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D I R E C TO R S
I R Cornelius
D I Chalmers
L A Colless
H D Kennedy
A D Lethlean
S E C R E TA R Y
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
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Chairman's Report
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SYDNEY NSW 2000
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Notes to the Financial Statements
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Directors' Declaration
Independent Auditors' Report
Corporate Governance
Shareholder Information
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A S X C O D E
ALK
I N T E R N E T
Internet Home Page:
http://www.alkane.com.au
E-mail address:
mail@alkane.com.au
The financial report covers both Alkane Exploration Ltd as an individual entity and the
consolidated entity consisting of Alkane Exploration Ltd and its subsidiaries. The financial report
is presented in Australian currency.
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C H A I R M A N ' S R E P O R T
1
This year saw the final gold pour from our very successful Peak Hill Gold Mine in New
South Wales. From start up in 1996 at a capital cost of A$5 million, the project has
recovered 153,655 ounces of gold and returned a net A$9 million cash flow to Alkane
after all costs and royalties were deducted. At commencement the mine was scheduled to
recover 86,000 ounces.
Rehabilitation of the site is well advanced but the Company will maintain its interest in
the Mining Leases to advance the possible development of the large sulphide gold and
copper resource below the current open pits at some time. The Peak Hill mine has given
Alkane operational experience, and significantly, environmental credibility and a good
reputation as a responsible corporate citizen with the residents of the region. Through the
development and operation of the mine the Company has also established a very good
working relationship with state and local authorities.
With the Tomingley Gold Project, the focus for the year was to complete a number of deep
diamond core drill holes into the Wyoming One ore body to ensure that we have enough
geological detail to be able to computer generate a 3D model of the ore system at depth.
This work is essential to the design of an efficient and economic underground mining
operation. Unfortunately bottlenecks in availability of drilling equipment delayed the
program by several months and the drilling was not completed until very late in the year.
On the positive side the drilling generated some spectacular results, including hole
WY831D which returned 66 metres grading 19.49g/t gold - probably one of the best gold
intersections in Australia for many years.
The Wyoming pre-feasibility study is progressing after being delayed by the late
completion of the drilling. The study includes a conceptual development involving open
cut operations at Wyoming One and Three, then an initial underground mine based on the
Wyoming One ore body. The results of the study should be available shortly and we are
optimistic that a positive outcome will see the project advance to full bankable feasibility
study and development. Certainly the dramatic improvement to the Australian dollar gold
price in the last six months or so will be very beneficial to the project economics.
“
The drilling generated
some spectacular results,
including hole WY831D
Elsewhere in New South Wales, a major joint venture agreement was signed with
which returned 66 metres
Newmont Australia which has that company farming into our Molong and Moorilda
properties near Orange. Newmont have to spend A$5 million to earn an initial 51%
interest and have the right to free carry Alkane to completion of a bankable feasibility
study for an additional 24% interest. We have believed in the potential of the ground for
some time but priorities at Peak Hill and Tomingley have resulted in a limited exploration
effort. Newmont commenced work late last year and the first drill holes gave great
encouragement that the geological concepts were correct. Further work has been
scheduled for 2006.
At Wellington, the small copper resource identified at Galwadgere has development
potential, while the Bodangora and Cudal properties are also considered very prospective
for gold and copper deposits. We are actively looking at options to advance all these
projects.
grading 19.49g/t gold -
probably one of the best
gold intersections
in Australia
for many years.
”
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C H A I R M A N ' S R E P O R T C o n t i n u e d
The Dubbo Zirconia Project continues to have strategic significance as a source of
zirconium chemicals and zirconia. Around the world these products are currently derived
from the processing of the mineral sand zircon, which has been forecast to be in serious
short supply in the next few years, already resulting in a dramatic increase in price.
The rapid increase in the demand for uranium and subsequent flow-on effect to its price
has also made us review the uranium potential of the deposit. While the uranium
mineralisation is not economic in its own right, the current flow sheet can easily produce
this as a by-product which could add to the revenue from the zirconium, niobium-
tantalum and yttrium-rare earth products. Like many other states, New South Wales still
prohibits the mining of uranium but we remain optimistic that public opinion will move in
favour of this valuable commodity.
We have continued to investigate options for advancing the DZP, and hopefully 2006 will
see a re-activation of the process development work, construction and operation of the
Demonstration Pilot Plant, and in 2007, completion of a favourable feasibility study.
We have also looked at options to generate a return to Alkane from the potentially large
channel iron deposit at Nullagine in the east Pilbara of Western Australia. Like many other
commodities demand for iron ore and its price have escalated in the last two years,
enhancing potential values of exploration areas. Our exploration for diamonds near
Nullagine in the mid 1990’s, identified an ancient river system covered by a pisolitic iron
deposit with a potential of 150-220 million tonnes. Limited surface sampling has given
iron results that are similar to current deposits mined by Rio Tinto and BHP Billiton.
Grant of the tenement applications covering the Nullagine area has been slow due to the
presence of Native Title Claims and bureaucratic procedures in dealing with these, and the
associated heritage issues. This has delayed our ability to formalise any deals. We believe
the titles should be granted in the next month or so enabling us to make some progress
with this valuable asset.
I would like 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
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R E V I E W O F O P E R A T I O N S
3
TO 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 three
kilometre corridor extending from
McLeans in the south, through Wyoming
One to Wyoming Three in the north.
Since 2001 a total of 121,191 metres of
drilling has been completed in 1,224
holes. Expenditure to date has totalled
A$6.6 million, or approximately A$10.50
per resource ounce defined. This level of
expenditure is well inside the industry
average of A$25-30 per resource ounce.
At 31 December 2005, Identified Mineral Resources stood at:
DEPOSIT
Wyoming One
Wyoming Three
TOTAL
Measured
Indicated
Inferred
Total
WYOMING RESOURCES (>0.75G/T AU CUT OFF)
Tonnage
(t)
4,020,000
815,000
4,835,000
Grade
(g/t)
2.25
2.20
2.24
Tonnage
(t)
1,010,000
15,000
1,025,000
Grade
(g/t)
2.77
2.32
2.76
Tonnage
(t)
Grade
(g/t)
Tonnage
(t)
1,270,000
4.09
6,300,000
830,000
1,270,000
4.09
7,130,000
Grade
(g/t)
2.70
2.20
2.70
Ounces
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 were
given in the 2004 Annual Report.
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Wyoming Resource Development
Drilling
As a result of the 2004 pre-feasibility
study which concluded that an
underground mining component with
the planned open pits would be
important to generate acceptable
financial returns for a development
project, a major diamond core drilling
program was completed at Wyoming
One during the year. A total of 19 holes
were completed for 6,902 metres. The
drilling was largely within the existing
resource envelope.
Wyoming One is characterised by
several different mineralisation styles,
ranging from quartz veining and
alteration grading around 1.5g/t gold to
2.00g/t gold within upper levels of the
main porphyry body, which is a near
vertical, pinnacle shaped body with its
long axis aligned north-north-west. The
northern extent of the porphyry is
truncated by the vertical, east-west
‘376’ structure which is strongly
mineralised where in contact with the
porphyry. Several other near east-west
structures have been located internally
within the porphyry and those defined
to date have been designated ‘497’ and
‘831’ structures, named after their
discovery drill hole. These structures can
host significant gold mineralisation.
One hole was particularly impressive
with intersections of
WY 831D 66.00 metres grading
19.49g/t gold from
268 metres
including 11.00 metres grading
89.00g/t gold from
281 metres
including 3.20 metres grading
271.50g/t gold from
287 metres
also
33.00 metres grading
7.51g/t gold from
301 metres
including 14.00 metres grading
15.56g/t gold from
302 metres
Well defined mineralisation also occurs
along the eastern margin of the
porphyry and this higher grade
(~5.00g/t gold) zone was termed the
Contact. This zone is evident in the
upper levels of the system extending to
about 200 metres vertical depth
(060mRL) but a recent hole intersected
new mineralisation at the contact at
400 metre depth (-125mRL) which could
indicate a repeat of this ore shoot. The
intercept is:
WY 826D 7.00 metres grading
9.41g/t gold from
417 metres
An apparently stratigraphically
controlled zone called 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. Recent intersections include:
WY 825D 13.00 metres grading
3.61g/t gold from
317 metres
including 6.00 metres grading
5.69g/t gold from
317 metres
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Mineralisation in the HWZ had been
intersected at -200mRL (WY811D), 450
metres below the ground surface and
the deepest known at Wyoming One to
date. This intersection gives some
encouragement that the Wyoming
system could extend to reasonable
depths.
The 2005 drilling has confirmed that the
HWZ folds around the north end of the
porphyry and may link back to what was
previously called the Footwall Zone,
forming an anticlinal closure. This may
present opportunities for delineation of
further mineralised zones.
The Wyoming One mineralisation is
overlain by approximately 30 metres of
unmineralised transported clay cover.
No drilling was undertaken at Wyoming
Three during the year but this 300
metre long structurally controlled west-
north-west trending sheeted quartz vein
system remains a target for future
deeper drilling to add to the Project’s
underground resource potential. The
clay cover at Wyoming Three is generally
less than 10 metres. Similarly Wyoming
Two, which is under 50 metres of cover
and too deep to be considered an open
pitable target, could be assessed from an
underground development linking
Wyoming One to Wyoming Three.
The collaborative structural study of the
Wyoming deposits with the pmd*CRC
(CSIRO) group continued. The current
work was designed to collect structural
information from drill core and factor
this data into the computer models to
assist with the understanding of the
mineralised system, and provide future
targeting.
Pre-feasibility Study
The pre-feasibility study in 2005
focussed on compiling the results from
the deep core drilling program and
remodelling of the mineralised zones at
depth to form the basis of a potential
underground operation. The shortage of
drill rigs in New South Wales impacted
upon the timing of the program and the
drilling was not completed until late in
the year.
Wyoming One is a moderately complex
orebody at depth with a number of
shoots orientated at various angles to
each other which makes 3D computer
modelling and planning for
underground mining complex and time
consuming.
The conceptual development remains as
two open pit mines, Wyoming One and
Three, followed by an initial
underground operation focussed on
Wyoming One. Gold production would
be through a conventional CIL gold
recovery circuit at an open pit rate of
around 500,000 tonnes per annum and
an underground mine at 250,000 tonnes
per annum. The pre-feasibility study is
scheduled for completion around the
end of April 2006, leading to a bankable
feasibility study and hopefully a
development decision by the end of the
year.
Capital costs remain crucial to the
financial viability of the project and the
Company has been actively reviewing
available plant and equipment
throughout Australia. As the final
specifications are not yet available, no
plant has been sourced to date.
While general industry costs have
escalated over the last few years, 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.
These factors should help minimise the
impact of rising costs.
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Exploration
With the effort at Wyoming focussed on
achieving a development outcome for
the deposits, regional exploration has
been limited to ground checking of
other geological and aeromagnetic
targets within the belt. However two
diamond core holes were completed at
the north end of McLeans, immediately
to the south of the historic Myall’s
United underground mine about 1km
south of Wyoming One, to assist with
geological interpretation of that area
and determine the potential for repeats
of Wyoming style mineralisation.
MCD 001 was terminated by an historic
underground working but the hole
intersected several metres of veining
and alteration prior to the mine opening
returning:
5.35 metres grading
2.02g/t gold from
124 metres
MCD 002 was drilled under MCD 001
and intersected volcanic and intrusive
stratigraphy similar to Wyoming,
however the mineralised zone appears
to have been stoped out by younger
mafic dykes at this location.
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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 )
Zirconium, niobium-tantalum, yttrium-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.
Over several years the Company has
developed a flow sheet, which has been
trialled to Mini Pilot Plant level, to
recover a suite of zirconium chemicals,
zirconia (ZrO2), a niobium-tantalum
concentrate and a yttrium-rare earth
concentrate which are used in the
expanding ceramic, catalyst, electronics,
engineering ceramic, and specialty
glasses and alloys industries.
With the increased interest in uranium
motivated by rapidly increasing prices,
uranium has now been included as a
component of the resource inventory.
Mining of uranium remains prohibited
in New South Wales but the current
flow sheet requires removal of uranium
from the zirconium process stream
otherwise it contaminates the end
products. The uranium recovered by this
process would be stabilised and
dispersed in to the residue storage
facility. The Project would benefit from
the flow on effect of less residue
management costs and increased
revenue from the sale of a uranium
product.
Identified Mineral Resources as at 31 December 2005 were:
MEASURED RESOURCES
(0-55m, 340mRL)
35.7 million tonnes
1.96% ZrO2, 0.04% HfO2,
0.46% Nb2O5, 0.03% Ta2O5,
0.14% Y2O3, 0.014% U3O8,
0.745% Total REO
INFERRED RESOURCES
(55-100m, 295mRL)
37.5 million tonnes
Similar grades
TOTAL
73.2 million tonnes
Similar grades
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 were
given in the 2004 Annual Report.
During the year various options for advancing the Project were considered and are still
being investigated.
Discussions were also initiated with laboratories to enable the planned process
optimisation work to be completed, and the construction and operation of the
Demonstration Pilot Plant (DPP) to commence prior to the end of the year.
The DPP would facilitate the final confirmation of the flow sheet, and importantly,
enable distribution of substantial amounts of sample products to potential end users.
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R E V I E W O F O P E R A T I O N S C o n t i n u e d
P E A K H I L L G O L D M I N E
Gold – New South Wales
Alkane Exploration Ltd 100%
The Peak Hill Gold Mine poured its final
gold bar of 243 ounces at the end of
the year. Total production over the 10
year mine life totalled 153,655 fine
ounces.
This compares well with the 86,000
ounce forecast production upon which
the heap leach mine was commissioned
in 1996. The inclusion of several satellite
resources and the addition of dump
leaching (no crushing) of the low grade
stockpiles provided the additional
ounces and doubled the anticipated five
year mine life. Approximately five
million tonnes were heap and dump
leached from five open cuts at an
average grade of 1.56g/t Au and waste
to ore ratio of 1:1. Treatment rates were
ramped up to 600,000 tonnes per
annum for heap leaching and a similar
rate for dump leaching. Gold production
peaked at 30,000 ounces in 2000 and
the operation employed around 50 full-
time employees.
The mine returned a healthy net cash
flow of approximately $9m to Alkane
over its life. This is after all costs and
royalties associated with the project.
Mine closure activities dominated the
second half of the year. The heap leach
pad was decommissioned with removal
of all the irrigation equipment. Final
rehabilitation involving major works in
reshaping, topsoiling and seeding of the
heap to create a long-term stable
landform was also completed.
The significant (450,000 ounces) but
moderately refractory sulphide gold-
copper orebody below the oxide mine
remains subject to ongoing review and
will be re-assessed following successful
development of the Wyoming deposits.
As at December 31, 2005, Mineral Resources remained as:
Sulphide (Proprietary orebody only) 0.5g/t gold cut off
INDICATED RESOURCES 9.44 million tonnes 1.35g/t Au 0.11% Cu
INFERRED RESOURCES 1.83 million tonnes 0.98g/t Au 0.10% Cu
TOTAL
11.27 million tonnes 1.29g/t Au 0.11% Cu 467,570 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 were
given in the 2004 Annual Report.
The Peak Hill Gold Mine represented Alkane’s first substantial operating venture and it
is one the Company intends to build on in the future.
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W E L L I N G TO N
Copper, 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. The
Galwadgere deposit, which has been the
focus of most of the recent exploration
effort, is located adjacent to favourable
infrastructure, being three kilometres
from the main Western Railway, near to
power and water.
During 2004 and early 2005, 26 RC holes
and one diamond core hole (total 4030
metres), were completed at Galwadgere.
The drilling was designed to test the
known copper-gold mineralisation over a
strike length of 500 metres on 50 metre
sections down to depths ranging from
25 metres to 175 metres. The diamond
core hole, GAL030D, was completed early
this year but unfortunately undershot
the shallow north plunging mineralised
zone and intersected only low grade
copper values.
Alkane’s drilling has enabled an initial
shallow resource to be calculated based
upon the following parameters. The
main zone of mineralisation outcrops
over a strike length of approximately
350 metres and is modelled over a total
strike length of about 500 metres
extending below Permian cover to the
north. The zone dips east at
approximately 55°, plunges north at
about 30° and varies in thickness from
five to 35 metres. The mineralisation
consists of disseminated and stringer
pyrite-chalcopyrite lenses within altered
felsic volcanic rocks. The system is
structurally overturned and appears to
be capped by a lead-zinc-silver-gold
rich bedded massive sulphide, but to
date this has rarely exceeded two to
three metres in width. There is potential
for this horizon to increase in thickness
to the north and down plunge. The
initial resource estimate at 0.5% copper
cut off is:-
INDICATED RESOURCE 2.09 million tonnes
0.99% Cu and 0.3g/t Au
Notes to Accompany Resource Statement for Galwadgere
The information in this report that relates to Mineral Resources or Ore Reserves is 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.
• drilling technique –the resource is based on reverse circulation drill holes completed by Alkane
during 2004;
• drilling density - drill holes completed on EW sections. Sections spaced 50m apart with drill holes
at variable intervals along these sections. 27 drill holes were used in the estimate;
• drill locations - all drill hole collars are surveyed by DGPS to obtain X Y Z position to ±0.1m;
• down hole surveys – all holes are surveyed down hole using a single shot camera;
• sampling technique - samples were collected at one metre intervals and riffle split to assay
samples of approximately 3kg in size;
• sample recovery - RC sample recovery is usually very good (>95%). Samples are usually dry;
• assay technique – samples were submitted to commercial laboratories for preparation by drying,
grinding and sub-setting and then analysed by industry standard ICPAES analysis for Ag, As, Cu,
Pb, Mo, Zn and 50g fire assay techniques for Au;
• top cut – a top cut of 3g/t for Au was used in the resource estimate. No top cut was used for Cu;
• specific gravity – no specific gravity measurements have been completed. Values were estimated
at 2.95 t/m3 for fresh rock and 2.25 t/m3 for oxidised material;
• estimation techniques - estimations used a 3D wireframed 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 a multi
element grade envelope.
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The bulk of the resource is located
above the 300mRL (150m below plain
level) and while the early drilling
(1970’s) has shown that the system
extends to at least 250m vertical depth,
no Inferred Resource has been
extrapolated due to some doubts on the
reliability of the historic data.
Using fairly simple parameters of A$1.79
per pound of copper metal (currently
>A$3.00/lb), A$550/oz (A$790) of gold
and 85% recovery, with standard
industry mining and processing costs, a
conceptual open pit to 350mRL
(approximately 110m depth) would
recover 1.46 million tonnes grading
1.00% Cu and 0.26g/t Au at a waste to
ore ratio of 7.8:1.
This basic model generated A$14.7
million cash flow (excluding capital
costs) and gives enough encouragement
to warrant a more detailed look at the
potential of the project.
A preliminary metallurgical program was
also undertaken on percussion chips
from various mineralisation types within
the ore body and a series of grind
optimisation–flotation tests were
completed. This work generated a clean
copper concentrate which ranged from
20-27% Cu and 1.59-3.38g/t Au with
recoveries of copper estimated to be
around 85-90%.
Several untested targets exist in the
project area and these also have
potential for copper and gold
mineralisation. A program to extend the
known resource at Galwadgere and test
new targets is being considered.
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O R A N G E D I S T R I C T E X P L O R AT I O N J O I N T V E N T U R E - O D E J V
Gold, Copper – NSW
Alkane Exploration Ltd 100%, subject to Newmont Australia Limited earning an initial 51%
In August, Alkane reached agreement
with Newmont Australia Limited
(Newmont) to farmin to Alkane’s
Orange Project which includes the
Molong and Moorilda tenements
located near the city of Orange in the
Central West of New South Wales,
adjacent to Newcrest Mining Ltd’s Cadia
Valley Operations (~30Moz total
resources). The basic terms are:
•
•
•
Newmont can earn an initial 51%
interest by expenditure of $5
million within five years, with
minimum expenditure in year one
of $600,000
Newmont may earn an additional
24% by electing to sole fund
exploration to completion of a
Bankable Feasibility Study
Alkane will be the initial operator
for the Project
The ODEJV lies within the central part of
the Ordovician aged Molong Volcanic
Belt (MVB) and 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 tested by various
programs including geological mapping
and sampling; auger soil geochemistry;
Induced Polarisation; detailed
aeromagnetics; and RC and diamond
core drilling. The areas are considered
prospective for monzonite associated
gold-copper porphyry deposits (Cadia-
Ridgeway type); sediment hosted
replacement gold deposits (Carlin type);
and structurally controlled gold deposits
(Wyoming type).
An initial reconnaissance drilling
program was completed at Molong late
in the year, where targets include
monzonite intrusive associated porphyry
gold-copper mineralisation of the
Cadia-Ridgeway type and sediment
replacement gold deposits of the Carlin
type. The program comprised four core
holes (MDD 028 - 031) totalling 1266.3
metres and one RC hole (MDD 032) for
150 metres and was designed to test
stratigraphic, alteration and geophysical
targets in the Charlies and Galloway
areas. Previous drilling in these areas has
intersected extensively altered
monzonite intrusives within altered
sediments and volcanic rocks, with
narrow high grade gold intercepts up to
9.91g/t gold and 0.56% copper.
In the Charlies area, holes MDD 028
and 029 are over one kilometre apart
and both intersected extensively altered
sediments and volcanics, with narrow
intensely hematite-magnetite altered
intrusive monzonite dykes. Sections
containing in excess of 10% pyrite with
rarer stringer veining of quartz-
carbonate ± chalcopyrite ± molybdenite
were also observed. Weakly anomalous
gold, copper and zinc results were
returned from both holes.
At the Galloway prospect, about 3
kilometres northeast of Charlies, MDD
030 also intersected extensively altered
sediments and volcanics, including a 20
metre intercept of oxidised garnet-
hematite-diopside skarn with up to 3%
pyrite and rare chalcopyrite. A one
metre interval within the skarn returned
1.23g/t gold from 185 metres down
hole. This horizon presents both an
exploration vector to porphyry style
gold-copper mineralisation as well as a
target in its own right. Other weakly
anomalous results were recorded.
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R E V I E W O F O P E R A T I O N S C o n t i n u e d
MDD 031 is located at Borenore
approximately two kilometres southeast
of MDD 028 and was sited to test an
aeromagnetic structural target
coincident with anomalous gold in soil
geochemistry. The hole intersected a
thick package of relatively unaltered
sediments but scattered intercepts up to
0.33g/t gold were recorded. RC hole
MRC032 tested a geophysical anomaly
800 metres west of MDD 030 at
Galloway but failed to intersect any
mineralisation.
These widely spaced reconnaissance
holes have confirmed the potential of
the project area to host both porphyry
style and sedimentary replacement style
mineralisation.
B O D A N G O R A A N D C U D A L
Gold, Copper – NSW
Alkane Exploration Ltd 100% (subject to 2%
NSR and buy back option to Rio Tinto
Exploration Pty Limited)
Other than reconnaissance geological
mapping and sampling, no field work
was carried out on the two projects in
2005. However a significant effort was
directed to compilation and digitising all
historic data into one coherent
database. This should assist with future
target generation.
Both projects are considered to have
potential for monzonite porphyry
associated gold – copper mineralisation.
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 the end of June 2006.
A plaint against the Miranda tenement
delayed field work during the year but
Jubilee completed soil sampling
programs at Leinster Downs and
McDonough. With resolution of the
plaint action Jubilee have recommenced
programs and Alkane granted Jubilee a
further extension of time to reach the
75% to allow for the delay caused by
the plaint.
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N U L L A G I N E
Iron, Diamonds, Gold – WA
Alkane Exploration Ltd - 60% Randolph Resources Syndicate 40%
Alkane holds three exploration licence
applications totalling 650km2 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.
As advised last year, Alkane’s diamond
exploration programs demonstrated that
the tops of the Bonnie Creek
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 however limited subsequent
surface sampling has generated results
which averaged:
58% Fe, 3.23% SiO2, 3.95% Al2O3,
0.22% TiO2, 0.04% MnO,
0.11% CaO, 0.09% P, 0.08% MgO,
9.08% LOI, or equivalent
63% Fe dry.
These results are very close to standard
Robe River Iron Associates (Rio Tinto)
CID direct shipping ore from the Robe
River mine. Alkane’s detailed mapping
enabled the surface area of the CID to
be reasonably accurately defined and
based on measured thickness and
assumed specific gravity of 2.6 tonnes
per cubic metre, a resource potential of
150 to 220 million tonnes could be
assigned to the Bonnie Creek system.
However it should be noted that 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 Heads of Agreement signed in
December 2004 with a private company,
Vaalbara Resources Pty Ltd (Vaalbara)
granting Vaalbara a six month option to
execute a joint venture document to
acquire the right to 80% of gold, silver
and uranium (Witwatersrand type
mineralisation), has been extended to 31
December 2006, to enable Vaalbara to
complete its capital raising and market
listing.
Discussions continued throughout the
year to determine the best course of
action to advance the potential of the
iron deposits.
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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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.
P E A K H I L L G O L D M I N E
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 2005.
OH&S Results 2005
Man
Hrs
21,554
2,326
23,880
Alkane
Contractors
Visitors
Total
2003
2004
2005
Minor Man
Minor Man
Minor
LTIs
Injuries
Hrs
LTIs
Injuries
Hrs
LTIs
Injuries
1
1
0
2
0
0
1
1
17,241
80
17,321
0
0
0
0
2
0
0
2
11,440
5,560
17,000
0
0
0
0
2
0
0
2
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E N V I R O N M E N TA L M A N A G E M E N T I N 2 0 0 5
There are currently in place 19 Approvals and Licences for the mining and processing
operation, access to water and for pipeline routes.
During 2005, the mine was in compliance with all consent conditions and approvals.
There was one complaint received by the Company in 2005, relating to foxes breeding
on the Mining Leases. A fox baiting program was subsequently employed across the
mine site with immediate and positive results.
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 2005. 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 six personnel in 2005, 83%
being original local residents. Three local organizations and charities were assisted by
the Peak Hill Gold Mine in 2005.
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 until July 2005 when the irrigation
pipework was removed. McCutcheon Bros (Trangie) were contracted to shape and
topsoil the spent ore stockpiles into a final landform. SoilWorks (Department of Lands)
designed and built a rock-lined channel to take surface waters off the heap leach final
landform.
The final gold pour on site was held on 20th December 2005 and wet plant
decommissioning will continue through 2006.
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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)
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
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 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
Alkane Exploration Ltd (“ALK”)
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
ALK
ALK
ALK
ALK, Kiwi Australian Resources
Pty Ltd (“Kiwi”),
Hot Holdings Pty Ltd (“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
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, NSW
Cudal, NSW
Cudal, NSW
Bodangora, NSW
Nullagine, WA
Nullagine, WA
Nullagine, WA
Miranda Well, WA
McDonough, WA
McDonough, 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
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17
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 2005.
D I R E C TO 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
P R I N C I PA L A C T I V I T I E 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.
R E S U LT S
The net amount of consolidated loss of the economic entity for the financial year after income tax was $1,772,472
(2004 loss $1,759,369).
D I V I D E N D S
No dividends have been paid by the Company during the financial year ended 31 December 2005, 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 recover gold at Peak Hill, NSW during the year whilst rehabilitating the site, and continued with its
exploration programs, primarily on its NSW mineral tenements. The Peak Hill mine site has now been fully rehabilitated and all gold
recovery has ceased. 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 15 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 F A I R S
The state of affairs of the Company was not affected by any significant changes during the year.
E V E N T S S U B S E Q U E N T TO B A L A N C E D AT E
No matter or circumstance has arisen since 31 December 2005 that has 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 2005.
L I K E LY D E V E L O P M E N T S
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.
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E N V I R O N M E N TA L R E G U L AT I O N
The consolidated entity is subject to significant environmental regulation in respect of its development, construction and mining
activities as set out below.
Mining
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.
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 its entire staff maintain that
standard.
PA R T I C U L A R S O F D I R E C TO R S
Ian Raymond (Inky) Cornelius (Executive Chairman)
Mr Cornelius, 65, 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 Fellow of the Australian Institute of Company Directors.
He 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 MSc (Technical Director)
Mr Chalmers, 57, 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, Member of the Society for Geology Applied to Ore Deposits, Member of the
Geological Society of Australia 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 CA JP (NSW) (Finance Director and Company Secretary)
Mr Colless, 60, is a member of the Institute of Chartered Accountants in Australia with 15 years experience in the profession
and a further 27 years experience in Commerce, mainly in the mineral and petroleum exploration industry in the capacities of
financial controller, company secretary and director. He is also a Fellow of the Australian Institute of Company Directors.
He is a director of Newland Resources Ltd Group and Summit Resources Ltd Group and is an alternate director of
Pancontinental Oil & Gas NL. Former directorships held in the last three years are; West Australian Metals Ltd (1986 to August
2005), Yilgarn Gold Limited group (February 2003 to April 2005), South Boulder Mines Ltd (August 2001 to May 2004), Northern
Star Resources Ltd (May 2000 to September 2003), Austin Engineering Limited (June 2001 to March 2004), Solco Ltd (November
2002 to December 2002).
Mr Colless is a member of the Executive Committee and is also Chief Financial Officer and Secretary of the Company.
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Henry David (David) Kennedy MA (geology) (Non-executive Director)
Mr Kennedy, 70, 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 a member of the Society of Economic Geologists, the American Institute of Mining and Metallurgical Engineers, the
Australian Institute of Geoscientists and the Petroleum Exploration Society of Australia.
Mr Kennedy is a director of Norwest Energy NL, Pancontinental Oil & Gas NL and Sub-Sahara Resources NL in Australia. Former
directorships held in the last three years are: Dragon Mining NL (July 1996 to February 2005) and Olympus Pacific Minerals Ltd
in Canada (resigned January 2006).
Mr Kennedy is a member of the audit committee.
Anthony Dean Lethlean BappSc (geology) (Non-executive Director)
Mr Lethlean, 42, 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.
He is also a director of Alliance Resources Limited.
Mr Lethlean is Chairman of the audit committee.
N O M I N AT I O N C O M M I T T E E
The Nomination Committee comprises the full Board.
D I R E C TO 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
D I R E C TO R ’ S O P T I O N S
Options held by directors or director related entities are as set out below:
Name of director
I R Cornelius
H D Kennedy
A D Lethlean
L A Colless
D I Chalmers
Direct
Indirect
7,500
3,600
19,370
-
-
1,180,000
767,580
225,947
11,609,981
-
Options
Held
Indirectly
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
Options held
1,000,000
1,000,000
250,000
750,000
1,000,000
1,000,000
Exercise
conditions
50c - 24 May 2006
50c - 24 May 2006
40c - 24 May 2007
50c - 24 May 2006
50c - 24 May 2006
50c - 24 May 2006
No options were granted to directors during the financial year or since the end of the year.
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D I R E C TO R S ' M E E T I N G S
The following sets out the number of meetings of the Company's directors held during the year ended 31 December 2005 and the
number of meetings attended by each director.
There were nine (9) Director’s Meetings, two (2) Audit, one (1) Nomination and one (1) Remuneration Committee Meeting held
during the financial year.
The number of meetings attended by each director during the year is as follows:
Director
I R Cornelius
D I Chalmers
L A Colless
H D Kennedy
A D Lethlean
Board
Meetings
9
9
9
9
9
Audit
N/A
N/A
N/A
1
1
Committee Meetings
Nomination
Remuneration
1
1
1
1
1
1
1
1
1
1
R E M U N E R AT I O N R E P O R T
A. 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 to 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 reward for contribution to shareholder growth
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.
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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 below and is fully disclosed in the Notes to the Financial Statements. Non-executive
directors do not receive performance-based remuneration.
All remuneration of directors is further disclosed in Note 13 in the Notes to the Financial Statements.
There are no executive officers of the Company other than directors.
B. Details of remuneration
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
Total income received, or due and receivable by the directors
978,787
1,014,481
866,394
887,852
The details of directors’ remunerations paid or payable are as follows:
Name
Executive Committee
I R Cornelius
D I Chalmers
L A Colless
Non-executive Directors
H D Kennedy
A D Lethlean
Primary
Directors’
Base Fee
$
Primary
Fees and
Disbursements
$
Post-employment
Superannuation
$
Total
$
-
-
-
150,000 (a)
540,387 (b)
169,200 (c)
40,000 (d)
-
-
79,200 (e)
-
-
-
-
-
150,000
540,387
169,200
40,000
79,200
a)
b)
c)
d)
e)
consulting fees of $150,000 (2004 $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.
technical services, geological consulting and management fees of $540,387 (2004 $582,681) 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. During the year, five technical and support staff, including Mr Chalmers, were employed to
carry out work programs for Alkane on an as needs basis.
administration, accounting and secretarial fees of $169,200 (2004 $169,200) 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.
amounts of $40,000 (2004 $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 $79,200 (2004 $72,600) 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.
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D I R E C T O R S ’ R E P O R T C o n t i n u e d
R E M U N E R AT I O N R E P O R T ( c o n t i n u e d )
C. Service agreements
Formal written consultancy agreements exist with companies of which directors have a substantial financial interest.
No performance related bonuses or benefits are provided.
I R Cornelius
Consulting services provided by Goldtrek Pty Ltd as trustee for the Lewis Trust of which Mr Cornelius is a beneficiary.
Term of agreement - 3 years commencing 1 July 2003
D I Chalmers
Geological consulting and management services provided by Multi Metal Consultants Pty Ltd in which Mr Chalmers has a
substantial financial interest.
Term of agreement - 3 years commencing 1 July 2003
L A Colless
Administration, accounting and secretarial services provided by Mineral Administration Services Pty Ltd in which Mr Colless has
a substantial financial interest.
Term of agreement - 3 years commencing 1 July 2003
D. Share-based payments
No share based remuneration compensation plan exists.
D I R E C TO R S ' I N D E M N I T I E S
During the financial year, Alkane Exploration Ltd paid a premium of $19,500 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.
A U D I TO R S ' I N D E P E N D E N C E - S E C T I O N 3 07 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)
no contraventions of the auditor independence requirements of the Act in relation to the audit of the 31
December 2005 annual financial statements; and
ii)
no contraventions of any applicable code of professional conduct in relation to the audit.
Graham Swan (Lead auditor)
Rothsay Chartered Accountants”
N O N - A U D I T S E R V I C E S
The board of directors has considered the position and, in accordance with the advice received from the audit committee is satisfied
that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
•
•
all non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity
of the auditor
none of the services undermine the general principles relating to auditor independence as set out in Professional Statement F1,
including acting in a management or a decision-making capacity for the Company or acting as advocate for the Company.
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CONSOLIDATED
2005
$
2004
$
29,700
25,000
5,000
5,764
The following amounts were paid to the auditors
Auditors' remuneration
- auditing the accounts
Non-Audit Services
- taxation services
C O R P O R AT E G O V E R N A N C E
The Company strives to comply with the ASX Principles of Good Corporate Governance and Best Practice Recommendations and this
is dealt with in the Supplementary Information section of the Annual Report.
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:
The following options are exercisable at 40 cents each on or before 24 May 2007
•
•
T W & J Ransted
Rocky Rises Pty Ltd
250,000
250,000
The following are exercisable 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
The following options are exercisable at 45 cents each on or before 29 May 2008
GR Meates & Associates Pty Ltd
S Allison
•
•
• M & K Sutherland
•
G Morgan
• M Morgan
•
•
•
•
Smiff Pty Ltd
Locksley Holdings Pty Ltd
D Meates
D Moyses
250,000
150,000
150,000
50,000
25,000
150,000
100,000
50,000
50,000
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 30th day of March 2006
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I N C O M E S T A T E M E N T
For The Year Ended 31 December 2005
Note
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
Revenue from continuing operations
Rent received
Gold sales
Silver sales
Revenue from sale of assets
Revenue from sale of shares
Interest received or due and receivable
from other corporations
Other revenue
Expenses from continuing operations
Rent
Filing fees
Annual reports
Directors' consulting
Consulting, administration and secretarial
Public relations
Travel & entertainment
Insurances
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
Deconsolidation of subsidiary
Loss before income tax
Income tax attributable
Loss for the year
Loss attributable to minority interests
Loss attributable to members of
Alkane Exploration Ltd
Accumulated losses at beginning of financial year
Accumulated losses at end of financial year
3
16
25,088
551,872
-
182,082
2,659
132,117
86,121
979,939
(40,901)
(26,230)
(31,959)
(229,200)
(182,315)
(70,013)
(231,868)
(40,391)
(40,000)
-
(55,857)
(180,436)
(29,700)
(5,000)
14,368
-
(1,025,312)
(310,000)
(355,059)
71,887
15,575
(2,752,411)
(1,772,472)
-
(1,772,472)
75
12,245
1,187,331
679
28,909
903,675
170,212
49,325
2,352,376
(46,287)
(35,160)
(30,811)
(247,600)
(169,200)
(79,426)
(324,568)
(38,694)
(40,000)
-
(84,591)
(63,408)
(25,000)
(5,764)
39,765
(960,705)
(1,796,615)
(68,909)
(306,720)
171,948
-
(4,111,745)
(1,759,369)
-
(1,759,369)
556
25,088
551,872
-
182,082
2,659
128,273
86,121
976,095
(40,901)
(16,055)
(31,959)
(229,200)
(140,315)
(70,013)
(231,658)
(40,391)
(40,000)
(38,808)
(55,857)
(177,425)
(29,700)
(3,000)
15,564
-
(1,025,312)
(310,000)
(301,369)
71,887
-
(2,694,512)
(1,718,417)
-
(1,718,417)
-
12,245
1,187,331
679
5,455
903,675
164,335
46,064
2,319,784
(41,297)
(17,392)
(30,811)
(222,600)
(84,000)
(79,426)
(322,814)
(38,420)
(40,000)
(399,877)
(84,591)
(99,639)
(25,000)
(3,400)
(16,100)
(960,705)
(1,796,615)
(10,909)
(281,524)
171,948
-
(4,383,172)
(2,063,388)
-
(2,063,388)
-
(1,772,397)
(19,945,305)
(21,717,702)
(1,758,813)
(18,186,492)
(19,945,305)
(1,718,417)
(19,886,790)
(21,605,207)
(2,063,388)
(17,823,402)
(19,886,790)
Earnings per share for loss attributable to the
ordinary equity holders of the Company:
20
($0.01)
($0.01)
($0.01)
($0.01)
The above income statement should be read in conjunction with the accompanying notes.
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As At 31 December 2005
25
Current Assets
Cash and cash equivalent
Receivables
Available for sale financial assets
Other financial assets
Total Current Assets
Non-Current Assets
Held-to-Maturity Investments
Property, Plant & Equipment
Other
Total Non-Current Assets
Total Assets
Current Liabilities
Payables
Provisions
Total Current Liabilities
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Accumulated losses
Note
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
17
4
5
6
7
8
9
10
11
11
12
2,773,734
226,353
4,350
747,050
3,751,487
556,453
345,861
91,267
1,137,775
2,131,356
-
761,447
15,970,761
16,732,208
20,483,695
-
995,647
14,421,330
15,416,977
17,548,333
2,765,926
201,243
4,350
645,675
3,617,194
7,899,669
656,649
8,255,599
16,811,917
20,429,111
544,142
266,207
91,267
1,040,222
1,941,838
8,058,550
675,800
6,788,246
15,522,596
17,464,434
603,316
30,488
633,804
429,270
365,098
794,368
554,025
30,488
584,513
404,719
365,098
769,817
184,977
184,977
818,781
19,664,914
187,874
187,874
982,242
16,566,091
184,977
184,977
769,490
19,659,621
187,874
187,874
957,691
16,506,743
41,264,828
(21,717,702)
36,393,533
(19,945,305)
41,264,828
(21,605,207)
36,393,533
(19,886,790)
Total parent entity interest
Outside equity interests in controlled entities
Total Equity
19,547,126
117,788
19,664,914
16,448,228
117,863
16,566,091
19,659,621
-
19,659,621
16,506,743
-
16,506,743
The above balance sheet should be read in conjunction with the accompanying notes.
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S T A T E M E N T O F C H A N G E S I N E Q U I T Y
For the year ended 31 December 2005
Note
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
Total equity at the beginning of the financial year
16,566,091
17,925,397
16,506,743
18,170,068
Loss for the year
Total recognised income and expense for the year
(1,772,472)
(1,772,472)
(1,759,369)
(1,759,369)
(1,718,417)
(1,718,417)
(2,063,388)
(2,063,388)
Transactions with equity holders
in their capacity as equity holders:
Options exercised
Share placement (net of costs)
Total equity at the end of the financial year
Total recognised income and expense
for the year is attributable to:
Members of Alkane Exploration Ltd
Minority interests
8,003
4,863,292
4,871,295
19,664,914
63
400,000
400,063
16,566,091
8,003
4,863,292
4,871,295
19,659,621
63
400,000
400,063
16,506,743
(1,772,397)
(75)
(1,772,472)
(1,758,813)
(556)
(1,759,369)
(1,718,417)
-
(1,718,417)
(2,063,388)
-
(2,063,388)
The above statement of changes in equity should be read in conjunction with the accompanying notes.
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C A S H F L O W S T A T E M E N T
For The Year Ended 31 December 2005
27
Cash Flows from Operating Activities
Rent received
Proceeds from gold & silver sales
Payments to suppliers
(inclusive of goods and services tax)
Other income
Interest received
Goods and services tax receipts
Net cash from operating activities
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
Proceeds from sale of investments
Loss of cash from deconsolidation
Proceeds from security deposits
Mine site rehabilitation expenditure
Exploration expenditure
Net cash provided for investing activities
Cash Flows from Financing Activities
Proceeds from issue of shares and options
Cost of share issues
Net cash flow from financing activities
Net increase (decrease) in cash
and cash equivalents
Cash and cash equivalents
at the beginning of the financial year
Cash and cash equivalents
at the end of the financial year
Note
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
18
25,088
596,652
12,245
1,188,010
25,088
596,652
12,245
1,188,010
(2,309,180)
321,464
132,117
120,923
(1,112,936)
10,000
(23,203)
161,464
-
-
150,000
(571)
390,723
(325,000)
(1,904,491)
(1,541,078)
5,116,463
(245,168)
4,871,295
(2,619,570)
47,123
170,240
327,555
(874,397)
28,910
(100,269)
953,024
(105,355)
-
-
-
-
-
(2,911,727)
(2,135,417)
(2,324,733)
321,464
128,273
114,586
(1,138,670)
10,000
(3,203)
161,464
-
(129,926)
150,000
-
394,547
(325,000)
(1,768,723)
(1,510,841)
(2,384,435)
43,862
164,336
309,937
(666,045)
5,455
(80,269)
903,675
(105,355)
(403,341)
-
-
-
-
(2,660,746)
(2,340,581)
63
-
63
5,116,463
(245,168)
4,871,295
63
-
63
2,217,281
(3,009,751)
2,221,784
(3,006,563)
556,453
3,566,204
544,142
3,550,705
17
2,773,734
556,453
2,765,926
544,142
The above cash flow statements should be read in conjunction with the accompanying notes.
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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 2005
1 . S TAT E M E N T O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S
The principal accounting policies adopted in the preparation of the financial report are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated. The financial report includes
separate financial statements for Alkane Exploration Ltd as an individual entity and the consolidated entity consisting of Alkane
Exploration Ltd and its subsidiaries (“the Company”).
a)
Basis of preparation
This general purpose financial report has been prepared in accordance with Australian equivalents to International Financial
Reporting Standards (AIFRSs), other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues
Group Interpretations and the Corporations Act 2001.
Compliance with IFRSs
Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (IFRSs).
Compliance with AIFRSs ensure that the consolidated financial statements and notes of Alkane Exploration Ltd comply with
IFRSs.
Application of AASB1 First time Adoption of Australian Equivalents to International Financial Reporting Standards
These financial statements are the first Alkane Exploration Ltd financial statements to be prepared in accordance with AIFRSs.
AASB1 First time Adoption of Australian Equivalents to International Financial Reporting Standards has been applied in
preparing these financial statements.
Financial statements of the Company until 31 December 2004 had been prepared in accordance with previous Australian
Generally Accepted Accounting Principles (‘AGAAP’). AGAAP differs in certain respects from AIFRS. When preparing the
Company’s financial statements, management has amended certain accounting, valuation and consolidation methods applied in
the AGAAP financial statements to comply with AIFRS. The comparative figures in respect of 2004 were restated to reflect these
adjustments. The Company has taken the exemption available under AASB 1 to apply AASB 2 Share-based Payments from
1 January 2006 (refer note 1 (l)).
Reconciliations and descriptions of the effect of transition from previous AGAAP to AIFRS on the Company’s equity and its net
income are given at note 24.
Historical cost convention
These financial statements have been prepared under the historical cost convention.
b)
Consolidation
The consolidated accounts incorporate the assets and liabilities of all entities controlled by Alkane Exploration Ltd ("the
Company") as at 31 December 2005 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 Group or the consolidated entity.
The effects of all intercompany transactions, balances and unrealised gains on transactions between entities in the Group 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 exists.
c)
Income Tax
The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the national
income tax rate, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between tax
bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
A deferred tax asset for unused tax losses is recognised only if it is probable that future taxable amounts will be available to
utilise losses.
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d)
Investments and other financial assets
From 1 January 2004 to 31 December 2004
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.
From 1 January 2005
The Group classifies its investments in the following categories: financial assets at fair value through profit and loss, loan and
receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for
which the investments were acquired. Management determines the classification of its investments at initial recognition and
re-evaluates this designation at each reporting date.
e)
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid
investments with original maturities of three months or less that are readily convertible to known amounts of cash and which
are subject to an insignificant risk of changes in value.
f)
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.
g)
Joint ventures
The consolidated 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.
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)
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 carried forward carrying value is considered to be in excess of (i) above, the value
of the area of interest is written down or provided against.
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1.
j)
STATEMENT OF ACCOUNTING POLICIES (Continued)
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.
k)
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.
l)
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.
The Company has not applied AASB 2 to existing options as AASB 1 (25B) allows relief from its application for first time
adoption of AIFRS.
m) 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. 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.
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2 . S H A R E - B A S E D PAY M E N T S
(a) Employee options granted
Employees and contractors received options approved by shareholders at the 2002 and 2003 annual general meetings. Those
eligible to participate were employees and contractors who had substantial input into the Group’s operations.
Options were granted for no consideration as a one off incentive bonus. The options carry no dividend or voting rights and are
exercisable at any time prior to expiry. When exercised, each option is convertible into one ordinary share.
For the options granted on 10 June 2002; the exercisable price is 40 cents on or before 24 May 2007. The options are granted
for a five year period.
For the options granted on 30 May 2003; the exercisable price is fixed at 45 cents each on or before 29 May 2008. The options
are granted for a five year period.
Grant Date
Expiry Date
10 June 2002
30 May 2003
Fair value of options granted
24 May 2007
29 May 2008
Balance
at the start
of the year
(Number)
500,000
975,000
Movement
-
-
Balance
at the end
of the Year
(Number)
500,000
975,000
The assessed fair value at the above grant dates was nil cents per option.
The share price at the grant dates were $0.37 and $0.43 respectively. The fair value of the above options is estimated to be $nil,
at conversion to AIFRS and at 31 December 2005, as the share price is below the options exercise price and it is believed that a
knowledgeable, willing market participant would set this price.
Accordingly, no liability or expense will be recognised until the options are exercised or are estimated to have a positive value.
(b) Expenses arising from share-based payment transactions
Options issued
CONSOLIDATED
PARENT ENTITY
2005
$
-
2004
$
-
2005
$
-
2004
$
-
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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 C o n t i n u e d
3 .
a)
b)
I N C O M E TA X E X P E N S E
Income tax expense
Current tax
Deferred tax
Tax losses
Unused tax losses for which no deferred
tax asset has been recognised:
Operating loss
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
-
-
-
-
-
-
-
-
(1,772,472)
(1,759,369)
(1,718,417)
(2,063,388)
Potential tax benefit at 30%
Add tax effect of permanent differences:
Tax losses not brought to account as deferred tax asset
Income tax attributable to operating profit (loss)
(531,741)
(527,810)
(515,525)
(619,016)
531,741
-
527,810
-
515,525
-
619,016
-
c) Deferred tax asset.
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% 2004)
8,970,256
8,438,515
9,010,773
8,495,248
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.
4 . R E C E I V A B L E S ( C U R R E N T )
Debtors including GST refunds
266,353
345,861
201,243
266,207
5 . AV A I L A B L E F O R S A L E F I N A N C I A L A S S E T S ( C U R R E N T )
Quoted Shares - At fair value
Opening balance at 1 January 2005
Disposals
Net gain (loss) from fair value adjustment
Closing balance at 31 December 2005
91,267
(89,577)
2,660
4,350
857,663
(709,357)
(57,039)
91,267
91,267
(89,577)
2,660
4,350
857,663
(709,357)
(57,039)
91,267
The Company has taken the exemption available under AASB 1 to apply AASB 132 Financial Instruments: Disclosure and
Presentation and AASB 139 Financial Instruments: Recognition and Measurement from 1 January 2005 both for the
consolidated and parent entities:
•
equity securities and interest bearing financial instruments with a carrying value of $1,229,042 were classified in the
balance sheet under previous AGAAP (at 31 December 2004) as Investments, were designated and re-classified as Available
for sale financial assets $91,267 and Other financial assets $1,137,775.
For more information refer Note 1 (d).
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6 . OT H E R F I N A N C I A L A S S E T S ( C U R R E N T )
Interest bearing deposits
Interest bearing security deposits (not available for use)
Deposits bear fixed interest at the rate of 4.9% (2004 4.89%)
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
67,070
679,980
747,050
-
1,137,775
1,137,775
67,070
578,605
645,675
-
1,040,222
1,040,222
* 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.
7 . H E L D - TO - M AT U R I T Y I N V E S T M E N T S ( N O N - C U R R E N T )
Shares in controlled entities - carried at cost (Note 16)
Opening balance at 1 January 2005
Disposal ( sale of Ventron Enterprises Ltd)
Closing balance at 31 December 2005
Loans to subsidiaries
At fair value
Opening balance at 1 January 2005
Addition
Net gain (loss) from fair value adjustment
Closing balance at 31 December 2005
8 . 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
Less: Accumulated depreciation
Reconciliation of carrying amount
Opening balance at 1 January 2005
Plant & equipment acquired during year
Disposals
Depreciation during year
Closing balance at 31 December 2005
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,115,565
(250,000)
5,865,565
6,115,565
-
6,115,565
1,942,985
93,981
(2,862)
2,034,104
7,899,669
1,808,544
534,318
(399,877)
1,942,985
8,058,550
926,452
(165,005)
761,447
995,647
23,235
(233,853)
(23,582)
761,447
1,175,019
(179,372)
995,647
924,523
100,269
(68,910)
39,765
995,647
794,508
(137,859)
656,649
675,800
3,235
-
(22,386)
656,649
829,223
(153,423)
675,800
622,541
80,269
(10,910)
(16,100)
675,800
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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 C o n t i n u e d
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
9 . OT H E R ( N O N - C U R R E N T )
Exploration and Development Expenditure
At fair value
Peak Hill Mine development
At fair value
Peak Hill Project acquisition and exploration
Opening balance at 1 January 2005
Addition
Net gain (loss) from fair value adjustment
Closing balance at 31 December 2005
At fair value
Accumulated contributions to other ongoing exploration projects
Opening balance at 1 January 2005
Addition
Net gain (loss) from fair value adjustment
Closing balance at 31 December 2005
1
1
1
1
2,630,848
17,481
(17,480)
2,630,849
2,630,848
11,406
(11,406)
2,630,848
500,000
17,480
(17,480)
500,000
500,000
11,406
(11,406)
500,000
11,790,481
1,508,981
40,449
13,339,911
15,970,761
8,785,472
2,819,496
185,513
11,790,481
14,421,330
6,288,245
1,427,041
40,312
7,755,598
8,255,599
3,639,999
2,443,842
204,404
6,288,245
6,788,246
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.
10 . PAYA B L E S ( C U R R E N T L I A B I L I T I E S )
Trade creditors
603,316
429,270
554,025
404,719
11 . P R O V I S I O N S ( C U R R E N T L I A B I L I T I E S )
Provision for annual leave
Provision for rehabilitation
30,488
-
30,488
40,098
325,000
365,098
30,488
-
30,488
40,098
325,000
365,098
Provision for rehabilitation is made to satisfy mine site and exploration rehabilitation expenditure requirements of the various
Mines Departments in Australia.
Provision for rehabilitation
Opening balance at 1 January 2005
Used amounts reversed
Closing balance at 31 December 2005
325,000
(325,000)
-
325,000
-
325,000
325,000
(325,000)
-
325,000
-
325,000
P R O V I S I O N S ( N O N - C U R R E N T L I A B I L I T I E S )
Provision for redundancy/long service leave
184,977
187,874
184,977
187,874
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PARENT ENTITY
2005
2004
Number
$
Number
$
138,151,857
-
-
27,824,777
22,867
165,999,501
-
165,999,501
36,647,414
-
-
5,108,460
8,003
41,763,877
(499,049)
41,264,828
136,151,678
-
2,000,000
-
179
138,151,857
-
138,151,857
36,247,351
-
400,000
-
63
36,647,414
(253,881)
36,393,533
1 2 . 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
As per Balance Sheet
In 2004, 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
Expired during the year
Balance as at 31 December 2005
Options - Unlisted
Exercisable at 35 cents expiring 31 May 2005
Balance at beginning of year
Expired during the year
Balance as at 31 December 2005
Exercisable at 40 cents expiring 24 May 2007
Issued during year
Balance 31 December 2005
Exercisable 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 2005
Exercisable at 45 cents each expiring 29 May 2008
Issued during year
Balance 31 December 2005
9,790,425
(22,867)
(9,767,558)
-
3,000,000
(3,000,000)
-
-
500,000
-
4,750,000
-
975,000
-
-
-
-
-
-
-
-
-
-
-
-
-
9,790,604
(179)
-
9,790,425
-
-
3,000,000
-
500,000
-
4,750,000
-
975,000
-
-
-
-
-
-
-
-
-
-
-
-
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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 C o n t i n u e d
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
1 3 . R E M U N E R AT I O N O F D I R E C TO R S
Total income received, or due and receivable by the directors
978,787
1,014,481
866,394
887,852
Name
Service provided
Amount of fees
Options held
Exercise conditions
I R Cornelius
H D Kennedy
A D Lethlean
Chairman, consulting fees
Director, directors fees
Director, consulting fees
150,000
40,000
79,200
1,000,000
1,000,000
250,000
750,000
50c- 24 May 2006
50c - 24 May 2006
40c - 24 May 2007
50c - 24 May 2006
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
169,200
1,000,000
50c - 24 May 2006
540,387
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 (disposed 19 September 2005)
L Thomas
Executives
Other than the executive chairman, there were no executive officers during the year.
Share options
No options were issued to directors during the financial year.
1 4 . 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 5 . R E L AT E D PA R T Y T R A N S A C T I O N S
DIRECTORS
Type of transaction
Management consulting
Management consulting
Geological consulting,
including geological and
technical support staff
Financial, administration,
accounting and Company
Secretarial services
and staff
Consulting
Directors' fees
CONSOLIDATED
PARENT ENTITY
Related party
- directors
Terms and conditions
2005
$
I R Cornelius
D I Chalmers
Normal commercial
Normal commercial
150,000
-
2004
$
150,000
25,000
2005
$
150,000
-
2004
$
150,000
-
D I Chalmers
Normal commercial
540,387
557,681
476,994
498,052
L A Colless
A D Lethlean
H D Kennedy
Normal commercial
Normal commercial
Normal commercial
169,200
79,200
40,000
169,200
72,600
40,000
127,200
79,200
40,000
127,200
72,600
40,000
Director’s 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
2005
2004
-
-
-
-
-
-
Aggregate number of Director’s share options in Alkane Exploration Ltd and their director-related entities expired during the year :-
Options over ordinary shares
Exercisable at 35 cents expired 31 March 2005
Exercisable at 35 cents expired 31 May 2005
2005
2004
91,878
3,000,000
3,091,878
-
-
-
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
2005
2004
13,813,978
5,000,000
13,142,300
8,091,878
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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 C o n t i n u e d
1 6 . C O N T R O L L E D E N T I T I E S
Name
Inc
Class
BOOK VALUE
2005
$
2004
$
EQUITY
2005
%
2004
%
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
-
1
2,300,000
250,000
1
2,300,000
NSW Ord
NSW Ord
-
3,558,700
-
3,558,700
Qld
Ord
6,864
5,865,565
6,864
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
6,643,203
(4,609,099)
7,899,669
6,549,222
(4,606,237)
8,058,550
* Ventron Enterprises Ltd was disposed of on 19 September 2005
CONTRIBUTION TO GROUP
2005
$
15,575
(26,952)
(7,481)
(52,767)
(20,951)
2004
$
(7,096)
(49,365)
(8,002)
(168)
(29,087)
-
100
100
100
100
100
100
100
100
100
74
74
(212)
(1,584)
(92,788)
(1,679,609)
(1,772,397)
(95,302)
(1,663,511)
(1,758,813)
1 7 . R E C O N C I L I AT I O N O F C A S H
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
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
2,773,733
-
2,773,733
556,453
-
556,453
2,765,926
-
2,765,926
544,142
-
544,142
Cash at bank bears a floating interest rate of 4.15% (2004 3.96%)
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CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
1 8 . 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 L O W
F R O M O P E R AT I N G A C T I V I T I E S TO O P E R AT I N G
L O S S A F T E R I N C O M E TA X
Operating Profit (Loss)
Write down in value of tenements in subsidiaries
Non-cash fair value adjustments
Exploration
(Profit)Loss on share trading
Loss on sale of assets
Changes in net current assets and liabilities
Net cash provided for operating activities
(1,772,472)
-
(114,337)
355,060
(2,659)
127,918
293,554
(1,112,936)
(1,759,369)
-
(201,491)
306,720
57,030
39,999
682,714
(874,397)
(1,718,417)
38,808
(99,958)
301,369
(2,659)
127,918
214,269
(1,138,670)
(2,063,388)
399,877
(145,626)
281,524
57,030
5,454
799,084
(666,045)
The Company has no credit standby or financing facilities in place other than disclosed on the statement of financial position.
1 9 . S U B S E Q U E N T E V E N T S
No matter or circumstance has arisen since 31 December 2005 that has 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 2005.
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
2 0 . 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)
(0.01)
(0.01)
(0.01)
The weighted average number of ordinary shares
on issue used in the calculation of basic earnings per share
151,986,034
136,195,640
151,986,034
136,195,640
The diluted earnings per share is not materially different from the basic earnings per share.
2005
Number
2004
Number
2005
Number
2004
Number
21 . 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
In order to maintain current rights of tenure to mining tenements, the Company will be required to outlay in 2006 amounts of
approximately $1,256,000 (2005 $1,117,000) 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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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 C o n t i n u e d
2 2 . F I N A N C I A L R I S K M A N A G E M E N T
The Company’s activities expose it to a variety of financial risks; credit risk and cash flow interest rate risk.
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.
Cash flow and fair value interest rate risk
Although the Company has significant interest bearing assets, the Company’s income and operating cash flows are substantially
independent of changes in market interest rates. The Company monitors interest rates to obtain the best terms and mix of cash
flow.
2 3 . A U D I TO R S ’ R E M U N E R AT I O N
CONSOLIDATED
PARENT ENTITY
2005
$
2004
$
2005
$
2004
$
Amount received or due and receivable by the auditor for:
a) Audit services
Current year audit of financial statements
29,700
25,000
29,700
25,000
b) Other services
Income tax return preparation
Total remuneration of auditors
5,000
34,700
5,764
30,764
3,000
32,700
3,400
28,400
The Company has received notification from the Company's auditor that he satisfies the independence criterion and that there
have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of
professional conduct in relation to the audit. The Company is satisfied that the non-audit services provided is compatible with
the general standard of independence for auditors imposed by the Corporations Act 2001.
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2 4 . E X P L A N AT I O N O F T R A N S I T I O N TO A U S T R A L I A N E Q U I V A L E N T S TO I F R S s
(1) Reconciliation of equity reported under previous Australian Generally Accepted Accounting Principles (AGAAP) to equity
under Australian equivalents to IFRSs (AIFRS)
(a) At the date of transition to AIFRS: 1 January 2004
Total equity under AGAAP
Adjustments for effect of transition to AIFRSs
Total equity under AIFRS
1 January 2004
$
17,925,397
-
17,925,397
(b) At the end of the last reporting period under previous AGAAP: 31 December 2004
Total equity under AGAAP
Adjustments for effect of transition to AIFRSs
Total equity under AIFRS
(2) Reconciliation of loss reported under previous AGAAP to loss AIFRS
Reconciliation of loss for the year ended 31 December 2004
Net loss as reported under AGAAP
Adjustments for effect of transition to AIFRSs
Net loss under AIFRS
31 December 2004
$
16,566,091
-
16,566,091
31 December 2004
$
(1,759,369)
-
(1,759,369)
(3) Reconciliation of cash flow statement for the year ended 31 December 2005
The adoption of AIFRS has not resulted in any material adjustment to the cash flow statement.
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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 24 to 41:
a)
b)
comply with Accounting Standards, the Corporations Regulations 2001 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 2005 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.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of
the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
L A Colless
Director
Perth, 30th March 2006
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To the Members of Alkane Exploration Ltd
43
S C O P E
We have audited the financial report of Alkane Exploration Ltd (the Company) for the financial year ended 31 December 2005
as set out on pages 24 to 42. 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.
A U D I T A P P R O A C 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.
A U 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 2005 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, 30 March 2006
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I N T R O D U C T I O N
Alkane Exploration Ltd ("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 :
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Corporate Governance Disclosures and explanations;
Statement of Board and Management Functions (Board Charter);
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 Selection, Appointment and Rotation of External Auditor;
Summary of Compliance Procedures for ASX Listing Rule Disclosure;
Shareholder Communication Strategy;
Summary of Company's Risk Management Policy and Internal Compliance and Control System;
Remuneration Committee Charter; and
Corporate Code of Conduct.
C O M P L I A N C E W I T H P R I N C I P L E S O F G O O D C O R P O R AT E G O V E R N A N C E A N D B E S T P R A C T I C E
R E C O M M E N D AT I O N S
The Company, during the financial year ended 31 December 2005 (the Reporting Period), has continued to follow the ASX Corporate
Governance Council Principles of Good Corporate Governance and Best Practice Recommendations (ASX Principles and
Recommendations).
1. Management and oversight
The Board has adopted a charter setting out the purpose and role of the Board, its responsibilities and powers and the way in which
the Board functions.
Formal letters of engagement setting out key terms and conditions of appointment are in place for non executive directors.
Executive directors are employed pursuant to service agreements including a formal job description.
2. Board structure
The Board comprises five directors. 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.
Two of the five directors are considered to be independent. The Board has determined that, given the size and nature of the
Company, a majority of independent directors is not necessarily appropriate.
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. Mr Lethlean has been appointed as a lead independent director.
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In accordance with the Constitution of the Company, all directors must retire from office no later than the third annual general
meeting following their last election and one third of the directors are to retire from office at each annual general meeting.
Where eligible, a director may stand for re-election.
During the Reporting Period the directors were:
• Mr Ian Raymond (Inky) Cornelius, Executive Chairman, was appointed to the Board on 10 June 1986.
• Mr David Ian (Ian) Chalmers, Technical Director, was appointed to the Board on 10 June 1986.
• Mr Lindsay Arthur Colless, Finance Director, was appointed to the Board on 1 August 1986.
• Mr Henry David Kennedy, independent non executive director, was appointed to the Board on 28 July 2000.
• Mr Anthony Dean Lethlean, independent non executive director, was appointed to the Board on 30 May 2002
Profiles of the directors are set out in the Directors’ Report.
If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his office as
a director then, provided the director first obtains approval for incurring such expense from the Chairman, the Company will pay the
reasonable expenses associated with obtaining such advise.
The full Board comprises the nomination committee which operates in accordance with the nomination committee charter. There
was one formal meeting of the Board as the nomination committee during the Reporting Period and the Board is mindful of
nomination issues on an ongoing basis.
3. Responsible decision making
The Board has adopted a code of conduct for directors and executives. The Board has also adopted a policy on trading in the
Company’s securities by directors, officers and employees of the Company.
4. Integrity of financial reporting
The Board has established a structure to independently verify and safeguard the integrity of the company’s financial reporting and
to ensure the independence and competence of the Company’s external auditor.
The Board requires the Executive Chairman and the Chief Financial Officer to state in writing that the Company’s financial reports
present a true and fair view, in all material respects, of the Company’s financial condition and operational results and are in
accordance with relevant accounting standards; that this opinion is founded on a sound system of risk management and internal
compliance and control which implements the policies adopted by the Board; and that the Company’s risk management and internal
compliance and control system is operating efficiently and effectively in all material respects.
The Board has established an audit committee which operates under a formal charter. 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, although not meeting the recommended size of at least three members, to be 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.
Mr Lethlean, the lead independent director, is chairman of the audit committee. The audit committee reviews the Company’s
financial reporting systems on an ongoing basis and has formalised its findings on two occasions during the Reporting Period.
5. Timely and balanced disclosure
The Board is committed to complying with the continuous disclosure obligations of the Corporations Act 2001 and the listing rules
of Australian Stock Exchange Limited. The Board has established a policy and procedures for compliance with these requirements.
6. Shareholder rights
The Board has established arrangements for communication and participation of shareholders.
The Company maintains an up to date website comprising corporate information, synopses of the Company’s projects, periodic
reports and announcements. Hard copies of publicly released documents are available from the Company on request.
Shareholders are given a reasonable opportunity to ask questions of the Board at general meetings. The external auditor is invited to
such meetings to answer questions from shareholders on matters relating to the audit of the Company’s financial statements.
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7. Risk management
The Board has adopted an internal control framework and a risk management policy designed to ensure operational, legal and
financial risks are identified, assessed, addressed and monitored. As stated previously, the Executive Chairman and the Chief Financial
Officer are required to provide a statement that the Company’s risk management and internal compliance and control system is
operating efficiently and effectively in all material respects (see item 4 above).
The Company has received advice that the Technical Director’s ability to recommend to the Board exploration programs to be carried
out by Multi Metal Consultants Pty Ltd may put him in a position of conflict. The Directors do not consider this to have caused any
inefficiency of the Company’s risk management in the past and are considering procedures to eliminate any perceived conflicts in
the future.
8. Enhancement of performance
During the Reporting Period an evaluation of the Board and its members was carried out. 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.
9. Remuneration
The Board’s remuneration policy is set out in the Remuneration Report section of the Directors’ Report.
The remuneration committee comprises the full Board. During the Reporting Period the Board met once to consider remuneration
matters. All members of the committee attended the meeting. No director participated in any deliberation regarding his own
remuneration or related issues.
There are no termination or retirement benefits for non-executive directors.
10. Stakeholder interests.
The Board has adopted a corporate code of conduct setting out the standard which the Board, management and employees of the
Company are encouraged to comply with when dealing with each other, shareholders and the broader community.
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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
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1 . S H A R E H O L D I N G AT 3 0 M A R C H 2 0 0 6 - A L K
(a) Distribution of Shareholders
Share holding
1,000
1 -
5,000
1,001 -
5,001 - 10,000
10,001 -100,000
100,001 - over
(b) Unmarketable Parcels
There are 2,570 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
2 .
TO P T W E N T Y S H A R E H O L D E R S AT 3 0 M A R C H 2 0 0 6
Shareholder
ANZ Nominees Limited
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