PARENT ENTITY
2004
$
2003
$
2004
$
2003
$
2 .
a)
I N C O M E TA X
Prima facie income tax expense on pre tax accounting
reconciles to the income tax expense in the accounts
as follows:
Operating Profit (loss)
(1,759,369)
(3,138,299)
(2,063,388)
(3,011,398)
Income tax benefit calculated at 30% of
operating profit (loss) (30% 2003)
Add tax effect of permanent differences:
Tax losses not brought to account
as future tax benefits
(527,810)
(941,490)
(619,016)
(903,419)
527,810
941,490
619,016
903,419
Income tax attributable to operating profit (loss)
-
-
-
-
b)
Future tax benefits.
Certain future tax benefits have not been
recognised as an asset:
Attributable to tax losses, the benefits of which
are not certain of realisation at 30% (30% 2003)
c) The benefit will only be obtained if the economic
entity derives future assessable income of a nature
and of an amount sufficient to enable the benefit to
be realised, continues to comply with the conditions
for deductibility imposed by taxation legislation and
there are no changes in tax legislation adversely
affecting the economic entity in realising the benefit.
3 . R E C E I VA B L E S ( C U R R E N T )
8,438,515
7,910,705
8,495,248
7,876,232
Debtors including GST refunds
345,861
278,324
266,207
261,607
4 .
I N V E N T O R I E S
Ore stockpile and gold in circuit
-
635,485
-
635,485
33
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 34
A
L
K
A
N
E
E
X
A
L
P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
For The Year Ended 31 December 2004
5 .
I N V E S T M E N T S ( C u r r e n t )
Quoted shares at cost
Less: Provision for diminution
Quoted shares at lower of cost or market value
Shares in unlisted entities
Less: Provision for diminution
Interest bearing deposits
Investments (Non-current)
Shares in controlled entities (Note 14)
Loans to subsidiaries
Less: Provision for diminution
CONSOLIDATED
PARENT ENTITY
2004
$
2003
$
2004
$
2003
$
163,518
(72,251)
91,267
172,100
1,101,862
(244,199)
857,663
172,100
163,518
(72,251)
91,267
172,100
1,101,862
(244,199)
857,663
172,100
(172,100)
(172,100)
(172,100)
(172,100)
-
1,137,775
1,229,042
-
1,104,131
1,961,794
-
1,040,222
1,131,489
-
957,229
1,814,892
-
-
-
-
-
-
-
-
6,115,565
6,549,222
6,115,565
6,014,904
(4,606,237)
(4,206,360)
8,058,550
7,924,109
6 . P R O P E R T Y, P L A N T A N D E Q U I P M E N T
Property, plant & equipment - at cost
1,175,019
1,143,661
829,223
(179,372)
(219,138)
(153,423)
995,647
924,523
675,800
924,523
100,269
(40,000)
(28,910)
39,765
995,647
856,699
91,326
-
-
(23,502)
924,523
622,541
80,269
(5,455)
(5,455)
(16,100)
675,800
759,864
(137,323)
622,541
570,667
70,104
-
-
(18,230)
622,541
Less: Accumulated depreciation
Reconciliation of carrying amount
Brought forward
Plant & equipment acquired during year
Cost of disposals
Disposals
Depreciation during year
Carrying value at balance date
7 . O T H E R ( N o n - C u r r e n t )
Exploration and Development Expenditure
Peak Hill Mine development costs
Less: depreciation and amortisation
5,563,738
5,563,738
5,563,738
5,563,738
(5,563,737)
(5,563,737)
(5,563,737)
(5,563,737)
Peak Hill Project acquisition and exploration
5,679,495
5,668,089
3,548,647
3,537,241
Less: provision for non-recovery
(3,048,647)
(3,037,241)
(3,048,647)
(3,037,241)
Accumulated contributions to other ongoing
exploration projects
12,606,741
9,787,245
6,876,690
4,432,848
Less: provision for non-recovery
(816,260)
(1,001,773)
(588,445)
(792,849)
14,421,330
11,416,321
6,788,246
4,140,000
The Company's activities in the mining industry are subject to regulations and approvals including mining, heritage, environmental
regulation, the implications of the High Court of Australia decisions in what is known generally as the "Mabo" and the "Wik" cases
and any State or Federal legislation regarding native and mining titles. Approvals, although granted in most cases, are discretionary.
The question of native title has yet to be determined and could affect any mining title area whether granted by the State or not.
4
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
34
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 35
CONSOLIDATED
PARENT ENTITY
2004
$
2003
$
2004
$
2003
$
8 . C R E D I T O R S A N D B O R R O W I N G S ( C U R R E N T L I A B I L I T I E S )
Trade creditors
Provision for annual leave
Provision for rehabilitation
429,270
40,098
325,000
794,368
314,504
41,398
325,000
680,902
404,719
40,098
325,000
769,817
236,521
41,398
325,000
602,919
Creditors and Borrowings (Non-current Liabilities)
Provision for redundancy
187,874
176,352
187,874
176,352
* Macquarie Bank has guaranteed performance bonds to the Department of Mineral Resources in NSW for an amount of
$450,000, which is secured by way of a deposit account with Macquarie Bank.
PARENT ENTITY
2004
$
Number
2003
$
Number
9 . S H A R E C A P I TA L
Movements in issued capital
Balance at beginning of year
Share Purchase Plan
Vendor issue
Placement
Exercise of options
Balance at end of year
Less: Costs of Issues
136,151,678
36,247,351
119,418,974
30,813,594
-
-
1,421,970
2,000,000
400,000
300,000
465,000
60,000
-
179
-
63
15,000,000
4,905,000
10,734
3,757
138,151,857
36,647,414
136,151,678
36,247,351
-
(253,881)
-
(253,881)
As per Statement of Financial Position
138,151,857
36,393,533
136,151,678
35,993,470
The issue of 2,000,000 shares to a vendor was in relation to the purchase of tenements in previous years.
Options - Listed
Exercisable at 35 cents expiring 31 March 2005
Balance at beginning of year
Exercised during year
Balance as at 31 December 2004
Options - Unlisted
Exercisable at 35 cents expiring 31 May 2005
Issued during year
Balance as at 31 December 2004
Exercisable at 40 cents expiring 24 May 2007
Issued during year
Balance 31 December 2004
Exercisable at 45 cents before 24 May 2004,
at 50 cents between 25 May 2004 and 24 May 2006,
or at 60 cents between 25 May 2006 and 24 May 2007
Issued during year
Balance 31 December 2004
Exercisable at 45 cents each expiring 29 May 2008
Issued during year
Balance 31 December 2004
9,790,604
(179)
9,790,425
-
3,000,000
-
500,000
-
4,750,000
-
975,000
-
-
-
-
-
-
-
-
-
-
9,801,838
(11,234)
9,790,604
-
3,000,000
-
500,000
750,000
4,750,000
975,000
975,000
-
-
-
-
-
-
-
-
-
-
35
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 36
A
L
K
A
N
E
E
X
A
L
P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
4
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
For The Year Ended 31 December 2004
CONSOLIDATED
PARENT ENTITY
2004
$
2003
$
2004
$
2003
$
1 0 . R E M U N E R AT I O N O F D I R E C T O R S
Total income received, or due and receivable by the directors 1,014,481
1,196,352
887,852
1,038,358
Name
Service provided
Amount of fees
Options held
Exercise conditions
I R Cornelius
Chairman, consulting fees
150,000
4,127
35c - 31 March 2005
1,000,000
35c - 31 May 2005
1,000,000
50c - 24 May 2006
H D Kennedy
Director, directors fees
40,000
68,502
35c - 31 March 2005
A D Lethlean
Director, consulting fees
72,600
L A Colless
Director/Secretary, financial, accounting
and administration fees for Parent,
1,000,000
50c - 24 May 2006
250,000
750,000
40c - 24 May 2007
50c - 24 May 2006
1,949
35c - 31 March 2005
1,000,000
35c - 31 May 2005
subsidiaries and gold operations
169,200
1,000,000
50c - 24 May 2006
D I Chalmers
Director, geological and technical services
20,300
35c - 31 March 2005
for Parent, subsidiaries and gold operations
557,681
1,000,000
35c - 31 May 2005
Management fees
25,000
1,000,000
50c - 24 May 2006
The names of Directors who have held office during the financial year are:
Alkane Exploration Ltd
Ian R Cornelius
D Ian Chalmers
Lindsay A Colless
H David Kennedy
Anthony D Lethlean
Subsidiaries
LFB Resources NL, Kiwi Australian Resources Pty Ltd, Australasian Geo-Data Pty Ltd, Australian Zirconia Ltd
I R Cornelius
D I Chalmers
L A Colless
Skyray Properties Ltd (BVI), Ventron Enterprises Ltd
L Thomas
Executives
There were no executive officers during the year.
Share options
No options were issued to directors during the financial year.
1 1 . S E G M E N TA L I N F O R M AT I O N
The economic entity operates predominantly in one geographic location. The operations of the economic entity consist of mining
and exploration for gold, diamonds and other minerals within Australia.
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1 2 . R E L AT E D PA R T Y T R A N S AC T I O N S
DIRECTORS
Related party -
Type of transaction
directors
Terms and conditions
2004
$
Management consulting
I R Cornelius Normal commercial
150,000
Management consulting
D I Chalmers Normal commercial
25,000
2003
$
150,000
60,000
2004
$
2003
$
150,000
150,000
-
-
CONSOLIDATED
PARENT ENTITY
D I Chalmers Normal commercial
557,681
481,292
498,052
426,798
Geological consulting,
including geological and
technical support staff
Financial, administration,
accounting and Company
Secretarial services
and staff
Consulting
Royalty
L A Colless
Normal commercial
169,200
A D Lethlean Normal commercial
72,600
H D Kennedy Normal commercial
-
170,700
88,200
206,160
40,000
127,200
72,600
-
40,000
127,200
88,200
206,160
40,000
Directors' fees
H D Kennedy Normal commercial
40,000
Shares and options
Aggregate number of shares and share options of Alkane Exploration Ltd acquired from the Company during the year by
Directors or their director-related entities:-
Ordinary shares
Options over ordinary shares
2004
2003
-
-
91,740
750,000
Aggregate numbers of shares and share options of Alkane Exploration Ltd held directly, indirectly or beneficially by Directors or
their director-related entities at balance date:
Ordinary shares
Options
1 3 . C O M M I T M E N T S F O R E X P E N D I T U R E
Mineral Tenement Leases
2004
2003
13,142,300
11,996,934
8,091,878
8,094,878
In order to maintain current rights of tenure to mining tenements, the Company will be required to outlay in 2005 amounts of
approximately $1,117,000 (2004 $1,134,500) in respect of tenement lease rentals and exploration expenditures to meet the
minimum expenditure requirements of the various Mines Departments in Australia. These obligations will be fulfilled in the
normal course of operations.
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A
L
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A
N
E
E
X
A
L
P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
For The Year Ended 31 December 2004
1 4 . C O N T R O L L E D E N T I T I E S
Name
Inc
Class
BOOK VALUE
EQUITY
CONTRIBUTION
TO GROUP
2004
$
2003
$
2004
2003
%
%
2004
$
2003
$
Ventron Enterprises Ltd
Australian Zirconia Ltd
Skyray Properties Ltd
Kiwi Australian
Resources Pty Ltd
LFB Resources NL
Australasian Geo-Data
Pty Ltd
BVI
WA
BVI
Ord
Ord
Ord
250,000
250,000
1
1
2,300,000
2,300,000
NSW Ord
-
-
NSW Ord
3,558,700
3,558,700
100
100
100
100
100
100
100
100
100
100
(7,096)
(7,928)
(49,365)
(123,177)
(8,002)
(9,599)
(168)
-
(29,087)
(270,657)
Qld
Ord
6,864
6,864
74
74
(1,584)
(1,387)
6,115,565
6,115,565
Contribution to Group
Profit (Loss) after minorities
Parent –Alkane Exploration Ltd
Profit (loss) for year – group
Loans to (from) subsidiaries
Provision for loss
Parent net investment in subsidiaries
6,549,222
6,014,904
(4,606,237)
(4,206,360)
8,058,550
7,924,109
(95,302)
(412,748)
(1,663,511)
(2,725,064)
(1,758,813)
(3,137,812)
CONSOLIDATED
PARENT ENTITY
2004
$
2003
$
2004
$
2003
$
1 5 . R E C O N C I L I AT I O N O F C A S H
For the purposes of the Statement of Cash Flows, cash includes cash on hand and at call deposits with banks or financial
institutions, net of bank overdrafts and investments in money market instruments maturing within less than two months. Cash as
at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the balance sheet
as follows:
Cash at bank
Call deposits
556,453
-
556,453
866,204
2,700,000
3,566,204
544,142
-
544,142
850,705
2,700,000
3,550,705
4
0
0
2
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R
O
P
E
R
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A
U
N
N
A
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CONSOLIDATED
PARENT ENTITY
2004
$
2003
$
2004
$
2003
$
16. R E C O N C I L I AT I O N O F N E T C A S H O U T F LO W
F R O M O P E R AT I N G AC T I V I T I E S T O
O P E R AT I N G LO S S A F T E R I N C O M E TA X
Operating Profit (Loss)
(1,759,369)
(3,138,299)
(2,063,388)
(3,011,398)
Write down in value of tenements in subsidiaries
-
1,000,000
399,877
1,286,334
Changes to provisions
Exploration
Loss on share trading
Loss on sale of assets
(201,491)
(636,894)
(145,626)
(642,166)
306,720
57,030
39,999
501,542
509,212
-
281,524
57,030
5,454
263,561
509,212
-
Changes in net current assets and liabilities
682,714
1,714,404
799,084
1,617,343
Net cash provided for operating activities
(874,397)
(50,035)
(666,045)
22,886
The Company has no credit standby or financing facilities in place other than disclosed on the statement of financial position.
1 7 . S U B S E Q U E N T E V E N T S
On 16 March 2005, the Company announced that it had completed a placement of shares with institutional and sophisticated
investors to raise funds to complete feasibility studies on the Company’s Wyoming and Galwadgere projects, to continue
exploration on other existing projects, and for working capital. This placement of approximately 17,825,000 ordinary fully paid
shares was made at an issue price of A$0.18 per share to raise A$3.2 million less costs of the issue. The financial effect of this
capital raising has not been disclosed in the financial statements. No other matters or circumstances have arisen since
31 December 2004 that have or may significantly affect the operations of the Company, the results of the Company, or the state
of affairs of the Company in the financial year subsequent to the financial year ended 31 December 2004.
CONSOLIDATED
PARENT ENTITY
2004
$
2003
$
2004
$
2003
$
1 8 . E A R N I N G S P E R S H A R E ( " E P S " )
Basic earnings per share
(0.01)
(0.02)
(0.01)
(0.02)
2004
Number
2003
Number
2004
Number
2003
Number
The weighted average number of ordinary shares
on issue used in the calculation of basic earnings per share
136,195,640
129,835,386
136,195,640
129,835,386
The diluted earnings per share is not materially different from the basic earnings per share.
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A
L
K
A
N
E
E
X
A
L
P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
N O T E S T O T H E F I N A N C I A L S T A T E M E N T S
For The Year Ended 31 December 2004
1 9 . F I N A N C I A L I N S T R U M E N T S
(i) Significant accounting policies
Details of significant accounting policies and methods adopted including the criteria for recognition, the basis of measurement and
the basis on which revenues and expenses are recognised, in respect of each class of financial asset, financial liability and equity
instrument are disclosed in Note 1 to the accounts.
(ii) Interest rate risk
The following table details the Company’s exposure to interest rate risk as at the reporting date:
Average
Interest
Rate
%
Variable
Interest
Rate
$
Fixed Interest
Rate Maturity
Less than
Non-interest
I year
$
Bearing
$
Total
$
3.96
529,783
-
-
-
4.89
886,605
226,920
-
-
1,416,388
226,920
26,670
556,453
-
115,517
345,861
488,048
-
1,229,042
345,861
2,131,356
-
-
(429,270)
(429,270)
1,416,388
226,920
58,778
1,702,086
4.26
5.20
4.55
837,648
2,700,000
846,183
-
-
-
233,698
-
4,383,831
233,698
28,555
-
-
278,324
306,879
866,203
2,700,000
1,079,881
278,324
4,924,408
-
-
(314,504)
(314,504)
4,383,831
233,698
(7,625)
4,609,904
2004 Financial assets
Cash
Term deposit
Investments
Receivables
Financial liabilities
Accounts payable
2003 Financial assets
Cash
Term deposit
Investments
Receivables
Financial liabilities
Accounts payable
(iii) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Company. The Company has adopted the policy of dealing with creditworthy counterparties and obtaining sufficient collateral or
other security where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company measures credit
risk on a fair value basis.
The Company does not have any significant credit risk exposure to a single counterparty or any group of counterparties having
similar characteristics.
The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the
Company’s maximum exposure to credit risk without taking account of the fair value of any collateral or other security obtained.
(iv) Net fair value
The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective net
fair values, determined in accordance with the accounting policies disclosed in Note 1 to the accounts.
4
0
0
2
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O
P
E
R
L
A
U
N
N
A
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D I R E C T O R S ' D E C L A R A T I O N
The directors declare that the financial statements and notes set out on pages 26 to 40:
a)
b)
comply with Accounting Standards, the Corporations Regulations and other mandatory professional reporting requirements; and
give a true and fair view of the Company's and controlled entities' financial position as at 31 December 2004 and of their
performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date.
In the directors' opinion:
a)
b)
the financial statements and notes are in accordance with the Corporations Act; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Directors.
L A Colless
Director
Perth, 16 March 2005
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A
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P
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R
A N E
O
A
E X P
T
I
O
N
L O R
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A
T
T
I O N
D
L
T D
4
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
I N D E P E N D E N T A U D I T O R S ' R E P O R T
To the Members of Alkane Exploration Ltd
S C O P E
We have audited the financial report of Alkane Exploration Ltd (the Company) for the financial year ended 31 December 2004 as set
out on pages 26 to 41. The directors of the Company are responsible for the preparation and true and fair presentation of the financial
report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records
and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates
inherent in the financial report.
AU D I T A P P R OAC H
We conducted an independent audit of the financial report in order to express an opinion on it to the members of the Company. Our
audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the
financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional
judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive
evidence. Therefore an audit cannot guarantee that all material misstatements have been detected.
We performed procedures to assess whether in all material respects the financial report presents fairly in accordance with the
Corporations Act 2001, Australian Accounting Standards and other mandatory professional reporting requirements in Australia a view
which is consistent with our understanding of the Company's and the consolidated entity's financial position, and of their performance
as represented by the results of their operations and cash flows.
We formed our opinion on the basis of these procedures, which included:
•
•
examining on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting
estimates made by the directors.
Whilst we considered the effectiveness of management's internal controls over financial reporting when determining the nature and
extent of our procedures, our audit was not designed to provide assurance on internal controls.
AU D I T O P I N I O N
In our opinion the financial report of the Company is in accordance with:-
a)
the Corporations Act, including:
i)
giving a true and fair view of the Company's and consolidated entity's financial position as at 31 December 2004 and of their
performance for the financial year ended on that date; and
ii)
complying with Australian Accounting Standards and the Corporations Regulations; and
b) other mandatory professional requirements.
Rothsay
Chartered Accountants
G R Swan
Partner
Sydney, 16 March 2005
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C O R P O R A T E G O V E R N A N C E
I N T R O D U C T I O N
Alkane Exploration Limited ("Company") has adopted systems of control and accountability as the basis for the administration of
Corporate Governance. Some of these policies and procedures are summarised below.
The following additional information about the Company's Corporate Governance practices is set out on the Company's website at
www.alkane.com.au:
•
Statement of Board and Management Functions;
• Nomination Committee Charter;
•
•
•
•
•
•
•
Policy and Procedure for Selection and Appointment of New Directors;
Summary of Code of Conduct for Company Executives;
Summary of Policy for Trading in Company Securities;
Audit Committee Charter;
Procedure for the Selection, Appointment and Rotation of External Auditor;
Summary of Compliance Procedures for ASX Listing Rule Disclosure Requirements;
Shareholder Communication Strategy;
• Company's Risk Management Policy and Internal Compliance and Control System;
•
•
Statement of process for performance evaluation of the Board, Board committees, individual directors and key executives;
Remuneration Committee Charter; and
• Corporate Code of Conduct.
E X P L A N AT I O N S F O R D E PA R T U R E S F R O M B E S T P R AC T I C E R E C O M M E N DAT I O N S
During 2004 (the "Reporting Period"), the Company embraced the ASX's Principles of Good Corporate Governance and Best
Practice Recommendations ("ASX Principles and Recommendations") and commenced the process of ensuring that appropriate
structures are put in place that reflect the spirit of the ASX Principles. The Company has complied with each of the ASX Principles
and Recommendations, other than in relation to the matters below.
1. Principle 1, Recommendation 1.1A
Notification of Departure
Formalisation and disclosure of the functions reserved to the Board and those delegated to management has occurred since the
end of the Reporting Period.
Explanation for Departure
Prior to the adoption of the Company's "Statement of Board and Management Functions" the functions were delegated but
without formalisation and disclosure.
2. Principle 1, Recommendation 1.1B
Notification of Departure
Formal letters of appointment for non-executive directors have been put in place since the end of the Reporting Period.
Explanation for Departure
Previously, directors' appointments were made in accordance with requirements at the time of their appointment.
3. Principle 2, Recommendation 2.1
Notification of Departure
Two out of the five directors are independent.
Explanation for Departure
Mr Lethlean and Mr Kennedy are the two independent directors of the Board. The reasons why the Board considers each of
these directors to be independent are set out further below in this Corporate Governance Report.
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A
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E
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A
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P
K
L
R
A N E
O
A
E X P
T
I
O
N
L O R
L
A
T
T
I O N
D
L
T D
C O R P O R A T E G O V E R N A N C E
The Board considers that its current structure is appropriate to efficiently and independently carry out its functions, given the
scope of its current activities. The Board is mindful of the need for management to be accountable for its actions, and has put
the following measures in place to ensure that the interests of shareholders are served to the best of the Company's ability:
• Mr Lethlean has been appointed as lead independent director; and
•
the two independent directors form the Audit Committee.
4. Principle 2, Recommendation 2.3
Notification of Departure
The Chairman is a member of the Executive Management Committee of the Company.
Explanation for Departure
The Board delegates day-to-day responsibility for managing the Company to the Executive Management Committee, which
comprises the Chairman, the Finance Director and the Technical Director, rather than to one individual. This structure has
worked historically for the Company and is considered at the current stage in the Company's operations to serve the best
interests of the Company's shareholders. While the Chairman is a member of the Executive Management Committee, the Board
is of the view that there are sufficient structures in place to ensure independent review of the Company's management functions.
These structures are discussed above in the explanation for departure from recommendation 2.1.
5. Principle 2, Recommendation 2.4
Notification of Departure
A separate nomination committee has not been formed. The full Board carries out this role in accordance with a Nomination
Committee Charter which has been adopted since the end of the Reporting Period.
Explanation for Departure
The Board considers that at this stage, no efficiencies or other benefits would be gained by establishing a separate nomination
committee.
6. Principle 3, Recommendation 3.1
Notification of Departure
A Code of Conduct has been formalised and adopted by the Company since the end of the Reporting Period.
Explanation for Departure
Prior to the adoption of a Code of Conduct, the Board considers that its business practices, as lead by the example of Board and
key executives, were the equivalent of a code of conduct. These practices are now reflected in the Code of Conduct.
7. Principle 3, Recommendation 3.2
Notification of Departure
The Company has adopted a written securities trading policy since the end of the Reporting Period.
Explanation for Departure
Although during the Reporting Period there was no written policy, there was an understanding as to when it was appropriate for
trading in securities to occur. This understanding has been formulated into the Company's written securities trading policy.
8. Principle 4, Recommendation 4.3
Notification of Departure
The audit committee does not meet the recommendation for composition as there are only two members.
Explanation for Departure
The Board considers it a priority to restrict membership of the audit committee to independent directors. Accordingly, due to
the current structure of the Board, only Mr Kennedy and Mr Lethlean are eligible to be members of the audit committee. The
Board considers the composition of the audit committee satisfactory in view of the Company's current scope of activities, and
the most appropriate structure to ensure the integrity of the Company's financial reporting.
4
0
0
2
T
R
O
P
E
R
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A
U
N
N
A
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9. Principle 5, Recommendation 5.1
Notification of Departure
Until adoption of a policy (which occurred after end of the Reporting Period) there were no written policies and procedures
designed to ensure compliance with ASX Listing Rules disclosure requirements and accountability for the compliance.
Explanation for Departure
Unwritten procedures were in place during the Reporting Period. The Finance Director, Mr Colless had, and continues to have,
primary responsibility in this area.
10. Principle 6, Recommendation 6.1
Notification of Departure
The Company's shareholder communication strategy has been designed and disclosed in a formal way since the end of the
Reporting Period.
Explanation for Departure
The Company has a positive strategy to communicate with shareholders, identify the expectations of shareholders and actively
promote shareholder involvement in the Company. These strategies have now been documented and disclosed.
11. Principle 7, Recommendation 7.1
Notification of Departure
The Company does not have a formal risk oversight and management policy and internal compliance and control system.
Explanation for Departure
The Company has an informal framework for risk management, whereby the Executive Management Committee is delegated
the responsibility for day-to-day risk management. The Board considers that this is a satisfactory measure in the Company's
current circumstances.
12. Principle 9, Recommendation 9.1
Notification of Departure
The Company has adopted a basic remuneration policy.
Explanation for Departure
Given the size and scope of the Company's activities and the overall number of managers and directors, the Board does not
consider that a more detailed remuneration policy is warranted. However, remuneration has been, and continues to be, in
accordance with the general principles recommended by the ASX; that is, non-executive directors receive a fixed fee for their
services and do not receive performance-based remuneration.
13. Principle 9, Recommendation 9.2
Notification of Departure
The Company has not established a separate remuneration committee. The full Board carries out this function in accordance
with a Remuneration Committee Charter which has been adopted since the end of the Reporting Period.
Explanation for Departure
The Board considers that due to its small size, all members should be involved in determining remuneration levels. Accordingly,
time is set aside at one Board meeting each year specifically to address the matters usually considered by a remuneration
committee and function in accordance with the Remuneration Committee Charter. Executive directors absent themselves during
discussion of their remuneration.
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D
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C O R P O R A T E G O V E R N A N C E
S K I L L S , E X P E R I E N C E , E X P E R T I S E A N D T E R M O F O F F I C E O F E AC H D I R E C T O R
A profile of each director containing the applicable information is set out in the Directors' Report.
I D E N T I F I C AT I O N O F I N D E P E N D E N T D I R E C T O R S
The independence of Mr Kennedy and Mr Lethlean, the Company's two non-executive directors, was considered in the context of
the ASX suggested criteria for independence, which was included in the commentary to the ASX Principles and Recommendations.
Mr Lethlean is considered independent in accordance with the criteria. Mr Kennedy, while a substantial shareholder for the purposes
of the Corporations Act, is considered to be independent as the Company considers that his interests are aligned with interests of the
shareholders.
S TAT E M E N T C O N C E R N I N G AVA I L A B I L I T Y O F I N D E P E N D E N T P R O F E S S I O N A L A DV I C E
If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his/her office
as a director, then, provided the director first obtains approval for incurring such expense from the chairperson, the Company will
pay the reasonable expenses associated with obtaining such advice.
N O M I N AT I O N A N D R E M U N E R AT I O N C O M M I T T E E M E E T I N G S
The Nomination and Remuneration Committees' responsibilities are carried out by the full Board. During the Reporting Period, there
were no specific meetings dealing with nomination and remuneration matters. Any such matters were dealt with from time to time
as required.
N A M E S A N D Q UA L I F I C AT I O N S O F AU D I T C O M M I T T E E M E M B E R S
Mr Kennedy and Mr Lethlean are members of the Audit Committee.
Both Mr Kennedy and Mr Lethlean are financially literate and are otherwise qualified to be members of the Audit Committee by virtue
of their respective industry experience. Notwithstanding that neither member of the Board possesses "financial expertise", the Board
considers it a priority to restrict membership of the Audit Committee to the independent members of the Board, a structure which
has worked well to date. Furthermore, the Financial Director and external auditor are available to attend meetings by invitation to
discuss any queries with the Audit Committee.
The Company has adopted the Audit Review Guidelines to assist the members of the Audit Committee in carrying out their duties.
N U M B E R O F AU D I T C O M M I T T E E M E E T I N G S A N D N A M E S O F AT T E N D E E S
During the Reporting Period the Audit Committee held 2 meetings.
C O N F I R M AT I O N W H E T H E R P E R F O R M A N C E E VA LUAT I O N O F T H E B OA R D A N D I T S M E M B E R S
H AV E TA K E N P L AC E A N D H O W C O N D U C T E D
During the Reporting Period the composition and functioning of the Board as a whole was discussed from time to time at regular
meetings of the Board, under the leadership of the Chairman. The Board considers that a more formal procedure is not warranted
at present in view of the small size, and overlap of many of the key functions, of the Board and management.
C O M PA N Y ’ S R E M U N E R AT I O N P O L I C Y
A statement of the Company's remuneration policy is included in the Directors' Report.
E X I S T E N C E A N D T E R M S O F A N Y S C H E M E S F O R R E T I R E M E N T B E N E F I T S F O R
N O N - E X E C U T I V E D I R E C T O R S
There are no termination or retirement benefits for non-executive directors.
4
0
0
2
T
R
O
P
E
R
L
A
U
N
N
A
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S H A R E H O L D E R I N F O R M A T I O N
1 . S H A R E H O L D I N G AT 1 A P R I L 2 0 0 5 - A L K
(a) Distribution of Shareholders
Share holding
1 -
1,001 -
1,000
5,000
5,001 - 10,000
10,001 - 100,000
100,001 -
over
(b) Unmarketable Parcels
There are 2,623 shareholders who hold less than a marketable parcel.
(c) Voting Rights
Voting rights are one vote per fully paid ordinary share
(d) Names of the substantial holders as disclosed in substantial holding notices:
Shareholder
Rockfield Investments Ltd
Resources Investment Trust Plc
Investors Trust and Custodial Services (Ireland) Limited
2 . T O P T W E N T Y S H A R E H O L D E R S AT 1 A P R I L 2 0 0 5
Shareholder
National Nominees Limited
HSBC Custody Nominees (Australia) Limited
ANZ Nominees Limited
Nefco Nominees Pty Ltd
Golden Moment Resources Ltd
Eikofin B V B A
Sydney Equities Pty Limited
Resource Capital Fund III LP
Citicorp Nominees Pty Ltd
J P Morgan Nominees Australia Limited
Riomin Australia Gold Pty Ltd
Lampsac Pty Ltd
Primdonn Nominees Pty Ltd
Gwynvill Trading Pty Limited
Balfes (QLD) Pty Ltd
Westpac Custodian Nominees Limited
Equity Trustees Limited
Cyrtha Corporation N V
Tasman Asset Management Ltd
Health Super Pty Ltd
Number of Holders
Fully paid ordinary shares
2,350
825
465
882
144
4,666
Number of Shares
11,399,370
8,800,000
4,000,000
Number
of Shares
% Issued
Capital
24,598,306
15.77
9,760,177
9,552,354
7,615,920
5,085,804
5,000,000
4,800,000
2,440,000
2,304,191
2,254,849
2,000,000
1,950,000
1,670,000
1,500,000
1,400,000
1,196,910
1,100,000
1,000,000
911,556
891,949
6.26
6.12
4.88
3.26
3.21
3.08
1.56
1.48
1.45
1.28
1.25
1.07
0.96
0.90
0.77
0.71
0.64
0.58
0.57
87,032,016
55.80
47
51345_JKL_Alkane AR 2004 1c 21/4/05 5:49 PM Page 48
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3 . U N L I S T E D O P T I O N S
Option Holding at 1 April 2005 - ALKAO
Total options exercisable at 35 cents each expiring 31 May 2005
Number of holders
Holdings of more than 20%
Goldtrek Pty Ltd
Mineral Administration Services Pty Ltd
Leefab Pty Ltd
Option Holding at 1 April 2005 – ALKAI
Total options exercisable at 40 cents each expiring 24 May 2007
Number of holders
Holdings of more than 20%
TW & J Ransted (The Ransted Family Account)
Rocky Rises Pty Ltd
Option Holding at 1 April 2005 – ALKAK
Total options exercisable at 45 cents each expiring 29 May 2008
Number of holders
Holdings of more than 20%
G R Meates & Associates Pty Ltd
Option Holding at 1 April 2005 - ALKAQ
Total options exercisable at 50 cents between 25 May 2004 and 24 May 2006; and
at 60 cents between 25 May 2006 and the expiry date 24 May 2007
Number of holders
Holdings of more than 20%
Goldtrek Pty Ltd
Mineral Administration Services Pty Ltd
Leefab Pty Ltd
Sundowner International Ltd
4 . R E S T R I C T E D S E C U R I T I E S
3,000,000
3
1,000,000
1,000,000
1,000,000
500,000
2
250,000
250,000
975,000
1
975,000
4,750,000
5
1,000,000
1,000,000
1,000,000
1,000,000
As at the date of this report, there were no securities subject to restriction under the Listing Rules of Australian Stock Exchange
Limited.
5 . O N M A R K E T B U Y- B AC K
As at the date of this report, there was no current on market buy-back.
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C O M P A N Y I N F O R M A T I O N
ACN 000 689 216 ABN 35 000 689 216
D I R E C T O R S
I.R. Cornelius
D.I. Chalmers
L.A. Colless
H. D. Kennedy
A. D. Lethlean
S E C R E TA RY
L.A. Colless
R E G I S T E R E D O F F I C E
129 Edward Street
PERTH WA 6000
Tel: 61 8 9227 5677 Fax: 61 8 9227 8178
T E C H N I C A L O F F I C E
96 Parry Street
Perth WA 6000
AU D I T O R S
Rothsay
Chartered Accountants
2 Barrack Street
SYDNEY NSW 2000
Tel: 61 2 9299 0091 Fax: 61 2 9299 2595
S T O C K E XC H A N G E
Australian Stock Exchange Limited
H O M E E XC H A N G E
Perth
A S X C O D E
ALK
I N T E R N E T
Internet home page: www.alkane.com.au
E-mail address: mail@alkane.com.au
Share registry investor services:
Tel: 61 8 9328 9411 Fax: 61 8 9227 6011
www.asrshareholders.com
S H A R E R E G I S T RY
Advanced Share Registry Services
110 Stirling Highway
NEDLANDS WA 6009
Tel: 61 8 9389 8033 Fax: 61 8 9389 7871
C O N T E N T S
Chairman's Report
Review of Operations
Tenement Schedule
Directors' Report
Statements of Financial Performance
Statements of Financial Position
Statements of Cash Flows
Notes to the Financial Statements
Directors' Declaration
Auditors' Report
Corporate Governance
Shareholder Information
1
3
20
21
26
27
28
29
41
42
43
47
A L K A N E E X P L O R A T I O N L T D
ACN 000 689 216
A l k a n e E x p l o r a t i o n L t d
Registered Office
129 Edward Street Perth WA 6000
Telephone: 61 8 9227 5677 Facsimile: 61 8 9227 8178
Technical Office
96 Parry Street Perth WA 6000
Telephone: 61 8 9328 9411 Facsimile: 61 8 9227 6011
www.alkane.com.au mail@alkane.com.au
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