AUSTRAL GOLD LIMITED
ANNUAL REPORT
2011
Contents
Chairman’s Letter ................................................................................................................................ 1
Corporate Directory ............................................................................................................................. 2
Review of Activities ...................................................................................................................... 3 – 9
Directors’ Report ...................................................................................................................... 10 - 19
Auditors Independence Declaration..................................................................................................20
Statement of Comprehensive Income ............................................................................................... 21
Statement of Financial Position.........................................................................................................22
Statement of Changes in Equity ....................................................................................................... 23
Statement of Cash Flows ................................................................................................................ 24
Notes to the Financial Statements ........................................................................................... 25 - 56
Directors’ Declaration ...................................................................................................................... 57
Independent Auditors’ Report ................................................................................................... 58- 59
Additional Information Required by Australian Stock Exchange Limited
Corporate Governance Statement................................................................... .............60 - 64
Statement of Issued Capital..................................................................................................65
Substantial Shareholders......................................................................................................65
Top Twenty Shareholders.....................................................................................................66
Chairman´s Letter
Dear Shareholders,
I am pleased to present this annual report for the 2011 year, my first as Chairman of Austral
Gold.
This has been a promising year for Austral Gold with the completion of the bankable feasibility
study and commencement of gold and silver production at our major project, Guanaco in Chile.
With gold recently trading at record high prices, it is indeed a good time to be focused on gold
mining and precious metals exploration. I am pleased to say that we now have a solid plan in
place to take Austral Gold to the next stage in its growth.
We have invested heavily in the Guanaco operation, and will continue to do so in order to make
this asset a highly successful gold and silver mine. The Board is currently assessing a number
of options to strengthen Guanaco and expand our asset base in Chile. We are assessing
additional gold and silver opportunities around Guanaco that include possible acquisitions, farm-
in agreements and joint ventures here.
We also plan to strengthen our presence in Argentina by broadening our exploration focus and
adding to our asset. Argentina is an important focus for us and we see considerable upside
opportunity in this market.
The major shareholder, IFISA and their associates in South America, have a track record of
success in building leadership positions in real estate investment, retail, asset management,
banking and agribusiness in Argentina and Brazil. They have supported Austral Gold and
provided financing to develop the Guanaco project to its current gold producing position.
With IFISA’s help and network, it is our plan to establish Austral Gold in a similar leadership
position in the resources sector. I have no doubt that our skilled staff and Board will make it
possible to transform Austral Gold into one of the leading mining companies in South America.
We will continue to update shareholders on our developments, and I would like to thank you for
your continued support of Austral Gold.
Yours sincerely,
Eduardo Elsztain
Chairman
1
Corporate Directory
Directors:
Eduardo Elsztain - Chairman & Non Executive Director
Saul Zang - Non Executive Director
Pablo Vergara del Carril - Non Executive Director
Stabro Kasaneva - Executive Director
Robert Trzebski - Independent Non-Executive Director
Ben Jarvis - Independent Non-Executive Director
(appointed 2 Jun 2011)
Company Secretary:
Catherine Lloyd
Registered Principal Office:
Suite 605, 80 William Street
Sydney NSW 2011
Antofagasta, Chile Office:
Telephone: +61 (02) 9380 7233
+61 (02) 9380 7972
Facsimile:
info@australgold.com.au
Email:
www.australgold.com.au
Website:
14 de Febrero 2065, of. 1103
Antofagasta, Chile
Telephone: +56 (55) 440 304
+56 (55) 440 305
Facsimile:
Buenos Aires, Argentina Office: Bolivar 108
Buenos Aires (1066) Argentina
Telephone: +54 (11) 4323 7500
+54 (11) 4323 7591
Facsimile:
Share Registry:
Computershare
GPO Box 2975
Melbourne VIC 3001
Tel (within Australia)
Tel (outside Australia)
1300 850 505
+61 3 9415 5000
Auditors:
PKF
www.pkf.com.au
Principal Bankers:
National Australia Bank Limited
www.nab.com.au
Solicitors:
Listed:
Norton Rose
www.nortonrose.com.au
Australian Stock Exchange
ASX: AGD
Place of Incorporation:
Western Australia
2
Review of Activities
The strategy of Austral Gold Limited (the Company) is to maximize shareholder value through
the development of mineral deposits in which the Company has an interest.
The Company continues to explore and invest in its Guanaco gold and silver mine (“Guanaco”)
in northern Chile to expand its mineral resources, increase the mine’s annual production and
improve its financial viability. This is our primary focus.
The Company is also seeking to acquire further properties in the Guanaco region and has
acquired properties in Argentina. The Company is also assessing a number of options to
expand its asset base in Chile and Argentina.
Guanaco Gold and Silver Mine, Chile (100% interest)
Background
In January 2003 Austral Gold Limited obtained, through its subsidiary Golden Rose International
Limited (GRIL), an option to acquire the Guanaco Project in Chile from subsidiaries of Kinross
Gold Corporation. At the General Meeting of the Company held on 14 March 2003, the
Shareholders approved the acquisition by the Company of an interest in the Guanaco Project.
The Guanaco Project was acquired from Compañia Minera Kinam Guanaco and Kinam de Chile
Limited (wholly owned subsidiaries of Kinross Gold Corporation) by a company that is currently
wholly owned by Guanaco Mining Company Limited (GMC) called Guanaco Compañía Minera
Limitada, incorporated in Chile.
Project and Mine Description
The Guanaco Mine is the Company’s main asset and is located some 220 kilometres south east
of Antofagasta in Northern Chile. It is at an elevation of some 2,700 metres and close to the Pan
American Highway which runs north/south through Chile.
Guanaco is located in the Palaeocene/Eocene belt, a structural trend which runs north/south
down the centre of Chile. This trend accommodates several large gold and copper mining
operations including Zaldivar, El Peñon and Escondida.
3
Mining was undertaken at Guanaco from 1886 - with some interruptions - until 2001. Gold,
copper and silver have been mined at Guanaco with more than 1 million ounces of gold
produced.
The year ended 30 June 2011 has been an exciting time at Guanaco. In August 2010 the
Bankable Feasibility Study (BFS) was finalised confirming viability of the project, then in early
October it was announced that a local contractor had been engaged to undertake open pit and
heap leach operations.
On 26 October 2010, the Company proudly announced that the first gold doré bar had been
poured. Since this time through to 31 August 2011, 8,126 gold ounces and 18,386 silver ounces
have been produced enabling the Company to record operating income for the first time.
Panoramic view taken from “Cerro Estrella” of
the Dumbo Pit and behind it the processing
plant, Heaps 1, 2 and 3 and the pregnant
solution ponds.
The refurbished crushing plant.
The first gold doré pouring in October 2010.
4
Bankable Feasibility Study
Key parameters of the BFS released in August 2010 and undertaken by AMEC International
(Chile S.A.) were as follows:
Reserves (probable)
Underground
Open Pit & Heap Leach
Financial Results
1.51Mt @ 4.23 g/t Au
205,000 oz Au
9.0Mt @ 0.62 g/t Au
179,000 oz Au
Start Up Capital Cost (including 10% contingency)
Average Annual Gold Production
Payback
Internal Rate of Return
Net Present Value (8% discount rate on cumulative net cash flow)
USD51.8M
50,000oz
3.0 years
36.9%
USD32.9M
Cash costs net of silver credit over projected mine life
USD560 per ounce
The reserves identified above have been calculated using a gold price of USD825 per oz and a
silver price of USD12.50 per oz.
The financial results were calculated on a gold price declining from USD1130/oz in 2010 to
USD960/oz in 2016 and a silver price of $15.15/oz remaining constant over the projected mine
life of five years.
Exploration Decline and Drilling Campaigns
An increase to gold and silver resources attributable to the Natalia mineralisation structure at
Guanaco was reported in September 2011.
This brings total gold and gold equivalent silver resources to almost 1 million ounces.
The decline totalling 1,641 meters was constructed between March and December 2010 and
allowed the underground delineation of the Cachinalito structure and nearby vein systems.
Decline portal at Guanaco.
5
A safety refuge for underground personnel.
A safety chimney with fortified ladder for
underground personnel, which also allows
natural ventilation.
Mesh and bolts cover the length of the decline.
Exploration continues to be a driving force of value at Guanaco through identifying, ranking and
investigating targets in our current tenements as well as considering new gold and silver
opportunities around Guanaco including staking new claims, possible acquisitions, farm-in
arrangements and joint ventures.
There has been an increase of about 22% in the Company’s tenements holdings around
Guanaco since June 2010. New claims were submitted during the year for 28 tenements
totalling 7,500 hectares.
6
Gold and Silver Production
Since production commenced in late 2010 through to 31 August 2011, 8,126 gold ounces and
18,386 silver ounces have been produced through heap leach. Whilst these figures are behind
budget, our rate of production has increased in recent months as technical difficulties have been
resolved. Production from underground reserves has not yet commenced.
A third leach pad has been constructed with
pre-treated ore and fresh ore from the open
pit for retreatment. The pregnant solution
ponds can be seen in the foreground.
A 30 ton truck discharging ore for crushing.
Refurbishment of critical components of the crushing and gold recovery facilities has been
completed and they are now in operation.
Other site works including upgrades to roads, maintenance facilities, power and water supply,
camp and other infrastructure has been undertaken.
7
AMINSA Project – San Juan, Argentina
San Juan is in the north west of Argentina, near the border with Chile. Under an Agreement
with Argentina Minera SA (AMINSA), Austral Gold is earning an interest in tenements covering
approximately 266,000 hectares in San Juan.
The properties are located near Xstrata’s advanced El Pachón copper exploration project in
Argentina and Los Pelambres owned by Antofagasta Minerals in Chile.
During 2010/2011 the exploration program focussed on analysing the gold anomaly discovered
in the Rincones de Araya project.
Further exploration at the Calderon-Calderoncito project commenced during the year prior to the
shutdown of activities at the end of the summer season.
8 de Julio Project - Santa Cruz, Argentina
8
In southern Patagonia, Austral Gold has nine tenement applications totalling almost 85,000
hectares in the Macizo el Deseado area in the Province of Santa Cruz.
During December 2010, geological mapping of the entire property of 8 de Julio was completed.
Chief Operating Officer & Director Stabro Kasaneva and a consultant reviewed the results and
13 target areas predominantly in the west were mapped at a larger scale. Veins with potential
ore shoots were identified in three areas and 91 samples were sent for geochemical assaying.
The Los Pino-Aguada Norte and Barroso Grande areas both showed anomalies for gold and
silver and ore considered to have the greatest potential for the project. The most attractive
results were found in the Barroso Grande area.
A ground magnetic program was completed in the Barroso Grande area followed by a
geochemical sampling campaign. Trench works have been designed and are planned to be
carried out in the next few months.
9
DIRECTORS REPORT
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Your Directors present the following report for the financial year ended 30 June 2011 together with the
financial report of Austral Gold Limited (“the Company”) and the consolidated financial report of the
economic entity, being the Company and its subsidiaries, (referred to hereafter as the Group) for the year
ended 30 June 2011 and the auditors’ report thereon.
PRINCIPAL ACTIVITIES
The principal activities of the Company during the course of the financial year were exploration,
evaluation of mineral properties, and gold and silver production as described in preceding sections of this
report.
The Company is a company limited by shares and incorporated and domiciled in Australia.
Detailed information on the Company’s operations during the year ended 30 June 2011 has been
released through the Company’s announcements and reports to the Australian Stock Exchange. This
information can also be accessed from the Company’s website at www.australgold.com.au.
REVIEW AND RESULTS OF OPERATIONS
Operating Results and Dividends
The Group’s net profit attributable to members for the year ended 30 June 2011 was $13,325,218 (2010:
loss $9,165,580).
No dividends of the Company or its subsidiaries have been paid, declared or recommended since the end
of the financial year. The Board does not recommend the payment of a dividend in respect of the
reporting period.
Financial Position
The total assets of the Group have increased by $32,579,540 since 30 June 2010 to $102,687,843 at 30
June 2011. The investment in the Guanaco Project has been assessed at fair value in accordance with
Accounting Standards.
The Company has the support of its substantial shareholder, Inversiones Financieras del Sur S.A. (IFISA)
and associates, who confirm that they will continue to support Austral Gold Limited by providing adequate
financial assistance in accordance with the details contained in the Funding Agreements between Austral
Gold Limited and IFISA.
The Directors believe the Company is in a position to maintain its current operations.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
Since its incorporation, Austral Gold has been an explorer for gold. First production of gold and silver
from Guanaco occurred in late 2010, and in line with the forecast commissioning period, commercial
production generated the company’s first operating income in January 2011. The focus is now shifting to
stabilise and increase production levels.
Further effort is being directed towards identifying and where possible, securing alternate sources of ore
from tenements within haulage distance from Guanaco, so that the newly refurbished crushing and gold
treatment facilities can be utilised to full capacity.
The Company is also exploring in both the San Juan and Santa Cruz provinces of Argentina. Whilst no
resources have yet been identified on these tenements, the geological prospectivity of some areas is
encouraging.
10
DIRECTORS REPORT
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
In summary, Austral Gold is an emerging gold producer and will continue working toward increasing
production, acquiring surrounding areas to continue with exploration and thus, extending the life of mine
program and working toward full capacity.
EVENTS SUBSEQUENT TO BALANCE DATE
On 26 July 2011 Austral Gold Limited signed amendments to the funding agreements with Inversiones
Finacieras del Sur S.A. (IFISA) to extend total borrowing facilities to USD59 million, an increase of USD8
million. In addition, the termination date was extended to 30 September 2014 on both agreements.
On 6 September 2011 Austral Gold announced an increase to gold and silver resources at Guanaco. The
increase of 73,000 gold ounces and 3.8 million silver ounces is primarily attributable to the underground
Natalia structure. Gold resources at Guanaco now total 884,653 ounces with approximately 95,000
additional gold equivalent ounces of silver.
PERFORMANCE IN RELATION TO ENVIRONMENTAL REGULATION
The Group’s exploration activities are subject to environmental regulations.
In relation to the Group’s mineral exploration operations in Chile, licence requirements relating to “Bases
Generales de Medio Ambiente” exist under the Chilean Law No. 19,300. The Directors are not aware of
any significant breaches during the period covered by this report. Moreover, all the exploration activities
performed so far have been approved by the Environmental Authority, Comisión Nacional de Medio
Ambiente (CONAMA).
Dr Robert Trzebski is a Director of Austral Gold Limited. He has a Degree in Geology, a PhD in Geophysics, a
Masters in International Project Management and has over 17 years professional experience in mineral
exploration, project management and research and development.
Dr Robert Trzebski is a member of the Australian Institute of Mining and Metallurgy (AUSIMM) and qualifies as
a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves.’ Dr Robert Trzebski consents to the inclusion of the resources
noted in this Annual Report.
11
DIRECTORS REPORT
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
DIRECTORS AND OFFICERS
The Directors and Officers of the Company at any time during or since the end of the financial year are:
Name and Qualifications
Experience and Special Responsibilities
Eduardo Elzstain
Chairman /
Non-Executive Director
Mark Bethwaite AM
Chairman /
Non-Executive Director
(part year only)
Mr. Elsztain is the Chairman of: (i) IRSA, a public company listed on the
New York Stock Exchange and the Buenos Aires Stock Exchange and
Argentina´s largest real estate company; (ii) Cresud, a leading agri-
business public company listed on the NASDAQ and the Buenos Aires
Stock Exchange, which directly and indirectly controls approximately 1
million hectares of rural land; (iii) APSA, a retail leading public company
listed on the NASDAQ and the Buenos Aires Stock Exchange; (iv) Banco
Hipotecario, one of Argentina’s largest commercial banks, listed on the
Buenos Aires Stock Exchange and with an ADR Program in New York with
its shares traded over the counter; and (v) BrasilAgro—Companhia
Brasileira de Propriedades Agrícolas, a public company listed on the
BOVESPA (Brazil). Mr. Elsztain is also a director of Hersha Hospitality
Trust, a hospitality public company listed on the New York Stock Exchange.
Mr. Eslztain has extensive experience in capital markets in a variety of
economic cycles and geographic locations. Mr. Elsztain is also the
Chairman of the Governing Board of the World Jewish Congress, member
of the World Economic Forum, the Group of 50, Argentina’s Association of
Corporations (AEA) and Endeavor, an organization that helps high-impact
entrepreneurs in emerging countries to promote economic growth and
development. He was also an attendee of the G20 Business Summit in
Seoul. Mr Eslztain is also a member of the Board of Directors of the Buenos
Aires Stock Exchange
Appointed 29 June 2007, re-elected by shareholders 20 November
2009, Appointed Chairman 2 June 2011
Mr. Bethwaite has qualifications of Bachelor of Engineering, Master of
Building Science and Master of Business Administration. His mining career
spans some 26 years including periods living and working in Mount Isa and
Broken Hill. Mark worked for North Limited from 1978 to 1987, including five
years as Managing Director. He worked
for Renison Goldfields
Consolidated Limited from 1987 to 1998, including six years as Managing
Director. From 1998 to 2001, Mark worked with Deutsche Bank, principally
in the financing of mining projects.
Mr Bethwaite was Chairman of the Australian National Maritime Museum
from 2001 - 2007. He is a non-executive Director of New South Innovations
Pty Limited, Digital Core Pty Limited and of a number of not for profit
organisations.
Resigned as Director and Chairman 2 June 2011
12
DIRECTORS REPORT
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Name and Qualifications
Experience and Special Responsibilities
Robert Trzebski
Non-Executive Director
Dr Robert Trzebski holds a Degree in Geology (equivalent to BSc), PhD in
Geophysics, Master in International Project Management and has over 18
years of professional experience
in mineral exploration, project
management and mining services. This includes his role as Executive
Officer of Austmine Ltd, Executive Director of Australia-Latin America
Business Council and Director of a junior gold exploration company with
interests in Colombia, Columbus Minerals Pty Ltd.
As a fellow member of the Australian Institute of Mining and Metallurgy (The
AusIMM), Dr Trzebski has acted as the Competent Person (CP) for the
Company’s ASX releases.
Appointed 10 April 2007, re-elected by shareholders 20 November
2009
Saul Zang
Non-Executive Director
law degree from University of Buenos Aires
Mr Zang obtained a
(Universidad de Buenos Aires). He is a member of the International Bar
Association (Asociación Internacional de Abogados) and the Interamerican
Federation of Lawyers (Federación Interamericana de Abogados). He is a
founding member of the law firm Zang, Bergel & Viñes.
He is also first Vice-Chairman of the Board of Directors of IRSA and
Shopping Alto Palermo SA, and Vice-Chairman of Alto Palermo, Puerto
Retiro and Fibesa; and Director of Banco Hipotecario, Nuevas Fronteras
SA., Tarshop and Palermo Invest SA.
Mr Zang is Adviser and Member of the Board of Directors of the Buenos
Aires Stock Exchange and he has also advised national and international
companies in different areas of the legal practice, including the privatization
process of YPF SA and State Owned Electricity Company of the Province of
Buenos Aires.
Appointed 29 June 2007, re-elected by shareholders 20 November
2009
Pablo Vergara del Carril
Non-Executive Director
Mr Vergara del Carril is a lawyer and is professor of Postgraduate Degrees
for Capital Markets, Contracts, Corporate Law and Business Law at the
Argentine Catholic University.
He is a director of Banco Hipotecario SA. [BASE: BHIP], Milkaut SA (an
Argentine leading dairy company), Nuevas Fronteras (owner of the
Intercontinental Hotel in Buenos Aires) and Emprendimiento Recoleta SA
(owner of the Buenos Aires Design Shopping Centre). Mr Vergara del Carril
is also a director of Guanaco Mining Company Limited and Guanaco
Capital Holding Corp.
Appointed 18 May 2006, re-elected by shareholders 26 November 2008
13
DIRECTORS REPORT
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Name and Qualifications
Experience and Special Responsibilities
Stabro Kasaneva
Non-Executive Director
Mr Kasaneva is the also the Chief Operating Officer for Austral Gold
Limited. Mr Kasaneva holds a degree in Geology from the Universidad
Católica del Norte, Chile. He has more than 20 years’ experience in geology
and exploration of gold deposits, mainly focused on the Paleocene belt in
Northern Chile, where Guanaco Austral Gold’s flagship gold/copper project
is located.
Appointed 7 October 2009, re-elected by shareholders 20 November
2009
Ben Jarvis
Non-Executive Director
(part year only)
Ben Jarvis is the Managing Director and co-founder of Six Degrees Investor
Relations, an Australian advisory firm that provides investor relations and
investor communication services to a wide range of resources, technology,
healthcare and industrial services companies listed on the Australian
Securities Exchange.
Ben is also a Director of South American Tin Limited, a company focused
on tin exploration and development in Bolivia, ORO SA Limited, a gold
exploration company with projects in Bolivia, and Arena Minerals Pty
Limited, a private company developing an iron sands mining operation in
Indonesia. Ben was educated at the University of Adelaide where he
majored in Politics.
Appointed 2 June 2011
14
DIRECTORS REPORT
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
DIRECTORS’ MEETINGS
The number of Directors’ meetings (including meetings of committees of Directors) and number of
meetings attended by each of the Directors of the Group during the financial year are:
Director
Mark Bethwaite AM**
Pablo Vergara del
Carril
Robert Trzebski
Eduardo Elsztain
Saul Zang
Stabro Kasaneva
Ben Jarvis***
Directors’
meetings
A
B
7
7
8
7
5
6
1
8
8
8
8
8
8
1
Audit Committee
meetings
A
3
3
*
*
*
*
*
B
3
3
*
*
*
*
*
A Number of meetings attended.
B Number of meetings held during the time the Director held office.
* Not a member of this committee
** Mark Bethwaite AM resigned from the Board and Audit Committee on 2 June 2011
*** Ben Jarvis was appointed to the Board on 2 June 2011
OPTIONS
During or since the end of the financial year, the Company has not granted options over unissued
ordinary shares to any Director or to any employee.
UNISSUED SHARES UNDER OPTION
At the date of this report there are no unissued shares under option.
INDEMNITY OF OFFICERS
The Company has not, during or since the end of the financial year, in respect of any person who is or
has been an officer or auditor of the Company or a related body corporate:
•
•
Indemnified or made any relevant agreement for indemnifying against a liability incurred as an
officer, including costs and expenses in successfully defending legal proceedings; or
Paid or agreed to pay a premium in respect of a contract insuring against a liability incurred as
an officer for the costs or expenses to defend legal proceedings.
15
DIRECTORS REPORT
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
INTERESTS OF DIRECTORS
The relevant interest of each director (directly or indirectly) in the share capital of the Company, as notified
by the Directors to the Australian Stock Exchange in accordance with S205G(1) of the Corporations Act
2001, at the date of this report is as follows:
Director
P Vergara del Carril
R Trzebski
E Elsztain
S Zang
S Kasaneva
B Jarvis
It is also noted:
Ordinary
Shares
68,119
-
144,934,945
1,435,668
-
-
1. P Vergara de Carril, E Elsztain and S Zang are directors of Guanaco Capital Holding Corp which holds
24,289,330 shares according to the last substantial holder notice lodged in November 2009.
2. E Elsztain and S Zang are directors of IFISA which holds 116,881,722 shares according to the last
substantial holder notice lodged in November 2009.
REMUNERATION REPORT
The remuneration report is set out under the following headings:
A)
B)
C)
D)
Remuneration Policy
Details of Remuneration
Service Agreements
Share Based Payments
A)
Remuneration Policy
The Company has a Remuneration Policy which aims to ensure remuneration packages of directors and
senior executives properly reflect the person’s duties and responsibilities and level of performance and
that remuneration is competitive in attracting, retaining and motivating people of the highest quality.
To give effect to this policy the Company reviews available information which measures the remuneration
levels in the various labour markets in which it competes. The expectation of the Company is that, for a
particular grade of employee, the total fixed compensation will be at the median level of the relevant market.
Remuneration of key management personnel is currently not linked to shareholder wealth generation and
is determined with reference to labour market rates.
Non-executive directors remuneration
Non-executive directors who are associates of the Company’s major shareholder (Eduardo Elsztain, Saul
Zang and Pablo Vergara del Carril) do not receive any fees or payments from the Group. Independent
non-executive directors (Robert Trzebski and Ben Jarvis) receive $40,000pa which reflects the demands
and responsibilities of their position.
16
DIRECTORS REPORT
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
B)
Details of Remuneration
Year ended
30 June 2011
Directors
M Bethwaite
R Trzebski
S Kaseneva
B Jarvis
44,372
36,697
300,955
3,058
Total Directors
385,082
Other Key
Management
Personnel
C Lloyd
J Dudley-Smith
59,633
49,541
TOTAL
494,256
PRIMARY
POST-EMPLOYMENT
SHARE-BASED
Cash
Salary &
Fees
Cash
bonus
Non
monetary
benefits
Super-
annuation
Retirement
benefits
Shares
Options
Total
$
$
$
$
$
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,295
3,303
-
275
50,873
5,367
4,459
60,699
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
91,667
40,000
300,955
3,333
435,955
65,000
54,000
554,955
Year ended
30 June 2010
Directors
M Bethwaite
R Trzebski
S Kaseneva
Total Directors
Other Key
Management
Personnel
C Lloyd
TOTAL
PRIMARY
POST-EMPLOYMENT
SHARE-BASED
Cash
Salary &
Fees
Cash
bonus
Non
monetary
benefits
Super-
annuation
Retirement
benefits
Shares
Options
Total
$
$
$
$
51,876
36,697
230,001
318,574
82,569
401,143
-
-
-
-
-
-
-
-
-
-
-
-
48,124
3,303
-
51,427
7,431
58,858
$
-
-
-
-
-
-
$
$
$
-
-
-
-
-
-
-
-
-
-
-
-
100,000
40,000
230,001
370,001
90,000
460,001
17
DIRECTORS REPORT
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
C) Service Agreements
Further to his responsibilities as a Director of Austral Gold Limited, Stabro Kasaneva is employed by the
Group in the capacity of Chief Operating Officer. His employment contract commenced in September
2009 and does not have a fixed termination date. The termination notice period is 30 days by either party.
His salary is paid in Chilean pesos and is subject to a 6 monthly review. Details of payments made for the
year ended 30 June 2011 are contained in the table above.
D) Share Based Payments
There were no share based payments made during the year.
Auditors
PKF continues in office as auditors in accordance with the requirements of the Corporations Act 2001.
Non-audit services
The company may decide to employ the auditors on assignments additional to their statutory audit duties
where the auditors’ expertise and experience with the Company are important.
Details of amounts paid or payable to the auditors, PKF, for audit and non-audit services provided during
the year are set out below:
The Board of Directors has considered the position and is satisfied that the provision of the 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 auditors,
as set out below, did not compromise the auditors 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 auditors.
• None of the services undermine the general principles relating to auditors independence as set out
in APES 110 Code of Ethics for Professional Accountants.
During the year the following fees were paid or payable for services provided by the auditors of Austral
Gold Limited:
Audit services
Audit and review of financial reports
Non-audit services
Total
2011
$
55,500
-
55,500
2010
$
56,750
4,500
61,250
18
DIRECTORS REPORT
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
PROCEEDINGS ON BEHALF OF THE COMPANY
Other than stated below, no person has applied for leave of Court to bring proceedings on behalf of the
Company or intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
AUDITORS INDEPENDENCE DECLARATION
The lead auditors’ independence declaration for the year ended 30 June 2011 has been received and is
included in this report.
Signed in accordance with a resolution of Directors at Sydney
Ben Jarvis
Director
20 September 2011
19
Lead auditor’s independence declaration under Section 307C of the Corporations Act 2001
To: the directors of Austral Gold Limited and the entities it controlled during the year
I declare to the best of my knowledge and belief, in relation to the audit for the financial year ended 30
June 2011 there have been:
• no contraventions of the auditor independence requirements as set out in the Corporations Act
2001 in relation to the audit, and
• no contraventions of any applicable code of professional conduct in relation to the audit.
PKF
Tim Sydenham
Partner
20 September 2011
Sydney
Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au
PKF | ABN 83 236 985 726
Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia
DX 10173 | Sydney Stock Exchange | New South Wales
PKF East Coast Practice is a member of PKF Australia Limited a national association of independent chartered accounting and consulting firms each trading as PKF. The East
Coast Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice is also a member of PKF International, an association of legally independent chartered
accounting and consulting firms
Liability limited by a scheme approved under Professional Standards Legislation
20
STATEMENT OF COMPREHENSIVE INCOME
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Continuing Operations
Revenue
Cost of sales
Depreciation and amortisation expense
Exploration and evaluation expenditure written off
Finance costs
Administration expenses
Employee benefits expense
Reversal of impairment /(impairment losses)
Gain/(loss) from foreign exchange
Profit/(loss) before income tax
Income tax expense
e
t
o
N
Consolidated
2011
$
2010
$
4
5
5
5
5
7
8,265,081
8,265,081
(8,568,851)
(826,888)
-
(652,503)
(1,376,302)
(1,111,706)
10,564,676
7,031,711
13,325,218
2,666
2,666
-
(74,732)
(5,059)
(652,723)
(576,028)
(332,039)
(6,971,678)
(555,987)
(9,165,580)
-
-
Profit/(loss) after income tax
13,325,218
(9,165,580)
Profit/(loss) after tax attributable to outside equity
interest
-
-
Net profit/(loss) for the year
13,325,218
(9,165,580)
Other comprehensive income
Foreign currency translation
Income tax on items of comprehensive income
(9,956,531)
(1,317,820)
-
-
Total comprehensive income for the year
3,368,687
(10,483,400)
Earnings /(loss) per share (cents per share):
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
8
8
7.9c
7.9c
(5.4)c
(5.4)c
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
21
STATEMENT OF FINANCIAL POSITION
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
AS AT 30 JUNE 2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Inventories
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Other receivables
Financial assets
Intangible assets
Plant and equipment
Exploration and evaluation expenditure
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
Borrowings
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
Borrowings
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Retained earnings/(accumulated losses)
Reserves
Outside equity interest
TOTAL EQUITY
e
t
o
N
10
12
11
12
13
14
15
16
17
18
19
18
19
20
21
23
22
Consolidated
2011
$
2010
$
1,309,145
3,289,022
1,438,653
6,036,820
2,077,241
4,306,285
70,129,488
20,021,794
116,215
1,399,382
3,061,046
-
4,460,428
280,943
4,061,595
57,000,000
4,266,272
39,065
96,651,023
65,647,875
102,687,843
70,108,303
6,139,889
12,179
181,680
6,333,748
639,755
49,818,669
50,458,424
5,007,846
12,142
22,561,292
27,581,280
-
-
-
56,792,172
27,581,280
45,895,671
42,527,023
44,400,742
9,818,120
(8,323,247)
56
44,400,742
(3,507,098)
1,633,284
95
45,895,671
42,527,023
The above Statement of Financial Position should be read in conjunction with the accompanying notes
22
STATEMENT OF CHANGES IN EQUITY
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
e
t
o
N
Issued
capital
Retained
earnings/
(accumulated
losses)
Reserves
Minority
interest
Total
$
$
$
$
$
Consolidated
Balance at 30 June 2009
44,398,254
5,658,482
2,951,104
101
53,007,941
Total comprehensive income for the year
Increase in minority interest attributable to
foreign exchange
Shares issued during the year
Balance at 30 June 2010
Total comprehensive income for the year
Decrease in minority interest attributable to
foreign exchange
21
22
20
21
22
-
-
2,488
-
-
(9,165,580)
(1,317,820)
-
(10,483,400)
-
-
-
-
(6)
-
95
-
(6)
2,488
42,527,023
3,368,687
44,400,742
(3,507,098)
1,633,284
13,325,218
(9,956,531)
-
-
(39)
(39)
Balance at 30 June 2011
44,400,742
9,818,120
(8,323,247)
56
45,895,671
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes
23
STATEMENT OF CASH FLOWS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
e
t
o
N
Consolidated
2011
$
2010
$
8,088,356
-
(13,036,020)
(2,328,760)
Net cash used in operating activities
28
(4,947,664)
(2,328,760)
Cash flows from investing activities
Purchase of property, plant and equipment
Investment in unlisted shares
Payment for exploration and evaluation expenditure
Investment in development assets
Interest received
(16,104,284)
(4,079,834)
(1,261,127)
(2,029,326)
(93,660)
(38,862)
(7,589,164)
(5,810,339)
7,102
2,353
Net cash used in investing activities
(25,041,133)
(11,956,008)
Cash flows from financing activities
Loans from related party
31,222,579
15,995,020
Net cash provided through financing activities
31,222,579
15,995,020
Movement attributable to foreign currency translation
Net increase/(decrease) in cash held
Cash at beginning of financial year
(1,324,019)
1,233,782
1,399,382
(551,549)
1,710,252
240,679
Cash at end of financial year
10
1,309,145
1,399,382
The above Statement of Cash Flows should be read in conjunction with the accompanying notes
24
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
1. Corporate information
The financial report of Austral Gold Limited (“the Company”) for the year ended 30 June 2011 was
authorised for issue in accordance with a resolution of the Directors on 20 September 2011.
Austral Gold Limited is a company limited by shares that is incorporated and domiciled in Australia,
whose shares are publicly traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
2.
Summary of accounting policies
The financial report is a general purpose financial report that has been prepared in accordance with
Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the
Australian Accounting Standards Board and the Corporations Act 2001.
The financial report covers the Economic Entity of Austral Gold Limited and its’ subsidiaries (“the Group”)
and are presented in English.
The financial report of Austral Gold Limited and its’ subsidiaries complies with all Australian equivalents to
International Financial Reporting Standards (AIFRS) in their entirety and International Financial Reporting
Standards (IFRS).
Parent entity information
In accordance with the Corporations Act, these financial statements present the results of the
consolidated entity only. Supplementary information about the parent entity is disclosed in note 29.
The following is a summary of the material accounting policies adopted by the Group in the preparation of
the financial report. The accounting policies have been consistently applied, unless otherwise stated.
(a) Basis of preparation
The financial report has been prepared on a historical cost basis, except for certain financial assets and
liabilities which are stated at fair value.
(b) Statement of compliance
The accounting policies set out below have been consistently applied to all years presented.
(c) Presentation currency
The financial report is presented in Australian dollars which is the presentation currency of the Group.
(d) Use of estimates and judgements
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates
will by definition, seldom equal the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities with
the next financial year are discussed below:
Estimated impairment / reversal of impairment of development assets
Where indicators of impairment or reversal of impairment are identified the recoverable amounts of the
assets are determined. The recoverable amounts of the assets have been determined using reports from
independent experts. The calculations require the use of assumptions. Refer to note 14 for details of
these assumptions.
25
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Estimated impairment of exploration and evaluation assets
The Group tests at each reporting date whether there are any indicators of impairment as identified by
AASB 6 “Exploration for and Evaluation of Mineral Resources”. Where indicators of impairment are
identified the recoverable amounts of the assets are determined. No indicators of impairment were
identified in the current year.
(e) Basis of consolidation
A subsidiary is any entity that Austral Gold Limited has the power to control the financial and operating
policies of so as to obtain benefits from its activities.
A list of subsidiaries is contained in note 27 to the financial statements. The financial statements of the
subsidiaries are prepared for the same reporting periods as the parent company using consistent
accounting policies.
All inter-company balances and transactions between entities in the Group, including any unrealised
profits or losses, have been eliminated on consolidation.
Outside equity interests in the equity and results of the entities that are controlled are shown as a
separate item in the consolidated financial report.
The financial statements of subsidiaries are included from the date control commences until the date
control ceases.
(f) Revenue recognition
Revenue from the sale of goods is recognised when control of the goods has passed to the buyer, the
amount of revenue can be measured reliably and it is probable that it will be received by the Group.
Sale of minerals
Sale of minerals is recognised at the point of sale, which is when the customer has taken delivery of the
goods, the risks and rewards have been transferred to the customer and there is a valid contract.
Interest revenue
Interest revenue is recognised as it accrues, using the effective interest method. This is a method of
calculating the amortised cost of a financial asset and allocating the interest income over the relevant
period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
(g) Goods and services tax/ Value added tax
Revenues, expenses and assets are recognised net of the amount of GST/VAT, except where the
amount of GST/VAT incurred is not recoverable from the Tax Office. In these circumstances the
GST/VAT is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables in the Statement of Financial Position are shown inclusive of GST/VAT.
Cash flows are presented in the cash flow statements on a gross basis, except for the GST/VAT
component of investing and financing activities, which are disclosed as operating cash flows.
(h) Intangibles
Development assets
When the technical and commercial feasibility of an undeveloped mining project has been demonstrated
the project enters the development phase. The cost of the project assets are transferred from exploration
and evaluation expenditure and reclassified into development phase and include past exploration and
evaluation costs, development drilling and other subsurface expenditure. When full commercial operation
commences, the accumulated costs are transferred into producing assets.
26
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
(i) Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of
interest and are carried forward in the Statement of Financial Position where:
(i) rights to tenure of the area of interest are current; and
(ii) one of the following conditions is met:
•
•
such costs are expected to be recouped through successful development and exploitation of
the area of interest or alternatively, by its sales; or
exploration and/or evaluation activities in the area of interest have not, at Statement of
Financial Position date, yet reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves and active and significant
operations in, or relation to, the areas are continuing.
Expenditure relating to pre-exploration activities is written off to the Statement of Comprehensive Income
during the period in which the expenditure is incurred.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to
carry forward costs in relation to that area of interest.
Accumulated expenditure on areas that have been abandoned, or are considered to be of no value, are
written off in the year in which such a decision is made.
When production commences, the accumulated costs for the relevant area of interest are amortised over
the life of the area according to the rate of depletion of the economically recoverable reserves.
(j) Investments
Investments in subsidiaries are carried in the Parent Entity’s financial statements at the lower of cost and
recoverable amount.
(k) Plant and equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment
losses.
Depreciation
Items of plant and equipment have limited useful lives and are depreciated on a straight line basis over
their estimated useful lives.
Depreciation and amortisation rates and methods are reviewed annually for appropriateness. When
changes are made, adjustments are reflected prospectively in current and future periods only.
Depreciation and amortisation are expensed, except to the extent that they are included in the carrying
amount of another asset as an allocation of production overheads.
The depreciation rate used is between 5% - 33%.
De-recognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no further future
economic benefits are expected from its use or disposal.
Any gain or loss arising on de-recognition of the asset (calculated as the difference between net disposal
proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is de-
recognised.
27
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
(l) Translation of foreign currency items
The functional and presentation currency of Austral Gold Limited is Australian dollars ($).
The functional currency of Guanaco Mining Company is American dollars (US$) and its presentation
currency is Australian dollars ($).
The functional currency of Austral Gold Argentina is Argentinean Pesos and its presentation currency is
Australian dollars ($).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates
ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at Statement of Financial Position date.
Exchange differences are recognised as revenues or expenses in net profit or loss in the period in which
exchange rates change except for qualifying assets and hedge transactions.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated
using the exchange rate as at the date of the initial transaction.
The results and financial position of all Group entities that have a functional currency different from the
parent’s functional currency are translated into Australian Dollars as follows:
• Assets and liabilities for each Statement of Financial Position presented are translated at the
•
closing rate at the date of that Statement of Financial Position.
Income and expenses for each Statement of Comprehensive Income are translated at the
average rate of exchange; and
• All resulting exchange differences are recognised as a separate component of equity
(m) Cash and cash equivalents
For the purpose of the statement of cash flows, cash includes:
•
cash on hand and at call deposits with banks or financial institutions; and
• Other short-term highly liquid investments with original maturities of three month or less, and bank
overdrafts.
(n) Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to
be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by Statement of Financial Position date.
Deferred income tax is provided on all temporary differences at Statement of Financial Position date
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences except :
• When the deferred income tax liability arises from the initial recognition of goodwill or of an asset
or liability in a transaction that is not a business combination and that, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss; or
• When the taxable temporary difference is associated with investments in subsidiaries, associates,
or interests in joint ventures, and the timing of the reversal of the temporary difference can be
controlled and it is probable that the temporary difference will not reverse in the foreseeable
future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of
unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences and the carry-forward of unused tax credits
and unused tax losses can be utilised, except:
• When the deferred income tax asset relating to the deductible temporary difference arises from
the initial recognition of an asset or liability in a transaction that is not a business combination
and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss;
or
28
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
• When the deductible temporary difference is associated with investments in subsidiaries,
associates, or interests in joint ventures, in which case a deferred tax asset is only recognised to
the extent that it is probable that the temporary difference will reverse in the foreseeable future
and taxable profit will be available against which the temporary difference can be utilised.
The carrying amount of any deferred income tax assets recognised is reviewed at each Statement of
Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply for the
year when the asset is realised or the liability is settled, based on the tax rates and tax laws that have
been enacted or substantively enacted at Statement of Financial Position date.
Income taxes relating to items recognised directly to equity are recognised in equity and not in profit or
loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off
current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the
same taxable entity and the same taxation authority.
(o) Inventories
Raw materials, work in progress and finished goods are stated at the lower of cost and net realisable
value on a first-in-first-out basis. Cost comprises direct materials and delivery costs, direct labour import
duties and other taxes and an appropriate proportion of variable and fixed overhead expenditure based
on normal operating capacity. Costs of purchased inventory are determined after deducting rebates and
discounts received or receivable.
(p) Trade and other receivables
Trade accounts receivable, amounts due from related parties and other receivables represent the
principal amounts due at balance date plus accrued interest and less, where applicable, any unearned
income and provisions for doubtful accounts.
(q) Trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the
end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within
30 days of recognition.
Trade payables and other payables are carried at amortised costs and represent liabilities for goods and
services provided to the Group prior to the end of the financial year that are unpaid and arise when the
Group becomes obliged to make future payments in respect of the purchase of these goods and services.
(r) Interest bearing liabilities
All loans and borrowings are initially recognised at cost, being the fair value of consideration received net
of issue costs associated with the borrowing.
After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised
cost using the effective interest method. Amortised cost is calculated by taking into account any issue
costs, and any discount or premium on settlement.
Gains and losses are recognised in the Statement of Comprehensive Income when the liabilities are
derecognised and as well as through the amortisation process.
(s) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a result of past
events, for which it is probable that an outflow of economic benefits will result and that outflow can be
reliably measured.
If the effect of the time value of money is material, provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects current market assessments of the time value of money
and where appropriate, the risks specific to the liability. Where discounting is used, the increase in the
provision due to the passage of time is recognised as a finance cost.
29
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
(t) Leases
Lease payments for operating leases, where all the risks and benefits remain with the lessor, are
recognised as an expense in the Statement of Comprehensive Income on a straight line basis over the
lease term.
(u) Impairment of assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to
determine whether there is any indication that those assets have been impaired. If such an indication
exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell or
value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its
recoverable amount is expensed to the Statement of Comprehensive Income. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives or more
frequently if events or changes in circumstances indicate that the carrying value may be impaired.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
(v) De-recognition of financial assets and financial liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial
assets) is derecognised when:
• The rights to receive cash flows from the asset have expired
• The group retains the right to receive cash flows from the asset, but has assumed an obligation to
pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or
The Group has transferred its rights to receive cash flows from the asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor
retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.
When the Group has transferred its rights to receive cash flows from an asset and has neither transferred
nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the
asset is recognised to the extent of the Group’s continuing involvement in the asset. Continuing
involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration received that the Group
could be required to repay.
Available-for-sale financial assets
The Group’s investments in equity securities are classified as available-for-sale financial assets.
Subsequent to initial recognition available-for-sale investments are measured at fair value with gains or
losses being recognised as a separate component of equity until the investment is derecognised or
determined to be impaired, at which time the accumulative gain or loss previously reported in equity is
recognised in profit or loss. Where the value of available-for-sale financial assets cannot be reliably
estimated the asset is carried at cost.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged or cancelled or
expires.
When an existing financial liability is replaced by another from the same lender on substantially different
terms, or the terms of an existing liability are substantially modified, such an exchange or modification is
treated as a de-recognition of the original liability and the recognition of a new liability, and the difference
in the respective carrying amounts is recognised in profit or loss
(w) 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.
30
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
(x) Earnings per share
Basic earnings per share
Basic earnings per share is determined by dividing net profit after income tax attributable to members of
the parent, excluding any costs of servicing equity other than ordinary shares, by the weighted average
number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary
shares issued during the year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in determination of basic earnings per share to take
into account the after income tax effect of interest and other financing costs associated with dilutive
potential ordinary shares and weighted average number of shares assumed to have been issued for no
consideration in relation to dilutive potential ordinary shares.
(y) Borrowing costs
Borrowing costs are recognised as an expense when incurred unless they are capitalised for qualifying
assets.
(z) Employee leave benefits
Wages and salaries, annual leave and sick leave
Liabilities for employees’ entitlements to wages and salaries, annual leave and other employee
entitlements expected to be settled within 12 months of the reporting date are recognised in the current
provisions in respect of employees’ services up to 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 is recognised in the provision for employee benefits and measured as
the present value of expected future payments to be made in respect of services provided by employees
up to the reporting date using the projected unit credit method. Consideration is given to expected future
wage and salary levels, experience of employee departures, and periods of service. Expected future
payments are discounted using market yields at the reporting date on national government bonds with
terms to maturity and currencies that match, as closely as possible, the estimated cash outflows.
Superannuation
The Company contributes to employee superannuation funds. Contributions made by the Company are
legally enforceable. Contributions are made in accordance with the requirements of the Superannuation
Guarantee Legislation.
(za) Going concern
At the reporting date the Group had net current liabilities of $296,928 (2010: $23,120,852) and had net
cash outflows from operations of $4,947,664 (2010: $2,328,760) for the year ended 30 June 2011.
Notwithstanding this the following events occurred during the year:
•
the repayment terms of the Group's loan from IFISA (refer to note 19 for details) were
renegotiated so that repayment in cash can be deferred up to 30 September 2014;
• production from Guanaco commenced in the 2nd half of the financial year and yielded revenue
from operations of $8,088,356. This is expected to increase as the mine increases production,
yielding positive cash flows; and
•
the Group is able to draw down an additional $10,402,493 on the loan from IFISA should it be
necessary.
Based on the above, the directors believe the going concern basis of preparation of the financial report is
appropriate.
(zb) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision maker. The chief operating decision maker, who is responsible for allocating resources
and assessing performance of the operating segments, has been identified as the Chief Financial Officer.
31
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
3. New standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations have been identified as those
which may impact the entity in the period of initial application. They are available for early adoption at 30
June 2011 but have not been applied in preparing this financial report. They are not expected to have a
material impact on the Group when they are adopted.
The following standards are considered applicable to the Group and will be adopted during the first
annual reporting period after the effective date of each pronouncement.
AASB No.
Title
Issue
Date
Operative
Date
(Annual reporting
periods beginning
on or after)
9
Financial Instruments
Dec 2010
1 Jan 2013
10
Consolidation
Jun 2011
1 Jan 2013
12
Disclosure of Interests in Other Entities
Jun 2011
1 Jan 2013
13
Fair Value Measurement
Jun 2011
1 Jan 2013
1053
Application of Tiers of Australian Accounting Standards
Jun 2010
1 Jul 2013
2009 – 12
Amendments to Australian Accounting Standards
[AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 &
1031 and Interpretations 2, 4, 16, 1039 & 1052]
Dec 2009
1 Jan 2011
2010 – 2
Amendments to Australian Accounting Standards arising
from Reduced Disclosure Requirements
Jun 2010
1 Jul 2013
2010 – 4
2010 – 5
Further Amendments to Australian Accounting Standards
arising from the Annual Improvements Project
[AASB 1, AASB 7, AASB 101 & AASB 134 and
Interpretation 13]
Amendments to Australian Accounting Standards
[AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134,
137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127,
132 & 1042]
Jun 2010
1 Jan 2011
Oct 2010
1 Jan 2011
2010 – 6
Amendments to Australian Accounting Standards – Disclosures
on Transfers of Financial Assets
[AASB 1 & AASB 7]
Nov 2010
1 Jul 2011
32
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
AASB No.
Title
2010 – 7
Amendments to Australian Accounting Standards arising
from AASB 9 (December 2010)
[AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121,
127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and
Interpretations 2, 5, 10, 12, 19 & 127]
Issue
Date
Operative
Date
(Annual reporting
periods beginning
on or after)
Dec 2010
1 Jan 2013
2010 – 8
Amendments to Australian Accounting Standards – Deferred
Tax: Recovery of Underlying Assets
[AASB 112]
Dec 2010
1 Jan 2012
2010 – 9
Amendments to Australian Accounting Standards – Severe
Hyperinflation and Removal of Fixed Dates for First-time
Adopters
[AASB 1]
Dec 2010
1 Jul 2011
2010 – 10
Further Amendments to Australian Accounting Standards –
Removal of Fixed Dates for First-time Adopters
[AASB 2009-11 & AASB 2010-7]
Dec 2010
1 Jan 2013
2011 - 1
2011 - 2
Amendments to Australian Accounting Standards arising from the
Trans-Tasman Convergence Project
[AASB 1, AASB 5, AASB 101, AASB 107, AASB 108, AASB 121,
AASB 128, AASB 132 & AASB 134 and Interpretations 2, 112 &
113]
Amendments to Australian Accounting Standards arising from the
Trans-Tasman Convergence Project – Reduced Disclosure
Requirements
[AASB 101 & AASB 1054]
May 2011
1 Jul 2011
May 2011
1 Jul 2013
2011 - 4
Amendments to Australian Accounting Standards to Remove
Individual Key Management Personnel Disclosure Requirements
[AASB 124]
Jul 2011
1 Jul 2013
33
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
AASB 9 Financial Instruments
The revised AASB 9 incorporates the IASB’s completed work on Phase 1 of its project to replace IAS 39
Financial Instruments: Recognition and Measurement (AASB 139 Financial Instruments: Recognition and
Measurement) on the classification and measurement of financial assets and financial liabilities. In
addition, the IASB completed its project on derecognition of financial instruments.
The Standard includes requirements for the classification and measurement of financial instruments, as
well as recognition and derecognition requirements for financial instruments. AASB 9 (issued in 2009)
only included requirements for the classification and measurement of financial assets resulting from the
first part of Phase 1 of the IASB’s project to replace IAS 39 (AASB 139).
The main changes in this Standard compared with AASB 139 are described below.
(a) Financial assets are classified based on:
(i)
(ii)
the objective of the entity’s business model for managing the financial assets; and
the characteristics of the contractual cash flows.
This replaces the categories of financial assets in AASB 139, each of which had its own
classification criteria. Application guidance has been included in AASB 9 on the conditions
necessary for a financial asset to be measured at amortised cost.
(b) AASB 9 allows an irrevocable election on initial recognition to present gains and losses on
investments in equity instruments that are not held for trading in other comprehensive income.
Dividends in respect of these investments that are a return on investment are recognised in profit
or loss and there is no impairment or recycling on disposal of the instrument.
(c) Financial assets can be designated and measured at fair value through profit or loss at initial
recognition if doing so eliminates or significantly reduces a measurement or recognition
inconsistency that would arise from measuring assets or liabilities, or recognising the gains and
losses on them, on different bases.
(d) Hybrid contracts with financial asset hosts are classified and measured in their entirety in
accordance with the classification criteria. (The treatment of embedded derivatives in respect of
financial liability hosts has not changed.)
(e) Investments in unquoted equity instruments (and contracts on those investments that must be
settled by delivery of the unquoted equity instrument) must be measured at fair value. However,
in limited circumstances, cost may be an appropriate estimate of fair value.
(f)
Investments in contractually linked instruments that create concentrations of credit risk (tranches)
are classified and measured using a ‘look through’ approach. Such an approach looks to the
underlying assets generating cash flows and assesses the cash flows against the classification
criteria (discussed in (a) above) to determine whether the investment is measured at fair value or
amortised cost.
(g) Financial assets are reclassified only in the rare circumstances when there is a relevant change
in the entity’s business model.
(h) The portion of a change of fair value relating to the entity’s own credit risk for financial liabilities
34
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
measured at fair value utilising the fair value option is presented in other comprehensive income,
except when that would create an accounting mismatch. If such a mismatch would be created or
enlarged, the entity is required to present all changes in fair value (including the effects of
changes in the credit risk of the liability) in profit or loss.
AASB 10 Consolidation
AASB 10 replaces AASB 127 and 3 key elements of control. According to AASB 10 an investor controls
an investee if and only if the investor has all the following:
(a) power over the investee;
(b) exposure, or rights, to variable returns from its involvement with the investee; and
(c) the ability to use its power over the investee to affect the amount of the investor’s returns.
Additional guidance is provided in how to evaluate each of the three limbs above. While this is not a
wholesale change from the current definition of control within AASB 127 (and for many entities no change
in practice will result) some entities may be impacted by the change. The limbs above are more principle
based rather than hard and fast rules. For instance, an example provided in AASB 10 is:
An investor acquires 48 per cent of the voting rights of an investee. The remaining voting rights
are held by thousands of shareholders, none individually holding more than 1 per cent of the
voting rights. None of the shareholders have any arrangements to consult any of the others or
make collective decisions. When assessing the proportion of voting rights to acquire, on the basis
of the relative size of the other shareholdings, the investor determined that a 48 per cent interest
would be sufficient to give it control. In this case, on the basis of the absolute size of its holding
and the relative size of the other shareholdings, the investor concludes that it has a sufficiently
dominant voting interest to meet the power criterion without the need to consider any other
evidence of power.
Potential voting rights are also discussed within AASB 10 and the following example provided:
Investor A holds 70 per cent of the voting rights of an investee. Investor B has 30 per cent of the
voting rights of the investee as well as an option to acquire half of investor A’s voting rights. The
option is exercisable for the next two years at a fixed price that is deeply out of the money (and is
expected to remain so for that two-year period). Investor A has been exercising its votes and is
actively directing the relevant activities of the investee. In such a case, investor A is likely to meet
the power criterion because it appears to have the current ability to direct the relevant activities.
Although investor B has currently exercisable options to purchase additional voting rights (that, if
exercised, would give it a majority of the voting rights in the investee), the terms and conditions
associated with those options are such that the options are not considered substantive (i.e.
remote possibility of being exercised).
Entities are advised to re-consider control of related entities in light of AASB 10 on adoption.
AASB 12 Disclosure of Interests in Other Entities
AASB 12 provides the disclosure requirements for entities that have an interest in a subsidiary, a joint
arrangement, an associate or an unconsolidated structured entity. As such, it pulls together and replaces
disclosure requirements from many existing standards.
The IASB noted:
“The global financial crisis that started in 2007 also highlighted a lack of transparency about the
risks to which a reporting entity was exposed from its involvement with structured entities,
including those that it had sponsored.”
AASB 12 is an attempt to improve the level of disclosure around these types of arrangements and to
enhance existing disclosures with regard to interests in a subsidiary, a joint arrangement and an
associate.
The AASB requires an entity to disclose information that enables users of financial statements to
evaluate:
35
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
(a) the nature of, and risks associated with, its interests in other entities; and
(b) the effects of those interests on its financial position, financial performance and cash flows.
Entities are advised to review AASB 12 in more detail in the lead up to adoption as the disclosures are
generally more detailed and enhanced compared to current requirements.
AASB 13 Fair Value Measurement
AASB 13:
(a) defines fair value;
(b) sets out in a single IFRS a framework for measuring fair value; and
(c) requires disclosures about fair value measurements.
Fair value is defined as:
“the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date (i.e. an exit price)”
The standard does not require fair value measurements in addition to those already required or permitted
by other IFRSs.
The IASB note:
“That definition of fair value emphasises that fair value is a market-based measurement, not an
entity-specific measurement. When measuring fair value, an entity uses the assumptions that
market participants would use when pricing the asset or liability under current market conditions,
including assumptions about risk. As a result, an entity’s intention to hold an asset or to settle or
otherwise fulfil a liability is not relevant when measuring fair value.”
Entities are advised to review their current policies with regards to measuring fair value in light of the
guidance in AASB 13 and the principles highlighted above.
36
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Consolidated
2011
$
2010
$
4
Revenue
Operating activities
Revenue from gold and silver sales
8,088,356
-
Interest revenue
Other
5
Profit/loss for the year
(a)
Expenses
Depreciation of plant and equipment
Amortisation
7,102
2,353
169,623
313
8,265,081
2,666
565,219
261,669
74,732
-
826,888
74,732
Exploration and evaluation expenditure written off
-
5,059
Finance costs - related parties
652,503
652,723
Rental expense on operating leases
19,224
23,022
(b)
Reversal of impairment/(impairment losses)
Impairment of intangible assets
Reversal of prior years’ impairment
-
(6,971,678)
10,564,676
-
10,564,676
(6,971,678)
The fair value of the Group's project in Guanaco is determined by an independent expert
at each reporting date. At 30 June 2011 the fair value of the project was estimated at
$135.3 million. This has resulted in the reversal of previously recognised impairment
losses of $10,564,676 in the current year. Refer note 14 for further details.
37
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
6
Auditors’ remuneration
Remuneration of the auditors of the Parent Entity for:
- auditing or reviewing the financial reports
- other services/taxation
Remuneration of auditors of subsidiaries for:
- auditing or reviewing the financial reports
- other services/taxation
Consolidated
2011
$
2010
$
55,500
-
55,500
41,492
-
41,492
56,750
4,500
61,250
18,048
268
18,316
7
Income tax benefit
Prima facie income tax expense/(benefit) calculated at 30%
on the profit/(loss)
3,997,565
(2,749,674)
Tax loss (utilised)/carried forward
(617,476)
484,027
(Exempt revenue)/non deductible expenses
(3,380,089)
2,265,647
Total income tax benefit
-
-
Cumulative tax losses carried forward
16,600,062
20,245,279
The potential future income tax benefit arising from tax losses and timing differences has not been recognised
as an asset because it is not probable that sufficient taxable profit will be available to allow the benefit of part
or all of that deferred tax asset to be utilised.
The potential future income tax benefit will be obtained if:
i. The relevant company derives future assessable income of a nature and an amount sufficient to enable
the benefit to be realised, or the benefit can be realised by another company in the Group in accordance
with Division 170 of the Income Tax Assessment Act 1997;
ii. The relevant company and/or Group continues to comply with the conditions for deductibility imposed by
the law; and
iii. No changes in tax legislation adversely affect the Company and/or the Group in realising the benefit.
38
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
8
Earnings/(loss) per share
Classification of securities as ordinary shares
Ordinary shares have been included in basic earnings/(loss) per share.
Earnings reconciliation
Net profit/(loss)
Consolidated
2011
$
2010
$
13,325,218
(9,165,580)
Net profit/(loss) attributable to outside equity interests
-
-
Net profit/(loss)
13,325,218
(9,165,580)
2011
Number
2010
Number
Weighted average number of shares used as the
denominator
Number for basic and diluted earnings per share
169,139,739
169,134,049
Number for diluted earnings per share
169,139,739
169,134,049
Basic earnings/(loss) per ordinary share
Diluted earnings/(loss) per ordinary share
7.9c
7.9c
(5.4)c
(5.4)c
9
Segments
Management have determined the operating segments based on reports reviewed by the Chief Operating
Decision Maker (“CODM”). The CODM considers the business from both an operations and geographic
perspective and has identified two reportable segments, Australia and South America. The CODM monitors
the performance in these two regions separately.
39
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
2011
$
2011
$
2011
$
2010
$
Australia
South
America
Consolidated
Australia
2010
$
South
America
2010
$
Consolidated
Revenue from gold and
silver sales
-
8,088,356
8,088,356
Interest revenue
1,841
5,261
7,102
Other
-
169,623
169,623
Total segment revenue
1,841
8,263,240
8,265,081
-
2,203
-
2,203
-
150
313
463
-
2,353
313
2,666
Amortisation
-
(261,669)
(261,669)
-
-
-
Depreciation
Reversal of impairment /
(impairment)
(1,449)
(563,770)
(565,219)
(977)
(73,755)
(74,732)
-
10,564,676
10,564,676
-
(6,971,678)
(6,971,678)
Finance costs
(652,503)
-
(652,503)
(652,723)
-
(652,723)
Other
3,275,224
(7,300,372)
(4,025,148)
(1,118,959)
(350,154)
(1,469,113)
Segment profit/(loss)
2,623,113
10,702,105
13,325,218
(1,770,456)
(7,395,124)
(9,165,580)
Segment assets
84,739
102,603,104
102,687,843
114,219 69,994,084
70,108,303
Segment liabilities
49,945,132
6,847,040
56,792,172
(22,303,982)
(5,277,298)
(27,581,280)
10 Cash and cash equivalents
Cash at call and in hand
Short-term bank deposits
Reconciliation of Cash
Consolidated
2011
$
2010
$
1,302,124
1,393,607
7,021
5,775
1,309,145
1,399,382
Cash at the end of the financial year as shown in the statement of cashflow, is reconciled to items in the
Statement of Financial Position as follows:
Cash and cash equivalents
1,309,145
1,399,382
Risk Exposure
The Group’s exposure to interest rate risk is discussed in note 24. The maximum exposure to credit risk at the
reporting date is the carrying amount of each class of cash and cash equivalents mentioned above.
40
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
11
Inventories
Raw materials
Work in progress
Finished goods
12
Trade and other receivables
Current
Other receivables
GST/VAT receivable
Trade receivables
Non current
GST/VAT receivable
Trade debtors
The ageing of trade receivables is
0 – 30 days
Consolidated
2011
$
2010
$
278,441
165,781
994,431
1,438,653
-
-
-
-
23,030
61,382
2,800,645
2,999,664
465,347
-
3,289,022
3,061,046
2,077,241
280,943
2,077,241
280,943
465,347
-
a) Past due but not impaired
There were no receivables past due at 30 June 2011.
b) Fair value and credit risk
Due to the short term nature of trade receivables, their carrying amount is assumed to approximate their fair
value.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivables
mentioned above. Refer to note 24 for more information on the risk management policy of the Group and the
credit quality of the receivables.
Consolidated
2011
$
2010
$
13
Financial assets available for sale
Investment in unlisted shares (AMINSA) – opening balance
4,061,595
2,236,831
Additions
1,261,127
2,029,326
Movement attributable to foreign currency translation
(1,016,437)
(204,562)
4,306,285
4,061,595
These financial assets are carried at cost less accumulated impairment losses. There are no fixed returns or
fixed maturity date attached to these investments. Refer to note 24 for detailed information on financial
instruments.
41
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
14
Intangible assets
Guanaco
Cost
Accumulated amortisation
Development assets – Guanaco
Consolidated
2011
$
2010
$
70,391,157
57,000,000
(261,669)
-
70,129,488
57,000,000
Movements in carrying value
Reconciliations of the carrying amounts for intangible assets
are set out below:
Carrying amount at beginning of year
57,000,000
-
Reclassification from exploration and evaluation expenditure
-
55,000,000
Additions
Recognition of restoration provision
Amortisation
Impairment reversal/(loss)
8,495,210
10,357,388
639,755
(261,669)
-
-
10,564,676
(6,971,678)
Movement attributable to foreign currency translation
(6,308,484)
(1,385,710)
Carrying amount at end of year
70,129,488
57,000,000
Impairment
Guanaco
The Guanaco project has been determined by Management to be a single cash generating unit ("CGU"). The
intangible assets noted above and the plant and equipment as included in note 15 below are included in
determining the carrying value of the CGU for the purposes of assessing for impairment. At each reporting
date the Group commissions an independent expert to determine the fair value of the Guanaco project. At 30
June 2011 the independent expert determined the fair value of the development assets to be $135.3m which
compares to a value of $57,000,000 as at 30 June 2010. The primary drivers of the increase in value have
been the gold price and a de-risking of the project as a result of progression from development to early stage
production.
As a result of the uplift in value previously recognised impairment losses of $10,564,676 have been reversed
in the current year.
42
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
15 Plant and equipment
Plant and equipment - at cost
Accumulated depreciation
Carrying amount at end of year
Movements in carrying value
Plant and equipment
Carrying amount at beginning of year
Additions
Disposals
Depreciation
Movement attributable to foreign currency translation
Carrying amount at end of year
Consolidated
2011
$
2010
$
20,857,912
4,641,383
(836,118)
(375,111)
20,021,794
4,266,272
4,266,272
154,529
18,023,147
4,079,834
(287)
(565,219)
(1,702,119)
-
(74,733)
106,642
20,021,794
4,266,272
Plant and equipment has been included in the Guanaco cash generating unit. Refer note 14 for
discussion on impairment.
16 Exploration and evaluation expenditure
Costs carried forward in respect of areas of interest in:
Opening balance
Write offs
Reclassification as intangible
Additions for the year
Movement attributable to foreign currency translation
Carrying amount at end of year
39,065
55,005,059
-
-
(5,059)
(55,000,000)
93,660
(16,510)
116,215
38,862
203
39,065
The ultimate recoupment of costs carried forward for exploration and evaluation phases is dependent on
the successful development and commercial exploration or sale of the respective areas.
43
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
17
Trade and other payables
Current
Consolidated
2011
$
2010
$
Trade creditors and accruals
6,139,889
5,007,846
Refer to note 24 for detailed information on financial instruments.
18 Provisions
Current
Employee entitlements
12,179
12,142
Movement in current provisions
Opening balance
Charged to the statement of comprehensive income
Closing balance
12,142
37
12,179
11,464
678
12,142
Amounts not expected to be settled within the next 12 months
The current provision for leave includes all unconditional entitlements in accordance with the
applicable legislation. The entire amount is presented as current, since the Group does not have an
unconditional right to defer payment.
Non current
Mine closure
Movement in non current provisions
Opening balance
Recognised as part of the cost of intangible asset
Closing balance
Consolidated
2011
$
2010
$
639,755
-
639,755
639,755
-
-
-
-
The restoration provision relates to the estimated costs of dismantling and restoring mining sites and
exploration tenements to their original condition at the end of the life of the mine or exploration drilling
program. The provision at year end represents the present value of the Directors' best estimate of the
future sacrifice of economic benefits that will be required for meeting environmental obligations for
existing tenements after activities have been completed. The provision is reviewed annually by the
Directors.
The present value of the restoration provision was determined based on the following assumptions:
•
•
•
Undiscounted rehabilitation costs: US$1,099,870;
Life of Mine: 6 years; and
Discount rate of 12%
44
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
19 Borrowings
Current
Loan – Guanaco Capital Holding Corp.
Loan – Kinam
Non current
Loan – IFISA #1
Loan – IFISA #2
Consolidated
2011
$
2010
$
-
22,248,925
181,680
312,367
181,680
22,561,292
29,803,422
20,015,247
49,818,669
-
-
-
Loan Guanaco Capital Holding Corp. (GCH)
During the year the loan due to GHC was ceded by GCH to Inversiones Financieras del Sur SA.
Loan Inversiones Financieras del Sur SA (IFISA) #1
The borrowings are unsecured. Interest is charged at the Westpac Business Development Loan Rate
published on its website. The loan comprises principal of $26,929,201 and capitalised interest of
$2,874,221. The loan is repayable as follows:
a) When sufficient cash flows of the Group allow;
b) At the election of IFISA to subscribe for shares in the Group (contingent on shareholder approval);
c) On successful completion of an equity raising by the Group; or
d) Failing all of the above by 30 September 2014.
Loan Inversiones Financieras del Sur SA (IFISA) #2
The borrowings are unsecured. Interest is charged at a fixed rate of 12%pa. The loan comprises principal of
$18,938,708 and capitalised interest of $1,076,539.The loan is repayable as follows:
a) When sufficient cash flows of the Group allow;
b) At the election of IFISA to subscribe for shares in the Group (contingent on shareholder approval);
c) On successful completion of an equity raising by the Group; or
d) Failing all of the above by 30 September 2014.
Loan Kinam
The borrowings are unsecured, interest free and repayable at a rate of US$75,000 per quarter with a final
payment of US$42,492. The financial liabilities are carried at cost as management have determined that the
amortised cost would not differ materially from the face value of the debt.
Risk exposure
The Group’s risk exposure is currency risk, as the Group is responsible for repaying the loans in USD, and
interest rate risk on the IFISA #1 Loan. Further details of these risk exposures is provided in note 24.
Fair value
The carrying value of the loans approximates their fair value.
45
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Consolidated
2011
$
2010
$
20
Issued capital
Fully paid ordinary shares
44,400,742
44,400,742
Ordinary Shares +
Balance at the beginning of the year
169,139,739
169,112,125
2011
No.
2010
No.
Shares Issued;
14 September 2009
Balance at end of year
-
27,614
169,139,739
169,139,739
+ Ordinary shares participate in dividends and the proceeds on winding up of the Parent Entity in
proportion to the number of shares held.
At shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise
each shareholder has one vote on a show of hands.
Consolidated
2011
$
2010
$
21 Retained earnings/(accumulated losses)
(Accumulated losses)/retained earnings at beginning of year
(3,507,098)
5,658,482
Net profit/(loss) for the year
Retained earnings/(accumulated losses) at end of year
13,325,218
(9,165,580)
9,818,120
(3,507,098)
22 Outside equity interests
Outside equity interests in subsidiaries comprise:
Acquired as part of subsidiary
56
95
46
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Consolidated
2011
$
2010
$
23 Reserves
Foreign Currency Translation Reserve
Balance at beginning of year
1,633,284
2,951,104
Movement attributable to translation of foreign subsidiaries
(9,956,531)
(1,317,820)
Balance at end of year
(8,323,247)
1,633,284
Total Reserves
(8,323,247)
1,633,284
Nature and purpose of reserves
Foreign Currency Translation Reserve
Exchange differences arising on translation of the foreign subsidiaries are recognised in the foreign currency
translation reserve. The reserve is recognised in the profit and loss when the net investment is disposed of.
24 Financial risk management objectives and policies
The Group’s principal financial instruments comprise borrowings, receivables, cash and short-term deposits.
These activities expose the Group to a variety of financial risks: market risk (including currency risk and
interest rate risk), credit risk and liquidity risk.
Although the Group does not have documented risk policies and procedures, the Directors manage the
different types of risks to which it is exposed by considering risk and monitoring levels of exposure to interest
rate and foreign exchange risk and by being aware of market forecasts for interest rates, foreign exchange
and commodity prices. The Group does not have significant exposure to credit risk and liquidity risk is
monitored through general business budgets and forecasts.
The Group holds the following financial instruments:
47
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Financial assets
Cash and cash equivalents
Trade and other receivables
Investment in AMINSA
Total financial assets
Financial liabilities
Trade and other payables
Other financial liabilities
Total financial liabilities
Net exposure
Fair value estimation
Consolidated
2011
$
2010
$
1,309,145
1,399,382
488,377
65,626
4,306,285
4,061,595
6,103,807
5,526,603
(5,998,314)
(5,007,846)
(50,000,349)
(22,561,292)
(55,998,663)
(27,569,138)
49,894,856
20,577,527
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes.
The fair value of financial instruments that are not traded in an active market such as investments in unlisted
subsidiaries is determined using valuation techniques. The Group uses a variety of methods and makes
assumptions that are based on market conditions existing at each balance date.
The carrying value less impairment provision of receivables and payables are assumed to approximate their
fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is
estimated by discounting the future contractual cash flows at the current market interest rate that is available
to the Group for similar financial instruments.
The fair value of the Group’s investment in AMINSA cannot be reliably estimated as AMINSA’s primary activity
is exploration and evaluation of mineral resources. This investment is accordingly carried at cost.
Risk Exposures and Responses
(a) Interest Rate Risk
The Group’s main interest rate risk arises from long term borrowings. Borrowings issued at variable rates
expose the Group to cash flow interest rate risk. The Group’s borrowings at variable interest rates were
denominated in US Dollars, however the risk is within the Australian interest rate market.
All other borrowings are at a fixed rate and therefore do not carry interest rate risk.
As at the reporting date the Group had the following variable interest rate borrowings:
Weighted
Average
Interest rate
Consolidated
Weighted
Average
Interest rate
2011
%
8.9
2011
$
29,803,422
2010
%
5.6
Borrowings
Consolidated
2010
$
22,248,925
48
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Sensitivity analysis
At 30 June 2011, if interest rates had increased/decreased by 100 basis points from the year end rates with all
other variables held constant, post tax profit for the year would have been $298,034 higher/lower (2010:
$225,613) mainly as a result of the Group’s variable interest rate borrowings.
(b) Currency Risk
At 30 June 2011 the Group had the following exposure to foreign:
Financial assets
Cash and cash equivalents
Trade and other receivables
Investment in AMINSA
Financial liabilities
Trade and other payables
Borrowings
Net exposure
Consolidated
2011
$
2010
$
1,239,167
1,296,047
484,245
61,382
4,306,285
4,061,595
(5,870,045)
(4,964,931)
(50,000,349)
(22,561,292)
(49,840,697)
(22,107,199)
Sensitivity analysis
The net exposure from financial assets and liabilities subject to exchange rate risk has been calculated using
an exchange rate of USD/AUD 1.05951.
Based on the financial instruments held at 30 June 2011, had the Australian Dollar weakened/strengthened
by 10% against the US Dollar with all other variables held constant, the Group’s post tax profit would have
been $4,132,300 lower/higher (2010: $1,229,278). The movement is mainly due to foreign exchange
gains/losses on translation of US Dollar denominated financial instruments as detailed above.
(c) Credit Risk
The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to
recognised financial assets is the carrying amount of those assets, net of any allowance for doubtful debts, as
disclosed in the Statement of Financial Position and notes to the financial report.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor
is it the Group's policy to securitize its other receivables.
In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure
to bad debts is not significant. There are no significant concentrations of credit risk.
(d) Price Risk
The Group’s revenues are exposed to fluctuations in the gold and other prices. Gold and silver produced is
sold at prevailing market prices in US Dollars.
The Group has resolved that for the present time the production should remain unhedged. The Group
considers exposure to commodity price fluctuations within reasonable boundaries to be an integral part of the
business.
(e) Liquidity Risk
The liquidity of the Group is managed to ensure sufficient funds are available to meet financial commitments in
a timely and cost effective manner. Management continuously reviews the Group’s liquidity position through
cash flow projections based upon the current life of mine plan to determine the forecast liquidity position and
maintain appropriate liquidity levels.
49
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Financing arrangements
Under the funding agreements amended in July 2011, the Group had access to the following undrawn United
States dollar denominated borrowing facilities at the reporting date:
Expiring 30 September 2014 (variable interest rate)
Expiring 30 September 2014 (fixed interest rate)
Consolidated
2011
US$
2010
US$
3,468,243
6,934,250
5,947,355
-
10,402,493
5,947,355
These loans may be drawn at any time and are repayable on the terms and conditions as set out in note 19.
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on the
remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are
the contractual undiscounted cash flows.
Year Ended 30 June 2011
Consolidated
Financial liabilities
Trade and other payables
Borrowings
< 6 months
6 – 12 months
1 – 5 years
(cid:1) 5 years
Total
$
$
$
$
$
5,998,314
-
5,998,314
-
-
323,255 65,459,982*
323,255 65,459,982*
-
5,998,314
- 65,783,237
- 71,781,551
*This amount is based on the following assumptions:
•
•
•
there are no additional draw downs on the IFISA loan facility;
the loan is held to 30 September 2014 and is not repaid or converted into equity by IFISA; and
interest of $15,641,313 calculated using rates disclosed in note 19.
Year Ended 30 June 2010
Consolidated
Financial liabilities
Trade and other payables
Borrowings
Defaults and breaches
< 6 months
6 – 12 months
1 – 5 years
(cid:1) 5 years
Total
$
$
$
$
$
5,007,846
22,248,925
27,256,771
-
312,367
312,367
-
-
-
5,007,846
-
- 22,561,292
- 27,569,138
During the current and prior years, there were no defaults or breaches on any of the loans.
Capital management
The Group’s policy is to maintain a strong and flexible capital base to maintain investor, creditor and market
confidence and to sustain future development of the business. The Group monitors the return on capital which
the Group defines as total shareholders’ equity attributable to the members of Austral Gold Limited. The
Group monitors Statement of Financial Position strength and flexibility using cash flow forecast analysis and a
detailed budget process. There were no changes in the Group’s approach to capital management during the
year.
50
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
25 Dividends
No dividends were paid or proposed during the year
26 Commitments
These obligations are not provided for in the accounts and are payable:
Consolidated
2011
$
2010
$
Within one year – AMINSA Earn-in Commitments
1,190,476
1,470,588
One year or later and no later than five years
-
-
1,190,476
1,470,588
Operating lease commitments
Future operating lease rentals not provided for in the financial statements and payable:
Within one year
One year or later and no later than five years
Consolidated
2011
$
2010
$
25,529
22,646
-
-
25,529
22,646
The Group rents offices at Suite 605/ 80 William Street, Sydney. The property lease is a non-cancellable
lease with a one year term expiring 31 May 2012. Rent is payable monthly in advance.
27 Subsidiaries
Parent Entity
Austral Gold Limited
Subsidiaries
Guanaco Mining Company
Guanaco Compañía Minera
Austral Gold Argentina
2011
% owned
2010
% owned
Country of incorporation
Australia
100.000
99.998
99.661
100.000
British Virgin Islands
99.997
99.499
Chile
Argentina
51
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
28 Cash flow information
Reconciliation of cash flow from operations with
profit/(loss) after income tax
Profit/(loss) after income tax
Non-cash flows in profit/(loss)
Interest expense capitalised
Share based payments
Impairment (reversal)/loss
Interest received
Consolidated
2011
$
2010
$
13,325,218
(9,165,580)
652,503
652,723
-
2,488
(10,564,676)
6,971,678
(7,102)
(2,353)
Exploration and evaluation expenditure written off
-
5,059
Exchange rate (gain)/loss
(7,031,711)
555,987
Depreciation and amortisation
826,888
74,372
Net cash used in operating activities before change in assets
and liabilities
(2,798,880)
(905,626)
Changes in assets and liabilities:
Increase in inventory
(1,438,653)
-
(Increase)/decrease in trade and other receivables
(2,753,594)
(1,768,347)
(Decrease)/increase in trade and other payables
1,942,805
404,337
Movement attributable to foreign currency translation
100,658
(59,124)
Cash flow used in operations
(4,947,664)
(2,328,760)
52
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
29 Parent Entity Information
Information relating to Austral Gold Limited:
Current assets
Total assets
Current liabilities
Total liabilities
Net Assets
Issued capital
Accumulated losses
Total shareholders’ equity
2011
$
2010
$
94,943
89,630,448
49,945,133
49,945,133
39,685,315
44,400,742
(4,715,427)
39,685,315
107,579
60,785,620
22,303,981
22,303,981
38,481,639
44,400,742
(5,919,103)
38,481,639
Profit/(loss) of the parent entity
Total comprehensive income of the parent entity
1,203,676
1,203,676
(2,258,969)
(2,258,969)
Details of any guarantees entered into by the parent entity in relation to
the debts of its subsidiaries
Details of any contingent liabilities of the parent entity
Details of any contractual commitments by the parent entity for the
acquisition of property, plant or equipment.
None
None
None
None
None
None
30 Subsequent Events
On 26 July 2011 Austral Gold Limited signed amendments to the funding agreements with Inversiones Financieras del
Sur SA (IFISA) to extend the facility limit across both loans to USD59 million, an increase of USD8 million. In addition
the termination date was extended to 30 September 2014 on both agreements.
On 6 September 2011 Austral Gold announced an increase to gold and silver resources at Guanaco. The increase of
73,000 ounces of gold is primarily attributable to the underground Natalia structure. Total gold resources at Guanaco
now total 884,653 ounces with approximately 95,000 additional gold equivalent ounces of silver.
53
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
31 Related Parties
Directors
The names of each person holding the position of Director during the year are; Eduardo Elsztain, Pablo Vergara del
Carril, Robert Trzebski, Saul Zang, Stabro Kasaneva, Mark Bethwaite (resigned 2 June 2011), and Ben Jarvis
(appointed 2 June 2011). Amounts paid to Directors are set out in the table below.
Directors’ holdings of shares and share options
The parent company, IFISA holds 69% interest in Austral Gold Limited.
Mr Pablo Vergara del Carril is a Director of Austral Gold Limited, Guanaco Capital Holding and of Guanaco Mining
Company. He holds 68,119 shares directly in Austral Gold Limited.
Mr Elsztain is a Director of Austral Gold Limited, Guanaco Capital Holding, Guanaco Mining Company, IFISA and
President of Austral Gold Argentina SA. He holds 144,934,945 shares indirectly in Austral Gold Limited.
Mr Zang is a Director of Austral Gold Limited, Guanaco Capital Holding, Guanaco Mining Company, Austral Gold
Argentina SA and IFISA and he holds 1,435,668 shares indirectly in Austral Gold Limited.
Mr Kasaneva is a Director of Austral Gold Limited and does not hold any shares either directly or indirectly in
Austral Gold Limited
P Vergara del Carril, E Elsztain and S Zang are directors of Guanaco Capital Holding Corp which holds 24,289,330
shares according to the last substantial holder notice lodged in November 2009.
E Elsztain and S Zang are directors of IFISA which holds 116,881,722 shares according to the last substantial
holder notice lodged in November 2009.
Dr Robert Trzebski is a Director of Austral Gold Limited and does not hold any shares either directly or indirectly in
Austral Gold Limited.
Mr Ben Jarvis is a Director of Austral Gold Limited and does not hold any shares either directly or indirectly in
Austral Gold Limited.
54
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Directors and Senior Management Remuneration
2011
PRIMARY
Cash
bonus
Cash
Salary &
Fees
Non
monetary
benefits
POST-EMPLOYMENT
SHARE-BASED
Super-
annuation
Retirement
benefits
Shares
Options
TOTAL
$
$
$
$
$
$
$
$
Directors
F M Bethwaite
R Trzebski
S Kaseneva
B Jarvis
44,372
36,697
300,955
3,058
Total Directors
385,082
Other Key
Management
Personnel
C Lloyd
J Dudley-Smith
59,633
49,541
TOTAL
494,256
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,295
3,303
-
275
50,873
5,367
4,459
60,699
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
91,667
40,000
300,955
3,333
435,955
65,000
54,000
554,955
2010
Directors
F M Bethwaite
R Trzebski
S Kaseneva
Total Directors
Other Key
Management
Personnel
C Lloyd
TOTAL
PRIMARY
Cash
bonus
Cash
Salary &
Fees
Non
monetary
benefits
POST-EMPLOYMENT
SHARE-BASED
Super-
annuation
Retirement
benefits
Shares
Options
TOTAL
$
$
$
$
$
$
$
$
51,876
36,697
230,001
318,574
82,569
401,143
-
-
-
-
-
-
-
-
-
-
-
-
48,124
3,303
-
51,427
7,431
58,858
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
40,000
230,001
370,001
90,000
460,001
55
NOTES TO THE FINANCIAL STATEMENTS
AUSTRAL GOLD LIMITED AND ITS SUBSIDIARIES
FOR THE YEAR ENDED 30 JUNE 2011
Borrowings from majority shareholder
IFISA
2011
$
GCH
2011
$
TOTAL
2011
$
Amount payable at end of
year
Interest
Funds received
Funds repaid
49,818,669
-
49,818,669
1,504,719
1,964,321
3,469,040
20,045,678
11,112,633
35,158,311
-
-
-
IFISA
2010
$
-
-
-
-
GCH
2010
$
TOTAL
2010
$
22,248,925
22,248,925
652,723
652,723
15,995,020
15,995,020
-
-
Ultimate parent entity
The Parent Entity is controlled by IFISA which is incorporated in Uruguay. The ultimate beneficial owner of IFISA is
Eduardo Elsztain.
56
AUSTRAL GOLD LIMITED
DIRECTORS’ DECLARATION
The Directors of Austral Limited declare that:
(a)
in the directors’ opinion the financial statements and notes and the Remuneration report in the
Directors Report set out on page 10, are in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the company’s and the consolidated entity’s financial
position as at 30 June 2011 and of their performance, for the financial year ended on that
date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and Corporations Regulations 2001.
(b)
(c)
the financial report also complies with International Financial Reporting Standards as disclosed in
note 2; and
there are reasonable grounds to believe that the company will be able to pay its debts as and
when they become due and payable.
The directors have been given the declarations required by Section 295A of the Corporations Act 2001 by
the chief financial officer for the financial year ended 30 June 2011.
Signed in accordance with a resolution of the Directors.
Ben Jarvis
Director
Sydney, 20 September 2011
57
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF AUSTRAL GOLD LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Austral Gold Limited, which comprises the statement of
financial position as at 30 June 2011, the statement of comprehensive income, the statement of changes in
equity and the statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies, other explanatory information, and the directors’ declaration of Austral Gold Limited ("the
company") and the consolidated entity. The consolidated entity comprises the company and the entities it
controlled at the year’s end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that is
free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in
accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit
in accordance with Australian Auditing Standards. Those standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable
assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of
the financial report in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au
PKF | ABN 83 236 985 726
Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia
DX 10173 | Sydney Stock Exchange | New South Wales
PKF East Coast Practice is a member of PKF Australia Limited a national association of independent chartered accounting and consulting firms each trading as PKF. The East Coast
Practice has offices in NSW, Victoria and Brisbane. PKF East Coast Practice is also a member of PKF International, an association of legally independent chartered accounting and
consulting firms
Liability limited by a scheme approved under Professional Standards Legislation
58
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Opinion
In our opinion:
(a)
the financial report of Austral Gold Limited is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2011 and of
its performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note
2.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2011.
The directors of the company are responsible for the preparation and presentation of the Remuneration Report
in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on
the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Austral Gold Limited for the year ended 30 June 2011, complies
with section 300A of the Corporations Act 2001.
PKF
Tim Sydenham
Partner
20 September 2011
Sydney
59
ADDITIONAL INFORMATION REQUIRED
BY AUSTRALIAN SECURITIES EXCHANGE LIMITED
Additional information included in accordance with the Listing Rules of the Australian Stock Exchange Limited.
CORPORATE GOVERNANCE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2011
This statement outlines the main corporate governance practices in place throughout the financial year, which comply with
the ASX Corporate Governance Council recommendations, unless otherwise stated.
Board of Directors and its Committees
Your board is responsible for the overall Corporate Governance of the Group including its strategic direction, establishing
goals for management and monitoring the achievement of these goals.
Composition of the Board
The names of the directors of the Company in office at the date of this Statement are set out in the Directors’ Report.
Audit Committee
The Audit Committee has a documented Charter, approved by the Board. The role of the Committee is to advise on the
establishment and maintenance of a framework of internal controls and appropriate ethical standards for the management
of the Group.
It also gives the Board of Directors additional assurance regarding the quality and reliability of financial information
prepared for use by the Board in determining policies or for inclusion in the financial report.
The members of the Audit Committee during the year were:
• Mr Mark Bethwaite (Non-Executive Director – Chairman Audit Committee). Resigned 2 June 2011
• Mr Pablo Vergara del Carril (Non-Executive Director)
• Dr Robert Trzebski (Non-Executive Director)
Audit Committee Meetings are also attended by the external auditors and management representatives as required.
The responsibility of the audit committee includes:
• Reviewing the financial report and other financial information distributed externally;
• Reviewing any new accounting policies to ensure compliance with Australian Accounting Standards and generally
accepted accounting principles;
• Considering whether non-audit services provided by the external auditor are consistent with maintaining the
external auditors’ independence;
•
Liaising with the external auditors and ensuring that the annual and half year statutory audits are conducted in an
effective manner and;
• Monitoring the procedure in place to ensure compliance with the Corporation Act 2001 and Stock Exchange Listing
Rules and all other regulatory requirements.
The Audit Committee reviews the performance of the external auditors on an annual basis and normally meets with them
during the following:
Prior to announcements of results:
•
•
To review the half yearly and preliminary final report prior to lodgement of these documents with ASX, and any
significant adjustments required as a result of the audit; and
To make the necessary recommendations to the Board for the approval of these documents.
Annual reporting:
•
•
To review the results and findings of the auditor, the adequacy of accounting and financial controls, and to monitor
the implementation of any recommendations made;
To review the draft financial report and audit report and to make the necessary recommendations to the Board for
the approval of the financial report.
60
Remuneration Committee
All remuneration decisions are made by the Board.
The Board is cognisant of the objectives concerning remuneration and they are:
•
•
•
to appropriately reward and thereby encourage excellent performance by management and directors, as measured
by growth of the Company;
to devise and/or approve appropriate incentives to facilitate growth;
to take into account the requirements and expectations of all stakeholders, including shareholders, so that
remuneration is balanced by expectations concerning profitability of the Company.
The Board will review:
•
•
•
•
policies for the annual remuneration of directors and senior management;
the basis of calculation of remuneration of those persons to ensure the appearance of reasonableness;
current industry practice in the remuneration of directors and senior executives of similar size and industry entities;
different methods of remuneration, including:
•
•
•
•
•
bonus schemes;
employee Share Option Scheme;
fringe benefits;
superannuation;
retirement and termination packages.
The Board will also review:
•
•
•
professional indemnity policies;
related party disclosures in the financial statements;
communication with major stakeholders to gauge their views on remuneration packages.
The Board’s objectives concerning remuneration are to devise appropriate criteria for Board membership, and identify
specific individuals for Board membership.
The Board takes into account:
•
•
•
the skill sets of current Board members;
the current and future requirements of the Company for skills in particular areas which it lacks;
the value to stakeholders of a Board comprising individuals with high levels of independence and stature.
The Board fosters open and confidential communications at its meetings.
The Board will initiate an annual review of Board and individual director performance, including a review of Board size,
committee structures, and effectiveness of Board meetings.
Internal Control Framework
The Board acknowledges that it is responsible for the overall internal control framework, but recognises that no cost
effective internal control system will preclude all errors and irregularities. To assist in discharging this responsibility, the
Board has instigated an internal control framework that can be described as follows:
•
•
Financial reporting – an annual budget is prepared by management and approved by the directors. Monthly actual
results are reported against budget and revised forecasts for the year are prepared as required. The Company
reports to shareholders quarterly. Procedures are also in place to ensure that price sensitive information is
reported to the ASX in accordance with Continuous Disclosure Requirements.
Investment appraisal – the Group has clearly defined guidelines for capital expenditure. These include annual
budgets, detailed appraisal and review procedures, and levels of authority.
The Role of Shareholders
The Board of Directors aims to ensure that the shareholders are informed of all major developments affecting the
consolidated entities state of affairs. Information is communicated to shareholders as follows:
61
•
•
The Annual Report is available to all shareholders (through the Company web site). The Board ensures that the
annual report includes relevant information about the operations of the Group during the year, changes in the state
of affairs of the Group and details of future developments, in addition to the other disclosures required by the
Corporations Act 2001;
the quarterly report contains summarised financial information and a review of the operations of the Group during
the period.
These reports are posted on the Company’s website at www.australgold.com.au as are announcements made to the
ASX.
The shareholders are responsible for voting on the appointment of directors.
The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of
accountability and identification with the Groups strategy and goals. Important issues are presented to the shareholders as
single resolutions.
Securities Trading Policy
The Group’s share trading policy restricts the times and circumstances in which directors, employees and parties legally
related to them, may trade in shares of the Company or its listed controlled entity. Trading is not permitted when directors
or employees possess price sensitive information which has not yet been disclosed to the market.
Principles of Good Corporate Governance and Best Practice Recommendations
In August 2007, the ASX Corporate Governance Council (Council) re-released its “Corporate Governance Principles and
Recommendations” (Recommendations).
Listing Rule 14.10.3 requires a company to disclose the extent to which the entity has followed the Recommendations set
by the Council during the reporting period. If the entity has not followed all of the recommendations it must identify those
recommendations that have not been followed and give reasons for not following them. If a recommendation had been
followed for only part of the period, the entity must state the period during which it had been followed.
In accordance with Listing Rule 14.10.3 the Company states that it has complied with each of the Eight Essential
Corporate Governance Principles and the corresponding Recommendations as published by the ASX Corporate
Governance Council.
Principal
No
Recommendation
Compliance or
Explanation for Non-compliance
1
1
1.1 Establish and disclose the functions
reserved to the Board and those
delegated to senior management.
1.2 Disclose the process for evaluating
senior
performance
of
the
executives
A formal policy document outlining board and management
functions has not been established.
The directors have determined that given the size and direction of
the Company, hands on day-to-day management and supervision
by directors is currently in its best interests.
Delegation of specific responsibilities to senior management is
agreed and documented in Board Meetings.
The Board reviews senior management performance and
assesses remuneration in line with this review annually.
2
2.1 A majority of the Board should be
independent directors.
Four of the six directors are not considered independent due to
their relationship with IFISA, the Company’s majority shareholder
and other significant shareholders. This situation is unlikely to
change.
2
2.2 The chairperson should be an
The Chairman is an independent, non-executive director.
independent director.
62
Principal
No
Recommendation
Compliance or
Explanation for Non-compliance
2
2.3 The same
individual should not
exercise the roles of chairperson
and chief executive officer.
The Company has not appointed a chief executive officer rather
they have appointed Stabro Kasaneva as the Chief Operating
Officer.
2
2.4 The Board should establish a
nomination committee.
The Board does not have a nomination committee because in the
directors’ view, a Company of this size and stage of development
can best operate with the functions of a nomination committee
undertaken by the full Board.
2
3
3
4
4
4
5
2.5 Disclose the process for evaluating
the performance of the Board, its
Committees and individual directors.
The Board
performance of individual directors within the next 12 months.
its overall performance and
to review
intends
3.1 Establish a code of conduct and
disclose a summary addressing:
The Company’s code of conduct is published on he Company’s
website under Corporate Governance.
•
•
•
the practices necessary
maintain confidence
company’s integrity
in
to
the
account
the practices necessary to take
legal
into
obligations and the reasonable
expectations
their
stakeholders
their
of
and
responsibility
the
accountability of individuals for
reporting
investigating
and
reports of unethical behaviour.
3.2 Establish and disclose a policy
in company
senior
concerning
securities by directors,
executives and employees.
trading
The Company’s Securities Trading Policy was provided to the
ASX on 29 December 2010 and is available on the Company’s
website.
4.1 Establish an Audit Committee
Complies. The Company has an Audit Committee.
4.2 Structure the audit committee so
that it consists of:
• only non-executive directors
• a majority of
independent
directors
• an
independent chairperson,
who is not chairperson of the
board
• at least three members
The Audit Committee comprises Robert Trzebski (as Chairman)
and Pablo Vergara del Carril. The committee lacks a majority of
independent directors as recommended.
The members of the Audit Committee possess the requisite
financial expertise and
to
effectively carry out the Committee's mandate.
industry experience necessary
4.3 The Audit Committee should have a
formal charter.
The Audit Committee has a documented charter approved by the
Board.
to
5.1 Establish and disclose written
policies
ensure
designed
compliance with ASX Listing Rule
disclosure
to
ensure accountability at a senior
that
management
compliance.
requirements and
level
for
The Company’s Continuous Disclosure Policy is available on the
Company’s website.
63
Principal
No
Recommendation
Compliance or
Explanation for Non-compliance
6
7
7
7
8
8
6.1 Design
and
disclose
a
communications policy to promote
effective
with
shareholders
encourage
effective participation at general
meetings.
communication
and
The Company’s Shareholder Communications Policy is available
on the Company’s website.
7.1 Establish and disclose policies for
the oversight and management of
material business risks.
The Company’s Risk Management and Internal Control Policy is
available on the Company’s website.
The Company’s system of risk management and internal control
is basic, yet appropriate for the size and nature of transactions
incurred.
The Board seek external advice when considering new or
identified and
significant
addressed in a timely manner.
to ensure risks are
transactions
The sign-off received by the Board from the CFO relates to
financial reporting. It is limited by knowledge and belief and
provides a reasonable, but not absolute level of assurance with
regards to the system of risk management and internal control.
7.2 Design and
implement a
risk
management and internal control
system to manage the company’s
material business risks and report
on whether those risks are being
managed effectively.
section
7.3 The Board should disclose whether
from
it has received assurance
senior management
the
that
declaration provided in accordance
with
the
Corporations Act is founded on a
sound system of risk management
and internal control and that the
system is operating effectively in all
material
to
in
financial reporting risks.
respects
relation
295A
of
8.1 Establish
a
Remuneration
Committee
The Company cannot justify the operation of a Remuneration
Committee. All remuneration decisions are made by the Board.
8.2 Distinguish the structure of non-
remuneration
executive directors’
from that of executive directors and
senior management.
The Board is cognisant of the objectives concerning remuneration
of directors and senior management and is committed to the
design of appropriate structures to fulfil these objectives.
The Board aspires to the highest standards of corporate governance and is fully supportive of and committed to the aims,
spirit and letter of the Recommendations and to their implementation as appropriate for a company of this size.
64
Capital
As at 31 August the total issued capital of Austral Gold Limited was 169,139,739 ordinary shares.
169,139,739 shares were quoted on the Australian Securities Exchange under the code AGD.
The only shares of the Company on issue are ordinary shares. None of these shares are restricted securities
within the meaning of the Listing Rules of the Australian Securities Exchange.
There are no restrictions on the voting rights attached to the fully paid ordinary shares. On a show of hands,
every member present in person shall have one vote and upon a poll, every member present in person or by
proxy shall have one vote for every share held.
a) Distribution of fully paid ordinary shareholders at 31 August 2011
Size of Holding
Total holders
Number of shares held
1 - 100
101 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 50,000
50,001 - 100,000
100,001 - 9,999,999,999
194
460
299
84
60
15
24
Total
1,136
9,777
256,708
793,051
688,128
1,316,079
1,055,694
165,020,302
169,139,739
b) Substantial Shareholders
At 31 August 2011, the Company’s register of substantial shareholdings in line with the last substantial holder
notice lodged in November 2009 shows the following:
Registered Holder
Beneficial Holder
Shares Held
Citicorp Nominees
Inversiones Financieras Del SUR SA (IFISA)
116,881,722
HSBC Custody Nominees
Guanaco Capital Holding Corp
Citicorp Nominees
Eduardo Sergio Elsztain
TOTAL
24,289,330
4,686,206
145,857,258
66
c) Top twenty shareholders as at 31 August 2011
Rank
Name
No. of shares
% of issued capital
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
CITICORP NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED - A/C 2
JP MORGAN NOMINEES AUSTRALIA LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY
LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED-GSCO ECA
HSBC CUSTODY NOMINEES (AUSTRALIA)
LIMITED
ASOCIACION ISRAELITA ARGENTINA TZEIRE
AGUDATH JABAD
J P MORGAN NOMINEES AUSTRALIA LIMITED
FORSYTH BARR CUSTODIANS LTD
HAZLAHA INVESTMENTS LIMITED
JP MORGAN TRUST COMPANY LTD
LIMOL TRADING CORP
MOSHE AMBARCHI
JOAMEL HOLDINGS PTY LTD
BIRCHALL PROJECTS LTD
MR CARLOS PERALTA TORREJON
MR MARCUS EINFELD
GREENFORD INVESTMENTS LIMITED
MOUNTAIN SIDE HOLDINGS LTD
MR MARCOS FISCHMAN
Total for top 20 shareholders
Other
Total shares on issue
125,407,138
24,289,330
3,234,624
2,192,682
1,969,392
1,640,822
1,158,265
1,148,000
819,557
336,865
297,445
297,445
250,000
250,000
230,000
227,614
200,000
200,000
194,800
190,451
164,534,430
4,605,309
169,139,739
74.14
14.36
1.91
1.30
1.16
0.97
0.68
0.68
0.48
0.20
0.18
0.18
0.15
0.15
0.14
0.13
0.12
0.12
0.12
0.11
97.28
2.72
100.00
66