A N N U A L R E P O R T 2 0 0 8
C o n t e n t s
Company Information
Chairman’s Report
Review of Operations
Directors’ Report
Income Statement
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Corporate Governance
Shareholder Information
Tenement Schedule
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C o m p a n y
I n f o r m a t i o n
ACN 000 689 216
ABN 35 000 689 216
DIRECTORS
SECRETARY
REGISTERED OFFICE
TECHNICAL OFFICE
J S F Dunlop
D I Chalmers
I R Cornelius
I J Gandel
A D Lethlean
L A Colless
K E Brown
129 Edward Street
PERTH WA 6000
Tel: 61 8 9227 5677
Fax: 61 8 9227 8178
96 Parry Street
Perth WA 6000
Tel: 61 8 9328 9411
Fax: 61 8 9227 6011
SHARE REGISTRY
AUDITORS
Advanced Share Registry Services
150 Stirling Highway
NEDLANDS WA 6009
Tel: 61 8 9389 8033
Fax: 61 8 9389 7871
Rothsay
Chartered Accountants
Level 18, Norwich House
6 O’Connell Street
SYDNEY NSW 2000
STOCK EXCHANGE
ASX Limited
HOME EXCHANGE
Perth
ASX CODE
ALK
INTERNET
Internet Home Page:
http://www.alkane.com.au
E-mail address: mail@alkane.com.au
1
This financial report covers both Alkane Resources Ltd as an individual
entity and the consolidated entity consisting of Alkane Resources Ltd
and its subsidiaries. The financial report is presented in the Australian
currency.
C h a i r m a n ’ s R e p o r t
Alkane has continued the advancements of 2007 with further significant achievements in 2008. Your company is now well positioned to get the Company back
into gold production and cash flow, and to progress the Dubbo Zirconia Project (DZP), our world class rare metal and rare earth resource.
The development of the Tomingley Gold Project (TGP), which is centred about 14 kilometres north of the Company’s Peak Hill Gold Mine, has progressed
following the discovery of the Caloma resource addition in 2007. We now expect the DFS to be completed later in calendar 2009 and for a formal go-ahead
announcement to be made soon thereafter.
It is now clear that the additional resources provided by the Caloma deposit will enable the project to proceed at a 0.75 to 1 Mtpa throughput rate and to operate
for at least the first five years based on open pit feed alone. Infrastructural requirements, such as land acquisition, power and water are all progressing well and
we expect no impediments to completing all necessary project approvals in 2009.
Mintrex (the consulting division of Perth engineering group, Holtfreters Pty Ltd) were appointed the DFS managers in October 2007 and they have been co-
ordinating all the aspects of the feasibility study. The recently completed metallurgical program has returned some very encouraging results with plus 90% gold
recovery from all deposits and an exceptional plus 50% recovery of gold in a gravity circuit. These results should reflect in lower operating costs for a standard
CIL gold recovery circuit to produce an average of 50,000 to 70,000 ounces of gold per year for a minimum of five years. At current spot A$ gold prices, the
lower production should be capable of generating cash flows of at least $20 million a year.
The DZP has also made substantial progress during the year. Construction of the Demonstration Pilot Plant (DPP) at ANSTO Minerals was completed early in
2008 and during the year a series of process rectification and de-bottlenecking culminated in a series of processing campaigns which produced both Zirconium
and Niobium concentrates for despatch to potential customers.
As mentioned last year, the DPP is designed to test the complete flowsheet, providing process and engineering data, but most importantly, to produce several
tonnes of the various products for distribution to potential end users. The aim is to underpin the marketing section of the feasibility study with letters of intent from
customers, at a minimum. The data generated by the DPP will be used to update the existing feasibility model which we hope to have completed in 2009.
Another significant opportunity presented by the DZP commenced during the year and will be advanced in 2009 – namely the finalisation of the light and heavy
rare earth recovery circuits.
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While the demand and pricing for some products flattened at the end of
the year as the recessionary influence in the world impacted, long term all
products will be subject to increasing demand as the stringent environmental
conditions are applied to many industries. Using the base case conceptual
development of a 200,000tpa ore processing and simple product range
of intermediate zirconium chemicals, a niobium-tantalum concentrate, a
light rare earth concentrate and yttrium-heavy rare earth concentrate, the
Project’s consultants estimated in 2007 that revenue for the Project would
be around US$42.5 million. The revenue would be closer to US$50 million
if current prices were achieved.
Whilst the TGP and DZP will continue to be the cornerstone of Alkane,
the very exciting McPhillamys discovery, first drilled in August 2006 has
progressed to the stage where joint venture partner Newmont Australia, is
getting close to its initial $5 million expenditure to earn its 51% interest in
the project and has assumed operatorship of the joint venture, as expected.
Newmont can go to 75% by carrying all expenditures through to completion
of a feasibility study.
Newmont’s proposals for the 2009 program have not been finalised for
McPhillamys but we believe that the prospect has now established a status
of major significance to the JV and will be the subject of a major drilling
program aimed at producing a maiden resource in 2009.
The Company also retains its 9 million shares (~15%) in BC Iron Limited
and feel the potential for mineable channel iron deposits at Nullagine
remains high. Since we last reported on the company’s progress, a resource
has been outlined, discussions with Fortescue based on sharing their rail
link and port facilities have commenced, and an offtake arrangement has
been completed with a Sydney based trading house. BC Iron expects to
make its first iron ore shipment at a rate of 1 Mtpa minimum in early 2010.
Alkane can be justifiably proud that its spin out has shown success in such
a short period, and we congratulate the BCI management both for its energy
and excellent progress.
Finally, I would like to thank my fellow directors, our consultants and
exploration team for their continued efforts during the year.
John S F Dunlop
Chairman
3
R e v i e w o f O p e r a t i o n s
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TOMINGLEY GOLD PROJECT
Gold – New South Wales
Alkane Resources 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 100 kilometres from near Parkes in the south, to the west of Narromine in the north within the Central
West of New South Wales and covers a narrow sequence of Ordovician volcanic rocks. Exploration during the year was focussed on the recent
discovery at Caloma, which is centred about 500 metres east of the defined resources at the Wyoming One and Wyoming Three deposits. These
deposits are 12 kilometres north of the Company’s Peak Hill Gold Mine.
The major reverse circulation (RC) and diamond core resource definition drilling program was completed at Caloma mid year with a total of 186 RC
holes (22,034 metres) drilled. The program focussed on a 400 metre long central section of the 1,000 metre north-south trending Wyoming style
feldspar porphyry host which is located at the contact of pelitic sediments in the west and an andesitic volcanic and volcaniclastic sequence to the
east.
The RC program was completed on a 20 metre by 20 metre pattern to ensure the definition of Measured and Indicated Resources to a depth of about
150 metres. Gold mineralisation is known to extend further to the north and south within the porphyry host but it was decided to focus on the central
section to compile the resource and open pit mining model as soon as possible to complete a feasibility assessment of the Project.
Multiple mineralised structures have been defined within the main feldspar porphyry host at Caloma, which is 80 to 150 metres in width. As a result
of the drilling a robust geological model has been developed and it is apparent that most of the mineralised structures within the porphyry have an
approximate northerly orientation, with a shallow westerly dip. These structures range in width from a few metres to in excess of 20 metres and appear
to extend across the full width of the porphyry host. Intersecting structures, or structures intersecting lithological contacts, occasionally generate
substantial intercepts.
The drilling had also demonstrated that the mineralised structures project
through the eastern contact of the porphyry into the volcaniclastic
sediments and have expanded the resource potential into that area.
East-west, vertical cross cutting dolerite dykes that postdate the
mineralisation occur at irregular intervals.
The currently defined Caloma mineralisation remains open at depth, and
along strike to the north and south.
Ten core holes totalling 2,571 metres were drilled at Caloma and nine
core holes totalling 3,720 metres were also completed at the Wyoming
One and Wyoming Three deposits. The core drilling was designed
to provide confirmatory geological information, and samples for
metallurgical testing and geotechnical data.
Much of the area is covered by transported and unmineralised clay
sediments and this has impacted on both the exploration techniques
used to locate and define orebodies, and also on development options
and costs. This cover ranges from about 5 to 10 metres at Wyoming
Three and Caloma, to more than 60 metres over Wyoming Two. The
major orebody at Wyoming One averages 25 metres of cover.
Resource Review and Caloma Compilation
The Wyoming One and Wyoming Three deposits were subject to an
independent review and subsequently independent estimates were
made along with a new estimate for the Caloma deposit.
The resource work was completed by Richard Lewis of Lewis Mineral
Resource Consultants Pty Ltd (LMRC). Mr Lewis (MAusIMM) has over
40 years experience in exploration and project development, including
25 years in resource estimation of gold and base metal projects and
mines. Mr Lewis was the Manager of Resource Evaluation for Placer
Dome Asia Pacific Limited from 1987 to 2006 and has more than 5
years experience in resource estimation of similar deposits.
Several different resource modelling
techniques were employed
to generate a number of models and the two extreme cases are
summarised in the table below. The “No top cut – mgeol model” was
the closest to that used by Alkane in 2005 to produce results for the
Wyoming One and Three deposits. Differences in identified resources
were caused by deeper drilling of the deposit at Wyoming One changing
the shape and extent of mineralisation in the main Porphyry and the
nearby Hangingwall ore zones, and differing classification parameters
used for this compilation.
5
R e v i e w o f O p e r a t i o n s
Identified Mineral Resources at the TGP as at 24 March 2009, above a cut off of 0.75g/t gold.
DEPOSIT
No top cut
mgeol model
Wyoming One
Wyoming Three
Caloma
Total
MEASURED
INDICATED
INFERRED
TOTAL
Tonnage
Grade
Tonnage
Grade
Tonnage
Grade
Tonnage
Grade
k Ounces
(t)
2,379,000
670,000
1,842,000
4,891,000
(g/t)
2.52
2.05
2.28
2.37
(t)
878,000
44,000
497,000
1,419,000
(g/t)
3.07
2.02
2.12
2.70
(t)
3,227,000
123,000
1,731,000
5,081,000
(g/t)
2.35
1.64
1.85
2.16
(t)
6,484,000
837,000
4,070,000
11,391,000
(g/t)
2.51
1.99
2.08
2.32
523.2
53.5
271.9
848.6
DEPOSIT
Top cut
MEASURED
INDICATED
INFERRED
Tonnage
Grade
Tonnage
Grade
Tonnage
Grade
Tonnage
2.5x2.5x5.0m model
(t)
Wyoming One
Wyoming Three
Caloma
Total
2,227,000
630,000
1,825,000
4,682,000
(g/t)
2.07
1.87
2.06
2.04
(t)
882,000
58,000
488,000
1,428,000
(g/t)
2.25
1.73
1.88
2.10
(t)
3,478,000
154,000
1,559,000
5,191,000
(g/t)
1.62
1.25
1.52
1.58
(t)
6,587,000
842,000
3,872,000
11,301,000
TOTAL
Grade
(g/t)
1.86
1.75
1.82
1.84
k Ounces
393.2
47.3
226.6
667.0
These Mineral Resources are based upon information compiled by Mr Richard Lewis MAusIMM (Lewis Mineral Resource 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. Richard Lewis consents to the inclusion in the report of the matters based on his information in the form and context
in which it appears. The full details of methodology are given in the attached Notes 1 and 2.
A more conservative model “Top cut 2.5 x 2.5 x 5.0m model” was
estimated to provide the basis for open pit mine planning and ultimately
Reserve definition for economic review of the project. This model
used statistical evaluation to remove high gold grade spikes in the
mineralisation and also a smaller internal block size to approximate to
that required for optimisation of the deposits for mining.
The full details of the Identified Mineral Resource statement are
included as Notes 1 and 2 at the end of this Operations Report.
Definitive Feasibility Study
The DFS was initiated late 2007 and is managed by Mintrex Pty Ltd,
the consulting division of Perth engineering group, Holtfreters Pty Ltd
with input from Alkane personnel and external consultants. The DFS
progressively advanced during the year and many of the infrastructure
issues of site access, power, water being resolved.
While general industry operating 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,
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 at Peak Hill, 16km to the south of the site.
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Water supply will be achieved via a pipeline to be laid from established
sources near Narromine, 40 kilometres. These factors should help
minimise the impact of rising costs.
A detailed metallurgical assessment of the various deposits is nearing
completion and results available were summarised in the ASX release
of 25 March 2009. The program was supervised by Metallurgical
Project Consultants Pty Ltd and used water for testing taken from a bore
site near Narromine (NSW), similar to that planned for the project. The
metallurgical work was carried out on recent composited core samples
which were divided according to specific deposit and oxidation state.
In general, all samples from the deposits, including oxide and fresh
ore, returned plus 90% gold recovery, with average cyanide and lime
consumption. Work indices (for crushing and grinding) are near
average for the oxide samples but above average for fresh ore. Abrasion
Indices are all near average. Gravity gold recoveries were exceptionally
high, particularly from the fresh ore samples, with all giving plus 50%
recovery. This has the potential to deliver positive cost benefits in an
operating treatment plant
In several samples, the calculated head grades were higher than that
returned from the original composite core samples, which combined
with the high gravity recoveries, could indicate that the drilling samples
may have under-called the gold content of the deposits.
Mine planning and scheduling has recently commenced and is designed
to provide the optimum operating size for the project.
The conceptual development options comprise three open pit mines,
Wyoming One, Wyoming Three and Caloma, followed by possible
underground operations. Initial gold production would be through a
conventional Gravity-CIL gold recovery circuit at an open pit mining rate
of around 0.75 to 1.0 million tonnes per annum. These treatment rates
would recover an average of 50,000 to 70,000 ounces of gold a year for
a minimum of five years.
7
Current estimates for the base case development model of the 1Mtpa
operation, indicate capital costs would be around A$50 million ± 20%,
depending upon sourcing of new plant or the availability of suitable
second hand equipment.
The DFS is scheduled for completion mid 2009, and work on the
associated Environmental Assessment and Development Consent
Application is underway.
R e v i e w o f O p e r a t i o n s
Peak Hill Gold Mine
Final rehabilitation involving major works in reshaping, topsoiling and seeding of the heaps to create a long-term stable landform have been completed
but the office infrastructure and exploration base will remain until development at Tomingley is completed.
The significant but moderately refractory sulphide gold-copper orebody below the oxide mine remains subject to ongoing review and will be re-
assessed following successful development at Tomingley. Several process options were previously trialled and an innovative bio-heap leach was
considered the most favourable alternative. The proximity to the town of Peak Hill houses and infrastructure however, means any mine development
would be underground.
As at December 31 2008, Identified Mineral Resources at Peak Hill remained as:
DEPOSIT
MEASURED
INDICATED
INFERRED
0.5g/t gold cut off
Tonnage
Grade
Tonnage
Grade
Tonnage
Grade
Tonnage
Proprietary
9,440,000
(t)
(g/t)
(t)
(g/t)
1.35
(t)
1,830,000
(g/t)
0.98
(t)
11,270,000
TOTAL
Grade
(g/t)
1.29
k Ounces
467.4
3.0g/t gold cut off
Tonnage
Grade
Tonnage
(t)
(g/t)
(t)
Proprietary
Grade
(g/t)
Tonnage
Grade
Tonnage
Grade
k Ounces
(t)
810,000
(g/t)
4.40
(t)
810,000
(g/t)
4.40
114.6
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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test the complete flowsheet, providing process and engineering data, but
most importantly, several tonnes of the various products for distribution
to potential end users. The plant is scheduled to initially process 100
tonnes of ore and this could be extended depending upon any process
issues and the amount of sample products required to be distributed to
potential consumers
After two continuous process runs of three weeks in August and four
weeks in November, the plant had treated about 40 tonnes of ore,
producing 51,000 litres of pregnant leach solution with precipitation
of 647 kilograms of zirconium basic sulphate wet filter cake and 66
kilograms of niobium concentrate filter cake.
Mechanically the plant functioned efficiently and chemical issues in the
solvent extraction circuit were progressively rectified as the operation
progressed. While much of the flow sheet data is still being assessed,
the preliminary analyses indicated that the plant was producing zirconium
and niobium products at planned quality specifications.
Test work to prove the recovery of yttrium and rare earths from the
current flow sheet commenced in the laboratory at ANSTO. Work to
date has focussed on the recovery of a light rare earth concentrate (La,
Ce, Nd, Pr, Sm) from the niobium product precipitate. The test work
will continue for optimisation of the LREE recovery and it is anticipated
that a program for separation of yttrium and heavy rare earths (Eu, Gd,
Tb, Dy) from the waste stream has commenced. It is anticipated that
YREE recovery circuit should be incorporated into DPP by the middle
of the year.
9
DUBBO ZIRCONIA PROJECT
Zirconium-hafnium, niobium-tantalum, yttrium-rare earths, uranium – NSW
Australian Zirconia Ltd (AZL) 100%
The Dubbo Zirconia Project (DZP) is located 20 kilometres south of the
large regional centre of Dubbo 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, hafnium, niobium, tantalum, yttrium
and rare earth elements.
Over several years the Company has developed a flow sheet consisting of
sulphuric acid leach followed by solvent extraction recovery and refining
to recover a suite of zirconium chemicals, zirconia, a niobium-tantalum
concentrate and yttrium-rare earth concentrates which are used in the
expanding ceramic, catalyst, electronics, rechargeable batteries and
permanent magnets, engineering ceramic, and specialty glasses and
alloys industries, as well as the nuclear power industries
The Perth based specialist zircon, titanium mineral and pigment industry
consultants, TZ Minerals International Pty Ltd, continued to provide
process and marketing advice, and project management for the DZP
feasibility studies.
Process optimisation and development work commenced at the
laboratory facilities of ANSTO Minerals at Lucas Heights south
of Sydney in July 2006. A Demonstration Pilot Plant (DPP) was
constructed and commissioned in May 2008. The DPP is designed to
R e v i e w o f O p e r a t i o n s
Two marketing consultants were added to the feasibility team during the year and they have commenced work to identify and initiate discussions
with potential customers for the project’s products. Distribution of samples from the DPP should commence in the second quarter of the year. The
consultants, in conjunction with the TZMI marketing group, continue to monitor market developments and will prepare a product strategy as the year
progresses.
While the demand and pricing for some products flattened at the end of the year as the recessionary influence in the world impacted, long term all
products will be subject to increasing demand as the stringent environmental conditions are applied to many industries. Using the base case conceptual
development of a 200,000tpa ore processing and simple product range of intermediate zirconium chemicals, a niobium-tantalum concentrate, a light
rare earth concentrate and yttrium-heavy rare earth concentrate, TZMI estimated in 2007 that revenue for the Project would be around US$42.5 million.
The revenue would be closer to US$50 million if current prices were achieved.
With increasing demand, the potential to increase the start up production rate is significant with the resulting increase in output and revenues. Even at
accelerated production rates, the open pit life would be measured in hundreds of years.
Production 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 at 31 December 2008 remained at:
Toongi
Deposit
Measured
Inferred
TOTAL
Tonnage
(Mt)
35.70
37.50
73.20
ZrO2
(%)
1.96
1.96
1.96
HfO2
(%)
0.04
0.04
0.04
Nb2O5
(%)
0.46
0.46
0.46
Ta2O5
(%)
0.03
0.03
0.03
Y2O3
(%)
0.14
0.14
0.14
REO
(%)
0.75
0.75
0.75
U3O8
(%)
0.014
0.014
0.014
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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ORANGE DISTRICT EXPLORATION JOINT VENTURE - ODEJV
Gold, Copper – NSW
Alkane Resources Ltd 100%, subject to Newmont Australia Limited earning an
initial 51%
In August 2005, 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 (~50Moz
total resources).
Exploration work during 2008 focused on the McPhillamys prospect which is
located within the Moorilda Project. In 2006 the joint venture reported the
discovery of significant gold mineralisation within altered Silurian aged felsic
volcanics and sediments at McPhillamys. Follow up drilling in late 2007 confirmed
extensive gold mineralisation over a strike length of 300 metres and widths up to
200 metres.
During the year, fourteen core holes totalling 5,203 metres, including the extension
to KPD003 drilled late 2007 (final result KPD003 366 metres @ 1.86g/t gold) and
fifteen RC holes for 3,312 metres were completed. The drilling largely concentrated
in the central or main zone at McPhillamys, but holes also tested adjacent pole-
dipole induced polarisation (PDIP) chargeability anomalies to the north, south
and west of McPhillamys, and at Kings Plains located about 2 kilometres to the
southeast where KPD004 intersected 78 metres @ 1.04g/t gold.
Other substantial intercepts in the main McPhillamys zone include KPD005 201
metres @ 0.93g/t gold; KPD011 236 metres @ 1.23g/t gold; and KPD014 151
metres @ 0.93g/t gold.
The results of the 2008 drilling program confirmed that a plus 0.5g/t gold
mineralised envelope extends over a north south strike of at least 600 metres with
widths up to 200 metres. This mineralisation is largely hosted by a generally steep
east-dipping, altered coarse grained intermediate volcanic and intrusive sequence,
with variable sulphide content up to 10%. Quartz veining is rare. Structurally
overlying the mineralised system to the east are unaltered fine-grained sediments
with a package of intensely deformed intermediate volcanics flanking the system
to the west.
While the drilling results have been very positive, the understanding of the exact
controls on gold mineralisation, along strike, down dip and down plunge is still not
clear. The drilling data also suggests that there may either be surface depletion
of the gold with many shallow holes showing irregular and generally lower grades
than the deeper core and RC holes. The system as defined has the potential to
host a multi million ounce deposit but additional drilling will be required to evaluate
these concepts.
Late in the year Newmont advised Alkane that it would assume the role of Operator
of the ODEJV as from 1 January.
1
1
R e v i e w o f O p e r a t i o n s
WELLINGTON
Copper, Gold – NSW
Alkane Resources Ltd 100%
The Wellington Project is centred 15 kilometres to the southeast 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.
The Company carried out a drilling program in 2004-5 which has enabled an initial shallow resource to be calculated at Galwadgere.
Identified Mineral Resources at 31 December 2008:
DEPOSIT
0.5% Cu cut off
Galwadgere
Tonnage
(t)
MEASURED
Grade
(% Cu)
Grade
(g/t)
INDICATED
Tonnage
(t)
2,090,000
Grade
(% Cu)
0.99
Grade
(g/t)
0.3
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 2005 Annual Report
Limited ground follow up of geological and geophysical targets was completed during the year and several, including a new area called Carinya with
rock chip values up to 5.13g/t gold, 151g/t silver, 5.01% copper and 0.9% molybdenum, were recommended for further work.
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BODANGORA and CUDAL
Gold, Copper – NSW
Alkane Resources Ltd 100% (subject to 2%NSR and buy back option to Rio Tinto Exploration Pty Limited)
Both projects are considered to have potential for monzonite porphyry associated gold – copper and structural gold mineralisation but as with Wellington,
commitments on other major projects limited follow up this year
1
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LEINSTER REGION JOINT VENTURE
Nickel, Gold – WA
Alkane Resources Ltd 25%,Xstrata Nickel 75%
During the year Xstrata advised that very limited work was carried out on the three prospects, LEINSTER DOWNS, MIRANDA and McDONOUGH
LOOKOUT within the joint venture.
BC IRON LIMITED (BCI)
Alkane retains its 9 million shares (~15%) in BCI. Early 2009 BCI announced that it had defined a Direct Shipping Ore Resource (M,I and I) of 46
million tonnes grading 57% Fe (64.69% CaFe = calcined Fe) within a larger Channel Iron Resource (M,I and I) of 80 million tonnes grading 54% Fe
(61.9% CaFe) within the Bonnie Creek system at Nullagine. The iron deposits have low impurities and good sintering characteristics and should attract
a premium price.
BCI also stated that the feasibility study for a 1.5 Mtpa operation should be completed mid-year. Exploration is continuing within the Bonnie Creek and
nearby Shaw River systems.
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.
R e v i e w o f O p e r a t i o n s
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ENVIRONMENTAL AND OCCUPATIONAL HEALTH AND SAFETY REVIEW
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.
Risk Policy & Framework Review
Alkane undertook a review of its risk policy and framework during 2007. Deloitte (Perth) facilitated a risk assessment workshop for Alkane Directors
and staff. Alkane is committed to actively managing risks to its operations.
Occupational Health and Safety
The Peak Hill Gold Mine is maintained by a full time site manager. The Peak Hill Gold Mine facilities support exploration activities on the Tomingley Gold
Project 15km to the north of Peak Hill.
Alkane also maintains an exploration base in Dubbo and Orange to service the eastern Central West tenements.
Alkane managed the Orange District Exploration Joint Venture on behalf of Newmont Australia during 2008. This JV saw extensive exploration activity
on the Moorilda prospects.
Despite taking on additional staff and casual employees in 2008 Alkane had no lost time injuries, however our drilling contractors did have an incident
which required medical treatment for a driller’s offsider and time off work.
Alkane has employed six casual employees to work on the Dubbo Zirconia Project Demonstration Pilot Plant during 2008. This project is being
conducted at ANSTO Minerals, Lucas Heights.
OH&S Results 2006-2008
2006
Man Hrs
LTIs
10,800
0
10,800
0
0
0
0
M i n o r
Injuries
0
0
0
0
2007
Man Hrs
LTIs
7,200
0
0
7,200
0
0
0
0
M i n o r
Injuries
0
0
0
0
2008
Man Hrs
LTIs
14,863
10,660
0
25,523
0
1
0
1
M i n o r
Injuries
0
0
0
0
Alkane
Contractors
Visitors
Total
Environmental Management in 2008
There are currently in place 19 Approvals and Licences for the mining and processing operation, access to water and for pipeline routes. There were
no breaches of environmental requirements either at the mine site or on the group’s exploration tenements in 2008.
During 2008, the Company was in compliance with all consent conditions and approvals. An Annual Environmental Management Report meeting was
held on site 12th December 2007 with Parkes Shire Council, Department of Environment and Climate Change, and Department of Primary Industries –
Mineral Resources in attendance.
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.
Operation of the Open Cut Experience (tourist mine) was transferred to Parkes Shire Council in 2008. This tourism asset has the potential to continue
to generate economic activity in the local area, post mine-closure.
The Peak Hill Gold Mine, essentially on care and maintenance, is still a minor contributor to the local economy and community. Alkane took on
three new employees during 2008 to cope with increased exploration activity on the Tomingley Gold Project and Moorilda tenements. Three local
organizations and charities were assisted by Alkane in 2008.
There were no complaints received by the Company in 2008.
Note 1 to Accompany Resource Statement for Wyoming One and Three deposits
•
•
•
•
•
•
•
•
•
•
drilling technique
– the resource is based on reverse circulation, air core and diamond core drill holes completed by Alkane between May 2001 and December 2007;
drilling density
these sections;
- drill holes completed on both EW and NS sections depending on the ore zone being evaluated. Sections are nominally spaced 25m apart with drill holes at a nominal 20m intervals along
drill locations
- All drill hole collars are surveyed by DGPS to obtain X Y Z position to ±0.1m;
down hole surveys
down hole interval;
– most holes are surveyed down hole using a single shot camera. Air core holes were surveys at bottom of hole only however RC and diamond holes are surveyed at a nominal 50m
sampling technique
and appropriate sized samples bagged for despatch to the laboratory. NQ, HQ and PQ diamond drill core was halved;
- RC and air core samples are collected at one metre intervals and initially composited to 3m for initial assay. All composites returning grades of ≥0.2g/t Au are subsequently riffle split
sample recovery
- RC sample recovery is usually very good (>80%). Samples are usually dry. Core recovery was usually very good;
assay technique
RC and air core samples are analysed from a 30g charge whilst the 1m RC and AC resplits and half diamond core from a 50g charge;
– samples were submitted to commercial laboratories for preparation by drying, grinding and sub-sampling and then analysed by industry standard Fire Assay techniques. 3m composite
specific gravity
– specific gravity measurements were completed by commercial laboratories on core samples. Values recorded are
2.75 t/m3 fresh
2.18 t/m3 oxide
1.72 t/m3 saprolite
1.96 t/m3 alluvials
- Estimations used a 3D pseudo-wireframe geological model as a basis for inverse distance squared grade extrapolation into a block model Block size is 2.5m x 2.5m x 5.0m.
estimation techniques
Wireframes/ore zones are constrained by boundaries defined by geology, structure and a 0.25 g/t Au grade envelope. The estimation search filters were dynamically re-orientated to follow the changing
orientations of the wireframes.
Comparative techniques such variable block size, Nearest Neighbour and Kriging, were used to generate additional estimates for validation of the quoted resources.
As sample intervals for Wyoming One ranged from 0.1m to 5.0m, assays were composited to 1m intervals for the modelling. A total of 16,716 samples are within the wireframe.
Sample intervals for Wyoming Three ranged from 0.2m to 4.0m, and these assays were composited to 1m intervals for the modelling. A total of 12,836 samples are within the wire frames;
– where applied, Top Cuts were selected for the 8 individual domains (ore zones) within Wyoming One using a combination of cutting plots, histograms and probability plots. Top Cuts ranged from
top cut
8g/t Au to 45g/t Au. For Wyoming Three there are 4 domains and Top Cuts ranged from 17g/t Au to 30g/t Au.
Note 2 to Accompany Resource Statement for the Caloma deposit
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•
•
•
•
•
•
•
•
•
drilling technique
–the resource is based on reverse circulation, air core and diamond core drill holes completed by Alkane between May 2006 and June 2008;
drilling density
are nominally 40m apart with holes spaced at 40m along these lines. Several NS holes were completed to assist in the geological interpretation;
- drill holes completed on both EW nominally spaced 20m apart with drill holes at a nominal 20m intervals along these sections. In areas peripheral to the central part of the ore zone sections
drill locations
- All drill hole collars are surveyed by DGPS to obtain X Y Z position to ±0.1m;
down hole surveys
down hole interval;
– most holes are surveyed down hole using a single shot camera. Air core holes were surveys at bottom of hole only however RC and diamond holes are surveyed at a nominal 50m
sampling technique
and appropriate sized samples bagged for despatch to the laboratory. HQ and PQ diamond drill core was halved or quartered;
- RC and air core samples are collected at one metre intervals and initially composited to 3m for initial assay. All composites returning grades of ≥0.2g/t Au are subsequently riffle split
sample recovery
observed;
- RC sample recovery is usually very good (>80%). Samples are usually dry. Core recovery was usually very good except in portions of the oxide zone where some core loss was
assay technique
and air core samples are analysed from a 30g charge whilst the 1m RC and AC resplits and half diamond core from a 50g charge;
– samples were submitted to commercial laboratories for preparation by drying, grinding and sub-setting and then analysed by industry standard Fire Assay techniques. 3m composite RC
specific gravity
– specific gravity measurements were completed by commercial laboratories on core samples. Values recorded are
2.78 t/m3 fresh
2.38 t/m3 oxide
1.72 t/m3 saprolite
1.96 t/m3 alluvials
- Estimations used a 3D pseudo-wireframe geological model as a basis for inverse distance squared grade extrapolation into a block model. Block size is 2.5m x 2.5m x 5.0m.
estimation techniques
Wireframes/ore zones are constrained by boundaries defined by geology, structure and a 0.25 g/t Au grade envelope. The estimation search filters were dynamically re-orientated to follow the changing
orientations of the wireframes.
Comparative techniques such as Nearest Neighbour and Kriging, were used to generate additional estimates for validation of the quoted resources.
As sample intervals ranged from 0.1m to 6.0m, assays were composited to 1m intervals for the modelling. A total of 17,641 samples are within the wire frame;
•
top cut
– where applied, Top Cuts were selected for the 18 individual domains and sub-domains (ore zones) using a combination of cutting plots, histograms and probability plots. Top Cuts ranged from
3.5g/t Au to 45g/t Au.
D i r e c t o r s ’
R e p o r t
The directors present their report on the consolidated entity consisting of
Alkane Resources Ltd (ACN 000 689 216) and the entities it controlled at the
end of, or during, the year ended 31 December 2008.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The state of affairs of the Company was not affected by any significant
changes during the year.
EVENTS SUBSEQUENT TO BALANCE DATE
No other matter or circumstance has arisen since 31 December 2008 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 2008.
LIKELY DEVELOPMENTS
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.
ENVIRONMENTAL REGULATION
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 at Peak Hill, NSW.
Management is constantly working with the New South Wales Department of
Primary Industry and Department of Environment and Conservation to ensure
compliance with the regulatory requirements. The Company employs a full
time environmental manager.
ENVIRONMENTAL REGULATION (continued)
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 and contractors maintain that
standard.
DIRECTORS
The following persons were directors of Alkane Resources Ltd during the
whole year and up to the date of this report:
J S F Dunlop (Chairman)
D I Chalmers
I R Cornelius
I J Gandel
A D Lethlean
PRINCIPAL ACTIVITIES
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.
RESULTS
The net amount of consolidated loss of the economic entity for the financial
year after income tax was $17,898 (2007 loss $1,325,615).
DIVIDENDS
No dividends have been paid by the Company during the financial year ended
31 December 2008, nor have the directors recommended that any dividends
be paid.
REVIEW OF OPERATIONS
The Company continues to advance its core projects at Tomingley and Dubbo
in New South Wales. Feasibility studies are in progress for the development
of the Tomingley gold deposits and the strategically important Dubbo Zirconia
Project (DZP) respectively. Following drilling of the new Caloma deposit, an
updated resource statement has been completed and the feasibility study for
the development at Tomingley is scheduled to be completed mid 2009.
The Demonstration Pilot Plant (DPP) for the DZP was commissioned mid
2008 at the ANSTO facilities located at Lucas Heights near Sydney. The DPP
operated in stages during the year and is producing zirconium and niobium
products for distribution to potential customers. Development of a yttrium
and rare earth recovery circuit is in progress. Re-activation of the feasibility
study is scheduled to commence before the end of 2009.
Work also continues on the Orange District Exploration Joint Venture with
Newmont Australia where the significant gold discovery at McPhillamys
was enhanced by further drilling during the year.
A more comprehensive review is included in the “Review of Operations”
section of the Annual Report.
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PARTICULARS OF DIRECTORS
John Stuart Ferguson Dunlop (Non-Executive Chairman)
BE (Min), MEng Sc (Min), FAusIMM (CP), FIMM, MAIME, MCIMM
Appointed director and Chairman 3 July 2006
Mr Dunlop (58) is a consultant mining engineer with over 37 years surface
and underground mining experience both in Australia and overseas. He
is a former director of the Australian Institute of Mining and Metallurgy
(2001 - 2006) and is currently Chairman of its affiliate, the Mineral Industry
Consultants Association.
Mr Dunlop is non-executive chairman of Alliance Resources Ltd and of
Drummond Gold Ltd (appointed 1 August 2007) and non-executive director
of Gippsland Ltd. Former public company directorships in the last three
years are: Encore Metals NL (November 1999 to November 2006).
Mr Dunlop is a member of the Audit Committee.
David Ian (Ian) Chalmers (Managing Director)
MSc, FAusIMM, FAIG, FIMMM, FSEG, MSGA, MGSA, FAICD
Appointed director 10 June 1986, appointed Managing Director 5 October
2006
Mr Chalmers (60) is a geologist and graduate of the Western Australian
Institute of Technology (Curtin University) and has a Master of Science
degree from the University of Leicester in the United Kingdom. He has
worked in the mining and exploration industry for over 39 years, during which
time he has had experience in all facets of exploration through feasibility and
development to the production phase.
Mr Chalmers is currently a principal in Multi Metal Consultants Pty Ltd.
During the last three years Mr Chalmers was also a non-executive director of
AuDAX Resources Ltd (October 1993 to February 2007) and Northern Star
Resources Ltd (May 2000 to September 2007).
Ian Raymond (Inky) Cornelius (Non-executive Director)
FAICD
Appointed director 10 June 1986
Mr Cornelius (68) 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.
experience in retail management and retail property. He has been a director
of the Gandel Retail Trust and has had an involvement in the construction and
leasing of Gandel shopping centres. He has previously been involved in the
Priceline retail chain and the CEO chain of serviced offices.
Through his private investment vehicles, Mr Gandel has been an investor in
the mining industry since 1994. Mr Gandel is currently a substantial holder
in a number of publicly listed Australian companies and, through his private
investment vehicles, now holds and explores tenements in his own right
in Victoria, Western Australia and Queensland. Mr Gandel is also a non-
executive director of Alliance Resources Ltd.
Mr Gandel is a member of the audit committee.
Anthony Dean Lethlean (Non-executive Director)
BAppSc(geology)
Appointed director 30 May 2002
Mr Lethlean (45) 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 Helmsec Global Capital Limited. Mr Lethlean is a
non-executive director of Alliance Resources Ltd.
Mr Lethlean is Chairman of the audit committee.
JOINT COMPANY SECRETARIES
Lindsay Arthur Colless
CA, JP (NSW), FAICD
Mr Colless (63) is a member of the Institute of Chartered Accountants in
Australia with 15 years experience in the profession and a further 31 years
experience in Commerce, mainly in the mineral and petroleum exploration
industry in the capacities of financial controller, company secretary and
director. He is a director and/or secretary of a number of public listed
companies.
Karen E V Brown
BEc (hons)
Miss Brown (48) is a director and company secretary of Mineral
Administration Services Pty Ltd. She has considerable experience in
corporate administration of listed companies over a period exceeding
20 years, primarily in the mineral exploration industry. She is company
secretary of a number of publicly listed companies including Northern Star
Resources Ltd, Alkane Resources Ltd and Newland Resources Ltd
Mr Cornelius is a non-executive director of Pancontinental Oil & Gas NL,
Austral Africa Resources Limited (appointed January 2004) and Montezuma
Mining Company Ltd (appointed August 2006).
NOMINATION COMMITTEE
The Nomination Committee comprises the full Board.
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7
Ian Jeffrey Gandel (Non-executive Director)
LLB, BEc, FCPA, FAICD
Appointed director 24 July 2006
Mr Gandel (51) is a successful Melbourne businessman with extensive
D i r e c t o r s ’
R e p o r t
DIRECTORS' MEETINGS
The following sets out the number of meetings of the Company's directors held during the year ended 31 December 2008 and the number of meetings attended
by each director.
There were nine (9) Directors’ meetings, five (5) Audit and two (2) Remuneration Committee meetings held during the financial year.
The number of meetings attended by each director during the year (while they were a director or committee member) is as follows:
Committee Meetings
Director
Board of Directors
Audit
Nomination
Remuneration
Held
Attended
Held
Attended
Held
Attended
Held
Attended
J S F Dunlop
D I Chalmers
I R Cornelius
I J Gandel
A D Lethlean
9
9
9
9
9
9
9
8
9
8
5
n/a
n/a
5
5
5
n/a
n/a
5
5
-
-
-
-
-
-
-
-
-
-
2
2
2
2
2
2
2
2
2
2
SHARE OPTIONS
Unissued ordinary shares of Alkane Resources Ltd under option at the date of this report are as follows:
Date options granted
Expiry date
Issue price of shares
Number under option
19 April 2007
19 April 2007
30 September 2009
30 September 2009
$0.30
$0.30
3,000,000
1,400,000
4,400,000
None of the existing options are listed on ASX 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.
DIRECTORS' INTERESTS AND BENEFITS
a)
technical services and geological consulting fees of $577,228 paid or due and payable to Multi Metal Consultants Pty Ltd, a company 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 four
technical and support staff, including Mr Chalmers, were employed by Multi Metal Consultants to carry out work programs for the Company on an as needs
basis.
consulting fees of $8,250 paid or due and payable to John S Dunlop & Associates Pty Ltd for services provided in the normal course of business and at
normal commercial rates.
amounts of $7,941 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.
consulting fees of $5,400 paid or due and payable to Gandel Metals Pty Ltd, a company in which Mr Ian Gandel has a substantial financial interest and
administration, accounting and secretarial fees of $126,000 paid or due and payable to a company in which Mr Colless and Miss Brown have substantial
financial interests for services provided in the normal course of business and at normal commercial rates.
b)
c)
d)
e)
These fees and disbursements exclude benefits included in the aggregate amount of emoluments received or due and receivable by Directors as directors’ fees
and shown in the financial statements, prepared in accordance with the Corporations Regulations, or the fixed salary of a full time employee.
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REMUNERATION REPORT
The remuneration report is set out under the following main headings:
A. Principles used to determine the nature and amount of remuneration
B. Details of remuneration
C. Service agreements
D. Share-based compensation
E. Additional information
The information provided in this report has been audited as required by section 308(3C) of the Corporations Act 2001.
The information provided within this remuneration report includes remuneration disclosures that are required under Accounting Standard AASB 124 ‘Related Party
Disclosures’. These disclosures have been transferred from the financial report and have been audited.
A. Principles used to determine the nature and amount of remuneration (audited)
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.
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.
Director’s 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, Multi Metal Consultants Pty Ltd of which Messrs Chalmers is a principal
provides technical services for the Company, separate from his task as an executive Director.
The Company has no performance based remuneration component built into director and executive remuneration packages.
Other than the managing director, there are no other executive officers or senior managers of the Company or Group.
B. Details of remuneration (audited)
Total income received, or due and receivable, by directors
of Alkane Resources Ltd from the Company, and any related
party in connection with the management of the Company and
any related parties.
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
964,600
1,761,752
825,565
1,646,458
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D i r e c t o r s ’
R e p o r t
REMUNERATION REPORT (continued)
The details of remuneration of the directors and key management personnel are set out in the following tables.
The key management personnel of Alkane Resources Ltd are the following:
•
•
L A Colless - Company Secretary
K E Brown - Joint Company Secretary
Key Management Personnel and other executives of the Company
Name
Short-term benefits
Post-employment benefits
Share-based payment
Cash Salary and fees
Superannuation
Executive Director of Alkane
Resources Ltd
2008
$
D I Chalmers
638,728*
$
-
$
Total
$
24,003
662,731
*$61,500 relates to fees paid for Mr Chalmers’ services as Managing Director, the balance relates to fees paid to Multi Metal Consultants Pty Ltd, a company in which Mr Chalmers has a substantial financial interest. During the
year four technical and support staff, including Mr Chalmers, were employed by Multi Metal Consultants to carry out work programs for the Company on an as needs basis.
No long term or termination benefits have been paid.
Name
Short-term benefits
Post-employment benefits
Share-based payment
Cash salary and fees
Superannuation
Non-executive Directors of Alkane
Resources Ltd
2008
J S F Dunlop
I R Cornelius
I J Gandel
A D Lethlean
$
76,560
51,567
54,567
57,517
240,211*
$
-
-
-
-
-
$
24,003
24,003
24,003
(10,351)
61,658
Total
$
100,563
75,570
78,570
47,166
301,869
* $216,220 relates to fees paid to non-executive directors, the balance relates to consulting fees paid to the directors or related entities for services provided in the normal course of business and at normal commercial rates
Name
Cash Salary and fees
Superannuation
Share-based payment
Short-term benefits
Post-employment benefits
Other key management personnel
2008
L A Colless
K E Brown
$
89,250*
36,750*
126,000
$
-
-
-
$
24,003
12,001
36,004
Total
$
113,253
48,751
162,004
* Corporate administration, accounting & company secretarial fees paid to Mineral Administration Services Pty Ltd, a company with which Mr Colless and Miss Brown are associated.
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No long term or termination benefits have been paid.
The share-based payments referred to above comprise options over ordinary shares in the Company issued in April 2007 and vesting in April 2008, and have been
valued based on the Black and Scholes option pricing model.
Name
Short-term benefits
Post-employment benefits
Share-based payment
Cash Salary and fees
Superannuation
Total
$
Executive Directors of Alkane
Resources Ltd
2007
$
D I Chalmers
643,442*
$
-
107,647
751,089
*Technical services and geological consulting fees paid to Multi Metal Consultants Pty Ltd, a company 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 by Multi Metal Consultants to carry out work programs for the Company on an as needs.
No long term or termination benefits have been paid.
Name
Short-term benefits
Post-employment benefits
Share-based payment
Cash salary and Fees
Superannuation
Non executive Directors of Alkane
Resources Ltd
2007
J S F Dunlop
I R Cornelius
I J Gandel
A D Lethlean
$
57,263
40,000
499,121*
43,332
639,716
$
-
-
-
-
-
$
107,647
107,647
48,006
107,647
370,947
* Includes underwriting fees of $ 451,121 payable to Gandel Metals Pty Ltd, a company in which Mr Gandel has an interest.
Name
Short-term benefits
Post-employment benefits
Share-based payment
Cash Salary and fees
Superannuation
Total
$
164,910
147,647
547,127
150,979
1,010,663
Total
$
2
1
Other key management personnel
2007
L A Colless
$
126,000*
$
-
* Corporate administration, accounting & company secretarial fees paid to Mineral Administration Services Pty Ltd, a company with which Mr. Colless is associated.
No long term or termination benefits have been paid.
The share-based payments referred to above comprise options over ordinary shares in the Company issued and vesting in April 2007 and have been valued based
on the Black and Scholes option pricing model.
107,647
233,647
$
$
D i r e c t o r s ’
R e p o r t
REMUNERATION REPORT (continued)
C. Service agreements (audited)
Formal written consultancy agreements exist with companies of which
the Managing Director and key management personnel have a substantial
financial interest as detailed below
J S F Dunlop
Agreement
Retainer payable to John S Dunlop & Associates Pty Ltd, in which Mr Dunlop
has a substantial financial interest, of $70,000 per annum plus per diem of
$1,200 per day up to 4 days per month averaged over a 12 month rolling
period for consulting services over and above normal director duties .
D I Chalmers
Term of agreement- 2 years commencing October 2008
Termination
There is no policy in place in regard to termination benefits.
I R Cornelius
Agreement
Retainer payable to Goldtrek Pty Ltd as trustee for the Lewis Trust, of which
Mr Cornelius is a beneficiary, of $50,000 per annum plus per diem of $1,200
per day up to 4 days per month for consulting services over and above normal
director duties.
Termination
There is no policy in place in regard to termination benefits.
I J Gandel
Agreement
Retainer payable to Gandel Metals Pty Ltd in which Mr Gandel has a
substantial financial interest of $50,000 per annum plus per diem of $1,200
per day up to 4 days per month for consulting services over and above
normal director duties.
Termination
There is no policy in place in regard to termination benefits.
A D Lethlean
Agreement
Retainer payable to Rocky Rises Pty Ltd, in which Mr Lethlean has a substantial
financial interest, of $50,000 per annum plus per diem of $1,200 per day up
to 4 days per month for consulting services over and above normal director
duties.
Termination
There is no policy in place in regard to termination benefits.
Agreement
Managing director retainer of $66,000 per annum payable to Leefab Pty Ltd
in which Mr Chalmers has a substantial financial interest pursuant to a formal
agreement for a term of two years commencing 1 October 2008.
Geological consulting, technical and support services provided by Multi
Metal Consultants Pty Ltd (and its personnel), a company in which Mr
Chalmers has a substantial financial interest, pursuant to a formal agreement
for a term of two years commencing 1 October 2008.
Termination
The Managing Director’s engagement may be terminated by agreement
between the Company and the Managing Director upon such terms as they
mutually agree. A payout of 6 months fees or the remainder of the term
of the contract is payable should the Company be taken over and there is
no equivalent role and/or the Managing Director elects to terminate his
employment contract.
The Multi Metals Consultants Pty Ltd consultancy agreement may be
terminated by six months notice from either the Company or the Consultant.
L A Colless and K E Brown
Term of agreement – on going commencing July 2006
Agreement
Consulting fees of $10,500 per month payable by the Company and its
subsidiaries to Mineral Administration Services Pty Ltd, a company in which
Mr Colless and Miss Brown have substantial financial interests.
Termination
Fees of up to 12 months “Notice Amount” are payable should the consultancy
agreement with Mineral Administration Services Pty Ltd be terminated by
Alkane Resources Ltd and fees of up to 6 months “Notice Amount” are payable
should the consultancy agreement be terminated by Mineral Administration
Services Pty Ltd.
Non – executive Directors
On appointment to the Board, all non-executive directors enter into a service
agreement with the company in the form of a letter of appointment. The letter
summarises the Boards policies and terms, including compensation, relevant
to the office of the director.
No performance related bonuses or benefits are provided.
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D. Share-based payments (audited)
Options granted during the year
No options were granted to the directors during the year.
The terms and conditions of each grant of options affecting remuneration in the previous, current or future reporting periods are as follows:
Grant date
19 April 2007
Date vested and
exercisable
19 April 2008
Expiry date
Exercise price
30 September 2009
$0.30
Value per option at grant
date
$0.144
Details of options over ordinary shares in the company provided as remuneration to each director of Alkane Resources Ltd and each of the key management
personnel of the Company are set out below.
Name
Number of options granted
Number of options vested
2008
2007
2008
2007
Directors of Alkane Resources Ltd
I R Cornelius
A D Lethlean
D I Chalmers
I J Gandel
J S Dunlop
Other Key Management personnel
L A Colless
K E Brown
-
-
-
-
-
-
-
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
500,000
500,000
500,000
500,000
500,000
500,000
500,000
250,000
500,000
500,000
500,000
500,000
500,000
500,000
250,000
2
3
Shares issued on exercise of remuneration options
Details of ordinary shares in the company provided as a result of the exercise of remuneration options to each director of Alkane Resources Ltd and other key
management personnel of the Group are set out below.
Name
Date of exercise of options
Number of ordinary shares issued on
exercise of options
Directors of Alkane Resources Ltd
I J Gandel
J S Dunlop
D I Chalmers
A D Lethlean
I R Cornelius
Other Key Management Personnel
L A Colless
K E Brown
23 November 2007
30 September 2008
30 September 2008
30 September 2008
30 September 2008
30 May 2008
30 May 2008
2008
-
500,000
500,000
212,000
500,000
500,000
250,000
2007
500,000
-
-
-
-
-
-
The amounts paid per ordinary share by the directors and key management personnel on the exercise of options at the date of exercise were as follows:
Exercise date
30 May 2008
30 September 2008
Amount paid per share
$0.25
$0.25
No amounts are unpaid on any shares issued on exercise of options.
D i r e c t o r s ’
R e p o r t
REMUNERATION REPORT (continued)
E
Additional information – (audited)
Share –based compensation: Options
Name
A
B
C
D
E
Remuneration
Value at grant date
Value of options
Value of options
Value at lapse date
consisting of options
exercised at exercise
exercised at date of
IR Cornelius
A D Lethlean
D I Chalmers
I J Gandel
J S Dunlop
L A Colless
K E Brown
31.76%
-
3.62%
30.55%
23.87%
21.19%
24.62%
$
-
-
-
-
-
-
-
date
$
69,171
29,328
69,171
-
69,171
111,994
55,997
this report*
$
49,384
20,939
49,384
-
49,384
43,424
21,712
$
-
39,843
-
-
-
-
-
*Subsequent to the exercise of options by the directors and key managerial personnel, the market share price has fallen to $0.25 at the date of this report. The value of options exercised during the year at the share price existing
on the date of report would be as given in column D. It is to be noted that none of the shares issued on exercise of the options have been sold by the respective holders as at the date of this report.
Cash Bonus
Options
Name
IR Cornelius
A D Lethlean
D I Chalmers
I J Gandel
J S Dunlop
L A Colless
K E Brown
Paid
%
-
-
-
-
-
-
-
Year
Financial Years in which
Minimum total value
Maximum total value
Forfeited
granted
Vested
Forfeited
options may vest
of grant yet to vest
of grant yet to vest
%
-
-
-
-
-
-
-
%
2007
2007
2007
2007
2007
2007
2007
%
100
100
100
100
100
100
100
%
-
28.80
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
Shares issued on the exercise of options
The following ordinary shares of Alkane Resources Ltd were issued during the year ended 31 December 2008 on the exercise of options
Date options granted
Issue price of shares
Number of shares issued
19/04/2007
$0.25
2,462,000
No further shares have been issued since that date. No amounts are unpaid on any of the shares.
Key Management Personnel
Other than the Executive Director and Company Secretary, there were no other key management personnel during the financial year.
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INSURANCE OF OFFICERS AND AUDITORS
During the financial year, Alkane Resources Ltd incurred premiums to insure the directors, secretary and/or officers of the Company.
The liability insured is the indemnifaction of the Company against any legal liability to third parties arising out of any Directors or Officers duties in their capacity
as a Director or Officer other than indemnification not permitted by law.
No liability has arisen under this indemnity as at the date of this report.
The Company has not otherwise, during or since the financial year, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body
corporate, against a liability incurred as such by an officer or auditor.
CORPORATE GOVERNANCE
In recognising the need for the highest standards of corporate behaviour and accountability, the directors of Alkane Resources Ltd support and have adhered to
the principles of corporate governance and have established a set of policies and manuals for the purpose of managing this governance. The Company’s detailed
corporate governance policy statement is contained in the additional Supplementary Information section of the annual report and can be viewed on the Company's
web site at www.alkane.com.au.
AUDIT INDEPENDENCE AND NON-AUDIT SERVICES
Auditors' Independence -Section 307c
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:
2
5
i)
no contraventions of the auditor independence requirements of the Act in relation to the audit of the 31 December 2008 annual
financial statements; and
ii)
no contraventions of any applicable code of professional conduct in relation to the audit.
Frank Vrachas (Lead auditor)
Rothsay Chartered Accountants
Dated 27 March 2009“
D i r e c t o r s ’
R e p o r t
Non-Audit Services
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 Code of Conduct APES 110 Code of Ethics for
Professional Accountants issued by the Accounting Professional & Ethical Standards Board, including acting in a management or a decision-making
capacity for the Company or acting as advocate for the Company.
2008
$
42,500
8,000
Consolidated
2007
$
48,000
8,000
The following amounts were paid to the auditors
Auditor’s remuneration
-
auditing the accounts
Non-audit services
-
taxation services
Signed in accordance with a resolution of the Directors.
D I Chalmers
Director
Dated at Perth this 27th day of March 2009
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I n c o m e S t a t e m e n t
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
Revenue from continuing operations
Rent received
Revenue from sale of assets
Interest received or due and receivable from other
corporations
Government grant
Other revenue
Expenses from continuing operations
Rent
Filing fees
Annual reports
Directors' consulting
Consulting, administration and secretarial
Public relations
Travel, entertainment & seminars
Insurances
Provision for subsidiaries
Administration expenses
Royalty
Audit fees
Auditor - other services
Share based remuneration
Depreciation and amortisation
Peak Hill minesite maintenance and rehabilitation
Cost of assets sold
Cost of unmarketable sale
Exploration costs
Provision for quoted shares
Provision for depreciation/amortisation
Provision for employee entitlements
Loss before income tax
Income tax attributable
Loss for the year
Loss attributable to minority interests
Loss attributable to members of Alkane
Resources Ltd
Accumulated losses at beginning of financial year
Accumulated losses at end of financial year
Earnings per share for loss attributable to the
ordinary equity holders of the Company
Note
26
21
2
18
14
23
Consolidated
Parent entity
2008
$
67,831
-
723,042
1,489,772
121,626
2,402,271
(68,628)
(35,575)
(19,833)
(431,181)
(140,971)
(113,659)
(75,525)
(57,614)
-
(12,589)
-
(42,500)
(8,000)
(197,476)
(49,325)
(122,106)
-
-
(1,015,344)
(3,574)
-
(26,269)
(2,420,169)
(17,898)
-
(17,898)
55
2007
$
49,563
3,470
284,992
834,620
74,578
1,247,223
(49,638)
(33,039)
(39,460)
(330,884)
(131,250)
(85,792)
(45,306)
(65,817)
-
(130,378)
(4,477)
(48,000)
(8,000)
(904,238)
(29,365)
(149,163)
(15,123)
(22,518)
(443,261)
2,314
(12,636)
(26,641)
(2,572,672)
(1,325,449)
-
(1,325,449)
55
2008
$
67,831
-
712,854
1,489,772
121,626
2,392,083
(68,628)
(26,949)
(19,833)
(431,181)
(98,955)
(113,659)
(75,525)
(58,368)
(719,751)
(43,408)
-
(42,500)
(8,000)
(197,476)
(49,325)
(122,106)
-
-
(304,474)
(3,574)
-
(26,269)
(2,409,981)
(17,898)
-
2007
$
49,563
3,470
280,827
834,620
74,578
1,243,058
(49,638)
(23,655)
(39,460)
(330,884)
(89,250)
(85,792)
(45,306)
(64,860)
(74,618)
(133,526)
(4,477)
(48,000)
(8,000)
(904,238)
(29,365)
(149,163)
(15,123)
(22,518)
(413,719)
2,314
(12,636)
(26,641)
(2,568,555)
(1,325,497)
-
(17,898)
(1,325,497)
-
-
(17,843)
(26,698,136)
(1,325,394)
(25,372,742)
(17,898)
(26,580,458)
(1,325,497)
(25,254,961)
(26,715,979)
(26,698,136)
(26,598,356)
(26,580,458)
($0.00)
($0.01)
($0.00)
($0.01)
The above income statement should be read in conjunction with the accompanying notes.
2
7
B a l a n c e S h e e t
A s A t 3 1 D e c e m b e r 2 0 0 8
Current Assets
Cash and cash equivalent
Receivables
Available for sale financial assets
Other financial assets
Total Current Assets
Non-Current Assets
Available for sale financial assets
Held-to-maturity investments
Property, plant & equipment
Capitalised exploration and evaluation
expenditure
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
Reserves
Accumulated losses
Total parent entity interest
Outside equity interests in controlled entities
Total Equity
Note
19
3
4
5
6
7
8
9
10
11
11
12
14
14
Consolidated
Parent entity
2008
$
8,324,003
756,389
1,140
469,693
9,551,225
2007
$
6,706,623
419,627
7,950
440,312
7,574,512
1,710,000
13,680,000
-
1,015,048
25,035,092
27,760,140
37,311,365
1,241,653
61,220
1,302,873
137,224
137,224
1,440,097
35,871,268
-
824,628
18,245,597
32,750,225
40,324,737
1,452,231
41,984
1,494,215
130,191
130,191
1,624,406
38,700,331
2008
$
8,282,818
749,453
1,140
367,266
9,400,677
1,710,000
10,561,863
864,057
14,501,659
27,637,579
37,038,256
968,544
61,220
1,029,764
137,224
137,224
1,166,988
35,871,268
2007
$
6,693,676
405,187
7,950
335,729
7,442,542
13,680,000
7,873,538
693,637
10,563,438
32,810,613
40,253,155
1,380,649
41,984
1,422,633
130,191
130,191
1,552,824
38,700,331
60,121,618
2,348,006
(26,715,979)
35,753,645
117,623
35,871,268
50,803,706
14,477,083
(26,698,136)
38,582,653
117,678
38,700,331
60,121,618
2,348,006
(26,598,356)
35,871,268
-
35,871,268
50,803,706
14,477,083
(26,580,458)
38,700,331
-
38,700,331
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
Consolidated
Contributed
Reserves
Attributable to members of Alkane Resources Ltd
Balance at 1 January 2007
Profit/(Loss) for the financial period
Share Investment Revaluation Reserve
Total recognised income and expense
for the year
Contributions of equity, net of
transaction costs
Share options expenses
Shares issued on exercise of options
Balance at 31 December 2007
Consolidated
Balance at 1 January 2008
Profit/(Loss) for the financial period
Share Investment Revaluation Reserve
Total recognised income and expense
for the year
Contributions of equity, net of transaction
costs
Share options expenses
Shares issued on exercise of options
Balance at 31 December 2008
Notes
14B
14A
12
14A
14A
Notes
14B
12
14A
14A
equity
$’000
46,327
-
-
-
4,477
-
-
$’000
-
-
13,674
13,674
-
904
(101)
Retained
earnings
$’000
(25,373)
(1,325)
-
(1,325)
-
-
-
Minority
Interest
$’000
117
-
-
-
-
-
-
50,804
14,477
(26,698)
117
Contributed
Reserves
equity
$’000
50,804
-
-
-
9,318
-
-
60,122
$’000
14,477
-
(11,973)
(11,973)
-
197
(353)
2,348
Retained
earnings
$’000
(26,698)
Minority
Interest
$’000
117
(18)
-
(18)
-
-
-
-
-
-
-
-
-
(26,716)
117
Total
equity
$’000
21,071
(1,325)
13,674
12,349
4,477
904
(101)
38,700
Total
equity
$’000
38,700
(18)
(11,973)
(11,991)
9,318
197
(353)
35,871
2
9
The above statement of changes in equity should be read in conjunction with the accompanying notes.
C a s h F l o w S t a t e m e n t
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
Consolidated
Parent entity
Note
2008
$
2007
$
2008
$
2007
$
Cash Flows from Operating Activities
Rent received
Payments to suppliers (inclusive of goods and
services tax)
Other income
Interest received
Goods and services tax receipts
Net cash from operating activities
20
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
Payments for 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
Receipts from Commercial Ready Grant
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
67,831
49,563
67,831
49,563
(2,139,231)
(697,505)
(2,196,955)
121,626
723,042
743,477
(483,255)
65,390
284,992
177,135
(120,425)
-
(239,745)
3,470
(64,825)
-
-
-
-
-
2,155
(31,537)
-
(7,804,838)
(8,073,965)
8,991,199
(26,604)
1,210,005
10,174,600
-
-
-
-
-
797,833
(4,149)
-
(4,149,934)
(3,417,605)
4,850,983
(475,318)
1,114,388
5,490,053
121,626
712,854
611,239
(683,405)
-
(219,745)
-
-
(3,408,076)
-
-
-
(31,537)
-
(4,242,695)
(7,902,053)
8,991,199
(26,604)
1,210,005
10,174,600
(616,919)
65,390
280,827
126,486
(94,653)
3,470
(54,825)
-
-
(2,224,009)
-
-
797,833
-
-
(1,966,958)
(3,444,489)
4,850,983
(475,318)
1,114,388
5,490,053
1,617,380
1,952,023
1,589,142
1,950,911
6,706,623
4,754,600
6,693,676
4,742,765
19
8,324,003
6,706,623
8,282,818
6,693,676
The accompanying notes form part of these financial statements
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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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
c)
d)
1.
Statement of Significant Accounting Policies
The principal accounting policies adopted in the preparation of the
financial report are set out below.
These policies have been consistently applied to all the years
presented, unless otherwise stated. The financial report includes
separate financial statements for Alkane Resources Ltd (“the
Company”) as an individual entity and the consolidated entity
consisting of Alkane Resources Ltd and its subsidiaries.
a)
b)
Basis of preparation
This general purpose financial report has been prepared
in accordance with the Corporations Act 2001, Australian
Accounting Standards and Interpretations and complies with
other requirements of the law.
All amounts are presented in Australian dollars, unless
otherwise noted.
Compliance with IFRSs
include Australian
Australian Accounting Standards
equivalents to International Financial Reporting Standards
(IFRSs). Compliance with AIFRSs ensures
the
consolidated financial statements and notes of Alkane
Resources Ltd comply with IFRSs.
Historical cost convention
These financial statements have been prepared under
the historical cost. Cost is based on the fair values of the
consideration given in exchange for assets.
that
Consolidation
The consolidated financial statements incorporate the assets
and liabilities of all entities controlled by Alkane Resources
Ltd ("the Company") as at 31 December 2008 and the
results of all controlled entities for the year then ended.
Control is achieved where the Company has the power to
govern the financial and operating policies of an entity to
obtain benefits from its activities. Alkane Resources 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.
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
and to unused tax losses.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in
the financial statements. Deferred income tax is determined
using tax rates (and laws) that have been enacted or
substantially accepted by the balance sheet date and are
expected to apply when the related deferred income tax asset
is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary
differences and unused tax losses only if it is probable that
future taxable amounts will be available to utilise those
temporary differences and losses.
Deferred tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets and
liabilities and when the deferred tax balances relate to the
same taxation authority. Current tax assets and liabilities
are offset where the entity has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise
the asset and settle the liability simultaneously.
Current and deferred tax balances attributable to amounts
recognised directly in equity are also recognised directly in
equity.
3
1
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the
amount of GST except:
•
where the GST incurred on a purchase of goods
and services is not recoverable from the taxation
authority, in which case the GST is recognised as part
of the cost of acquisition of the asset or as part of the
expense item as applicable; and
receivables and payables are stated with the amount
of GST included.
•
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables or
payables in the Balance Sheet.
Cash flows are included in the Statement of Cash Flows on
a gross basis and the GST component of cash flows arising
from investing and financing activities, which is recoverable
from, or payable to, the taxation authority, are classified as
operating cash flows.
Commitments and contingencies are disclosed net of the
amount of GST recoverable from, or payable to, the taxation
authority.
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
1.
Statement of Accounting Policies (Continued)
j)
e)
f)
g)
h)
i)
Segment Reporting
A business segment is a group of assets and operations
engaged in providing products or services that are subject
to risks and returns that are different to those of other
business segments. A geographical segment is engaged
in providing products or services within a particular
economic environment and is subject to risks and returns
that are different from those of segments operation in other
economic environments.
Revenue Recognition
Revenue is measured at the fair value of the consideration
received or receivable. Amounts disclosed as revenue are net
of returns, trade allowances and amounts collected on behalf
of third parties.
Interest income is recognised on a time proportionate basis
that takes into account the effective yield on the financial
asset.
Government Grants
Grants from the government are recognised at their fair
value where there is a reasonable assurance that the grant
will be received and the Group will comply with all attached
conditions.
Government grants relating to costs are deferred and
recognised in the income statement over the period
necessary to match them with the costs that they are
intended to compensate.
Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of
giving immediate financial support to the Group with no
future related costs are recognised as income of the period
in which it becomes receivable.
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).
Cash and cash equivalents
For cash flow statement presentation purposes, cash and
cash equivalents include cash on hand and 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.
k)
l)
m)
n)
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Trade and Other Receivables
Trade and other receivables are recognised initially at fair
value and subsequently measured at amortised cost, less
provision for doubtful debts. Trade receivables are due for
settlement no more than 30 days from the date of recognition.
Collectibility of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectible are written
off. A provision for doubtful debts is established when there
is objective evidence that the Company will not be able to
collect all amounts due according to the original terms of
receivables. The amount of the provision is recognised in
the income statement.
Fair Value Estimation
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or for
disclosure purposes.
The carrying value, less impairment provision, of trade
receivables and payables are assumed to approximate their
fair values due to their short term nature.
Plant and Equipment
Plant and equipment is stated at historical cost less
depreciation. Depreciation is calculated on a straight line
basis to write off the net cost of each asset during their
expected useful life of 3 to 5 years.
and
loan
Investments and Other Financial Assets
The Group classifies its investments in the following
categories:
receivables, held-to-maturity
investments, and available-for-sale financial assets. The
classification depends on the nature and purpose of the
financial asset and is determined at the time of initial
recognition. This designation is re-evaluated at each
reporting date.
Impairment of assets
Assets are reviewed for impairment at each reporting date
or whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which the
asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less
costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows which are largely
independent of the cash inflows from other assets or groups
of assets (cash- generating units)
Non financial assets, other than goodwill, that sufferred
an impairment are reviewed for possible reversal of the
impairment at each reporting date.
Goodwill and intangible assets that have an indefinite useful
life are not subject to amortisation and are tested annually
for impairment or more frequently if events or changes in
circumstances indicate that they might be impaired.
o)
p)
q)
r)
s)
Trade Payables
These amounts represent liabilities for goods and services
provided to the Company prior to the end of the financial
year which are unpaid. These amounts are unsecured and are
usually paid within 30 days of recognition.
Provisions
Provisions are recognised when the Company has a present
obligation and it is probable that an outflow of resources will
be required to settle the obligation and the amount has been
reliably estimated.
Leases
Leases of property, plant and equipment where the Company
has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised.
The Company has no finance leases.
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
farm out continues to be carried forward without adjustment,
unless the terms of the farm out 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.
the area has proven commercially recoverable reserves;
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)
or
ii) 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.
is considered
Capitalised exploration expenditure
for
impairment based upon areas of interest on an annual
basis, depending on the existence of impairment indicators
including:
•
the period for which the Company has the right to
explore in the specific area has expired during the
period or will expire in the near future, and is not
expected to be renewed;
substantive expenditure on further exploration for and
evaluation of mineral resources in the specific area is
neither budgeted or planned;
exploration for and evaluation of mineral resources
in the specific area have not led to the discovery of
commercially viable quantities of mineral resources
and the Company has decided to discontinue such
activities in the specific area; and
sufficient data exists to indicate that, although a
development in the specific area is likely to proceed,
the carrying amount of the exploration and evaluation
asset is unlikely to be recovered in full from
successful development or by sale.
•
•
•
3
3
t)
u)
Costs carried forward in respect of an area of interest that is
abandoned are written off in the year in which the decision
to abandon is made.
Mineral Tenements
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 decision in what is known generally as the
"Mabo" case 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 effect any mining title
area whether granted by the State or not.
rehabilitation
Restoration, rehabilitation and environment
expenditure
Restoration,
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.
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
8
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1.
Statement of Accounting Policies (Continued)
v)
w)
x)
y)
z)
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.
Redundancy
The liability for redundancy is provided in accordance with work place agreements.
Contributed Equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Earnings per share
Basic earnings per share is determined by dividing the operating profit after income tax attributable to members of Alkane Resources Ltd by the
weighted average number of ordinary shares outstanding during the year.
Share based payments
Where shares or options are issued to employees, including directors, as remuneration for services, the difference between fair value of the
shares or options issued and the consideration received, if any, from the employee is expensed. The fair value of the shares or options issued is
recorded in contributed equity.
New accounting standards and UIG interpretations
Certain new accounting standards have been published that are not mandatory for 31 December 2008 reporting periods. The Group has not applied any
of the following in preparing this financial report:
Affected Standard
AASB 8: Operating Segments
AASB 2007-3: Amendments to Australian Accounting
Standards arising from AASB 8 [AASB5, AASB6, AASB102,
AASB 107, AASB119, AASB127, AASB134, AASB136,
AASB 1023 and AASB1038]
Revised AASB 101: Presentation of Financial Statements
Nature of Change to
Accounting Policy
No impact on accounting policy, affects disclosures in
relation to operating segments instead of business and
geographical segments for the financial report ending
30 June 2010.
No impact on accounting policy, affects disclosures
only
No impact on accounting policy, affects disclosures
only
Amendments to Australian Accounting Standards arising
from AASB 101
No impact on accounting policy, affects disclosures
only
* Applicable to reporting periods commencing on or after the given date.
Application *
1 January 2009
1 January 2009
1 January 2009
1 January 2009
aa)
Critical accounting estimates & judgements
In preparing this Financial Report the Company has been required to make certain estimates and assumptions concerning future occurrences.
There is an inherent risk that the resulting accounting estimates will not equate exactly with actual events and results.
i)
ii)
Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving
estimations, which have the most significant effect on the amounts recognised in the financial statements:
Capitalisation of exploration and evaluation expenditure
The Group has capitalised significant exploration and evaluation expenditure on the basis either that this is expected to be recouped
through future successful development (or alternatively sale) of the Areas of Interest concerned or on the basis that it is not yet possible
to assess whether it will be recouped.
Significant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and
liabilities within the next annual reporting period are:
Impairment of capitalised exploration and evaluation expenditure
The future recoverability of capitalised exploration and evaluation expenditure is dependent on an number of factors, including whether the
Company decides to exploit the related lease itself, or, if not, whether it successfully recovers the related exploration and evaluation asset
through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, costs of
drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes
to commodity prices.
As at 31 December 2008, the carrying value of exploration expenditure of the group is $25,035,092.
3
5
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
2.
Income Tax Expense
a)
Income tax expense
Current tax
Deferred tax
b)
Numerical reconciliation of income tax
expense to prima facie tax payable
Loss from continuing operations before
income tax expense
Prima facie tax payable at 30 %
Add: tax effect of amounts which are not
deductible (taxable) in calculating taxable
income
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
-
-
-
-
-
-
-
-
(17,898)
(5,369)
(1,325,449)
(397,635)
(17,898)
(5,369)
(1,325,497)
(397,649)
Share based payments
59,243
271,271
59,243
271,271
Adjustments in respect of deferred income
tax of previous years
Tax losses not brought to account as a
deferred tax
5,117,422
4,318,017
3,026,036
2,659,399
(5,171,296)
(4,191,653)
(3,079,910)
(2,533,021)
-
-
-
-
c)
Tax losses
Unused tax losses for which no deferred tax
asset has been recognised
Potential tax benefit at 30%
12,168,293
10,193,148
11,135,864
10,232,077
d)
Unrecognised temporary differences
Deferred tax liabilities – capitalised
exploration
Deferred tax assets – accrued expenses
Deferred tax assets – provisions
(7,205,924)
(5,473,679)
(4,259,156)
(3,169,031)
59,533
-
51,653
-
59,533
207,825
51,653
-
Deferred tax assets – revenue tax losses
12,168,293
10,193,148
11,135,864
10,232,077
Total deferred tax asset not recognised
12,227,826
10,244,801
11,403,222
10,283,730
Net deferred tax asset
5,021,902
4,771,122
7,144,066
7,114,699
Deferred tax assets and liabilities have been offset as they relate to income taxes levied by the same taxation authority and there is a legally recognised
right to set off.
8
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2
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3.
Trade and other Receivables (Current)
Debtors including GST refunds
4.
Available for sale financial assets (Current)
Quoted Shares - At fair value
Opening balance at 1 January
Net gain (loss) from fair value adjustment
Closing balance at 31 December
5.
Other financial assets (Current)
Interest bearing security deposits (not available for
use)
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
756,389
419,627
749,453
405,187
7,950
(6,810)
1,140
2,400
5,550
7,950
7,950
(6,810)
1,140
2,400
5,550
7,950
469,693
469,693
440,312
440,312
367,266
367,266
335,729
335,729
Deposits bear a weighted average interest rate of 3.75% (2007: 6.96%)
6.
Available for sale financial assets (Non-Current)
Quoted Shares - At fair value
Opening balance at 1 January
13,680,000
9,000
13,680,000
9,000
Net gain (loss) from fair value adjustment
(11,970,000)
13,671,000
(11,970,000)
13,671,000
3
7
Closing balance at 31 December
1,710,000
13,680,000
1,710,000
13,680,000
7.
Held-to-maturity investments (Non-current)
Shares in controlled entities - carried
at cost (Note 18)
Opening balance at 1 January
Closing balance at 31 December
Loans to (from) subsidiaries
At fair value
Opening balance at 1 January
Addition
Closing balance at 31 December
Net gain (loss) from fair value adjustment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,865,565
5,865,565
5,865,565
5,865,565
4,964,073
3,408,076
8,372,149
2,740,066
2,224,007
4,964,073
(3,675,851)
(2,956,100)
10,561,863
7,873,538
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
Consolidated
Parent entity
2008
$
2007
$
2008
$
8.
Property, Plant And Equipment
Property, plant & equipment - at cost
1,265,049
1,025,304
1,086,741
Less: Accumulated depreciation
Reconciliation of carrying amount
Opening balance at 1 January
Plant & equipment acquired during year
Disposals
Depreciation during year
Closing balance at 31 December
(250,001)
1,015,048
824,628
239,745
-
(49,325)
1,015,048
(200,676)
824,628
791,876
64,826
(15,367)
(16,707)
824,628
(222,684)
864,057
693,637
219,745
-
(49,325)
864,057
2007
$
866,996
(173,359)
693,637
670,885
54,826
(15,367)
(16,707)
693,637
9.
Exploration and Development Expenditure
(Non-Current)
Peak Hill Mine development at fair value
1
1
1
1
Peak Hill Project acquisition and exploration at
fair value
Opening balance at 1 January
Expenditure during the period
Net gain (loss) from fair value adjustment
1,000,000
1,000,000
1,000,000
1,000,000
22,570
(22,570)
14,545
(14,545)
22,570
(22,570)
14,545
(14,545)
Closing balance at 31 December
1,000,000
1,000,000
1,000,000
1,000,000
Accumulated contributions to other ongoing
exploration projects at fair value
Opening balance at 1 January
Expenditure during the period
Net gain (loss) from fair value adjustment
17,245,596
13,538,922
7,550,197
(760,702)
3,854,913
(148,239)
9,563,437
3,988,053
8,010,198
1,671,936
(49,832)
(118,697)
Closing balance at 31 December
24,035,091
17,245,596
13,501,658
9,563,437
25,035,092
18,245,597
14,501,659
10,563,438
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.
8
0
0
2
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10.
Trade and other Payables (Current Liabilities)
Trade creditors
11.
Provisions (Current Liabilities)
Provision for annual leave
Consolidated
Parent entity
2008
$
1,241,653
1,241,653
2007
$
1,452,231
1,452,231
61,220
61,220
41,984
41,984
2008
$
968,544
968,544
61,220
61,220
2007
$
1,380,649
1,380,649
41,984
41,984
Provisions (Non-current Liabilities)
Provision for redundancy/long service leave
137,224
130,191
137,224
130,191
Parent entity
2008
2007
Number
$
Number
$
12.
Contributed Equity
Share Capital
Ordinary shares – Fully paid
244,634,162
60,121,618
215,888,726
50,803,706
Movements in ordinary share capital
Opening balance at 1 January
Rights issue
Exercise of options**
Share option reserve transferred on exercise
Closing balance at 31 December
Less: Costs of Issues
As per Balance Sheet
215,888,726
25,783,436
2,962,000
-
244,634,162
-
244,634,162
51,902,846
8,250,699
740,500
353,317
61,247,362
(1,125,744)
60,121,618
200,543,468
14,495,258
850,000
-
215,888,726
-
215,888,726
46,950,472
4,638,483
212,500
101,391
51,902,846
(1,099,140)
50,803,706
3
9
Terms and conditions of ordinary shares:
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholder’s meetings.
In the event of winding up of the company, ordinary shareholders rank after all other shareholders and creditors are fully entitled to any proceeds of
liquidations.
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
13.
Options on Issue
Options –Unlisted
Exercisable at 40 cents expiring 24 May 2007
Movements in these options:
Balance at beginning of year
Exercised during year
Expired during the year
Balance as at 31 December
Exercisable at 60 cents expiring 24 May 2007
Movements in these options:
Balance at beginning of year
Expired during the year
Balance 31 December
Exercisable at 45 cents each expiring 29 May 2008
Movements in these options:
Balance at beginning of year
Expired during year
Balance 31 December
Exercisable at 25 cents each expiring 30 Sep 2008
Movements in these options:
Balance at beginning of year
Issued during year
Exercised during the year
Expired during the year
Balance 31 December
Parent entity
2008
Number
-
-
-
-
-
-
-
-
-
-
975,000
(975,000)
-
-
3,350,000
-
(2,962,000)
(388,000)
-
2007
Number
-
500,000
-
(500,000)
-
-
4,750,000
(4,750,000)
-
975,000
975,000
-
975,000
3,350,000
-
4,200,000
(850,000)
-
3,350,000
Exercisable at 30 cents each vesting 19 Apr 2008 expiring 30 Sep 2009
4,400,000
4,200,000
Movements in these options:
Balance at beginning of year
Issued during year
Balance 31 December
4,200,000
200,000
4,400,000
-
4,200,000
4,200,000
8
0
0
2
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o
p
e
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a
u
n
n
A
0
4
d
t
L
s
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r
u
o
s
e
R
e
n
a
k
l
A
14.
Reserves and Accumulated Losses
(A) RESERVES
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
Share-based payments reserve
647,006
802,847
647,006
802,847
Movement:
Balance 1 January
Employee Option expense
Issue of shares to employees
Equity-settled benefits
Balance 31 December
802,847
197,476
(353,317)
-
647,006
-
904,238
(101,391)
-
802,847
802,847
197,476
(353,317)
-
647,006
-
904,238
(101,391)
-
802,847
Share Investment Revaluation Reserve
1,701,000
13,674,236
1,701,000
13,674,236
Movement:
Balance 1 January
Revaluation
Balance 31 December
(B) ACCUMULATED LOSSES
Balance 1 January
Loss for the year after related income tax expense
Balance 31 December
(C) NATURE AND PURPOSE OF RESERVES
13,674,236
(11,973,236)
1,701,000
-
13,674,236
13,674,236
13,674,236
(11,973,236)
1,701,000
-
13,674,236
13,674,236
(26,698,136)
(17,843)
(26,715,979)
(25,372,742)
(1,325,394)
(26,698,136)
(26,580,458)
(17,898)
(26,598,356)
(25,254,961)
(1,325,497)
(26,580,458)
4
1
The share based payments reserve is used to recognise the fair value of options issued to employees but not exercised and equity-settled benefits
issued in settlement of share issue costs and part consideration, in lieu of cash payment, for acquisition of mineral interests.
15.
Key Management Personnel Disclosure
A)
Directors
The names of Directors who have held office during the financial year are:
Alkane Resources Ltd
John S F Dunlop, D Ian Chalmers, Ian R Cornelius, Ian J Gandel, Anthony D Lethlean
Subsidiaries
LFB Resources NL, Kiwi Australian Resources Pty Ltd, Australasian Geo-Data Pty Ltd, Australian Zirconia Ltd
Ian R Cornelius, D Ian Chalmers, Lindsay A Colless
Skyray Properties Ltd (BVI)
L Thomas
Executives during year
D Ian Chalmers (Managing Director)
B)
Other key management personnel
The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or
indirectly during the financial year:
L A Colless – Company Secretary
K E Brown – Joint Company Secretary
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
15.
Key Management Personnel Disclosure (continued)
C)
Transactions with Key Management Personnel
a)
technical services and geological consulting fees of $577,228 paid or due and payable to Multi Metal Consultants Pty Ltd, a company 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 four technical and support staff, including Mr Chalmers, were employed by Multi Metal Consultants to carry out
work programs for the Company on an as needs basis.
consulting fees of $8,250 paid or due and payable to John S Dunlop & Associates Pty Ltd for services provided in the normal course of
business and at normal commercial rates.
amounts of $7,941 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.
consulting fees of $5,400 paid or due and payable to Gandel Metals Pty Ltd, a company in which Mr Ian Gandel has a substantial financial
interest and
administration, accounting and company secretarial fees of $126,000 paid or due and payable to a company in which Mr Colless and Miss
Brown have substantial financial interests for services provided in the normal course of business and at normal commercial rates.
b)
c)
d)
e)
These fees and disbursements exclude benefits included in the aggregate amount of emoluments received or due and receivable by Directors as
directors’ fees and shown in the financial statements, prepared in accordance with the Corporations Regulations, or the fixed salary of a full time
employee.
D) Outstanding Balances
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current payables – Directors’ fees
a) A D Lethlean
b) I J Gandel
c) J S Dunlop
d) D I Chalmers
$6,566
$4,167
$6,430
$5,500
E)
Equity instrument disclosures relating to key management personnel
The interests of Directors and key management personnel and their respective related entities in shares and share options at the end of the
financial period are as follows:
Name
I R Cornelius
A D Lethlean
D I Chalmers
I J Gandel
J S Dunlop
L A Colless
K E Brown
L A Colless & K E Brown in
joint interests
Shares held directly
Shares held indirectly
Options held directly
Options held indirectly
9,450
4,536
24,405
58,324
-
-
-
-
2,683,609
212,000
1,467,148
70,411,964
500,000
502,000(a)
250,000(a)
284,849(b)
-
-
-
-
-
-
-
-
500,000
500,000
500,000
500,000
500,000
500,000(a)
250,000(a)
-
(a)
(b)
Held by MAS Superfund for the benefit of the respective key management personnel
Held in the name of Mineral Administration Services Pty Ltd, a company in which Mr. Colless and Miss Brown are directors and
shareholders.
8
0
0
2
t
r
o
p
e
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a
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n
n
A
2
4
d
t
L
s
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c
r
u
o
s
e
R
e
n
a
k
l
A
15.
Key Management Personnel Disclosure (continued)
E)
Equity instrument disclosures relating to key management personnel (continued)
Name
Balance at the start of
Changes during the
Issued during the year
Balance at the end
the financial period
year
on exercise of options
of the financial period
(1) Shares
Directors
I R Cornelius
A D Lethlean
D I Chalmers
I J Gandel
J S Dunlop
Key Management Personnel
L A Colless
K E Brown
L A Colless & K E Brown in joint
interests
Total shares
(2) Options
Directors
I R Cornelius
A D Lethlean
D I Chalmers
I J Gandel
J S Dunlop
Key Management Personnel
L A Colless
K E Brown
Total Options
2007
Name
(1) Shares
Directors
I R Cornelius
A D Lethlean
D I Chalmers
I J Gandel
J S Dunlop
Key Management Personnel
L A Colless
K E Brown
L A Colless & K E Brown in joint
interests
1,103,550
-
971,684
44,622,808
-
26,405
58,324
284,849
1,089,509
-
-
25,789,156
-
-
-
-
500,000
212,000
500,000
-
500,000
500,000
250,000
-
2,693,059
212,000
1,471,684
70,411,964
500,000
526,405
308,324
284,849
47,067,620
26,878,665
2,462,000
76,408,285
1,000,000
1,000,000
1,000,000
500,000
1,000,000
1,000,000
500,000
6,000,000
(500,000)
(500,000)
(500,000)
-
(500,000)
(500,000)
(250,000)
(2,750,000)
-
-
-
-
-
-
-
-
4
3
500,000
500,000
500,000
500,000
500,000
500,000
250,000
3,250,000
Balance at the start of
Changes during the
Issued during the year
Balance at the end
the financial period
year
on exercise of options
of the financial period
1,299,375
-
809,738
33,245,674
-
21,370
48,604
226,072
(195,825)
-
161,946
10,877,134
-
5,035
9,720
58,777
-
-
-
500,000
-
-
-
-
1,103,550
-
971,684
44,622,808
-
26,405
58,324
284,849
Total shares
35,650,833
10,916,787
500,000
47,067,620
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
15.
Key Management Personnel Disclosure (continued)
E)
Key Management Personnel Disclosure (continued)
Balance at the start of
Changes during the
Issued during the year
Balance at the end
the financial period
year
on exercise of options
of the financial period
2007
Name
(2) Options
Directors
I R Cornelius
A D Lethlean
D I Chalmers
I J Gandel
J S Dunlop
Key Management Personnel
L A Colless
K E Brown
Total Options
* Expired during the year
1,000,000
1,000,000
1,000,000
-
-
-
-
(1,000,000)*
(1,000,000)*
(1,000,000)*
(500,000)
-
1,000,000
500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
-
-
3,000,000
(2,000,000)
5,000,000
F)
Key management personnel compensation
Short term employee benefits
Post-employment benefits
Long-term benefits
Termination benefits
Share-based payments
2008
$
1,004,939
-
-
-
121,665
1,126,604
The Company has taken advantage of the relief provided by Corporations Regulation 2M.6.04 and has transferred the detailed remuneration
disclosures to the Directors’ Report. The relevant information can be found in sections A-C of the remuneration report within the Directors’
Report.
G) Related party transactions
Other than, the transactions disclosed above there are no other transactions between related parties that require disclosure.
16.
Segmental Information
The economic entity operates predominantly in one geographic location. The operations of the economic entity consist of mining and
exploration for gold and other minerals within Australia.
1,000,000
1,000,000
1,000,000
500,000
1,000,000
1,000,000
500,000
6,000,000
2007
$
1,409,158
-
-
-
586,241
1,995,399
8
0
0
2
t
r
o
p
e
R
l
a
u
n
n
A
4
4
d
t
L
s
e
c
r
u
o
s
e
R
e
n
a
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A
17.
Related Party Transactions
Directors (current)
Type of transaction
Management consulting
Director’s retainer
Geological consulting, including
geological and technical support
staff
Director’s retainer
Management consulting
Direc tor’s retainer
Director’s consulting
Director’s retainer
Consulting
Directors’ retainer
Related party
Directors
Terms and conditions
J S F Dunlop
Normal commercial
Consolidated
Parent entity
2008
$
8,250
68,310
2007
$
7,263
50,000
2008
$
8,250
68,310
2007
$
7,263
50,000
D I Chalmers
Normal commercial
577,228
61,500
583,442
60,000
439,193
61,500
468,148
60,000
I R Cornelius
Normal commercial
I J Gandel
Normal commercial
A D Lethlean
Normal commercial
2,400
49,167
5,400
49,167
7,941
49,576
-
40,000
8,000
40,000
3,600
39,732
2,400
49,167
5,400
49,167
7,941
49,576
-
40,000
8,000
40,000
3,600
39,732
-
451,121
-
451,121
Underwriting agreement
I J Gandel
(2007- 3.5% of
underwritten value )
18.
Controlled Entities
Name
Inc
Class
Australian Zirconia Ltd
Skyray Properties Ltd
Kiwi Australian Resources Pty Ltd
LFB Resources NL
Australasian Geo-Data Pty Ltd
WA
BVI
NSW
NSW
Qld
Ord
Ord
Ord
Ord
Ord
Contribution to Group Profit (Loss) after minorities
Parent – Alkane Resources Ltd
Profit (loss) for year – group
Loans to (from) subsidiaries
Provision for loss
Parent net investment in subsidiaries
Book value
2008
$
2007
$
Equity
2008
2007
%
%
Contribution to Group
2007
2008
$
$
1
1
2,300,000
2,300,000
-
3,558,700
6,864
5,865,565
-
3,558,700
6,864
5,865,565
100
100
100
100
74
100
100
100
100
74
(684,904)
(6,144)
-
(28,492)
(157)
(21,146)
(7,127)
-
(46,251)
(157)
4
5
(719,697)
701,854
(74,681)
(1,250,713)
(17,843)
(1,325,394)
12,978,387
(8,282,089)
10,561,863
9,570,310
(7,562,337)
7,873,538
19.
Reconciliation of Cash
Cash as at the end of the financial year as shown
in the Cash Flow Statement is reconciled to the
related items in the balance sheet as follows:
Cash at bank
Call deposits
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
6,081,482
2,242,521
8,324,003
5,788,359
918,264
6,706,623
6,040,297
2,242,521
8,282,818
5,775,412
918,264
6,693,676
Cash at bank bears a weighted average interest rate of 3.75% (2007: 5.21%)
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
20.
Reconciliation Of Net Cash Outflow From
Operating Activities To Operating Loss After
Income Tax
Operating Profit (Loss)
Non-cash fair value adjustments
•
•
Depreciation
Movements in Provisions
Share based payments
Grant received
Exploration
Loss on sale of assets
Changes in net current assets and liabilities
Decrease (increase) in Trade and other
•
receivables
•
Decrease (increase) in Trade and other payables
Net cash provided for operating activities
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
(17,898)
(1,325,449)
(17,898)
(1,325,497)
49,325
29,843
197,476
(1,489,772)
1,015,344
-
(339,332)
71,759
(483,255)
16,707
24,571
904,238
(834,620)
443,260
11,653
36,766
602,449
(120,425)
49,325
749,594
197,476
(1,489,772)
304,474
-
(346,836)
(129,768)
(683,405)
16,707
99,189
904,238
(834,620)
413,719
11,653
43,639
576,319
(94,653)
The Company has no credit standby or financing facilities in place other than disclosed in the statement of financial position.
21.
Share-Based Payments
Set out below is a summary of the options granted during the financial period:
Consolidated and parent entity 2008
Grant Date
Expiry date
Exercise
Balance at
Granted
Excercised
Expired
Balance at
Vested and
price
the start of
during the
during the
during the
end of the
exercisable
the year
financial
financial
financial
financial
period
period
period
period
at end of
financial
period
(Number)
(Number)
(Number)
(Number)
(Number)
(Number)
Director options
19 April 2007
19 April 2007
30 Sep 2008
30 Sep 2009
$0.25
$0.30
2,000,000
2,500,000
Company Secretary options
19 April 2007
30 Sep 2008
19 April 2007
30 Sep 2009
$0.25
$0.30
500,000
500,000
-
(1,712,000)
(288,000)
-
-
-
-
-
2,500,000
2,500,000
-
-
500,000
500,000
-
(500,000)
-
-
-
-
-
Employee/Consultants options
30 May 2003
29 May 2008
19 April 2007
19 April 2007
30 Sep 2008
30 Sep 2009
$0.45
$0.25
$0.30
975,000
850,000
(975,000)
(750,000)
(100,000)
-
-
-
-
1,200,000
200,000
-
-
1,400,000
1,400,000
Weighted average exercise price
$0.30
$0.30
$0.25
$0.39
$0.30
$0.30
8
0
0
2
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n
A
6
4
d
t
L
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e
R
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l
A
21.
Share-Based Payments (continued)
Consolidated and parent entity 2007
Grant Date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
during the
financial
period
Excercised
during the
financial
period
Expired
during the
financial
period
Balance at
end of the
financial
period
(Number)
(Number)
(Number)
(Number)
(Number)
Vested and
exercisable
at end of
financial
period
(Number)
Director options
10 June 2002
26 May 2003
19 April 2007
19 April 2007
24 May 2007
24 May2007
30 Sep 2008
30 Sep 2009
Company Secretary options
19 April 2007
19 April 2007
30 Sep 2008
30 Sep 2009
Employee/Consultants options
10 June 2002
30 May 2003
19 April 2007
19 April 2007
24 May 2007
29 May 2008
30 Sep 2008
30 Sep 2009
$0.60
$0.60
$0.25
$0.30
$0.25
$0.30
$0.40
$0.45
$0.25
$0.30
4,000,000
750,000
-
-
-
-
-
-
2,500,000
2,500,000
500,000
500,000
(500,000)
-
-
-
500,000
975,000
-
-
-
-
1,200,000
1,200,000
(500,000)
-
(350,000)
-
-
-
(4,000,000)
(750,000)
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
2,500,000
2,000,000
-
500,000
500,000
-
975,000
850,000
1,200,000
500,000
-
-
975,000
850,000
-
Weighted average exercise price
$0.50
$0.28
$0.25
$0.50
$0.30
$0.30
4
7
Options granted carry no dividend or voting rights.
When exercisable, each option is convertible into one ordinary share.
Director option expense
(A)
No options were issued to the Directors during the financial year.
(B) Employee option expense
Employee share options have been granted to provide long-term incentive for senior employees to deliver long-term shareholder returns. Participation
in employee share options is at the Board’s discretion and no individual has a contractual right to participate in a plan or to receive any guaranteed
benefits.
Fair value of options granted on 17 April 2008 and expiring on 30/09/2009
The fair value at grant date is independently determined using a Black-Scholes option pricing model that takes into account the exercise price($0.30),
the term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the share price at grant date
($0.375) and expected price volatility (107%) of the underlying share, the expected dividend yield (nil) and the risk-free interest rate (6.27%) for the
term of the option.
(C) Expenses arising from share-based payment transactions
Total expenses arising from share-based payments recognised during the financial period as employee benefits expense was:
Director benefits (share options)
Employee/Consultant benefits (share options)
Consolidated
Parent entity
2008
$
109,663
87,813
197,476
2007
$
645,884
258,354
904,238
2008
$
109,663
87,813
197,476
2007
$
645,884
258,354
904,238
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
22.
Subsequent Events
No other matter or circumstance has arisen since 31 December 2008 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 2008.
23.
Earnings per Share ("Eps")
(a)
Basic loss per share
Loss attributable to the ordinary equity holders of the Company
(b)
Earnings used in calculating earnings per share
Loss attributable to the ordinary equity holders of the Company
Consolidated
Parent entity
2008
$
(0.00)
2008
$
2007
$
(0.01)
2007
$
2008
$
(0.00)
2008
$
2007
$
(0.01)
2007
$
(17,898)
2008
Number
(1,325,449)
2007
Number
(17,898)
2008
Number
(1,325,497)
2007
Number
(c)
The weighted average number of ordinary shares on issue used
in the calculation of basic earnings per share
244,634,162
200,798,126
244,634,162
200,798,126
The diluted earnings per share is not materially different from the basic earnings per share.
24.
Commitments for Expenditure
Mineral Tenement Leases
In order to maintain current rights of tenure to mining tenements, the Company will be required to outlay in 2009 amounts of approximately $1,080,000
(2008 $1,081,000) 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.
The estimated exploration and joint venture expenditure commitments for the ensuing year, but not recognised as a liability in the financial statements:
Consolidated
Within one year
Later than one year but less than five years
Later than five years
25.
Financial Risk Management
2008
$
1,080,000
-
-
2007
$
1,081,000
-
-
1,080,000
1,081,000
Overview:
The company and group have exposure to the following risks from their use of financial instruments:
(a) credit risk
(b) liquidity risk
(a) market risk
This note presents information about the company’s and group’s exposure to each of the above risks, their objectives, policies and processes for measuring and
managing risk, and the management of capital.
The board of directors has overall responsibility for the establishment and oversight of the risk management framework. Management monitors and manages the
financial risks relating to the operations of the group through regular reviews of the risks.
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25.
Financial Risk Management (continued)
(a) Credit risk:
Credit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument fails to meet its contractual obligations,
and arises principally from the group’s receivables from customers and investment securities. For the company it arises from receivables due from
subsidiaries and recharges to joint venture partners.
(i) Investments:
The group limits its exposure to credit risk by only investing with counterparties that have an acceptable credit rating.
(ii) Trade and other receivables:
The company and group have established an allowance for impairment that represents their estimate of incurred losses in respect of receivables
and investments. The main components of this allowance are a specific loss component that relates to individually significant exposures. The
management does not expect any counterparty to fail to meet its obligations.
Presently, the group undertakes exploration and evaluation activities in Australia. At the balance sheet date there were no significant concentrations
of credit risk.
Exposure to credit risk:
The carrying amount of the group’s financial assets represents the maximum credit exposure.
The group’s maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
Other financial assets
Total exposure
Consolidated
Carrying amount
Parent entity
Carrying amount
2008
$
8,691,269
756,389
1,813,567
11,261,225
2007
$
7,146,935
419,627
13,687,950
21,254,512
2008
$
8,650,084
749,453
1,711,140
11,106,677
2007
$
7,029,405
405,187
13,687,950
21,122,542
4
9
An impairment loss of $719,751 in respect of inter-group loans was recognised during the current year from a net asset analysis of the subsidiaries
positions.
Impairment losses:
None of the Company’s other receivables are past due (2007: nil).
The movement in the allowance for impairment in respect of inter-group loans on a non-consolidated basis during the year was as follows:
Balance at 1 January
Impairment loss/(write-back) recognised
Balance at 31 December
Parent entity
2008
$
(7,562,338)
(719,751)
(8,282,089)
2007
$
(7,487,719)
(74,619)
(7,562,338)
Whilst the loans were not payable as at 31 December 2008, a provision for impairment based on the subsidiaries financial position was made. The
balance of this provision may vary due to the performance of a subsidiary in a given year.
The movement in the allowance for impairment in respect of listed shares on a consolidated basis during the year was as follows:
Balance at 1 January
Impairment loss/(write-back) recognised
Balance at 31 December
Consolidated
Carrying amount
Parent entity
Carrying amount
2008
$
13,680,000
(11,970,00)
1,710,000
2007
$
9,000
13,671,000
13,680,000
2008
$
13,680,000
(11,970,00)
1,710,000
2007
$
9,000
13,671,000
13,680,000
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
25.
Financial Risk Management (continued)
(b) Liquidity risk:
Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group’s approach to managing liquidity is to
ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the group’s reputation.
The group manages liquidity risk by maintaining adequate reserves through continuously monitoring forecast and actual cash flows.
The consolidated entity's exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and
unrecognised at the balance date, are as follows:
Weighted Average
Effective Interest Rate
%
4.49
3.83
-
-
-
Weighted Average
Effective Interest Rate
%
5.76
5.87
-
-
-
2008
Financial assets
Cash
Interest bearing deposits
Investments
Receivables
Financial liabilities
Accounts payable
2007
Financial assets
Cash
Interest bearing deposits
Investments
Receivables
Financial liabilities
Accounts payable
Variable
Interest
$
Fixed Maturity Date
Less than
1 year
$
1 to 2
years
$
Non-interest
Total
Bearing
$
$
8,268,027
259,693
-
200,000
-
-
-
-
8,527,720
200,000
-
-
-
-
-
-
-
-
-
-
-
55,976
10,000
8,324,003
469,693
1,711,140
756,389
2,533,505
1,711,140
756,389
11,261,225
(1,241,653)
(1,241,653)
(1,241,653)
(1,241,653)
Fixed Maturity Date
Less than
1 year
$
1 to 2
years
$
Non-interest
Total
Bearing
$
$
Variable
Interest
$
2,047,577
220,062
-
-
-
200,000
-
-
2,267,639
200,000
-
-
-
-
-
-
-
-
-
-
-
4,659,046
20,250
13,687,950
419,627
18,786,873
6,706,623
440,312
13,687,950
419,627
21,254,512
(1,452,231)
(1,452,231)
(1,452,231)
(1,452,231)
(c) Market Risk:
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the group’s income or the
value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable
parameters, while optimising the return.
(i) Currency risk:
The group does not operate internationally and is not exposed to currency risk.
The group has not entered into any derivative financial instruments to hedge such investments and anticipated future receipts or payments that are
denominated in a foreign currency.
The group’s investments in its subsidiaries are not hedged as those currency positions are considered to be long term in nature.
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25.
Financial Risk Management (continued)
(ii) Price Risk
The Group and the parent entity are exposed to equity securities price risk. This arises from investments held by the Group and classified on the balance
sheet as available for sale or at fair value through profit and loss.
The table below summarises the impact of increases/decreases of the securities prices on the Group’s and the parent entity’s profit for the year and on
equity. The analysis is based on the assumption that the price of securities increased/decreased by 80% (2007 – 60%) with all the other variables held
constant.
Consolidated and Parent
31 December 2008 – 80% change
31 December 2007 – 60% change
Increase
$
2,314
1,440
Profit or loss
Decrease
$
Equity
Increase
$
Decrease
$
(2,314)
10,950,360
(10,950,360)
(1,440)
5,023,440
(5,023,440)
(iii) Interest rate risk:
At balance date the group had minimal exposure to interest rate risk, through its cash and equivalents held within financial institution.
Fixed rate instruments
Financial assets
Variable rate instruments
Financial assets
Consolidated
Carrying Amount
Parent Entity
Carrying Amount
31 December
31 December
31 December
31 December
2008
$
-
2007
$
2008
$
2007
$
-
-
-
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1
11,261,225
21,254,512
11,110,677
21,122,542
Fair value sensitivity analysis for fixed rate instruments:
There was no exposure to fixed rate instruments at balance date or at the previous reporting period.
Fair value sensitivity analysis for variable rate instruments:
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown
below. The analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2007.
Consolidated
Profit or loss
Equity
100 bp increase
100bp decrease
100 bp increase
100 bp decrease
31 December 2008
Cash and cash equivalents
31 December 2007
Cash and cash equivalents
112,613
(112,613)
112,613
(112,613)
212,545
(212,545)
212,545
(212,545)
Net Fair value
For unlisted investments where there is no organised financial market, the net fair value has been based on a reasonable estimation of the underlying
assets of the investment.
For other assets and other liabilities the net fair value approximates their carrying value as disclosed in the Balance Sheet.
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
F o r T h e Y e a r E n d e d 3 1 D e c e m b e r 2 0 0 8
26.
Auditors remuneration
Amount received or due and receivable by the auditor for:
a) Audit services
Audit and review of financial reports under the Corporations Act
2001
b) Non Audit services
Income tax return preparation
Total remuneration of auditors
Consolidated
Parent entity
2008
$
2007
$
2008
$
2007
$
42,500
48,000
42,500
48,000
8,000
50,500
8,000
56,000
8,000
50,500
8,000
56,000
The auditor of the Company and its subsidiaries is Rothsay Chartered Accountants.
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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D i r e c t o r s ’ D e c l a r a t i o n
In the opinion of the Directors of Alkane Resources Ltd:
a)
the financial statements and notes set out in preceding pages are in accordance with the Corporations Act 2001 including:
i)
giving a true and fair view of the financial position of the Company and the consolidated entity as at 31 December 2008 and of their performance
for the financial year ending on that date; and
ii)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements
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 audited remuneration disclosures set out in the Directors’ Report comply with Accounting Standard AASB 124 Related Party Disclosures and the
Corporations Regulations 2001.
b)
c)
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.
D I Chalmers
Director
Perth, 27th March 2009
5
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Independent Audit Report To The Members Of
Alkane Resources Ltd
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We have audited the accompanying financial report of Alkane Resources Ltd (the Company”) which comprises the balance sheet as at 31 December
2008 and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant
accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it
controlled at the year’s end or from time to time during the year.
The Company has disclosed information as required by Australian Accounting Standard AASB 124 Related Party Disclosures (“remuneration
disclosures”) under the heading “Remuneration Report” in the directors’ report as permitted by the Corporations Regulations 2001.
Directors Responsibility for the Financial Report
The Directors of the Company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Australian
Accounting Standards (including the Australian Accounting Interpretations) and 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. The Directors are also responsible for the remuneration disclosures contained in the
directors’ report.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing
Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform
the audit to obtain reasonable assurance as to whether the financial report is free of material misstatement and the remuneration disclosures in the
Directors’ report comply with AASB 124.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected
depend on our judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In
making those risk assessments, we consider internal controls relevant to the entity’s preparation and fair presentation of the financial report in order to
design audit procedures that are appropriate to the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal controls. An audit also includes evaluating the appropriateness of accounting policies used in and the reasonableness of accounting estimates
made by the directors as well as evaluating the overall presentation of the financial report and the remuneration disclosures contained in the directors’
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
We are independent of the Company, and have met the independence requirements of Australian professional ethical requirements and the Corporations
Act 2001.
Liability limited by the Accountants Scheme, approved under the Professional Standards Act 1994 (NSW).
Audit opinion
In our opinion the financial report of Alkane Resources Ltd is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Company’s and the group’s financial position as at 31 December 2008 and of their performance for the
year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
the consolidated financial report also complies with International Financial Reporting Standards.
the remuneration disclosures in the Directors’ report comply with AASB 124
a)
b)
c)
Rothsay
Frank Vrachas
Partner
Dated 27 March 2009
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C o r p o r a t e G o v e r n a n c e
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INTRODUCTION
In accordance with the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (2nd edition) ("ASX Principles
and Recommendations")1, Alkane Resources Ltd ("Company") has made it a priority to adopt systems of control and accountability as the basis for the
administration of corporate governance. Some of these policies and procedures are summarised in this statement. Commensurate with the spirit of the
ASX Principles and Recommendations, the Company has followed each recommendation where the Board has considered the recommendation to be
an appropriate benchmark for corporate governance practices, taking into account factors such as the size of the Company and the Board, resources
available and activities of the Company. Where, after due consideration, the Company's corporate governance practices depart from the ASX Principles
and Recommendations, the Board has offered full disclosure of the nature of and reason for the adoption of its own practice, in compliance with the
"if not, why not" regime.
Further information about the Company's corporate governance practices is set out on the Company's website at www.alkane.com.au. In accordance
with the ASX Principles and Recommendations, information published on the Company's website includes charters (for the Board and its committees),
the Company's Code of Conduct and other policies and procedures relating to the Board and its responsibilities.
DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES
Summary Statement
Recommendation 1.1
Recommendation 1.2
Recommendation 1.3
Recommendation 2.1
Recommendation 2.2
Recommendation 2.3
Recommendation 2.4
Recommendation 2.5
Recommendation 2.6
Recommendation 3.1
Recommendation 3.2
Recommendation 3.3
Recommendation 4.1
Recommendation 4.2
ASX P & R1
3
If not, why not2
3
3
3
3
3
3
3
3
3
3
3
3
3
Recommendation 4.3
Recommendation 4.4
Recommendation 5.1
Recommendation 5.2
Recommendation 6.1
Recommendation 6.2
Recommendation 7.1
Recommendation 7.2
Recommendation 7.3
Recommendation 7.4
Recommendation 8.1
Recommendation 8.2
Recommendation 8.3
ASX P & R1
3
If not, why not2
3
3
3
3
3
3
3
3
3
3
3
3
1
2
Indicates where the Company has followed the Principles & Recommendations.
Indicates where the Company has provided "if not, why not" disclosure.
Since 17 April 2008 the Company has adopted a new Corporate Governance Manual which complies with the ASX Principles and Recommendations.
During the Company's 2008 financial year ("Reporting Period") the Company has complied with each of the Principles and Recommendations, other
than in relation to the matters specified below.
Principle 2
Recommendation 2.4: The Board should establish a Nomination Committee.
Notification of Departure
No separate nomination committee has been established.
Explanation for Departure
The role of the nomination committee is carried out by the full Board. The Board considers that at this stage, no efficiencies or other benefits would
be gained by establishing a separate nomination committee. To assist the Board in fulfilling its function in this regard, it has adopted a Nomination
Committee Charter.
1
A copy of the ASX Principles and Recommendations is set out on the Company’s website under the Section entitled "Corporate Governance".
Principle 8
Recommendation 8.1: The Board should establish a Remuneration Committee.
Notification of Departure
No separate remuneration committee has been established.
Explanation for Departure
The role of the remuneration committee is carried out by the full Board. The Board considers that at this stage, no efficiencies or other benefits would
be gained by establishing a separate remuneration committee. To assist the Board in fulfilling its function in this regard, it has adopted a Remuneration
Committee Charter.
NOMINATION MATTERS
The full Board carries out the role of the Nomination Committee. The full Board did not officially convene as a Nomination Committee during the
Reporting Period, however nomination related discussions occurred from time to time during the year as required. To assist the Board to fulfil its
function as the Nomination Committee, it has adopted a Nomination Committee Charter (available on the Company's website).
AUDIT MATTERS
The Audit Committee members are Anthony Lethlean, John Dunlop and Ian Gandel.
The Audit Committee held four meetings during the Reporting Period. The following table identifies those directors who are members of the Audit
Committee and shows their attendance at committee meetings:
Name
John Dunlop
Anthony Lethlean
Ian Gandel
No. of meetings attended
4
4
4
5
7
While none of the Audit Committee members have financial qualifications, they all have extensive industry knowledge and are financially literate. Details
of each of the directors' qualifications are set out in the Directors' Report. Further, the Chief Financial Officer is available to assist the Audit Committee,
if necessary. The Audit Committee Charter also provides that the Committee may seek explanations and additional information from the Company's
external auditors, without management present, when required.
REMUNERATION MATTERS
Details of remuneration, including the Company's policy on remuneration, are contained in the "Remuneration Report" which forms part of the Directors'
Report.
The full Board, in its capacity as the Remuneration Committee, held two meetings during the Reporting Period. All Board members attended the
meetings. To assist the Board to fulfil its function as the Remuneration Committee, it has adopted a Remuneration Committee Charter (available on the
Company's website). Further the Company subscribes to an independent annual report to provide comparative mining industry remuneration details
for all levels of personnel.
OTHER
Skills, Experience, Expertise and term of office of each Director
A profile of each director containing their skills, experience and expertise is set out in the Directors' Report.
C o r p o r a t e G o v e r n a n c e
Assurances to the Board
The Board has received assurance from management that the Company's management of its material business risks are effective. Further, the Chief
Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) have provided a declaration in accordance with section 295A of the
Corporations Act and have assured the Board that such declaration is founded on a sound system of risk management and internal control and that the
system is operating effectively in all material respects in relation to financial reporting risk.
Risk Management
The Company is committed to the implementation and maintenance of an integrated risk management program for all its activities in accordance with
the Australian/New Zealand Standard on Risk Management (AS/NZS 4360:2004) and during 2007 the Company adopted a Risk Management Policy and
Risk Management Manual. The Company’s Risk Management Policy, Manual and procedures are subject to periodic review.
In adopting the Risk Management Policy it was accepted that risk for the Company is likely to occur in two areas: strategic risk (including political and
structural risks and risks associated with opportunity and with reputation) and organisational risk (including risks associated with financial and asset
management, information management and technology, compliance and regulatory issues, operational management, occupational health and safety
and stakeholder management).
The implementation of the Risk Management Policy is aimed at enabling the Company to:
•
•
•
•
•
•
•
facilitate the Board and senior management in making informed business decisions based on risk assessment
identify, prioritise and manage risks in a coordinated manner
provide a more rigorous basis for strategic planning as a result of a structured consideration of the key element of risk
better identify and exploit opportunities
comply with relevant legislation
identify and manage undesirable risks to minimise costly surprises
reduce costs through more targeted and effective controls
In 2007, a Risk Management Workshop was conducted with the Board and senior management personnel to identify specific risks applying to the
Company and to analyse these risks in terms of likelihood and consequence in the context of existing risk control measures. The workshop also sought
to identify areas of risk requiring attention in terms of improving mitigating practices and controls.
The Board of Alkane Resources Ltd is accountable for the risks within the Company, and oversight of the Risk Management Policy and procedures
is conducted by the Audit Committee. It is the responsibility of the management team, led by the Managing Director, to manage risks within their
respective areas of responsibility. It is the responsibility of all personnel for sound risk management practices within the individual’s particular area.
An Operational Risk Management Sponsor has been appointed with the responsibility of keeping the Risk Management Policy and Operational Risk
Framework updated subject to formal approval of policy amendments by the Board.
In the process for compliance with section 295A of the Corporations Act, detailed internal control questionnaires are completed and reviewed by
management, by the Audit Committee and by the Company’s external auditor. The Board also receives written assurance from the Managing Director
and the Chief Financial Officer that, in their respective opinions, the declaration provided by each of them in accordance with section 295A of the
Corporations Act 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.
Identification of Independent Directors and the Company's Materiality Thresholds
In considering the independence of directors, the Board refers to its Policy on Assessing the Independence of Directors (available on the Company's
website).
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The Board has agreed on the following guidelines for assessing the materiality of matters, as set out in the Company's Board Charter (available on the
Company's website):
•
•
•
•
balance sheet items are material if they have a value of more than 10% of pro-forma net asset.
profit and loss items are material if they will have an impact on the current year operating result of 10% or more.
items are also material if they impact on the reputation of the Company, involve a breach of legislation, are outside the ordinary course of
business, they could affect the Company’s rights to its assets, if accumulated they would trigger the quantitative tests, involve a contingent
liability that would have a probable effect of 10% or more on balance sheet or profit and loss items, or they will have an effect on operations
which is likely to result in an increase or decrease in net income or dividend distribution of more than 10%.
contracts will be considered material if they are outside the ordinary course of business, contain exceptionally onerous provisions in the
opinion of the Board, impact on income or distribution in excess of the quantitative tests, there is a likelihood that either party will default, and
the default may trigger any of the quantitative or qualitative tests, are essential to the activities of the Company and cannot be replaced, or
cannot be replaced without an increase in cost of such a quantum, triggering any of the quantitative tests, contain or trigger change of control
provisions, they are between or for the benefit of related parties, or otherwise trigger the quantitative tests.
In considering the independence of directors, the Board refers to the information set out in Box 2.1 of the ASX Principles and Recommendations
("Independence Criteria"). To the extent that it is necessary for the Board to consider issues of materiality, the Board refers to the thresholds for
qualitative and quantitative materiality as adopted by the Board and contained in the Board Charter, which is disclosed in full on the Company’s
website.
Applying the Independence Criteria, the independent directors of the Company are John Dunlop and Anthony Lethlean. Notwithstanding the Independence
Criteria, the Board considers Ian Gandel and Ian Cornelius to be independent.
The Board considers Ian Gandel to be independent of management and the executive of the Company. Furthermore, Mr Gandel's interests as a major
shareholder are considered to be in line with the interests of all other shareholders.
5
9
The Board considers Ian Cornelius to be independent of management and the executive of the Company notwithstanding his long tenure as a director
of the Company and his previous role as Executive Chairman.
Statement concerning availability of Independent Professional Advice
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 chairperson, the Company will pay the reasonable expenses associated
with obtaining such advice.
Performance Evaluations
During the Reporting Period an evaluation of the Board, individual directors and the company secretary was carried out. The evaluation was carried out
by the chairperson. In relation to the Board and individual director evaluations, each director completed a Director's Questionnaire which was provided
to the chairperson to assist with his review. The Questionnaires were also tabled and discussed at a meeting of the Board.
Existence and Terms of any Schemes for Retirement Benefits for Non-Executive Directors
There are no termination or retirement benefits for non-executive directors.
S h a r e h o l d e r I n f o r m a t i o n
1.
Share Holding at 27 March 2009 - ALK
(a)
Distribution of Shareholders
Share holding
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
over
(b)
(c)
(d)
Unmarketable Parcels
There are 318 shareholders who hold less than a marketable parcel.
Voting Rights
Voting rights are one vote per fully paid ordinary share
Names of the substantial holders as disclosed in substantial holding notices:
Shareholder
Abbotsleigh Pty Ltd
2.
Top Twenty Shareholders at 27 March 2009
Shareholder
Abbotsleigh Pty Ltd
Merrill Lynch (Australia) Nominees Pty Ltd
ANZ Nominees Limited
National Nominees Limited
JP Morgan Nominees Australia Limited
Sydney Equities Pty Limited
Funding Securities Pty Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Lampsac Pty Ltd
Riomin Australia Gold Pty Ltd
Eikofin B V B A
Kinane Holdings Pty Ltd
RM Dimond & Associates Pty Ltd
Leefab Pty Ltd
Choice Investments (Dubbo) Pty Ltd
Bond Street Custodians Limited
Spacebull Pty Limited
Mr Ian Cornelius
Aquatic Resources Limited
Number of Holders
Fully paid ordinary shares
186
919
530
1,209
214
3,058
Number of Shares
70,411,964
% Issued
Capital
28.78
6.44
4.70
3.81
3.14
1.96
1.49
1.27
1.06
0.89
0.82
0.82
0.82
0.57
0.55
0.53
0.51
0.49
0.49
0.49
Number
of Shares
70,411,964
15,753,690
11,507,618
9,313,966
7,680,973
4,798,000
3,650,000
3,101,420
2,592,114
2,176,549
2,000,000
2,000,000
2,000,000
1,400,000
1,353,384
1,294,667
1,239,417
1,209,000
1,205,600
1,203,400
145,891,762
59.63
8
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0
2
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6
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A
3.
Unlisted Options
Option Holding at 27 March 2009 – ALKAU
Total options exercisable at 30 cents each
expiring 30 September 2009
Number of holders
Holdings of more than 20%
Not applicable
Option Holding at 27 March 2009 – ALKAY
Total options exercisable at 30 cents each
expiring 30 September 2009
Number of holders
Holdings of more than 20%
Not applicable
4.
5.
Restricted Securities
As at the date of this report, there were no securities subject to restriction under the Listing Rules of ASX Limited.
On Market Buy-back
As at the date of this report, there was no current on market buy-back
3,000,000
9
1,400,000
8
6
1
T e n e m e n t S c h e d u l e
8
0
0
2
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2
6
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Tenement
Number
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 6320
EL 6700
ELA 3623
EL 5675
EL 5830
EL 5942
EL 6085
EL 7139
EL 7020
EL 4022
EL 7235
EL 5760
EL 6111
EL 6025
EL 6091
E 46/522
E 46/523
E 46/524
M 36/303
M 36/329
M 36/330
Project
Name
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
Wellington, NSW
Wellington, NSW
Wellington, NSW
Tomingley, NSW
Tomingley, NSW
Tomingley, NSW
Tomingley, NSW
Tomingley, NSW
Cudal, NSW
Bodangora, NSW
Calula, NSW
Moorilda, NSW
Moorilda, NSW
Orange-Molong, NSW
Orange-Molong, NSW
Nullagine, WA
Nullagine, WA
Nullagine, WA
Miranda Well, WA
McDonough, WA
McDonough, WA
Alkane
Interest %
Other interests
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
100
100
100
0
0
0
25
25
25
]
]
]
]
] Alkane group 100%
]
]
]
]
]
]
]
] Alkane group 100%
]
] Alkane group 100%
]
]
]
] Alkane group 100%
]
]
]
] Alkane group 100%
] Alkane group 100%
] Alkane group 100%
]
] Alkane group 100%
] Newmont Australia Ltd earning 51%
]
] Alkane group retains 60% interest
] in diamond potential
]
] Xstrata Nickel holds 75%, Alkane diluting
] Xstrata Nickel holds 75%, Alkane diluting
]
Tenement
Number
E 36/622
P 36/1601
P 36/1602
P 36/1603
P 36/1604
P 36/1605
Project
Name
Alkane
Interest %
Other interests
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
Leinster Downs, WA
25
25
25
25
25
25
]
]
] Xstrata Nickel holds 75%, Alkane diluting
]
]
]
6
3
8
0
0
2
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R
l
a
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A
4
6
d
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c
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R
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a
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A
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