2012
[ANNUAL REPORT]
Austral Gold Limited ABN 30 075 860 472
Contents
Corporate Directory ...................................................................................................................................................... 2
Chairman´s Letter ......................................................................................................................................................... 3
Review of Activities....................................................................................................................................................... 4
Director’s Report ........................................................................................................................................................ 12
Independent Auditors Declaration ............................................................................................................................. 19
Financial Statements .................................................................................................................................................. 20
Notes to the Financial Statements ............................................................................................................................. 24
Directors’ Declaration ................................................................................................................................................. 50
Audit Opinion .............................................................................................................................................................. 51
Additional Information ............................................................................................................................................... 53
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Corporate Directory
Directors:
Chairman & Non-Executive Director
Eduardo Elsztain
Saul Zang
Non-Executive Director
Pablo Vergara del Carril Non-Executive Director
Stabro Kasaneva
Wayne Hubert
Robert Trzebski
Ben Jarvis
Executive Director
Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Company Secretary:
Catherine Lloyd
Registered Principal Office:
Antofagasta, Chile Office:
Buenos Aires, Argentina Office:
Suite 605, 80 William Street
Sydney NSW 2011
Tel: +61 (02) 9380 7233
Fax: +61 (02) 9380 7972
Email: info@australgold.com.au
Web: www.australgold.com.au
14 de Febrero 2065, of. 1103
Antofagasta, Chile
Tel: +56 (55) 440 304
Fax: +56 (55) 440 305
Bolivar 108
Buenos Aires (1066) Argentina
Tel: +54 (11) 4323 7500
Fax: +54 (11) 4323 7591
Share Registry:
Auditors:
Principal Bankers:
Solicitors:
Listed:
Computershare
GPO Box 2975
Melbourne VIC 3001
Tel: 1300 850 505 (within Australia)
Tel: +61 3 9415 5000 (outside Australia)
BDO East Coast Partnership (formerly PKF East Coast Practice)
www.bdo.com.au
National Australia Bank Limited
www.nab.com.au
Addisons Lawyers
www.addisonslawyers.com.au
Australian Stock Exchange
ASX: AGD
Place of Incorporation:
Western Australia
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Chairman´s Letter
Dear Shareholders,
2012 has been a year of significant progress for Austral Gold, one in which we have witnessed continued growth
in gold and silver production at our flagship Guanaco project in Chile.
The team at Guanaco has worked hard to improve the performance of the mine and they are to be commended
for their efforts. At a time when the gold price is again approaching record levels, it is pleasing to note that
Guanaco is shaping up as a very valuable asset.
This improved performance is reflected in our growth in production which stood at 17,803 ounces of gold and
47,575 ounces of silver for the eight months to August 2012. This compares to total production of 12,373 ounces
of gold and 37,511 ounces of silver for all of calendar 2011.
During the year, we continued to invest in the development of Guanaco and we are confident that this will lead to
much greater value being realised for this project.
We are investing in new equipment and strengthening our operating procedures and this is expected to deliver
production of 35,000 gold equivalent ounces in the 2012 calendar year.
Exploration has also been a focus for Austral Gold during 2012. We initiated a major exploration and resource
definition drilling program at Guanaco and we expect this to lead to an upgrade of our existing inferred resources
as well as identifying additional mineralisation across the project. It is our strong view that Guanaco has further
upside.
Exploration efforts in Argentina remain a priority for the company and our technical team is encouraged by the
prospects for our 8 de Julio project in the Santa Cruz Province. We continue to advance this project and we are
also reviewing other exploration and development opportunities in Argentina – a market we know very well.
Your Board is very encouraged by the outlook for precious metals in 2013 and beyond. Global markets remain
uncertain and central banks continue to implement stimulus programs to promote growth. All of which bodes
well for the outlook for gold and gives us further encouragement as we ramp up production.
I would like to take this opportunity to thank our shareholders for their continued support for Austral Gold.
Eduardo Elsztain
Chairman
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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 mine life and improve its financial
viability. This is our primary focus.
The Company is seeking to acquire further properties in Chile and has acquired properties in Argentina. The
Company is also assessing a number of options to expand its existing 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 from Compañia Minera Kinam Guanaco Limitada, a wholly-
owned subsidiary of Kinross Gold Corporation.
At the General Meeting of the Company held on 14 March 2003, the Shareholders approved this acquisition and
the Guanaco Project was acquired by Guanaco Compañía Minera Limitada - a company wholly owned by Guanaco
Mining Company Limited (GMC) and incorporated in Chile.
Project and Mine Description
is the company’s
The Guanaco mine
located approximately
primary asset
220km SE of Antofagasta
in Northern
Chile. It is at an elevation of some 2,700m
the Pan American
and 45km
from
in the
is
Highway. Guanaco
Palaeocene/Eocene belt, a structural trend
which runs north/south down the centre
of Chile, and hosts several large gold and
copper mining operations
including:
Zaldivar, El Penon and Escondida.
located
The Guanaco operation includes the mining of ore from two open pits (Defensa and Perseverancia) at an average
grade of 1.6 g/t gold. The majority of the ore processed came from the Cachinalito underground and nearby vein
systems with 419,000oz in gold JORC Measured and Indicated resources averaging 3.2 g/t. Gold mineralisation at
Guanaco is controlled by pervasively silicified, E/NE trending sub-vertical zones with related hydrothermal
breccias. Silicification grades outward into advanced argillic alteration and further into zones with propylitic
alteration. In the Cachinalito vein system most of the gold mineralisation is concentrated between the 75m and
200m levels and is contained in long shoots. High grade ore shoots (up to 180 g/t Au), 0.5 to 3.0m wide, have
been mined out, but the lower grade halos, below 3 g/t, can reach up to 20m in width. The alteration pattern and
the mineralogical makeup of the Guanaco ores have led to its classification as a high sulfidation epithermal
deposit.
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Guanaco recommenced operations in August 2010 and
poured its first doré bars in October 2010. In the 2012
calendar year, the company
is forecasting total
production of approximately 35,000 gold equivalent
ounces from this operation.
Top: 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.
Above: The refurbished crushing plant.
Right: The first gold doré pouring in October 2010.
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Production
Production from heap leach processes, using existing leach
pads and new ore mined from two open pit mines, plus the
underground operation generated 17,803oz of gold and
47,575oz of silver in the 8 months to August 2012. The cash
operating cost was approximately US$ 942 /oz.
Production figures were behind budget due to labour supply
issues experienced by the mining contractors; lower grade ore
from the open pit; and ongoing cyanide supply issues across
the mining sector in Chile.
Production results for July and August 2012 have shown a
strong improvement, with August 2012 gold production
reaching 105% of budget. This trend is expected to continue
with new production from the Quillota open pit due to
commence in September 2012. In addition, a new higher-
capacity carbon regeneration kiln has been commissioned
from Australia. This
is expected to further
improve production efficiency from 2013.
investment
In summary, we are confident of meeting our 35,000 gold
equivalent ounces production estimate for the 2012 calendar
year.
Gold and Silver Production:
Production
Gold (Au Oz)
Silver (Ag Oz)
2010
Cal Year
2011
Cal Year
Jan-Aug
2012
Cal Year
Forecast
332
431
12,373
37,511
17,803
47,575
33,000
99,000
Guanaco Operational Performance:
Jan – June 2012
Total Ore Mined (t)
Ore from Open Pits (t)
Open Pit Grade (Au g/t)
Ore from Underground (t)
Underground Grade (Au /t)
Ore from Old Heaps (t)
Old Heap Grade (Au g/t)
Weighted Average Recovery (%)
Gold Produced (oz)
Silver Produced (oz)
Cash operating cost (US$/oz)
387,032
309,458
1.17
49,896
6.49
27,678
0.8
58
11,533
36,968
972
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Safety
Two lost time incidents (LTIs) and two no-lost time accidents (NLTAs) were reported involving employees of the
Company and its subsidiaries during the year ended 30 June 2012. These incidents have been thoroughly
investigated and in all cases corrective actions have been identified and implemented to prevent recurrence.
Safety is a core value of the Company and the implementation of strategies to identify and manage risks in our
workplaces being our highest priority.
Exploration Program
With production now well underway, the geological team has undertaken a review of the results from the 2010
drilling campaign to define an approach for the identification of extensions and new resources at Guanaco. In
undertaking the review, the geological team reviewed data from the 50-60,000 metres of drilling completed to
date.
The 2012 Guanaco exploration program for precious metals involved 12,000 metres of RC drilling. The epithermal
program was built around three main objectives:
1) Exploration of new epithermal deposits with ~200k oz resource potential.
This objective corresponds to the activities developed in an 11,700 ha area of focus within the 40,031 mine
property at Guanaco. The program is focused mostly in the covered areas both east and west of the Guanaco
deposit, that have never seriously been explored in the past where several lineaments following the
projection of the major corridors are present. Currently, geologists are working on a reconnaissance program
in these areas and an IP geophysics profile is in progress to support the target generation program.
2) Near mine extensions to existing epithermal ore bodies.
Either lateral extensions or parallel zones providing 20-30k oz potential. This program also includes
the revision of intersections with gold grades greater than 5 g/t Au identified through previous drilling
campaigns such as Veta Nueva
(6m/21 g/t Au), San Lorenzo, and Cerro Guanaquito veins
(4.8m/10 g/t Au).
3) Upgrade of inferred resources.
This program is targeting to upgrade approximately 600,000oz of gold that are currently in the inferred
category into the measured and indicated categories.
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Reserves & Resources
Guanaco’s resource inventory is outlined in the table below. The resource inventory was last updated by AMEC in
July 2011 and is compliant with NI 43-101 and JORC Standards.
Total Resources
Resources
Gold (Au)
Underground
(>1.0 g/t Au)
Open Pit
(>0.4 g/t Au)
Heap Leach
(>0.4 g/t Au)
Total
Silver(Ag)
Measured (Me)
Indicated (Ind)
Total (Me + Ind)
Inferred (Inf)
Ton
(kt)
Grade
(g/t)
Ounces
Au
Ton
(kt)
Grade
(g/t)
Ounces
Au
Ton
(kt)
Grade
(g/t)
Ounces
Au
Ton
(kt)
Grade
(g/t)
Ounces
Au
1,264
3.7
150,506
2,862
2.91
268,018
4,126
3.15
418,524
2,553
2.42
198,824
657
1.7
35,794
766
1.45
35,692
1,423
1.57
71,486
15
1.63
810
8,334
0.54
145,748
8,334
0.54
145,748
2,777
0.55
49,261
10,255
1.01
332,048
3,628
2.60
303,710
13,883
1.43
635,758
5,345
1.44
248,895
Ton
(kt)
Grade
(g/t)
Ounces
Ag
Ton
(kt)
Grade
(g/t)
Ounces
Ag
Ton
(kt)
Grade
(g/t)
Ounces
Ag
Ton
(kt)
Grade
(g/t)
Ounces
Ag
Underground
1,264
7.88
320,078
2,862
10.65
979,507
4,126
9.80
1,299,585
2,553
11.34
930,362
Open Pit
657
15.05
317,851
766
12.18
299,879
1,423
13.51
617,730
15
10.27
5,097
Heap Leach
8,334
2.66
712,175
8,334
2.66
712,715
2,777
2.63
234,946
Total
10,255
4.09
1,350,104
3,628
10.97
1,279,386
13,883
5.89
2,629,490
5,345
6.81
1,170,405
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Copper Porphyry System
Work continues to develop the
exploration model of the deep
copper porphyry system potential at
Guanaco. Preliminary recommend-
ations were received in April from
geology
respected
several
consultants following a field visit
and review of available geological
results were
information. The
encouraging and confirm the high
potential in the area for exploration
of this type of mineralisation.
On the back of these encouraging
recommendations, an experienced
geologist was engaged to identify
areas that present the best opp-
ortunities for the exploration of a
copper porphyry. This resulted in a
drilling campaign involving 5 holes
of 1000m each. (400m RC pre-collar and 600m DDH). The first three holes were drilled in July and August and due
to an operational failure by the contractor one hole had to be abandoned at 580m.
After initial analysis a further three drill holes of 1000m each have been identified with drilling due to commence
in the next month.
Left: Drilling rigs at Guanaco
Above: one of the heap leach pads at Guanaco
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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 270,000 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 2011/2012 a four-hole drilling program was completed totalling 898 meters. This program was designed to
test a surface gold anomaly in the Rincones de Araya East sector. Logging of the four holes recognised polymictic
brecciated rocks with silica alteration and in some cases argillic alteration. The first few meters of the holes
showed a strong oxidation with leaching textures where the gaps were filled with limonite and some vuggy silica.
According to the observations of the completed holes and obtained grades, it can be concluded that the strongest
surface geochemical gold anomalies, emplaced in a favourable lithology and alteration complemented by
favourable geophysics, were entirely drilled.
Images of the San Juan exploration site
8 de Julio Project - Santa Cruz, Argentina
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 the year important results were received from the trench program developed in the Campo Barroso
Grande of the Estancia 8 de Julio. A comprehensive strategy is being designed in order to more aggressively
advance with the exploration of this prospect.
A geophysics consulting company will perform a resistivity study and the geochemical sampling program in the
area will be expanded. The following figure reflects the level of progress with the latest results and the next
activities considered for the projects.
Expansion of the 100x100m geochemical mesh for silica and quartz vein float, to the entire Barroso Grande
field.
Development of a new geophysical program corresponding to a resistivity gradient in the Barroso Grande
field where important gold values were obtained.
Start with the systematic sampling of the other sectors/targets identified in the geological mapping.
Planned drilling of holes that will test the vertical extension of the mineralized column.
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Images of the 8 de Julio exploration site
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Director’s Report
Austral Gold Limited and its Subsidiaries
For the year ended 30 June 2012
Your Directors present the following report for the financial year ended 30 June 2012 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 2012 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 2012 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 loss attributable to members for the year ended 30 June 2012 was $15,923,280 (2011: profit
$13,325,218).
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 decreased by $4,715,734 since 30 June 2011 to $97,972,109 at 30 June 2012.
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 are confident 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. FY2012 saw the stabilisation of production with
the focus now shifting to maximise efficiency of the operations.
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Events Subsequent to Balance Date
There have been no reportable events since 30 June 2012 to the date of this report.
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.
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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 Elsztain
Chairman
Appointed 2 Jun 11
Non-Executive Director
Appointed 29 Jun 07
Re-elected by shareholders 20 Nov 09
Wayne Hubert
Non-Executive Director
Appointed 18 Oct 11
Re-elected 30 Nov 11
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;
(v)
(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
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. Elsztain 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 Elsztain is also a member of
the Board of Directors of the Buenos Aires Stock Exchange.
Mr Elsztain has not held any other Directorships with listed entities in the last
three years.
Mr. Hubert is a highly experienced and accomplished mining executive with over
15 years’ experience working in the South American resources sector. From
2006 until 2010 he was the Chief Executive Officer of ASX-listed Andean
Resources Limited, and led the team that increased Andean’s value from $70
million to $3.5 billion in four years. Andean was developing a world-class silver
and gold mine in Argentina with a resource of over 5 million ounces of gold
when it was acquired by Goldcorp Inc. of Canada.
Mr. Hubert, who holds a Bachelor degree in Engineering and a Master of
Business Administration and has held executive roles for Meridian Gold with
experience in operations, finance and investor relations. Currently he is a
Director of: Samco Gold Limited [TSX], a company focused on gold exploration in
Argentina; Midas Gold Corp [TSX], a Canadian company with a 5.7 million ounce
gold resource and Lithic Resources [TSX].
Other than stated above, Mr Hubert has not held any other Directorships with
listed entities in the last three years.
Stabro Kasaneva
Executive Director
Appointed 7 Oct 09,
Re-elected by shareholders 20 Nov 09
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.
Mr Kasaneva has not held any other Directorships with listed entities in the last
three years.
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Name and Qualifications
Experience and Special Responsibilities
Saul Zang
Non-Executive Director
Appointed 29 Jun 07
Re-elected by shareholders 30 Nov 11
Pablo Vergara del Carril
Non-Executive Director
Appointed 18 May 06
Re-elected by shareholders 29 Nov 10
Mr Zang obtained a law degree from Universidad de Buenos Aires. He is a
member of the International Bar Association and the Interamerican Federation
of Lawyers and is a founding member of the law firm ang, Bergel i es.
Mr Zang currently holds Vice-Chairmanships on the Boards of IRSA, Shopping
Alto Palermo SA, and Alto Palermo and holds Directorships with Cresud [Nasdaq
/ BASE], Alto Palermo [Nasdaq / BASE], Banco Hipotecario [BASE], BrasilAgro
[Bovespa], Puerto Retiro and Fibesa; Nuevas Fronteras SA, Tarshop and Palermo
Invest SA.
Mr Zang is an adviser and Member of the Board of Directors of BASE and
provides legal advice to national and international companies, including the
privatisation process of YPF SA and the Province of Buenos Aires’ electricity
company.
Mr Zang has not held any other Directorships with listed entities in the last three
years.
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) Alto Palermo [Nasdaq / BASE] 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.
Mr Vergara del Carril has not held any other Directorships with listed entities in
the last three years.
Robert Trzebski
Non-Executive Director
Appointed 10 Apr 07
Re-elected by shareholders 30 Nov 11
Dr Robert Trzebski holds a degree in Geology, a PhD in Geophysics, a Masters in
International Project Management and has over 18 years of professional
experience in mineral exploration, project management and mining services. He
is currently Executive Officer of Austmine Ltd, Executive Director of Australia-
Latin America Business Council and Director of Columbus Minerals Pty Ltd.
Ben Jarvis
Non-Executive Director
Appointed 2 Jun 11
Re-elected 30 Nov 11
As a fellow of the Australian Institute of Mining and Metallurgy, Dr Trzebski has
acted as the Competent Person (CP) for the Company’s ASX releases.
Dr Trzebski has not held a Directorship of any other listed company in the last
three years.
Ben Jarvis is the Managing Director and co-founder of Six Degrees Investor
Relations, an Australian advisory firm that provides investor relations and
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 Eagle Nickle [ASX] and 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.
In the last three years, Mr Jarvis also held a Directorship with Connxion Limited.
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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
Attended
Held during Office
Attended
Held during Office
Directors’ meetings
Audit Committee meetings
Pablo Vergara del Carril
Robert Trzebski
Eduardo Elsztain
Saul Zang
Stabro Kasaneva
Ben Jarvis
Wayne Hubert
6
6
6
3
6
6
4
6
6
6
6
6
6
4
2
2
n/a
n/a
n/a
n/a
n/a
2
2
n/a
n/a
n/a
n/a
n/a
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 140,949 unissued shares under option with an exercise price of $0.30 expiring
15 November 2016.
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.
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
Ordinary Shares
It is also noted:
P Vergara del Carril
R Trzebski
E Elsztain
S Zang
S Kasaneva
B Jarvis
W Hubert
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 September 2012.
2. E Elsztain and S Zang are directors of IFISA which holds
115,492,415 shares according to the last substantial
holder notice lodged in September 2012.
68,119
-
144,467,951
1,435,668
-
-
1,750,000
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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Remuneration Report (Audited)
Remuneration Policy
The Company has a Remuneration Policy that aims to ensure the remuneration packages of directors and senior
executives properly reflect the person’s duties, responsibilities and level of performance, as well as ensuring that
remuneration is competitive in attracting, retaining and motivating people of the highest quality.
The Company reviews information about remuneration levels in the various labour markets in which it competes.
Total fixed compensation for a particular grade of employee is aimed 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 that are associates of the Company’s major shareholder (Eduardo Elsztain, Saul ang and
Pablo Vergara del Carril) do not receive any fees or payments from the Group. Independent non-executive
directors (Robert Trzebski, Ben Jarvis and Wayne Hubert) receive between $40,000 and $50,000 pa which reflects
the demands and responsibilities of their position.
Details of Remuneration
PRIMARY
POST-EMPLOYMENT
SHARE-BASED
TOTAL
Cash Salary
& Fees
$
Cash
Bonus
$
Non-monetary
Benefits
$
Super-
annuation
$
Retirement
Benefits
$
Shares
Options
$
$
$
YEAR ENDED 30 JUNE 2012
S Kasaneva
W Hubert
R Trzebski
B Jarvis
308,135
*310,184
35,150
36,697
36,697
-
-
-
Total Directors
416,679
310,184
OTHER KEY MANAGEMENT PERSONNEL
C Lloyd
Total KMP
Total 2012
123,089
123,089
-
-
539,768
310,184
-
-
-
-
-
-
-
-
-
-
3,303
3,303
6,606
11,078
11,078
17,684
-
-
-
-
-
-
-
-
*$165,765 of this bonus relates to the years ended 30 June 2011 and 30 June 2010.
YEAR ENDED 30 JUNE 2011
M Bethwaite
S Kasaneva
R Trzebski
B Jarvis
Total Directors
44,372
300,955
36,697
3,058
385,082
OTHER KEY MANAGEMENT PERSONNEL
C Lloyd
J Dudley-Smith
Total KMP
Total 2011
59,633
49,541
109,174
494,256
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,295
-
3,303
275
50,873
5,367
4,459
9,826
60,699
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
618,319
35,150
40,000
40,000
733,469
134,167
134,167
867,636
91,667
300,955
40,000
3,333
435,955
65,000
54,000
119,000
554,955
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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Service Agreements
Further to his responsibilities as a Director of Austral Gold Limited, Stabro Kasaneva is employed by the Group as
Chief Operating Officer. His employment contract commenced in September 2009 and has no fixed termination
date. The termination period is 30 days notice 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 2012 are contained in the table above.
Share Based Payments
There were no share based payments made to Directors or key management personnel during the year.
This concludes the Remuneration Report which has been audited.
Auditors
BDO (formerly PKF East Coast Practice) 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 of the
Company and its subsidiaries – BDO and Nexia respectively –
for audit and non-audit services provided during the year are
set out in the adjacent table.
Audit Services and
review of financial reports
2012
$
2011
$
101,476
96,492
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:
Total auditors fees
Non-audit services
104,061
96,492
2,585
-
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.
Fees paid or payable for services provided by the auditors of Austral Gold Limited are set out in the table above.
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 2012 has been received and is included
in this report.
Signed in accordance with a resolution of Directors at Sydney
Ben Jarvis
Director
28 September 2012
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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Tel: 61 2 9251 4100
Fax: 61 2 9240 9821
www.bdo.com.au
Level 10, 1 Margaret St
Sydney NSW 2000
Australia
DECLARATION OF INDEPENDENCE BY TIM SYDENHAM TO THE DIRECTORS OF AUSTRAL GOLD
LIMITED
As lead auditor of Austral Gold Limited for the year ended 30 June 2012, I declare that, to the best
of my knowledge and belief, there have been no contraventions of:
•
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
any applicable code of professional conduct in relation to the audit.
This declaration is in respect Austral Gold Limited and the entities it controlled during the period.
Tim Sydenham
Partner
BDO East Coast Partnership
Sydney, 28 September 2012
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
Financial Statements
Statement of Comprehensive Income
Austral Gold Limited and its Subsidiaries
For the year ended 30 June 2012
Consolidated
Notes
2012
$
2011
$
CONTINUING OPERATIONS
Revenue
Total revenue
Cost of sales
Depreciation and amortisation expense
Finance costs
Administration expenses
Employee benefits expense
(Impairment losses) / reversal of impairment
(Loss) / gain from foreign exchange
(Loss) / profit before income tax
Income tax expense
(Loss) / profit after income tax
(Loss) / profit after tax attributable to outside equity interest
Net (Loss) / profit for the year
OTHER COMPREHENSIVE INCOME
Foreign currency translation
Income tax on items of comprehensive income
Total comprehensive income for the year
(LOSS) / EARNINGS PER SHARE (cents per share):
Basic (loss) / earnings per share
Diluted (loss) /earnings per share
4
5
5
5
7
8
8
30,389,567
30,389,567
8,265,081
8,265,081
(22,872,651)
(8,568,851)
(5,410,824)
(4,859,464)
(3,770,073)
(1,146,455)
(4,917,831)
(2,229,932)
(14,817,663)
(733,039)
(652,503)
(1,470,111)
(1,111,706)
10,564,676
7,031,711
13,325,218
(1,105,617)
-
(15,923,280)
13,325,218
-
-
(15,923,280)
13,325,218
2,093,363
(9,956,531)
-
-
(13,829,917)
3,368,687
(9.4)c
(9.4)c
7.9c
7.9c
The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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Statement of Financial Position
Austral Gold Limited and its Subsidiaries
as at 30 June 2012
Consolidated
Notes
2012
$
*2011 restated
$
*2010 restated
$
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
Deferred tax liability
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Retained earnings/(accumulated losses)
Reserves
Outside equity interest
TOTAL EQUITY
10
12
11
12
13
14
15
16
17
18
19
18
19
7
20
21
23
22
469,876
3,088,005
3,555,662
1,309,145
5,342,263
1,438,653
1,399,382
3,061,046
-
7,113,543
8,090,061
4,460,428
3,828,225
340,111
6,070,447
4,306,285
7,871,386
4,061,595
66,332,753
64,083,041
49,409,557
20,185,655
20,021,794
4,266,272
171,822
116,215
39,065
90,858,566
94,597,782
65,647,875
97,972,109
102,687,843
70,108,303
5,924,731
6,139,889
5,007,846
22,047
721,988
12,179
181,680
12,142
22,561,292
6,668,766
6,333,748
27,581,280
742,752
639,755
57,352,048
49,818,669
1,128,290
-
59,223,090
50,458,424
-
-
-
-
65,891,856
56,792,172
27,581,280
32,080,253
45,895,671
42,527,023
44,400,742
44,400,742
44,400,742
(6,105,160)
9,818,120
(3,507,098)
(6,215,387)
(8,323,247)
1,633,284
58
56
95
32,080,253
45,895,671
42,527,023
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
* Refer to Note 2.29 for an explanation of the restatement
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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Statement of Changes in Equity
Austral Gold Limited and its Subsidiaries
For the year ended 30 June 2012
Consolidated
Issued
capital
$
Notes
Retained
earnings/
accumulated
losses)
$
Reserves
$
Minority
interest
$
Total
$
44,400,742
(3,507,098)
1,633,284
95
42,527,023
13,325,218
-
(9,956,531)
-
-
13,325,218
(9,956,531)
-
(39)
(39)
-
-
44,400,742
9,818,120
(8,323,247)
56
45,895,671
Balance at 30 June 2010
Profit for the year
Other comprehensive Income
Decrease in minority interest
attributable to foreign exchange
Balance at 30 June 2011
Loss for the year
Other comprehensive income
Increase in minority interest
attributable to foreign exchange
21
22
21
22
-
-
-
-
-
-
(15,923,280)
-
-
-
-
2,093,363
-
14,497
-
-
2
-
(15,923,280)
2,093,363
2
14,497
TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS:
Options issued
23
-
Balance at 30 June 2012
44,400,742
(6,105,160)
(6,215,387)
58
32,080,253
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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Statement of Cash Flows
Austral Gold Limited and its Subsidiaries
For the year ended 30 June 2012
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Consolidated
Notes
2012
$
2011
$
30,112,158
8,088,356
(22,581,080)
(13,036,020)
Net cash provided through / (used in) operating activities
28
7,531,078
(4,947,664)
Cash flows from investing activities
Proceeds from sale of plant and equipment
Purchase of property, plant and equipment
Investment in unlisted shares
Payment for exploration and evaluation expenditure
Investment in development assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Loans from related party
Repayment to related party
Net cash provided through financing activities
10,738
(1,946,477)
(1,216,219)
(63,572)
-
(16,104,284)
(1,261,127)
(93,660)
(4,016,475)
(7,589,164)
1,787
7,102
(7,230,218)
(25,041,133)
2,595,002
(2,353,664)
31,222,579
-
241,338
31,222,579
Movement attributable to foreign currency translation
(1,381,467)
(1,324,019)
Net (decrease) / increase in cash held
Cash at beginning of financial year
Cash at end of financial year
(839,269)
1,309,145
469,876
1,233,782
1,399,382
1,309,145
10
The above Statement of Cash Flows should be read in conjunction with the accompanying notes
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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Notes to the Financial Statements
1 CORPORATE INFORMATION
The financial report of Austral Gold Limited (“the Company”) for the year ended 30 June 2012 was authorised
for issue in accordance with a resolution of the Directors on 28 September 2012.
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, as appropriate for profit oriented
entities.
The financial report covers the Consolidated 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 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.
2.1
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.
2.2
Statement of compliance
The accounting policies set out below have been consistently applied to all years presented.
2.3
Presentation currency
The financial report is presented in Australian dollars which is the presentation currency of the Group.
2.4 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.
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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.
2.5
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.
2.6
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.
2.7 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 Statement of Cash Flows on a gross basis, except for the GST/VAT
component of investing and financing activities, which are disclosed as operating cash flows.
2.8
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.
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2.9
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:
2.9.1
rights to tenure of the area of interest are current; and
2.9.2 one of the following conditions is met:
i
such costs are expected to be recouped through successful development and exploitation
of the area of interest or alternatively, by its sales; or
ii 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
Comprehensive Income during the period in which the expenditure is incurred.
is written off to the Statement of
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.
2.10
Investments
Investments in subsidiaries are carried in the Parent Entity’s financial statements at the lower of cost
and recoverable amount.
2.11 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.
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2.12 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:
i 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.
ii
Income and expenses for each Statement of Comprehensive Income are translated at the average
rate of exchange.
iii All resulting exchange differences are recognised as a separate component of equity.
2.13 Cash and cash equivalents
For the purpose of the Statement of Cash Flows, cash includes:
i
cash on hand and at call deposits with banks or financial institutions; and
ii other short-term highly liquid investments with original maturities of three month or less, and
bank overdrafts.
2.14
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 :
i 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
ii 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.
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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:
iii 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
iv 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.
2.15
Inventories
Raw materials and work in progress 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, an appropriate proportion of variable and fixed overhead expenditure based on normal
operating capacity. Finished goods are stated at net realisable value. Net realisable value is
determined using the prevailing metal prices.
2.16 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.
2.17 Trade and other payables
These amounts represent liabilities for goods and services provided to the Group 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.
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2.18
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.
2.19 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.
2.20 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.
2.21
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 rate.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives or
more frequently if events or 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.
2.22 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:
i
ii
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
iii the Group has transferred its rights to receive cash flows from the asset and either:
iv
has transferred substantially all the risks and rewards of the asset, or
v has neither transferred nor retained substantially all the risks and rewards of the asset, but has
transferred control of the asset.
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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.
2.23 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.
2.24 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.
2.25 Borrowing costs
Borrowing costs are recognised as an expense when incurred unless they are capitalised for qualifying
assets.
2.26 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.
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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.
2.27 Going concern
At the reporting date the Group had net current assets of $444,777 (2011: $1,756,313) and had net
cash inflows from operations of $7,531,078 (2011: net cash outflows of $4,947,664) for the year
ended 30 June 2012. In addition:
i
production from Guanaco yielded revenue from operations of $30,112,061 in the 12 months to 30
June 2012 (2011: $8,088,356);
ii draw downs on the loan from IFISA ceased in February 2012 and a repayment of $2,353,664 to
IFISA was made in May 2012;
iii At 30 June 2012 the Group is able to draw down an additional $9,793,284 on the loan from IFISA
should it be necessary;
iv the interest rate applicable to the loan from IFISA was renegotiated down to 4% pa in June 2012
which represents significant on-going savings to the Group.
Based on the above, the directors believe the going concern basis of preparation of the financial report
is appropriate.
2.28 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 Board of
Directors.
2.29 Restatement of comparatives
A reclassification has been made prior to period figures relating to the pre-payment of royalties at
acquisition of the Guanaco mining concessions. $6.4 million paid at the time of acquisition has
previously been reported as part of intangible assets and is now being disclosed separately as a pre-
payment.
The balance of $5.3 million at 30 June 2012 ($6 million at 30 June 2011) has been included in the
Statement of Financial Position as follows:
Other current assets
Other non-current assets
Total
30 June 2012
$
30 June 2011
$
30 June 2010
$
1.5 million
2.0 million
-
3.8 million
5.3 million
4.0 million
6.0 million
7.6 million
7.6 million
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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
2012 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
9
10
11
12
13
20
Financial Instruments
Consolidation
Joint Arrangements
Disclosure of Interests in Other Entities
Fair Value Measurement
Issue Date
Operative Date
Dec 2010
Aug 2011
Aug 2011
Aug 2011
Sep 2011
1 Jan 2013
1 Jan 2013
1 Jan 2013
1 Jan 2013
1 Jan 2013
Stripping Costs in the Production Phase of a Surface Mine
Nov 2011
1 Jan 2013
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]
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 – 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 - 4
2012 - 2
2012 - 3
2012 - 5
Amendments to Australian Accounting Standards to Remove Individual
Key Management Personnel Disclosure Requirements [AASB 124]
Jul 2011
1 Jul 2013
Amendments to Australian Accounting Standards – Disclosures –
Offsetting Financial Assets and Financial Liabilities [AASB 7 & AASB 132]
Jun 2012
1 Jan 2013
Amendments to Australian Accounting Standards – Offsetting Financial
Assets and Financial Liabilities [AASB 132]
Jun 2012
1 Jan 2014
Amendments to Australian Accounting Standards arising from Annual
Improvements 2009–2011 Cycle [AASB 1, AASB 101, AASB 116, AASB 132
& AASB 134 and Interpretation 2]
Jun 2012
1 Jan 2013
Operative Date applies to annual reporting periods beginning on or after this date
3.1
Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine
This interpretation clarifies when production stripping costs should lead to the recognition of an asset
and how that asset should be initially and subsequently measured.
Stripping costs incurred during the development phase of a mine are usually capitalised and
depreciated or amortised on a systematic basis (typically units of production method) once production
begins.
Interpretation 20 deals with the situation where an entity continues to remove overburden and to
incur stripping costs during the production phase of the mine. Stripping in this phase may produce
inventory and/or provide access to deeper levels of material that have a higher ratio of ore to waste.
This interpretation outlines that stripping activity which provides benefit in the form of inventory
produced should be accounted for in accordance with the principles of AASB 102 Inventories. To the
extent the benefit is improved access to ore, the entity shall recognise these costs as a non-current
asset, if certain criteria are met. This interpretation refers to the non-current asset as the ‘stripping
activity asset’ and it shall be accounted for as an addition to, or as an enhancement of an existing
asset.
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4
REVENUE
Operating activities
Revenue from gold and silver sales
Interest revenue
Other
Total revenue
5
PROFIT/LOSS FOR THE YEAR
Expenses
Depreciation of plant and equipment
Amortisation of intangible
Total depreciation and amortisation
Finance costs - related parties
Rental expense on operating leases
Impairment of financial assets
Reversal of prior years’ impairment
Defined contribution plan expense
6
AUDITORS’ REMUNERATION
Remuneration of the auditors of the parent entity (BDO) for:
Auditing or reviewing the financial reports
Other services/taxation
Total auditors’ remuneration – parent entity (BDO)
Remuneration of auditors of subsidiaries (Nexia) for:
Auditing or reviewing the financial reports
Other services/taxation
Total auditors’ remuneration – subsidiaries (Nexia)
Consolidated
2012
$
2011
$
30,112,061
1,787
275,719
30,389,567
8,088,356
7,102
169,623
8,265,081
Consolidated
2012
$
2011
$
2,496,319
2,914,505
5,410,824
4,859,464
30,755
4,917,831
-
21,094
565,219
167,860
733,079
652,503
19,224
-
(10,564,676)
26,061
Consolidated
2012
$
2011
$
66,000
-
66,000
35,476
2,585
38,061
55,500
-
55,500
41,492
-
41,492
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7
INCOME TAX EXPENSE
(Loss) / profit before tax
Consolidated
2012
$
2011
$
(14,817,663)
13,325,218
Prima facie income tax (benefit) / expense calculated at 30%
on the (loss)/profit
(4,445,299)
3,997,565
Difference due to overseas tax rate
Non deductible expenses / (exempt revenue)
Temporary differences previously not brought into account
Temporary differences not brought into account
Income tax expense
Deferred tax asset
Tax loss carried forward
Accrual for mine closure
Accrual for vacations
Total deferred tax assets
Deferred tax liabilities
Mining concessions
Other receivables
Total deferred tax liabilities
Net deferred tax liabilities
150,031
2,573,186
1,273,011
1,554,688
1,105,617
4,094,913
137,409
48,480
4,280,802
(4,440,821)
(968,271)
(5,409,092)
1,128,290
-
(3,380,089)
-
(617,476)
-
-
-
-
-
-
-
-
-
8
(LOSS) / EARNINGS PER SHARE
Classification of securities as ordinary shares
Ordinary shares have been included in basic (loss)/earnings per
share.
Consolidated
2012
$
2011
$
Earnings reconciliation
Net (loss) / profit
(15,923,280)
13,325,218
Net (loss) / profit attributable to outside equity interests
-
-
Net (loss) / profit
(15,923,280)
13,325,218
Weighted average number of shares used as the denominator
Number for basic earnings per share
Number for diluted earnings per share
Basic earnings/(loss) per ordinary share
Diluted earnings/(loss) per ordinary share
169,139,739
169,139,739
(9.4)c
(9.4)c
AGD Annual Report 2012 FINAL.docx 28 Sep 12
169,139,739
169,139,739
7.9c
7.9c
Page 34 / 60
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.
2012
2011
Australia
$
South America
$
Consolidated
$
Australia
$
South America
$
Consolidated
$
Revenue from gold
and silver sales
-
30,112,061
30,112,061
-
8,088,356
8,088,356
Interest revenue
1,787
-
1,787
1,841
5,261
7,102
Other
-
275,719
275,719
-
169,623
169,623
Total segment revenue
1,787
30,387,780
30,389,567
1,841
8,263,240
8,265,081
Amortisation
Depreciation
(Impairment) /
Reversal of impairment
-
(2,914,505)
(2,914,505)
-
(261,669)
(261,669)
(1,545)
(2,494,774)
(2,496,319)
(1,449)
(563,770)
(565,219)
-
(4,917,831)
(4,917,831)
-
10,564,676
10,564,676
-
Finance costs
(4,859,464)
-
(4,859,464)
(652,503)
-
(652,503)
Other
(9,012,859)
(22,111,869)
(31,124,728)
3,275,224
(7,300,372)
(4,025,148)
Segment profit/(loss)
(13,872,081)
(2,051,199)
(15,923,280)
2,623,113
10,702,105
13,325,218
Segment assets
68,457
97,903,652
97,972,109
84,739 102,603,104 102,687,843
Segment liabilities
57,572,254
8,319,602
65,891,856
49,945,132
6,847,040
56,792,172
10 CASH AND CASH EQUIVALENTS
Cash at call and in hand
Short-term bank deposits
Total cash and cash equivalents
Consolidated
2012
$
2010
$
462,855
7,021
469,876
1,302,124
7,021
1,309,145
Reconciliation of Cash
Cash at the end of the financial year as shown in the Statement of Cash Flows, is reconciled to items in the
Statement of Financial Position as follows:
Cash and cash equivalents
469,876
1,309,145
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.
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11 INVENTORIES
Raw materials – at cost
Work in progress – at cost
Finished goods – at net realisable value
Total inventories
12 TRADE AND OTHER RECEIVABLES
CURRENT
Other current receivables
Pre-payments
GST/VAT receivable
Trade receivables
Total current receivables
NON CURRENT
GST/VAT receivable
Pre-payments
Total non-current receivables
TRADE DEBTORS
Consolidated
2012
$
2011
$
462,932
629,246
2,463,484
3,555,662
278,441
165,781
994,431
1,438,653
Consolidated
2012
$
2011
$
627,897
1,486,330
589,029
384,749
3,088,005
63,092
3,765,133
3,828,225
23,030
2,053,241
2,800,645
465,347
5,342,263
2,077,241
3,993,206
6,070,447
The ageing of trade receivables is 0 – 30 days
384,749
465,347
12.1 Past due but not impaired
There were no receivables past due at 30 June 2012 (2011: nil).
12.2 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.
12.3 Key Customers
The Company is not reliant on any one customer to sell gold and silver produced from the Guanaco
mine.
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13 FINANCIAL ASSETS
Investment in unlisted shares (AMINSA) – opening balance
Additions
Impairment
Movement attributable to foreign currency translation
Total investment in unlisted shares
Consolidated
2012
$
2011
$
4,306,285
1,216,219
(4,917,831)
(264,562)
340,111
4,061,595
1,261,127
-
(1,016,437)
4,306,285
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.
Impairment
An independent expert has been engaged to value the AMINSA project in San Juan. Due to climatic
conditions in the region, the asset is inaccessible for parts of the year and the valuation was unable to be
completed in time for this report. As a result, an impairment of $4,917,831 has been made to the carrying
value of the investment in AMINSA this financial year. The Company expects to reverse this impairment to
the extent permitted by accounting standards when the valuation is completed.
14 INTANGIBLE ASSETS
Guanaco
Cost
Accumulated amortisation
Development assets – Guanaco
MOVEMENTS IN CARRYING VALUE
Reconciliations of the carrying amounts for intangible assets are set out below:
Carrying amount at beginning of year
Additions
Recognition of restoration provision
Amortisation
Impairment reversal
Movement attributable to foreign currency translation
Carrying amount at end of year
Consolidated
2012
$
2011
$
69,409,044
(3,076,291)
66,332,753
64,083,041
4,016,475
-
(2,914,505)
-
1,147,742
66,332,753
62,250,901
(167,860)
64,083,041
49,409,557
8,495,210
639,755
(167,860)
10,564,676
(4,858,297)
64,083,041
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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.
Management have assessed the fair value of the Guanaco project to be $104 million, based on an
independent valuation using a discounted cash flow model and the following assumptions:
Gold price: USD 1,785 / oz - 1,834 / oz
Life of Mine: 5 years
Discount Rate: 12% (before tax)
Management performed a sensitivity analysis on this valuation and determined that a 10% decrease in gold
prices would still not cause an impairment to the carrying value of the Guanaco Project in the 30 June 2012
accounts.
15 PLANT AND EQUIPMENT
Plant and equipment - at cost
Accumulated depreciation
Carrying amount at end of year
MOVEMENTS IN CARRYING VALUE
Carrying amount at beginning of year
Additions
Disposals
Depreciation
Movement attributable to foreign currency translation
Carrying amount at end of year
Consolidated
2012
$
2011
$
23,942,242
(3,756,587)
20,185,655
20,021,794
1,946,477
(50,655)
(2,496,319)
764,358
20,185,655
20,857,912
(836,118)
20,021,794
4,266,272
18,023,147
(287)
(565,219)
(1,702,119)
20,021,794
Plant and equipment has been included in the Guanaco cash generating unit. Refer note 14 for discussion on
impairment.
EXPLORATION AND
EVALUATION EXPENDITURE
16
Costs carried forward in respect of areas of interest in:
Opening balance
Additions for the year
Movement attributable to foreign currency translation
Carrying amount at end of year
Consolidated
2012
$
2011
$
116,215
63,572
(7,965)
171,822
39,065
93,660
(16,510)
116,215
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.
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17 TRADE AND OTHER PAYABLES
CURRENT
Trade creditors and accruals
Refer to note 24 for detailed information on financial instruments.
18 PROVISIONS
CURRENT
Employee entitlements
MOVEMENT IN CURRENT PROVISIONS
Opening balance
Charged to the statement of comprehensive income
Closing balance
Consolidated
2012
$
2011
$
5,924,731
6,139,889
Consolidated
2012
$
2011
$
22,047
12,179
12,179
9,868
22,047
12,142
37
12,179
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
Charged to the statement of comprehensive income
Recognised as part of the cost of intangible asset
Closing balance
742,752
639,755
639,755
102,997
-
742,752
-
-
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: 5 years; and
Discount rate of 12%
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19 BORROWINGS
CURRENT
Royalty payable
Total current borrowings
NON-CURRENT
Loan – IFISA #1
Loan – IFISA #2
Total non-current borrowings
Consolidated
2012
$
2011
$
721,988
721,988
57,352,048
-
57,352,048
181,680
181,680
29,803,422
20,015,247
49,818,669
19.1 Loan Inversiones Financieras del Sur SA (IFISA) #1
The borrowings are unsecured. Interest is charged at 4%. The loan comprises principal of $48,283,298
and capitalised interest of $9,068,750. The loan is repayable as follows:
i when sufficient cash flows of the Group allow;
ii at the election of IFISA to subscribe for shares in the Group (contingent on shareholder approval);
iii on successful completion of an equity raising by the Group; or
iv
failing all of the above by 30 September 2014.
19.2 Loan Inversiones Financieras del Sur SA (IFISA) #2
During the year this agreement was consolidated into one single agreement (Loan IFISA #1).
19.3 Royalty payable
In accordance with the signed agreement with Compania Minera Kinam Guanaco, the Company is
required to pay quarterly amounts determined as the greater between;
i
The equivalent of USD75,000 or
ii The “NPI”, that is approximately 5% of the income from the sale of concentrate less the necessary
costs to produce the concentrate.
The Company can decide to cease to pay these quarterly amounts at any time with the payment of the
local currency equivalent of USD 7,500,000 (without deducting royalties already paid).
The balance of $721,988 corresponds to the amount accrued up to 30 June 2012, that remains unpaid.
Risk exposure
The Group’s risk exposure is currency risk, as the Group is responsible for repaying the loans in US$. Further
details of this risk exposure is provided in note 24.
Fair value
The carrying value of the loan approximates its fair value.
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20 ISSUED CAPITAL
Fully paid ordinary shares
ORDINARY SHARES*
Balance at the beginning of the year
Balance at end of year
Consolidated
2012
$
2011
$
44,400,742
44,400,742
2012
Number of shares
2011
Number of shares
169,139,739
169,139,739
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. The ordinary shares do not
have any par value.
RETAINED EARNINGS /
(ACCUMULATED LOSSES)
21
Consolidated
2012
$
2011
$
Retained earnings / (accumulated losses) at beginning of year
Net (loss) /profit for the year
(Accumulated losses) / retained earnings at end of year
9,818,120
(15,923,280)
(6,105,160)
(3,507,098)
13,325,218
9,818,120
22 OUTSIDE EQUITY INTERESTS
Outside equity interests in subsidiaries comprise:
Consolidated
2012
$
2011
$
Acquired as part of subsidiary
58
56
23 RESERVES
FOREIGN CURRENCY TRANSLATION RESERVE
Balance at beginning of year
Movement attributable to translation of foreign subsidiaries
Balance at end of year
SHARE OPTION RESERVE
Balance at beginning of year
Options issued November 2011
Balance at end of year
Total Reserves
Consolidated
2012
$
2011
$
(8,323,247)
2,093,363
(6,229,884)
1,633,284
(9,956,531)
(8,323,247)
-
14,497
14,497
-
-
-
(6,215,387)
(8,323,247)
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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23.1 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.
Exercise price: 30 cents
Share Option Reserve
Options granted / issued as share-based payments are recognised in the share option reserve. The
assessed fair value at grant date of options granted during the year ended 30 June 2012 was 10.29
cents per option. The fair value at grant date was independently determined using a Black-Scholes
option pricing model, using the following input:
i
ii Grant date: 15 November 2011
iii Expiry date: 15 November 2016
iv Share price at grant date: 25 cents
v Expected price volatility: 44.99%
vi Expected dividend yield: 0%
vii Risk-free interest rate: 5.5%
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:
v
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
Consolidated
2012
$
2011
$
469,876
1,012,646
340,111
1,822,633
(6,620,103)
(57,352,048)
(63,972,151)
(62,149,518)
1,309,145
488,377
4,306,285
6,103,807
(5,998,314)
(50,000,349)
(55,998,663)
49,894,856
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24.1 Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and
measurement or for disclosure purposes.
The fair value of financial instruments 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 without obtaining
and independent valuation as AMINSA’s primary activity is exploration and evaluation of mineral
resources. This investment is accordingly carried at cost less impairment.
24.2 Risk Exposures and Responses
24.2.1 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
Consolidated
2012
%
-
2012
$
-
2011
%
8.9
2011
$
29,803,422
Sensitivity analysis
At 30 June 2012, 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
$nil higher/lower (2011: $298,034) mainly as a result of the Group’s variable interest rate
borrowings.
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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24.2.2 Currency Risk
At 30 June 2012 the Group had the following exposure to foreign currency:
FINANCIAL ASSETS
Cash and cash equivalents
Trade and other receivables
Investment in AMINSA
FINANCIAL LIABILITIES
Trade and other payables
Other financial liabilities
Net exposure
Consolidated
2012
$
2011
$
428,869
1,008,296
340,111
1,239,167
484,245
4,306,285
(6,421,293)
(57,352,048)
(61,996,065)
(5,870,045)
(50,000,349)
(49,840,697)
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 1.0159.
Based on the financial instruments held at 30 June 2012, 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 $6,298,180 lower/higher (2011: $4,132,300). The
movement is mainly due to foreign exchange gains/losses on translation of US Dollar
denominated financial instruments as detailed above.
24.2.3 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.
24.2.4 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.
24.2.5 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.
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Financing arrangements
Under the funding agreement amended in June 2012, the Group had access to the following
undrawn United States dollar denominated borrowing facilities at the reporting date:
Total facility
Total used
Amount available
Consolidated
2012
USD
2011
USD
59,000,000
49,051,002
9,948,998
59,000,000
48,597,507
10,402,493
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.
Consolidated
< 6 months
$
6-12 mnths
$
1 -5 years
$
>5 years
$
Total
$
YEAR ENDED 30 JUNE 2012
FINANCIAL LIABILITIES
Trade and other payables
6,620,103
-
-
Borrowings
-
- 62,477,732*
Total 2012 liabilities
6,620,103
-
62,477,732
YEAR ENDED 30 JUNE 2011
FINANCIAL LIABILITIES
Trade and other payables
5,998,314
-
-
Borrowings
-
323,255 65,459,982*
Total 2011 liabilities
5,998,314
323,255 65,459,982*
-
-
-
-
-
-
6,620,103
62,477,732
69,097,835
5,998,314
65,783,237
71,781,551
*This amount is based on the following assumptions:
i
ii
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 $5,125,684 (2011: $15,641,313) calculated using rates disclosed in note 19.
iii
Defaults and breaches
During the current and prior years, there were no defaults or breaches on any of the loans.
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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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.
25 DIVIDENDS
No dividends were paid or proposed during the year.
26 COMMITMENTS
26.1 AMINSA Earn-in commitments
These obligations are not provided for in the accounts and are payable:
I.
Consolidated
2012
$
2011
$
Within one year – AMINSA Earn-in commitments
3,000,000
1,190,476
One year or later and no later than five years
-
-
Total commitments
3,000,000
1,190,476
26.2 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
Total operating lease commitments
Consolidated
2012
$
2011
$
-
-
-
25,529
-
25,529
The Group rents offices at Suite 605/ 80 William Street, Sydney. The property lease is on a month-to-
month basis. Rent is payable monthly in advance.
27 SUBSIDIARIES
PARENT ENTITY
Country of
Incorporation
2012
% owned
2011
% owned
Austral Gold Limited
Australia
SUBSIDIARIES
Guanaco Mining Company
British Virgin Islands
Guanaco Compañía Minera
Chile
Austral Gold Argentina
Argentina
AGD Annual Report 2012 FINAL.docx 28 Sep 12
100.000
99.998
99.750
100.000
99.998
99.661
Page 46 / 60
28 CASH FLOW INFORMATION
Consolidated
2012
$
2011
$
Reconciliation of cash flow from operations with (loss)/profit after income tax:
(Loss)/profit after income tax
(15,923,280)
13,325,218
Non-cash flows in (loss) / profit
Interest expense capitalised
Impairment loss/(reversal)
Interest received
Exchange rate loss / (gain)
Depreciation and amortisation
Net cash used in operating activities
before change in assets and liabilities
Changes in assets and liabilities:
Increase in inventory
(Decrease) / increase in trade and other receivables
Increase in trade and other payables
Movement attributable to foreign currency translation
Cash flow from/(used in) operations
4,859,464
4,917,831
(1,787)
2,229,932
5,410,824
1,492,984
(2,055,251)
5,049,174
834,315
(2,209,855)
7,531,078
652,503
(10,564,676)
(7,102)
(7,031,711)
826,888
(2,798,880)
(1,438,653)
(2,753,594)
1,942,805
100,658
(4,947,664)
29 PARENT ENTITY INFORMATION
Information relating to Austral Gold Limited:
Consolidated
2012
$
2011
$
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Accumulated losses
Reserves
Total shareholders’ equity
Profit/(loss) of the parent entity
Total comprehensive income of the parent entity
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.
AGD Annual Report 2012 FINAL.docx 28 Sep 12
61,905
83,886,037
706,257
58,058,306
25,827,731
44,400,742
(18,587,508)
14,497
25,827,731
(13,872,081)
(13,886,578)
None
None
None
94,943
89,630,448
49,945,133
49,945,133
39,685,315
44,400,742
(4,715,427)
-
39,685,315
1,203,676
1,203,676
None
None
None
Page 47 / 60
30 SUBSEQUENT EVENTS
There have been no reportable events subsequent to 30 June 2012 up to the date of this report.
31 RELATED PARTIES
31.1 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, Ben Jarvis and Wayne Hubert
(appointed 18 October 2011). Amounts paid to Directors are set out in the table below.
31.2 Directors’ holdings of shares and share options
The parent company, IFISA holds 68% interest in Austral Gold Limited.
Mr Eduardo Elsztain is a Director of Austral Gold Limited, Guanaco Capital Holding, Guanaco Mining
Company, IFISA and President of Austral Gold Argentina SA. He holds 144,467,951 shares indirectly in
Austral Gold Limited.
Mr Saul 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 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.
E Elsztain and S Zang are directors of IFISA which holds 115,492,415 shares according to the last
substantial holder notice lodged in September 2012.
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 September 2012.
Mr Stabro Kasaneva is a Director of Austral Gold Limited and does not hold any shares either directly
or indirectly in Austral Gold Limited
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.
Mr Wayne Hubert is a Director of Austral Gold Limited. He holds 1,750,000 shares indirectly in Austral
Gold Limited.
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31.3 Directors and Senior Management Remuneration
PRIMARY
POST-EMPLOYMENT
SHARE-BASED
TOTAL
Cash
Salary &
Fees
$
Cash
bonus
$
Non
monetary
benefits
$
Super-
annuation
Retirement
benefits
Shares
Options
$
$
$
$
$
YEAR ENDED 30 JUNE 2012
DIRECTORS
S Kasaneva
W Hubert
R Trzebski
B Jarvis
308,135 *310,184
35,150
36,697
36,697
-
-
-
Total Directors
416,679
310,184
-
-
-
-
-
-
-
3,303
3,303
6,606
-
-
-
-
-
-
-
-
-
-
*$165,765 of this bonus relates to the years ended 30 June 2011 and 30 June 2010.
OTHER KEY MANAGEMENT PERSONNEL
C Lloyd
Total KMP
Total 2012
123,089
123,089
-
-
539,768
310,184
YEAR ENDED 30 JUNE 2011
DIRECTORS
M Bethwaite
S Kasaneva
R Trzebski
B Jarvis
44,372
300,955
36,697
3,058
Total Directors
385,082
OTHER KEY MANAGEMENT PERSONNEL
C Lloyd
J Dudley-Smith
Total KMP
Total
59,633
49,541
109,174
494,256
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11,078
11,078
17,684
47,295
-
3,303
275
50,873
5,367
4,459
9,826
60,699
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
618,319
35,150
40,000
40,000
733,469
134,167
134,167
867,636
91,667
300,955
40,000
3,333
435,955
65,000
54,000
119,000
554,955
31.4 Borrowings from majority shareholder
IFISA
2012 $
IFISA
2011 $
GCH
2011 $
TOTAL
2011 $
Amount payable at end of year
57,352,048
49,818,669
-
49,818,669
Interest
Funds received
Funds repaid
4,859,464
1,504,719
1,964,321
3,469,040
2,595,002
20,045,678
11,112,633
35,158,311
(2,353,664)
-
-
-
31.5 Ultimate parent entity
The Parent Entity is controlled by IFISA which is incorporated in Uruguay. The ultimate beneficial
owner of IFISA is Eduardo Elsztain.
AGD Annual Report 2012 FINAL.docx 28 Sep 12
Page 49 / 60
Directors’ Declaration
AUSTRAL GOLD LIMITED
The Directors of Austral Gold Limited declare that:
1) The financial statements, comprising the statement of comprehensive income, statement of financial
position, statement of cash flows, statement of changes in equity, accompanying notes, are in accordance
with the Corporations Act 2001 and:
i
comply with Accounting Standards and the Corporations Regulations 2001; and
ii give a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its
performance for the year ended on that date.
2) The company has included in the notes to the financial statements an explicit and unreserved statement of
compliance with International Financial Reporting Standards
3) In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its
debts as and when they become due and payable
The Directors have received the declarations required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf
of the directors by:
Ben Jarvis
Director
Sydney,
28 September 2012
AGD Annual Report 2012 FINAL.docx 28 Sep 12
Page 50 / 60
Tel: 61 2 9251 4100
Fax: 61 2 9240 9821
www.bdo.com.au
Level 10, 1 Margaret St
Sydney NSW 2000
Australia
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
consolidated statement of financial position as at 30 June 2012, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and for such internal control as the directors determine is necessary to enable the preparation
of the financial report that gives a true and fair view and is free from material misstatement,
whether due to fraud or error. 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 company’s preparation of the financial report that gives a true and fair view in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001. We confirm that the independence declaration required by the Corporations
Act 2001, which has been given to the directors of Austral Gold Limited, would be in the same
terms if given to the directors as at the time of this auditor’s report.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
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
2012 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 pages 19 to 20 of the directors’ report for
the year ended 30 June 2012. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Austral Gold Limited for the year ended 30 June 2012
complies with section 300A of the Corporations Act 2001.
BDO East Coast Partnership
Tim Sydenham
Partner
Sydney, 28 September 2012
Additional Information
Included in accordance with the Listing Rules of the Australian
Stock Exchange Ltd and as required by Australian Securities Exchange Ltd.
Corporate Governance Statement
FOR THE YEAR ENDED 30 JUNE 2012
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 Company directors 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 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 Aud it 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.
AGD Annual Report 2012 FINAL.docx 28 Sep 12
Page 53 / 60
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.
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.
AGD Annual Report 2012 FINAL.docx 28 Sep 12
Page 54 / 60
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.
Gender Diversity
Austral Gold does not have a documented gender diversity policy. The Board is cognisant of the benefits that
come with gender diversity in the workforce, but are unable to make this objective a priority at this stage.
Whilst Austral Gold no longer has any female Directors following the resignation of Natalia Zang in December
2009, Austral Gold is proud to have a female CFO and Company Secretary to support the Board of Directors.
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:
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.
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Principles of Good Corporate Governance and Best Practice Recommendations
In June 2010 the ASX Corporate Governance Council released its Corporate Governance Principals and
Recommendations with 2010 Amendments 2nd Edition which came into effect on 1 January 2011.
Listing Rule 4.10.3 requires a company to disclose the extent to which the entity has followed the
Recommendations during the reporting period. The entity must identify those recommendations it has not
followed and give reasons for not following them. If a recommendation has only been followed for part of the
period, the entity must state the period during which it had been followed.
In accordance with Listing Rule 4.10.3 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.
No
Recommendation
Compliance or Explanation for Non-compliance
1.1
Establish the functions reserved to the board and
those delegated to senior executives and disclose
those functions
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.
1.2 Disclose the process for evaluating the
performance of senior executives
The Board reviews senior management performance and
assesses remuneration in line with this review annually.
2.1
A majority of the Board should be independent
directors.
2.2
The chair should be an independent director.
2.3
The roles of chair and chief executive officer
should not be exercised by the same individual.
2.4
The Board should establish a nomination
committee.
2.5 Disclose the process for evaluating the
performance of the board, its committees and
individual directors.
3.1
Establish a code of conduct and disclose a
summary addressing the practices necessary to:
maintain confidence in the company’s integrity
take into account their legal obligations and the
reasonable expectations of stakeholders
the responsibility and accountability of
individuals for reporting and investigating
reports of unethical behaviour.
3.2
Establish a policy concerning diversity including:
measurable objectives for achieving gender
diversity
an annual process for assessing diversity
objectives and the company’s progress in
achieving them.
3.3 Disclose the measurable objectives for achieving
gender diversity set by the board and its progress
towards achieving them.
Four of the six non-executive directors are not considered
independent due to their relationship with IFISA, the Company’s
major shareholder. From August 2012 Wayne Hubert becomes
independent.
The Chairman is Eduardo Elsztain, the ultimate beneficial holder
of the Company’s majority shareholder.
The role of chair is held by Eduardo Elsztain.
The Company has not appointed a chief executive officer rather
they have appointed director, Stabro Kasaneva as the Chief
Operating Officer.
The Board has not established a nomination committee. 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.
The Board intends to review its overall performance and
performance of individual directors within the next 12 months.
The Company’s code of conduct is published on the Company’s
website under Corporate Governance.
Austral Gold does not have a documented gender diversity
policy. The Board is cognisant of the benefits that come with
gender diversity in the workforce, but are unable to make this
objective a priority at this stage.
Austral Gold does not have a documented gender diversity
policy.
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No
Recommendation
Compliance or Explanation for Non-compliance
3.4 Disclose in each annual report the proportion of
women employees in the whole organisation,
women in senior executive positions and women
on the board
Whilst Austral Gold no longer has any female Directors following
the resignation of Natalia Zang in December 2009, Austral is
proud to have a female CFO and Company Secretary to support
the Board of Directors.
The board should establish an audit committee
The Company has an audit committee.
4.1
4.2
Structure the audit committee so that it:
consists only of non-executive directors
consists of a majority of independent directors
is chaired by an independent chair, who is not
chair of the board
has at least three members
4.3
The Audit Committee should have a formal
charter.
5.1
Establish and disclose written policies designed
to ensure compliance with ASX Listing Rule
disclosure requirements and to ensure
accountability at a senior executive level for that
compliance.
6.1 Design and disclose a communications policy for
promoting effective communication with
shareholders and encouraging their participation
at general meetings.
The Audit Committee comprises Robert Trzebski (as Chairman)
and Pablo Vergara del Carril. Both are non-executive directors.
The committee lacks a majority of independent directors which
is a reflection of the composition of the Board and influence of
the major shareholder.
The members of the Audit Committee possess the requisite
financial expertise and industry experience necessary to
effectively carry out the Committee's mandate.
The Audit Committee has a documented charter approved by the
Board. The charter is published on the Company’s website under
Corporate Governance.
The Company’s Continuous Disclosure Policy is available on the
Company’s website.
The Company’s Shareholder Communications Policy is available
on the Company’s website under Corporate Governance.
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.
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.
7.3
The board should disclose whether it has
received assurance from the chief executive
officer (or equivalent) and the chief financial
officer (or equivalent) that the declaration
provided in accordance with section 295A of the
Corporations Act is founded on a sound system
of risk management and internal control and that
the system is operating effectively in all material
respects in relation to financial reporting risks
8.1
Establish a remuneration committee
8.2
Remuneration committee structure so that it:
consists of a majority of independent directors
is chaired by an independent chair
has at least three members
8.3 Distinguish the structure of non-executive
directors’ remuneration from that of executive
directors and senior management.
The Company’s system of risk management and internal control
is basic, yet appropriate for the size and nature of transactions
incurred.
The Board seeks external advice when considering new or
significant transactions to ensure risks are identified and
addressed in a timely manner.
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.
The Company cannot justify the operation of a Remuneration
Committee. All remuneration decisions are made by the Board.
The Company cannot justify the operation of a Remuneration
Committee. All remuneration decisions are made by the Board.
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. Details of remuneration are set out in the
remuneration report contained in the Directors Report.
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
its size.
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Statement of Issued Capital
As at 31 August 2012 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.
As at 31 August 2012, there exist 140,949 unlisted options as set out below:
No of options
Exercise Price
140,949
$0.30
Expiry Date
15 Nov 2016
No of Holders
1
Distribution of fully paid ordinary shares
at 31 August 2012
Size of Holding
Holders
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
191
448
288
82
56
18
25
9,526
247,513
775,284
669,562
1,213,903
1,261,694
164,962,257
1,108
169,139,739
Substantial Shareholders
In accordance with substantial holder notice lodged on 21 September 2012
Registered Holder
Beneficial Holder
Shares Held
Citicorp Nominees
Inversiones Financieras Del SUR SA (IFISA)
114,716,915
HSBC Custody Nominees
Inversiones Financieras Del SUR SA (IFISA)
775,500
HSBC Custody Nominees Guanaco Capital Holding Corp
Citicorp Nominees
Eduardo Sergio Elsztain
24,289,330
4,686,206
144,467,951
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Top twenty shareholders as at 31 August 2012
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
J P MORGAN NOMINEES AUSTRALIA LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
ASOCIACION ISRAELITA ARGENTINA TZEIRE AGUDATH JABAD
FORSYTH BARR CUSTODIANS LTD
HAZLAHA INVESTMENTS LIMITED
Mr PHILIP DOUGLAS CHISHOLM
JP MORGAN TRUST COMPANY LTD
LIMOL TRADING CORP
MR RODNEY DAVID JACKSON
MOSHE AMBARCHI
JOAMEL HOLDINGS PTY LTD
BIRCHALL PROJECTS LTD
MR CARLOS PERALTA TORREJON
MR MARCUS EINFELD
GREENFORD INVESTMENTS LIMITED
MOUNTAIN SIDE HOLDINGS LTD
Total
Other
Total shares on issue
124,081,801
25,064,830
3,190,954
3,179,077
1,682,674
1,598,926
1,158,265
849,557
770,416
317,195
297,445
297,445
271,185
250,000
250,000
230,000
227,614
200,000
200,000
194,800
164,282,184
4,857,555
169,139,739
73.35
14.82
1.89
1.88
0.99
0.94
0.68
0.50
0.46
0.19
0.18
0.18
0.16
0.15
0.15
0.14
0.13
0.12
0.12
0.12
97.13
2.87
100.00
AGD Annual Report 2012 FINAL.docx 28 Sep 12
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Austral Gold Limited
ABN 30 075 860 472 ASX:AGD
Suite 605, 80 William St,
Sydney NSW 2011
T +61 2 9380 7233
F +61 2 9380 7972
E info@australgold.com.au
W www.australgold.com.au