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Contents
Corporate Directory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Chairman’s Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Review of Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Directors’ Declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
3
2014 ANNUAL REPORT CoRPoRAte
DIrECTOry
Directors:
Registered Principal office:
Auditors:
eduardo elsztain
Chairman & Non-Executive Director
saul Zang
Non-Executive Director
Pablo Vergara del Carril
Non-Executive Director
stabro Kasaneva
Executive Director
Wayne Hubert
Independent Non-Executive Director
Robert trzebski
Independent Non-Executive Director
Ben Jarvis
Independent Non-Executive Director
Company secretary:
Andrew Bursill
Franks & Associates
Suite 4, Level 9
341 George Street
Sydney NSW 2000
Suite 206, 80 William Street
Sydney NSW 2011
Tel: +61 2 9380 7233
Fax: +61 2 8354 0992
Email: info@australgold.com.au
Web: www.australgold.com.au
Antofagasta, Chile office:
14 de Febrero 2065, of. 1103
Antofagasta, Chile
Tel: +56 (55) 2892 241
Fax: +56 (55) 2893 260
BDo east Coast Partnership
www.bdo.com.au
Principal Bankers:
national Australia Bank Limited
www.nab.com.au
solicitors:
Addisons Lawyers
www.addisonslawyers.com.au
Buenos Aires, Argentina office:
Listed:
Bolivar 108
Buenos Aires (1066) Argentina
Tel: +54 (11) 4323 7500
Fax: +54 (11) 4323 7591
Australian stock exchange
ASX: AGD
Place of Incorporation:
share Registry:
Western Australia
Computershare Investor services
GPO Box 2975
Melbourne VIC 3001
Tel: 1300 850 505 (within Australia)
Tel: +61 3 9415 5000 (outside Australia)
4
CHAIRmAn’s
LETTEr
Dear Shareholders,
strategic acquisitions ongoing
Austral Gold has experienced another year
of strong progress shaped by successful
acquisitions, equity investments, and record
levels of production.
Record production continues
Once again, it is encouraging to note that
Austral Gold has delivered record production
at the company’s flagship Guanaco project
in Chile. Gold production for the Financial
year 2014 (Fy14) was 50,193 ounces
(39,843 for Fy13), with 61,240 ounces of
silver (77,382 for Fy13), which equates to
51,237 gold equivalent ounces (41,133 for
Fy13). These figures are in line with guidance
provided throughout the year.
This is a pleasing outcome for the company,
as the cash flow from this production gives
Austral Gold the financial flexibility to pursue
its growth objectives. This result also reflects
the dedication and hard work of Austral
Gold’s Technical Team and especially the
operational team at the Guanaco mine,
complemented by our executives in
Antofagasta and Buenos Aires, all of whom
are to be commended for their efforts.
In Fy14, Austral Gold completed its
acquisition of strategic stakes in TSX-V
listed entities Argentex Mining Limited
(TSX-V: ATX) (‘Argentex’) and Goldrock
Mines Corp (‘Goldrock’) (TSX-V: GrM).
Austral Gold has invested circa CAD$14.3
million in acquiring key stakes of 19.9% and
15% respectively in these companies, both
of which hold significant gold-silver projects
in Argentina.
Through our subsidiary Guanaco Compañia
Minera SpA (‘Guanaco’), in June 2014
Austral Gold entered into an agreement to
acquire the Amancaya exploration property
in Chile, a gold-silver deposit consisting
of eight mining exploration concessions
covering 1,755 hectares. Consideration for
this asset will be an aggregate amount of
US$12 million, negotiated as payable in a
series of five six-monthly instalments until
2016, as well as a royalty agreement.
5
2014 ANNUAL REPORT The purchase of Amancaya will be a
significant step for Austral Gold, as its
proximity to our existing Guanaco mine
will not only provide synergies and cost
benefits, but will also give our Chilean asset
base much greater scale.
These acquisitions are both significant
milestones towards Austral Gold reaching
our goal of annual production of 100,000
ounces of gold within 24 months and
becoming a leading South America-focused
precious metals resource company.
All of these factors have greatly assisted
with boosting productivity and controlling
costs at the Guanaco mine, with average
cash operating costs for Fy14 remaining
very competitive around US$630 per gold
equivalent ounce.
In June 2014, Austral Gold (through
Guanaco) also acquired a 51% interest in
Humberto reyes Arriendo de Maquinarias
SpA (“Humberto reyes”), a mining services
company in Chile. Humberto reyes has
been undertaking underground contract
mining at Austral Gold’s Guanaco mine since
2011. Guanaco will assume management
control over Humberto reyes, an important
step in controlling costs as well as
maintaining and increasing production levels.
Another achievement for Austral Gold
during the year was the exit of the royalty
agreement with Kinross, the former owners
of Guanaco. Payments totalling US$7.5
million were made during the year to
terminate this commitment.
strengthening Productivity and
Controlling Costs
During Fy14, Guanaco renewed the
agreement with its workforce at the mine,
negotiating an incentivised scheme which
has assisted in lifting production levels. We
are also pleased to note that our safety
record has improved significantly in Fy14,
with 3 lost-time accidents occurring (4 in
Fy13) and 18 nil-lost-time accidents (24 in
Fy13). These figures include Austral Gold
employees and third party contractors.
Reporting in Us dollars
In January 2014, the Board of Austral
Gold announced that it was changing its
accounting policy to enable all financial
reporting in US dollars (US$), as from
1 July 2013.
This change better reflects the profile of
Austral Gold´s consolidated revenues, costs
and cash flows as its primary operations
relate to gold, which is widely quoted and
traded in US$. Additionally, US$ is the
internal reporting currency for Austral Gold’s
operating subsidiaries.
6
“The Board is committed to growing
Austral Gold to become a leading South
America-focused precious metals company”
Financial Year 2015 (FY15)
Longer term objectives
We will focus on developing Amancaya
by utilising the resources we have at
Guanaco with a view to increasing our
production to 100,000 ounces of gold
within the next 24 months. We will also
assess further acquisitions which fit with
our strategic objectives.
The Board is committed to growing
Austral Gold to become a leading
South America-focused precious metals
company, and in doing so, delivering
maximum value to shareholders. I would
like to thank our shareholders for their
continued support.
eduardo elsztain
Chairman
Austral Gold is in the strongest position in
its history as we enter Fy15. Our strategic
acquisitions, combined with a solid financial
position, and backed by an experienced
management team, all provide the platform
for further growth. Fy15 will be a year of
consolidation as we take stock of our Fy14
acquisitions, maintain our strong operating
cashflows and assess the next steps in
further expanding our operations.
We will focus on bringing Amancaya to
production stage, starting with a feasibility
study which has been initiated with Austral
Gold’s engineering team with completion
expected by the end of 2014.
We have again budgeted to produce 50,000
ounces of gold in Fy15 with costs in line
with our consistently low cost structure.
As always, we remain committed to
the wellbeing of our employees and the
communities in which we operate and
continue to promote the highest health,
safety and environmental standards.
7
2014 ANNUAL REPORT ReVIeW oF
ACtIVItIes
Key milestones for Austral Gold
Austral Gold signs agreement
to acquire the Amancaya
exploration property. Amancaya
is expected to significantly
enhance Austral Gold’s reserves
and production profile.
2014 on track to being the second
consecutive year with gold
production in the 50k oz range.
4
1
0
2
Completed the payment of the US$7.5 million royalty
agreement exit payment to Compañia Minera Kinam
Guanaco (a subsidiary of Kinross Gold Corporation).
Acquisition of 51% of underground mining contractor
for Guanaco mine since 2011, Humberto Reyes (now
Ingeneria y Mineria Cachinalito Ltd) to gain greater
control and flexibility over the underground mining
operations and equipment.
Operating cash cost at around US$630/GEO.
Operating profit – US$28m
R
A
e
Y
R
A
D
n
e
L
A
C
2
1
0
2
0
1
0
2
–
3
0
0
2
3
1
0
2
Completed strategic equity transactions
in two Canadian listed companies with
assets in Argentina to expand the Group´s
mineral resource base in the region.
Private placement in Argentex
for 19.9% shareholding interest.
Private placement in Goldrock
for 15% shareholding interest.
Cash flow positive starting late in the year.
1
1
0
2
Gold production of 12k oz.
Austral Gold conducted multiple exploration
programs and reconditioned the processing plant
and facilities that were on site. In August 2010,
the Bankable Feasibility Study was finalised
confirming the viability of a new mine at Guanaco.
October 2010 – Poured the first doré
bar from retreatment of material on the
existing heap leach pads late in the year.
9
2014 ANNUAL REPORT
Currently, the majority of the ore processed
from the Guanaco operation comes from the
Cachinalito underground system and nearby
vein systems with higher average grades.
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
depths of 75m and 200m and is contained
in elongated shoots. High grade ore shoots
(up to 180 g/t Au), 0.5m to 3.0m wide,
have been exploited, but the lower grade
halos, below 3 g/t Au, can reach up to
20m in width. The alteration pattern and the
mineralogical composition of the Guanaco
ores have led to the classification as a high-
sulfidation epithermal deposit.
Austral Gold Limited (‘the Company’)
and its subsidiaries (‘the Group’) remain
committed to maximising shareholder value
as it continues to explore and invest in its
flagship asset, the Guanaco gold and silver
mine, and expand and invest in South
America precious metals opportunities.
Guanaco Gold and silver mine,
Chile (100% interest)
Project and mine Description
The 100% owned Guanaco mine has been
operated by Austral Gold since September
2009 and remains the Company’s flagship
asset. Guanaco is located approximately
220km SE of Antofagasta in Northern Chile
at an elevation of 2,700m and 45km from the
Pan American Highway. Guanaco is located
in the Palaeocene/Eocene belt, a structural
trend which runs north/south through the
centre of Chile, and hosts several large gold
and copper mining operations including:
Zaldivar, El Peñon and Escondida.
10
7
4
,
0
3
1
5
0
,
2
2
6
Gold (Au oz)
Silver (Ag oz)
6
1
,
2
4
0
5
0
,
1
9
3
Production
Gold and silver Production
Total production from the heap-leach process
reached a total of 50,193 gold ounces and
61,240 silver ounces during the 12-month
period ended June 2014.
The Company reached its target of
producing 50,000 gold ounces in Fy14
despite the harsh winter conditions and
the lower than expected grades in a small
portion of the underground mine in the
June quarter.
For the 12-month period ended June
2014, the average operating cash cost was
US$630/gold-equivalent ounce.
Guanaco operational Performance
Jul 2013 – June 2014
Total Ore processed (t)
457,795
Underground grade (g/t Au)
Gold recovery (%)
Gold Produced (Au oz)
Silver Produced (Ag oz)
5.29
77
50,193
61,240
Cash operating cost (US$/GEO)
630
7
4
,
8
0
7
2
8
,
9
1
1
2012 Calendar Year
2013 Calendar Year
2014 Financial Year
11
2014 ANNUAL REPORT Quarterly production - Gold (Au) oz
16,200
14,400
12,600
10,800
9,000
7,200
)
z
o
(
d
e
c
u
d
o
r
p
d
o
G
l
5,400
5,261
3,600
1,800
0
16,016
13,702
12,222
11,736
10,219
8,841
8,528
8,772
6,281
1,620
1,440
1,260
1,080
900
720
540
360
180
0
O
E
G
/
$
S
U
Mar
‘12
Jun
‘12
Sep
‘12
Dec
‘12
Mar
‘13
Jun
‘13
Sep
‘13
Dec
‘13
Mar
‘14
Jun
‘14
Gold (Au) Production
Average Selling Price (US$/GEO)
12
safety
Three (3) lost-time accidents (LTAs) occurred
and eighteen (18) nil-lost-time accidents
(NLTAs) were reported involving employees
and third party contractors of the Group
during the year ended 30 June 2014. All
accidents were investigated and corrective
actions were identified and implemented to
prevent recurrence. Safety and environmental
protection are core values of the Group. The
implementation of safety best practices along
with a sound risk management program are
key priorities for Austral Gold.
exploration Program
The Geology Team continued to advance
on its exploration program within the current
mine development area of the Guanaco
deposit including the main corridors:
Cachinalito, Dumbo-Defensa and Salvadora-
Los Nanos.
The exploration program for the 12-month
period ended June 2014 comprised
several activities such as (i) 2,800 metres of
drilling, (ii) re-logging of rC chips, (iii) further
geophysics studies, (iv) review of historical
geological database, amongst others. The
program also identified new sectors to
explore such as (a) Salvadora-Los Nanos,
(b) Cerro Guanaquito, and (c) Veta Nueva.
• Salvadora-Los Nanos structures are
possibly related to a deeper source
of metals and can be compared with
Cachinalito in terms of the host rock
and style of mineralization. Salvadora
(ENE strike) and Los Nanos (E-W to
WNW strike) are related to the primary
high sulphidation mineralization.
• Cerro Guanaquito is a group of parallel
ENE structures located in the same
regional structure as Dumbo-Defensa
Trend and is very similar in terms of the
host rock and the style of mineralization.
Red = Mineralised veins
• Veta Nueva is a new mineralization
vein selected as one of the targets with
high potential to be explored during
2014. This vein has some higher grade
intercepts, albeit insufficient drilling has
been undertaken to date.
For the second half of calendar year 2014,
main exploration activities will include:
(i) an update of inner mine geology (to
further understand the mineralization of
the entire Cachinalito vein system), (ii) an
underground drilling campaign of about
1,000 metres (to confirm the continuity of
veins previously identified as well as the
potential eastern continuity of the San
Lorenzo vein), and (iii) an update of the
geological district mapping scale 1:5,000
(to further understand the structural-
alteration-mineralization problematic of the
Guanaco district).
13
2014 ANNUAL REPORT “We remain committed to the wellbeing
of our employees and the communities
in which we operate and continue to
promote the highest health, safety and
environmental standards.”
14
8 de Julio Project
- santa Cruz, Argentina
The 8 de Julio site is comprised of 30
mining properties equivalent to 82,101
hectares in the Deseado Massif corridor
of the Province of Santa Cruz (the “8 de
Julio Project”). Four of these properties are
classified as “Cateos” (23,232 hectares)
while the remaining properties are already
classified as “Manifestation of discovery”
(58,869 hectares).
In June 2013, Austral Gold Argentina
completed the 2013 exploration season
of the 8 de Julio Project where a new
systematic surface sampling was executed.
The study was carried out using a circular
saw over 78 channels from the most
prospective tenements (Barroso Grande,
Barroso Chico, Los Pinos-Aguada Norte
and El Salitral) leading to 200 additional
samples including 23 rock chip and float
ones. The Barroso Grande area remains
the most attractive target with gold grades
up to 12 g/t where further geophysics
studies were performed covering an area of
38 km², a total of 332 lines (or 910km) of
exploration study. As a result of this test,
several buried structures were identified for
further exploration with trends similar to the
Deseado Massif general structure setting.
During 2014, the company concluded
with an Environmental Impact report (EIr)
as requested by the mining authorities of
the province of Santa Cruz. In addition,
the company continues with (i) the
conversion of cateos to manifestation of
discovery (MDs), and (ii) the completion
of base geological reports in compliance
with local regulations.
15
2014 ANNUAL REPORT DIReCtoRs’
RePoRt
Austral Gold Limited and its
subsidiaries
For the year ended 30 June 2014
your Directors present the following report
for the financial year ended 30 June
2014 together with the financial report of
Austral Gold Limited (the Company) and
the consolidated financial report of the
consolidated entity, being the Company
and its subsidiaries, (referred to hereafter
as the Group) for the year ended 30 June
2014 and the auditor’s 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 The review of Activities.
There were no significant changes in the
nature of those activities during the year.
Review and Results of operations
operating Results and Dividends
The Group’s net loss attributable to
shareholders for the year ended 30 June
2014 was US$11,681,223 (2013: loss
US$7,683,590).
The Group reached a record revenue high
of US$66,376,158 (2013: US$64,209,315)
following the record production volumes
of 50,193 gold equivalent ounces (GEO)
that offset the decrease in gold prices
during Fy14.
Cost of sales decreased by 11%
contributing to 51% gross margin for the
current year (2013 gross margin % : 44%).
The better margins are mainly due to (i)
the higher production of gold ounces, (ii)
the higher mix of ore extracted from the
underground mine with higher grades
than the Open Pit, (iii) the decrease in
the consumption and purchase price
of cyanide, and (iv) the lower amount of
accrued royalties.
Administration expenses increased by 17%
to US$6,721,746 (2013: US$5,734,792)
mainly as a result of (i) fees to Non-
Executive Directors that started to be
remunerated in Fy14, (ii) new shares issued
to the Chief Operating Officer and (iii) legal
fees related to Argentex, Goldrock and
Humberto reyes transactions.
The magnitude of foreign exchange
gains and losses in the operating profit
(Fy14 gain of US$545,299 vs. Fy13 loss
of US$6,148,499) have greatly diminished
after the change to US$ as the functional
currency of the Group effective 1 July 2013.
During Fy14 the Company posted a loss of
US$7.5 million to the profit or loss and other
comprehensive income statement related
to the one-off Kinam royalty agreement
exit fee. By making this payment, the
Group extinguishes the requirement to pay
royalties to the previous owner of the site
on future Guanaco production.
In the current year, impairment losses
of US$10 million were charged to the
statement of profit or loss and other
comprehensive income. As of 30 June
2014, the fair value of the Guanaco mine
was US$59 million (7% post-tax discount
rate) while net book value of the mine was
US$69 million (prior to the impairment)
17
2014 ANNUAL REPORT as the Group continues to invest in its
flagship asset. With relatively low levels
of capex foreseen for the remaining life
of the mine and the potential to create
synergies with the new Amancaya project
acquisition, management believes that
the value on the assets impaired will be
realised in future years.
Finance costs are predominantly the
accrued interest of the IFISA loan.
No dividends of the Company or its
subsidiaries have been paid, declared
or recommended since the end of the
financial year. A payment of US$933,866 in
the form of a return of capital was made to
shareholders on 12 December 2013.
Financial Position
The net assets of the Group have
decreased by US$19,732,920 since 30
June 2013 to US$14,098,372 at 30 June
2014 (2013: US$33,831,292).
As at June 30, 2014, the Group continued
showing healthy liquidity figures with a
current ratio equal to 1.4x along with US$4
million cash balance and a cash conversion
cycle of 14 days. All accounts receivable
from gold sales were collected in advance
before the end of the financial year.
The inventory balance for the year was
slightly above the level of Fy13 (following
the higher stock of cyanide (244 tons in
Fy14 vs. 96 tons in Fy13)).
The increase in plant and equipment is
mainly driven by the acquisition of Humberto
reyes Arriendo de Maquinarias SpA (now
trading as Ingenieria y Mineria Cachinalito
Limitada, “Cachinalito”) with US$~5 million
of mining equipment and vehicles.
The balance of non-current financial assets
(US$6,339,952 at 30 June 2014) reflects
the fair value of the equity investments in
Argentex and Goldrock at their market
prices as traded in the TSX-V.
The decrease in intangibles is mainly
explained by the US$10 million impairment
loss on the Guanaco mine and foreign
exchange adjustments related to the change
in the functional currency on 1 July 2013.
The non-current loan with IFISA accounts
for approximately 80% of total liabilities, a
similar proportion to Fy13.
As from Fy14, the equity balance also
includes a negative reserve of US$3.9
million that reflects the fair value fluctuation
of the Argentex and Goldrock investments.
The Group used part of its strong Fy14
operating cashflows of US$30.0 million
(Fy13: US$20.4 million) to invest in exiting
the Kinam royalty agreement and to
make private placements in two TSX-V
listed securities. Similarly, the future
commitments for the acquisitions of
Cachinalito and Amancaya are expected to
be met using cash generated by operations
and the Group’s cash flow forecast
indicates that no further draw-downs on
the existing debt facility will be required
to meet future obligations of the Group.
Therefore, 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 other than those disclosed in
the review and results of Operations above.
18
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, with gold production steadily
increasing since this time. The Guanaco
gold and silver mine remains the Company’s
key asset and a focus of management along
with its new acquisition, Amancaya.
events subsequent
to Balance Date
Acquisition of Amancaya project in Chile
Final closing of this transaction took place
on 8 August 2014 and the first payment
of US$3 million was made to the escrow
agent, a Canadian law firm, on that date.
The payment has subsequently been
released from escrow and all the mining
properties have been duly transferred
to the Group.
On 17 June 2014, the Company and
its subsidiary, Guanaco, entered into
an asset transfer agreement with a
100%-owned subsidiary of yamana Gold
Inc., Minera Meridian Ltda (the Seller)
to acquire the Amancaya exploration
property (Amancaya) located 70km
east of the city of Tatal in Northern
Chile. Amancaya is a low sulphidation
epithermal gold-silver deposit consisting
of eight mining exploration concessions
covering 1,755 hectares. As part of
the acquisition, the Company also
secures the rights to exploration projects
currently under application, as well as
water rights, underlying property and
necessary easements.
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
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).
Consideration for Amancaya will be an
aggregate amount of US$12 million of
cash instalments. In addition to the US$3
million paid on closing, payments of US$1
million, US$3 million, US$3 million and
US$2 million are payable within each
successive six-month period. A royalty
agreement has also been entered into on
closing whereby the Company will pay
2.25% of the net smelter return (NSr)
to the Seller on production from the
Amancaya mining concessions.
Performance In Relation to
environmental Regulation
The Group has no exploration activities in
Australia and is therefore not subject to
any particular and significant environmental
regulations under a law of the
Commonwealth or of a State or Territory.
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 20 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.
19
2014 ANNUAL REPORT DIReCtoRs &
oFFICeRs
The Directors and Officers of the Company throughout
and since the end of the financial year are:
(iv) Banco Hipotecario (BASE: BHIP):
one of Argentina’s largest commercial
banks, engaged in the personal
banking and corporate banking sectors.
(v) (Co-Chairman) IDB Development
(TASE:IDBD), a leading conglomerate
in the State of Israel which directly
and indirectly owns Clal Insurance
Enterprises Holdings (TASE: CLIS),
Shufersal (TASE: SAE), Cellcom
(NySE & TASE: CEL), Properties &
Building Corp. (TASE: PTBL), ADAMA
Agricultural Solutions, Elron Electronic
Industries (TASE: ELrN) among others;
Mr Elsztain is a member of the World
Economic Forum, the Group of 50 and
of Argentina’s Association of Corporations
(AEA).
He is Chairman of “Fundación IrSA”, a
foundation that promotes education for
children and young adults and also serves
as Vice-President of the World Jewish
Congress.
Mr Elsztain has not held any other
Directorships with listed companies
in the last three years.
stabro Kasaneva
Executive Director
Chief Operating Officer
Appointed 7 Oct 2009
re-elected by shareholders
28 Nov 2012
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/silver
project, is located.
Mr Kasaneva has not held any other
Directorships with listed companies in the
last three years.
eduardo elsztain
Chairman
Appointed 29 Jun 2007
re-elected by shareholders
28 Nov 2012
Mr Elsztain is the Chairman of:
(i) IrSA (NySE: IrSA, BASE: IrSA):
Argentina´s largest real estate company,
operating a diversified portfolio of
shopping centres, office buildings,
luxury hotels and residential properties
in Argentina and United States;
(ii) Cresud (NASDAQ: CrESy, BASE:
CrES): a leading agri-business
company, with presence in Argentina
and Bolivia, involved in activities such
as crop production, beef cattle raising
and milk production;
(iii) BrasilAgro (NySE: LND,
BOVESPA:AGrO3): Companhia
Brasileira de Propriedades Agrícolas,
Cresud’s arm in Brazil and Paraguay;
20
saul Zang
Non-Executive Director
Appointed 29 Jun 2007
re-elected by shareholders
30 Nov 2011
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 Zang, Bergel & Viñes.
Mr Zang currently holds Vice-Chairmanships
on the Boards of IrSA (NySE: IrSA, BASE:
IrSA), Shopping Alto Palermo SA, and
Alto Palermo and holds Directorships with
Cresud (NASDAQ: CrESy, BASE: CrES),
Alto Palermo (NASDAQ: APSA, BASE:
APSA), Banco Hipotecario (BASE: BHIP),
BrasilAgro (NySE: LND, BOVESPA:AGrO3),
Puerto retiro and Fibesa; Nuevas Fronteras
SA, Tarshop and Palermo Invest SA.
Mr Zang has not held any other
Directorships with listed companies
in the last three years.
Ben Jarvis
Non-Executive Director
Appointed 2 Jun 2011
re-elected by shareholders
30 Nov 2011
Mr Jarvis is the Managing Director and co-
founder of Six Degrees Investor relations, an
Australian advisory firm that provides investor
relations to a broad range of companies
listed on the Australian Securities Exchange.
Mr Jarvis is also a Director of South
American Tin Limited, an unlisted public
company focused on tin exploration and
project development in Bolivia. Mr Jarvis
was educated at the University of Adelaide
where he majored in Politics.
In the last three years, Mr Jarvis also held
Directorships with the listed companies,
Connxion Limited and Eagle Nickel Limited.
Pablo Vergara del Carril
Non-Executive Director
Chairman of the Audit Committee
Appointed 18 May 2006
re-elected by shareholders
27 Nov 2013
Mr Vergara del Carril is a lawyer and is
professor of Postgraduate Degrees for
Capital Markets, Corporate Law and
Business Law at the Argentine Catholic
University.
He is a director of Banco Hipotecario SA.
[BASE: BHIP], 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 companies in the
last three years.
Robert trzebski
Non-Executive Director
Member of the Audit Committee
Appointed 10 Apr 2007
re-elected by shareholders
27 Nov 2013
Dr Trzebski holds a degree in Geology,
PhD in Geophysics, Masters in Project
Management and has over 20 years
of professional experience in mineral
exploration, project management and mining
services. He is currently Chief Operating
Officer of Austmine Ltd. 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 companies in the last
three years.
Wayne Hubert
Non-Executive Director
Member of the Audit Committee
Appointed 18 Oct 2011
re-elected by shareholders
30 Nov 2011
Mr Hubert is a 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 holds a 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: Midas Gold Corp [TSX], a
Canadian company with a 5.7 million ounce
gold resource, Lithic resources [TSX] and
Argentex Mining Corporation (ATX).
Mr Hubert has not held any other
Directorships with listed companies in the
last three years.
Andrew Bursill
(Franks & Associates)
Company Secretary
Appointed 10 Jan 2014
Since commencing his career as an
outsourced CFO and Company Secretary
in 1998, Mr Bursill has been CFO,
Company Secretary and/or Director for
numerous ASX listed, unlisted public and
private companies, in a range of industries
including mineral exploration, oil and gas
exploration and biotechnology.
Catherine Lloyd
Former CFO and Company Secretary
resigned 9 Jan 2014
Ms Lloyd held office as Chief Financial
Officer and Company Secretary during the
financial year, until her resignation on 9
January 2014.
21
2014 ANNUAL REPORT
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
Company during the financial year are:
Directors’
meetings
Audit
Committee
meetings
Director
A
B
Pablo
Vergara
del Carril
Robert
Trzebski
Eduardo
Elsztain
Saul Zang
Stabro
Kasaneva
Ben Jarvis
Wayne
Hubert
3
3
2
1
2
3
3
4
4
4
4
4
4
4
A
3
3
N/A
N/A
N/A
N/A
N/A
B
3
3
N/A
N/A
N/A
N/A
N/A
A – Number of meetings attended
B – Number of meetings held during the time the
director held office during the year
shares and options
During or since the end of the financial
year, the Company has not granted options
over its ordinary shares.
At the date of this report there are 140,949
options over the Company’s ordinary
shares with an exercise price of $0.30
expiring 15 November 2016. No shares
have been issued during or since the end
of the year as a result of the exercise of an
option over unissued shares.
Indemnity and Insurance
of officers
Under a deed of access, indemnity and
insurance, the Company indemnifies each
person who is a director or secretary of
Austral Gold Limited against:
• any liability (other than for legal costs)
incurred by a director or secretary in
his or her capacity as an officer of the
Company or of a subsidiary of the
Company; and
an officer of the Company or of a
subsidiary of the Company.
The above indemnities:
• apply only to the extent the Company is
permitted by law to indemnify a director
or secretary;
• are subject to the Company’s constitution
and the prohibitions in section 199A of
the Corporations Act; and
• apply only to the extent and for the
amount that a director or secretary is
not otherwise entitled to be indemnified
and is not actually indemnified by
another person (including a related body
corporate or an insurer).
Indemnity and Insurance
of Auditor
The Company has not, during or since
the end of the financial year, indemnified
or agreed to indemnify the auditor of the
Company or any related entity against a
liability incurred by the auditor.
• against reasonable legal costs incurred
in defending an action for a liability
incurred or allegedly incurred by a
Secretary in his or her capacity as
During the financial year, the Company
has not paid a premium in respect of
a contract to insure the auditor of the
Company or any related entity.
22
Interests of Directors
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 level of remuneration for non-executive
directors is considered with regard to
the practices of other public companies
and the aggregate amount of fees paid
to non-executive directors approved by
shareholders.
At this stage, the level of remuneration is
based on market rates and is not directly
linked to shareholders’ wealth.
The relevant interest of each director
(directly or indirectly) in the share capital of
the Company, as notified by the Directors
to the Australian Securites Exchange
in accordance with S205G(1) of the
Corporations Act 2001, at the date of this
report is as follows:
Director
Ordinary Shares
P Vergara del Carril
R Trzebski
E Elsztain
S Zang
S Kasaneva
B Jarvis
W Hubert
68,119
-
144,817,951
1,435,668
1,691,398
-
1,750,000
It is also noted:
1. 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 2014.
2. E Elsztain and S Zang are directors of
IFISA which holds 115,842,415 shares
according to the last substantial holder
notice lodged in September 2014.
E Elsztain is the ultimate beneficial
owner of IFISA.
remuneration of executive director
and Chief Operating Officer (COO)
Stabro Kasaneva is made up of a fixed
component and a variable component
equal to 50% of the fixed component.
Performance against pre-determined
targets are used to determine the portion
of the variable component paid.
The targets are based on financial and
non-financial indicators and include
production, safety and new business.
The bonus (variable component) paid in the
year ended 30 June 2014 represents 100%
achievement of his 2013 calendar year
targets. Stabro Kasaneva was awarded
100% bonus (comprising a cash bonus of
US$167,128 and a share-based payment
of US$185,756) based on the following
three main achievements for the year:
• record production of 50K
gold ounces.
• Competitive Cash Costs below
US$700/oz.
•
Initiation and execution of both
the Argentex and Goldrock private
placements.
23
2014 ANNUAL REPORT Details of Remuneration (current year)
YEAR ENDED 30 JUNE 2014
PRIMARY
POST-EMPLOYMENT
SHARE-BASED
TOTAL
Cash Salary &
Fees
Cash Bonus
Non-
monetary
Benefits
Super-
annuation
Retirement
Benefits
Shares
Options
US$
US$
US$
US$
US$
US$
E . Elsztain
S . Zang
S Kasaneva
W Hubert
R Trzebski
B Jarvis
P Vergara del
Carril
US$
80,000
40,000
-
-
340,253
167,128
48,000
33,682
33,682
40,000
-
-
-
-
Total Directors
615,617
167,128
OTHER KEY MANAGEMENT PERSONNEL
C Lloyd
Total KMP
Total 2014
72,193
72,193
-
-
687,810
167,128
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,116
3,116
-
6,232
5,355
5,355
11,587
-
-
-
-
-
-
-
-
-
-
-
-
-
185,756
-
185,756
-
-
185,756
-
-
-
-
-
-
-
-
-
-
-
US$
80,000
40,000
693,137
48,000
36,798
36,798
40,000
974,733
77,548
77,548
1,052,281
Non-executive directors that are associates
of the Company’s major shareholder
(Eduardo Elsztain, Saul Zang and Pablo
Vergara del Carril) received fees from
the Group for the first time in 2014 after
Board approval as the Group became
cash flow positive. Independent non-
executive directors (robert Trzebski, Ben
Jarvis and Wayne Hubert) receive between
US$35,000 and US$48,000 pa which
reflects the demands and responsibilities of
their position.
CFO/Company Secretary Catherine Lloyd
resigned from her position effective 9
January 2014. replacing her in the finance
part of her role is the Finance Manager of
Austral Gold Limited, Alison Crealy. This
role does not meet the definition of KMP
under IFrS. The Company Secretary
from 10 January 2014 is Andrew Bursill of
Franks & Associates.
24
Details of Remuneration (prior year)
YEAR ENDED 30 JUNE 2013
PRIMARY
Cash Bonus
Cash
Salary &
Fees
Non-
monetary
Benefits
POST-EMPLOYMENT
SHARE-BASED
TOTAL
Super-
annuation
Retirement
Benefits
Shares
Options
US$
US$
US$
US$
US$
US$
US$
S Kasaneva
329,380
166,483
W Hubert
R Trzebski
B Jarvis
P Vergara
del Carril
49,143
38,932
38,932
1,458
-
-
-
-
Total Directors
457,845
166,483
-
-
-
-
-
-
-
-
3,373
3,373
-
6,746
In addition, one gold coin gifted in May 2013 to each director listed above.
OTHER KEY MANAGEMENT PERSONNEL
C Lloyd
Total KMP
Total 2013
121,792
121,792
579,637
-
-
166,483
-
-
-
10,961
10,961
17,707
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
US$
495,863
49,143
42,305
42,305
1,458
631,074
132,753
132,753
763,827
service Agreements
Further to his responsibilities as a Director
of Austral Gold Limited, Stabro Kasaneva
is employed by the Group as COO.
His employment contract commenced
in September 2009 and has no fixed
termination date. The termination period
is 30 days notice by either party and the
termination payment provided for under
the contract is approximately US$28,000
plus any pro rata bonus accrued. 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 2014 are
contained in the table opposite.
25
2014 ANNUAL REPORT share Based Payments
On 27 December 2013, a share-based
payment of 1,691,398 new ordinary shares
was issued to Stabro Kasaneva, as part
of a performance bonus following his
outstanding role in leading the Guanaco
Mine project and business development
activities as Chief Operating Officer.
During 2013, the Company achieved
record production levels, providing
positive operating cashflows and
allowing the Company to increase growth
potential through ongoing exploration
and strategic acquisitions.
For this reason, the Board decided to
seek shareholder approval for making
the share-based payment and it was
approved at the Annual General Meeting
on 27 November 2013.
Mr Kasaneva also received a cash bonus
of US$167,128. Therefore, for the year
ended 30 June 2014, 51% of Mr Kasaneva’s
remuneration was related to performance
and 49% was fixed.
Auditors
BDO continues in office as auditors in
accordance with the requirements of the
Corporations Act 2001.
non-audit services
Details of the amounts paid or payable to
the auditor for non-audit services provided
during the financial year by the auditor are
outlined in note 6 to the financial statements.
The directors are satisfied that the
provision of non-audit services during the
financial year, by the auditor (or by another
person or firm on the auditor’s behalf), is
compatible with the general standard of
independence for auditors imposed by
the Corporations Act 2001.
26
The directors are of the opinion that the
services as disclosed in note 6 to the
financial statements do not compromise
the external auditor’s independence
requirements of the Corporations Act 2001
for the following reasons:
• all non-audit services have been
reviewed and approved to ensure that
they do not impact the integrity and
objectivity of the auditor; and
• none of the services undermine the
general principles relating to auditor
independence as set out in APES
110 Code of Ethics for Professional
Accountants issued by the Accounting
Professional and Ethical Standards
Board, including reviewing or auditing
the auditor’s own work, acting in a
management or decision-making
capacity for the company, acting as
advocate for the company or jointly
sharing economic risks and rewards.
Proceedings on Behalf
of the Company
Auditor’s Independence
Declaration
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.
The lead auditor’s independence
declaration for the year ended 30 June
2014 has been received and is included in
this report.
Signed in accordance with a resolution
of Directors at Sydney.
Robert trzebski
Director
30 September 2014
27
2014 ANNUAL REPORT
“The Guanaco gold and silver mine
remains the Company’s key asset and a
focus for management, along with its new
acquisition, Amancaya.”
29
2014 ANNUAL REPORT FInAnCIAL
stAtements
Statement of Profit or Loss and Other Comprehensive Income
Austral Gold Limited and its Subsidiaries
For the year ended 30 June 2014 – All figures are reported in US$
CONTINUING OPERATIONS
revenue
Cost of sales
Gross profit
Administration expenses
Gain/(loss) from foreign exchange
Operating profit
royalty agreement exit fee
Impairment of assets
Profit before interest, tax, depreciation & amortisation
Finance costs
Depreciation and amortisation expense
Loss before income tax expense
Income tax expense
Loss after income tax expense
Profit/(loss) attributable to:
Owners of the Company
Non-controlling interests
OTHER COMPREHENSIVE INCOME
Items that may not be classified subsequently to profit or loss
Loss arising on revaluation of financial assets, net of tax
Items that may be classified subsequently to profit or loss
Foreign currency translation
Total comprehensive income for the year
Comprehensive income attributable to:
Owners of the Company
Non-controlling interests
EARNINGS PER SHARE (cents per share):
Basic earnings per share
Diluted earnings per share
Consolidated
Notes
2014
US$
2013
US$
4
5
5
14
14
5
5
7
66,376,158
64,209,315
(32,115,429)
(36,269,466)
34,260,729
27,939,849
(6,721,746)
(5,734,792)
545,299
(6,148,499)
28,084,282
16,056,558
(7,500,000)
-
(10,000,000)
(1,738,752)
10,584,282
14,317,806
(2,369,908)
(2,180,145)
(17,180,541)
(16,892,165)
(8,966,167)
(4,754,504)
(2,641,568)
(2,929,086)
(11,607,735)
(7,683,590)
21
(11,681,223)
(7,683,590)
73,488
-
(11,607,735)
(7,683,590)
23
23
8
8
(3,970,036)
-
(17,862)
7,321,298
(15,595,633)
(362,292)
(15,669,121)
(362,292)
73,488
-
(15,595,633)
(362,292)
(6.82)c
(6.82)c
(4.50)c
(4.50)c
The above Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
31
2014 ANNUAL REPORT
Statement of Financial Position
Austral Gold Limited and its Subsidiaries
As at 30 June 2014 – All figures are reported in US$
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Financial assets
Inventories
Total current assets
Non-current assets
Other receivables
Financial assets
Intangible assets and goodwill
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
Trade and other payables
Provisions
Borrowings
Deferred tax liability
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Accumulated losses
reserves
Non-controlling interest
TOTAL EQUITY
Consolidated
Notes
30 June 2014
US$
30 June 2013
US$
1 July 2012
US$
10
12
13
11
12
13
14
15
16
17
18
19
17
18
19
7
20
21
23
22
4,347,075
4,586,313
477,347
3,375,885
10,327,612
3,137,105
278,072
-
3,934,932
3,413,204
11,935,964
18,327,129
-
3,612,197
7,226,649
589,582
1,644,344
3,889,090
6,339,952
47,002
345,519
36,348,774
58,827,339
69,043,103
28,124,421
22,081,833
20,454,223
506,718
346,698
174,554
71,909,447
82,947,216
93,906,489
83,845,411
101,274,345
101,133,138
5,620,582
4,722,204
5,752,709
595,969
2,271,375
8,487,926
1,127,280
1,695,702
480,604
1,719,223
6,922,031
288,624
733,467
6,774,800
-
-
831,297
754,562
54,274,278
55,614,409
58,263,946
4,161,853
4,075,316
1,146,230
61,259,113
60,521,022
60,164,738
69,747,039
67,443,053
66,939,538
14,098,372
33,831,292
34,193,600
39,803,088
39,003,832
39,003,832
(24,035,750)
(12,698,850)
(5,015,260)
(3,307,372)
7,526,270
204,972
1,638,406
40
56
14,098,372
33,831,292
34,193,600
The above Statement of Financial Position should be read in conjunction with the accompanying notes.
32
Statement of Changes in Equity
Austral Gold Limited and its Subsidiaries
For the year ended 30 June 2014 – All figures are reported in US$
Notes
Issued
capital
US$
Accumulated
losses
US$
Balance at 30 June 2012
39,003,832
(5,015,260)
Reserves
US$
204,972
Consolidated
Total comprehensive income for
the year
21, 23
22
Increase in non-controlling
interest attributable to foreign
exchange
Balance at 30 June 2013
Foreign exchange movements
from change of accounting
policy
Balance at 1 July 2013
-
-
(7,683,590)
7,321,298
-
-
39,003,832
(12,698,850)
7,526,270
1.3
1,547,366
344,323
(6,845,744)
Non-controlling
interest
US$
56
-
(16)
40
70
Total
US$
34,193,600
(362,292)
(16)
33,831,292
(4,953,985)
40,551,198
(12,354,527)
680,526
110
28,877,307
Total comprehensive income for
the year
21, 22, 23
Acquisition of subsidiary with
non-controlling interests
22
Transactions with owners in their capacity as owners:
-
-
Share-based payment
return of capital
20
20
185,756
(933,866)
(11,681,223)
(3,987,898)
73,488
(15,595,633)
-
-
-
-
-
-
1,564,808
1,564,808
-
-
185,756
(933,866)
Balance at 30 June 2014
39,803,088
(24,035,750)
(3,307,372)
1,638,406
14,098,372
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
33
2014 ANNUAL REPORT Statement of Cash Flows
Austral Gold Limited and its Subsidiaries
For the year ended 30 June 2014 – All figures are reported in US$
Cash flows from operating activities
receipts from sale of goods
Payments to suppliers and employees
Taxes paid
Interest paid
Net cash provided through operating activities
Cash flows from investing activities
Proceeds from sale of plant and equipment
Purchase of plant and equipment
Payment for investment in financial assets
Deposit for investment in Argentex
Payment to exit the Kinam royalty
Investment in subsidiaries (Cachinalito), net of cash acquired
Payment for exploration and evaluation expenditure
Payment for investment in development assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Proceeds from borrowings
return of capital to shareholders
repayment of borrowings to related party
Net cash used in financing activities
Movement attributable to foreign currency translation
Net (decrease) / increase in cash held
Cash at beginning of financial year
Cash at end of financial year
Consolidated
Notes
30 June 2014
US$
30 June 2013
US$
71,315,617
64,106,069
(40,212,271)
(43,659,164)
(977,185)
(106,719)
-
-
30,019,442
20,446,905
-
(1,514,177)
(7,854,486)
75,274
(1,318,510)
(479,362)
-
(2,693,003)
(7,500,000)
(132,346)
(160,020)
-
-
(156,456)
(8,249,887)
(7,011,619)
14,018
5,240
(25,396,898)
(11,578,436)
313,609
(933,866)
-
-
(4,644,316)
(4,398,307)
(5,264,573)
(4,398,307)
402,791
(239,238)
4,586,313
4,347,075
(361,195)
4,108,967
477,346
4,586,313
7
29
15
13
14
28
16
14
20
19
10
The above Statement of Cash Flows should be read in conjunction with the accompanying notes.
34
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The relevant exchange rates used were as follows:
1.1 Reporting entity
Austral Gold Limited (“the Company”) is a company limited by shares
that is incorporated and domiciled in Australia, whose shares are
publicly traded on the Australian Securities Exchange.
These consolidated financial statements comprise the Company
and its subsidiaries (‘the Group’) and are presented in English. They
were authorised for issue in accordance with a resolution of the
Board of Directors on 29 September 2014.
The nature of the operations and principal activities of the Group are
described in the Directors’ report.
1.2 Basis of accounting
The consolidated financial statements are general purpose financial
statements which have been prepared in accordance with Australian
Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) and the Corporations Act
2001, as appropriate for for-profit oriented entities. The consolidated
financial statements also comply with International Financial
reporting Standards as issued by the International Accounting
Standards Board (‘IASB’).
The financial statements have been prepared under the historical cost
convention, except for certain financial assets and liabilities which are
stated at fair value.
1.3 Presentation and functional currency
The consolidated financial statements are presented in United
States dollars (US$) which is the presentation and functional
currency of the Group.
At the time of the Q2 quarterly results, it was announced that the
Board had decided to change the Group’s reporting currency to
US Dollars (US$) as from 1 July 2013. At the same time, the parent
company, Austral Gold Limited, changed its functional currency to
US$ to align itself to the rest of the Group and its operations and the
new US$ presentation currency.
The majority of the Group’s sales and earnings originate in US$ or
US$-quoted commodities (eg. gold) and the change of presentation
currency to US$ more closely aligns the Group’s external reporting
with the profile of the Group, as well as with current internal
management reporting.
The change of the Group’s presentation currency has been
accounted for in accordance with AASB 121 The Effects of Changes
in Foreign Exchange rates. The following methodology was used to
re-present the 2013 results, originally reported in Australian dollars (as
well as earlier comparative figures), into US$:
a)
Income and expenses were translated at the average
exchange rate for the relevant period;
b) Assets and liabilities were translated at the closing
exchange rate for each reporting date; and
c) Equity items were translated at historical exchange rates.
Year ended 30 June 2013
AUD = US$
As at 1 July 2012
AUD = US$
Average rate
Closing rate
1.021183
0.913300
–
1.015900
With the exception of the parent entity, the Group’s controlled entities
had used US$ as the functional currency prior to 1 July 2013, and the
Group had presented its consolidated results in Australian dollars ($A).
The change in presentation from A$ to US$ at 1 July 2013 resulted in
the reversal of foreign exchange differences previously recognised in
the Foreign Currency Translation reserve (‘reserves’).
The overall impact of this change in accounting policy was a
decrease in the overall net assets of the Group from US$33.83 million
on 30 June 2013 to US$28.88 million on 1 July 2013, an overall
decrease of US$4.95 million. This is a one-off impact and will ensure
that the operations and financial results going forward from this date
are consistent and a better reflection of the underlying business.
The following table summarises the re-stated balances in the
statement of financial position upon implementation of the new
accounting policy.
30 June 2013
1 July 2012
A$
US$
A$
US$
105,459,524
101,274,345
97,972,109
101,133,138
73,845,457
67,443,053
65,891,856
66,939,538
Consolidated
assets
Consolidated
liabilities
Net assets
31,614,067
33,831,292
32,080,253
34,193,600
Contributed
equity
44,400,742
39,003,832
44,400,742
39,003,832
Reserves
740,629
7,526,270
(6,215,387)
204,972
Accumulated
losses
Earnings per
share (cents
per share)
(13,527,348)
(12,698,850)
(6,105,160)
(5,015,260)
(4.4)c
(4.5)c
-
-
1.4 Use of estimates and judgements
In preparing these consolidated financial statements, management
has made judgements, estimates and assumptions that affect the
application of the Group’s accounting policies and the reported
amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. revisions to estimates are recognised prospectively.
Information about assumptions and estimation uncertainties that
have a significant risk of resulting in a material adjustment in the year
ending 30 June 2014 is detailed 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.
35
2014 ANNUAL REPORT 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.
Measurement of fair values
A number of the Group’s accounting policies and disclosures require
the measurement of fair values, for both financial and non-financial
assets and liabilities.
When measuring the fair value of an asset or a liability, the Group
uses market observable data as far as possible. Fair values are
categorised into different levels in a fair value hierarchy based on the
inputs used in the valuation techniques as follows:
•
•
•
Level 1 – the instrument has quoted prices (unadjusted) in
active markets for identical assets or liabilities
Level 2 – a valuation technique is used using other than
quoted prices within level 1 that are observable for the
financial instrument, either directly (i.e. as prices), or
indirectly (i.e. derived from prices)
Level 3 – a valuation technique is used using inputs that
are not observable based on observable market data
(unobservable inputs).
The Group hold bonds and listed equity securities at fair value,
which are measured at the closing bid price at the end of the
reporting period. All financial assets held at fair value fall within Level
1 of the fair value hierarchy.
1.5 Parent entity information
In accordance with the Corporations Act 2001, these financial
statements present the results of the consolidated entity only.
Supplementary information about the parent entity is disclosed in
note 30.
2. SIGNIFICANT ACCOuNTING POlICIES
The following is a summary of the material accounting policies
adopted by the Group in the preparation of the consolidated
financial statements. The accounting policies have been consistently
applied, unless otherwise stated.
2.1 Basis of consolidation
A subsidiary is any entity over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power to direct the
activities of the entity. Subsidiaries are fully consolidated from the
date on which control is transferred to the consolidated entity. They
are de-consolidated from the date that control ceases.
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 intercompany balances and transactions between entities in
the Group, including any unrealised profits or losses, have been
eliminated on consolidation.
The acquisition of subsidiaries is accounted for using the acquisition
method of accounting.
Non-controlling interests in the equity and results of the subsidiaries
are shown separately in the statement of profit or loss and other
comprehensive income, statement of financial position and
statement of changes in equity of the consolidated entity.
Business combinations
The Group accounts for business combinations using the
acquisition method when control is transferred to the Group. The
consideration transferred in the acquisition is generally measured at
fair value, as are the identifiable net assets acquired. Any goodwill
that arises is tested annually for impairment. Any gain on a bargain
purchase is recognised in profit or loss immediately. Transaction
costs are expensed as incurred, except if related to the issue of
debt or equity securities.
2.2 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.
2.3 Goods and services tax (GST)/ Value
added tax (VAT)
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 authorities. 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.
2.4 Foreign currency translation
The financial statements are presented in United States Dollars
(US$), which is the Group’s functional and presentation currency
from 1 July 2013.
Foreign currency transactions
Foreign currency transactions are translated into US$ using the
exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at financial year-end exchange
rates of monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss.
2.5
Intangibles
Development assets
When the technical and commercial feasibility of an undeveloped
mining project has been demonstrated, the project enters the
36
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.
Amortisation
Costs on productive areas are amortised over the life of the area of
interest to which such costs relate on the production output basis.
2.6 Exploration and evaluation expenditure
Exploration and evaluation expenditure incurred is accumulated in
respect of each identifiable area of interest and carried forward in
the statement of financial position where:
2 .6 .1
rights to tenure of the area of interest are current; and
2 .6 .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 reporting 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 the
area are continuing.
Expenditure relating to pre-exploration activities is written off to the
profit or loss during the period in which the expenditure is incurred.
A regular review is undertaken of each area of interest to determine
the appropriateness of continuing to carry forward costs in relation
to that area of interest.
Accumulated expenditure on areas that have been abandoned, or
are considered to be of no value, are written off in the year in which
such a decision is made.
When production commences, the accumulated costs for the
relevant area of interest are amortised over the life of the area
according to the rate of depletion of the economically recoverable
reserves.
Investments in subsidiaries
2.7
Investments in subsidiaries are carried in the Parent Entity’s financial
statements at the lower of cost and recoverable amount.
2.8 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 the statement of profit or loss in
the year the asset is de-recognised.
2.9 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.
2.10 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
reporting date.
Deferred income tax is provided on all temporary differences at
reporting 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.
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:
i 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
ii 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 reporting 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.
37
2014 ANNUAL REPORT 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 reporting 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.
2.11 Inventories
Materials and supplies 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. Gold and gold-
in-process are stated at net realisable value. Net realisable value is
determined using the prevailing metal prices.
2.12 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.
2.13 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. They are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within
30 days of recognition.
2.14 Interest bearing liabilities
Loans and borrowings are initially recognised at the fair value of
the consideration received, net of transaction costs. They are
subsequently measured at amortised cost using the effective
interest method.
Where there is an unconditional right to defer settlement of the
liability for at least 12 months after the reporting date, the loans or
borrowings are classified as non-current.
2.15 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.
2.16 Leases
Assets held by the Group under leases that transfer to the Group
substantially all of the risks and rewards of ownership are classified
as finance leases. The leased assets are measured initially at an
amount equal to the lower of their fair value and the present value of
the minimum lease payments.
Lease payments for operating leases, where all the risks and
benefits remain with the lessor, are recognised as an expense in the
profit or loss on a straight line basis over the lease term.
2.17 Impairment of non-financial 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 profit
or loss. 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.
2.18 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; or
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;
a) has transferred substantially all the risks and rewards
of the asset; or
b) has neither transferred nor retained substantially
all the risks and rewards of the asset, but has
transferred control of the asset.
When the Group has transferred its rights to receive cash flows from
an asset and has neither transferred nor retained substantially all the
risks and rewards of the asset nor transferred control of the asset,
the asset is recognised to the extent of the Group’s continuing
involvement in the asset. Continuing involvement that takes the form
of a guarantee over the transferred asset is measured at the lower of
the original carrying amount of the asset and the maximum amount
of consideration received that the Group could be required to repay.
Fair value through Other Comprehensive Income
The Group’s investments in equity securities are classified as ‘fair
value through Other Comprehensive Income’. Subsequent to
initial recognition fair value through other comprehensive income
investments are measured at fair value with gains or losses being
recognised directly through Other Comprehensive Income in the
Statement of Profit or Loss and Other Comprehensive Income.
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.
38
2.19 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.
2.20 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.
2.21 Borrowing costs
Borrowing costs are recognised as an expense when incurred
unless they are attributable to qualifying assets, in which case they
are then capitalised as part of the assets.
2.22 Employee leave benefits
Wages and salaries, annual leave and sick leave
Liabilities for employees’ entitlements to wages and salaries, annual
leave and other employee entitlements expected to be settled
within 12 months of the reporting date are recognised in the current
provisions in respect of employees’ services up to reporting date
and are measured at the amounts expected to be paid when the
liabilities are settled. Liabilities for non-accumulating sick leave are
recognised when the leave is taken and measured at the rates paid
or payable.
Long service leave
The liability for long service leave is recognised in the provision for
employee benefits and measured as the present value of expected
future payments to be made in respect of services provided by
employees up to the reporting date using the projected unit credit
method. Consideration is given to expected future wage and salary
levels, experience of employee departures, and periods of service.
Expected future payments are discounted using market yields at the
reporting date on national government bonds with terms to maturity
and currencies that match, as closely as possible, the estimated
cash outflows.
Superannuation
The Company contributes to employee superannuation funds.
Contributions made by the Company are legally enforceable.
Contributions are made in accordance with the requirements of the
Superannuation Guarantee Legislation.
2 .23 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 .24 New, revised or amending Accounting
Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or
amending Accounting Standards and Interpretations issued by
the AASB that are mandatory for the current reporting period. The
adoption of these Accounting Standards and Interpretations did not
have any significant impact on the financial performance or position
of the consolidated entity.
The following Accounting Standards and Interpretations are most
relevant to the consolidated entity:
AASB 9 Financial Instruments
The Group has early adopted AASB 9 Financial Instruments
(AASB9), issued in December 2009 (as amended), with effect from
1 July 2013.
In accordance with AASB 9 the Group has designated its
investments in equity securities as ‘fair value through Other
Comprehensive Income’. This results in all realised and unrealised
gains and losses from its investments being recognised directly
through Other Comprehensive Income in the Statement of Profit or
Loss and Other Comprehensive Income.
As a result of the application of AASB 9, fair value losses of
US$4.9 million for the year were recognised directly through Other
Comprehensive Income and not in profit or loss. There was no
impact on the Statement of Financial Position as the assets already
reflected fair value of the investments at reporting date.
As the application of this standard did not impact the financial
position or performance in the previous financial year no
adjusted opening financial position or any other impacts are
required to be disclosed.
AASB 10 Consolidated Financial Statements
The consolidated entity has applied AASB 10 from 1 July 2013,
which has a new definition of ‘control’. Control exists when the
reporting entity is exposed, or has the rights, to variable returns
from its involvement with another entity and has the ability to
affect those returns through its ‘power’ over that other entity.
A reporting entity has power when it has rights that give it the
current ability to direct the activities that significantly affect
the investee’s returns. The consolidated entity not only has to
consider its holdings and rights but also the holdings and rights
of other shareholders in order to determine whether it has the
necessary power for consolidation purposes. There is no material
impact on the adoption of this standard.
AASB 12 Disclosures of Interests in Other Entities
The consolidated entity has applied AASB 12 from 1 July 2013. This
standard contains the entire disclosure requirement associated with
other entities, being subsidiaries, associates and joint arrangements.
The disclosure requirements have been significantly enhanced
when compared to the disclosures previously located in AASB
127 ‘Consolidated and Separate Financial Statements’, AASB 128
‘Investments in Associates’, AASB 131 ‘Interests in Joint Ventures’
and Interpretation 112 ‘Consolidation - Special Purpose Entities’.
AASB 13 Fair Value Measurement and AASB
2011–8 Amendments to Australian Accounting
Standards arising from AASB
The consolidated entity has applied AASB 13 and its
consequential amendments from 1 July 2013. The standard
provides a single robust measurement framework, with clear
measurement objectives, for measuring fair value using the ‘exit
price’ and it provides guidance on measuring fair value when a
39
2014 ANNUAL REPORT market becomes less active. The ‘highest and best use’ approach
is used to measure non-financial assets whereas liabilities
are based on transfer value. The standard requires increased
disclosures where fair value is used.
3. NEw ACCOuNTING STANdARdS
ANd INTERPRETATIONS NOT YET
MANdATORY OR EARlY AdOPTEd
AASB 119 Employee Benefits (September 2011) and
AASB 2011–10 Amendments to Australian Accounting
Standards arising from AASB 119 (September 2011)
The consolidated entity has applied AASB 13 and its consequential
amendments from 1 July 2013. The standard changed the definition
of short-term employee benefits, from ‘due to’ to ‘expected to’
be settled within 12 months. Annual leave that is not expected to
be wholly settled within 12 months is now discounted allowing
for expected salary levels in the future period when the leave is
expected to be taken.
AASB 2012–2 Amendments to Australian Accounting
Standards – Disclosures – Offsetting Financial Assets
and Financial Liabilities
The consolidated entity amendments are applicable to annual
reporting periods beginning on or after 1 January 2013. The
disclosure requirements of AASB 7 ‘Financial Instruments:
Disclosures’ (and consequential amendments to AASB 132
‘Financial Instruments: Presentation’) have been enhanced to
provide users of financial statements with information about netting
arrangements, including rights of set-off related to an entity’s
financial instruments and the effects of such rights on its statement
of financial position. The adoption of the amendments from 1 July
2013 will increase the disclosures by the consolidated entity.
AASB 2011–4 Amendments to Australian Accounting
Standards to Remove Individual Key Management
Personnel Disclosure Requirement
The consolidated entity has applied AASB 2011-4 from 1 July 2013,
which amends AASB 124 ‘related Party Disclosures’ by removing
the disclosure requirements for individual key management
personnel (‘KMP’). Corporations and related Legislation
Amendment regulations 2013 and Corporations and Australian
Securities and Investments Commission Amendment regulation
2013 (No. 1) now specify the KMP disclosure requirements to be
included within the directors’ report.
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 2014 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.
AASB 2013–9 Amendments to Australian Accounting
Standards – Conceptual Framework, Materiality and
Financial Instruments
Three amendments were made to AASB 9, which includes adding
the new hedge accounting requirements into AASB 9, deferring the
effective date of AASB 9 from 1 January 2015 to 1 January 2017,
and making available for early adoption the presentation of changes
in ‘own credit’ in other comprehensive income (OCI) for financial
liabilities under the fair value option without early applying the other
AASB 9 requirements. The Group has not yet made an assessment
of the impact of these amendments.
AASB 2012–3 Amendments to Australian Accounting
Standards – Offsetting Financial Assets and Financial
Liabilities
The amendments are applicable to annual reporting periods
beginning on or after 1 January 2014. The amendments add
application guidance to address inconsistencies in the application
of the offsetting criteria in AASB 132 ‘Financial Instruments:
Presentation’, by clarifying the meaning of “currently has a legally
enforceable right of set-off”; and clarifies that some gross settlement
systems may be considered to be equivalent to net settlement.
The adoption of the amendments from 1 July 2014 will not have a
material impact on the consolidated entity.
AASB 2013–3 Amendments to AASB 136 –
Recoverable Amount Disclosures for Non-Financial
Assets
These amendments are applicable to annual reporting periods
beginning on or after 1 January 2014. The disclosure requirements
of AASB 136 ‘Impairment of Assets’ have been enhanced to require
additional information about the fair value measurement when
the recoverable amount of impaired assets is based on fair value
less costs of disposals. Additionally, if measured using a present
value technique, the discount rate is required to be disclosed. The
adoption of these amendments from 1 July 2014 may increase the
disclosures by the consolidated entity.
40
4. REvENuE
Operating activities
revenue from gold and silver sales
Interest revenue
Other revenue
Total revenue
5. lOSS FOR ThE YEAR
Loss before income tax includes the following specific expenses:
Depreciation of plant and equipment
Amortisation of intangible assets
Total depreciation and amortisation
Finance costs - related parties
Finance costs - other
Total finance costs
rental expense on operating leases
Defined contribution plan expense
Share-based payment
6. AudITORS’ REMuNERATION
Remuneration of the auditors of the parent entity (BDO) for:
Auditing or reviewing the financial reports
Other services
Total auditors’ remuneration – parent entity (BDO)
Remuneration of auditors of subsidiaries (Nexia & PKF) for:
Auditing or reviewing the financial reports
Other services/taxation
Total auditors’ remuneration – subsidiaries (Nexia & PKF)
Consolidated
30 June 2014
US$
30 June 2013
US$
66,147,537
64,106,070
14,018
214,603
5,240
98,005
66,376,158
64,209,315
Consolidated
30 June 2014
US$
30 June 2013
US$
5,889,667
5,531,567
11,290,874
11,360,598
17,180,541
16,892,165
2,225,707
1,875,243
144,201
304,902
2,369,908
2,180,145
14,162
21,184
185,756
15,726
20,985
-
Consolidated
30 June 2014
US$
30 June 2013
US$
59,246
11,932
71,178
68,858
19,501
88,359
72,790
-
72,790
74,966
22,086
97,052
41
2014 ANNUAL REPORT Consolidated
30 June 2014
US$
30 June 2013
US$
977,185
1,577,846
86,537
2,641,568
-
-
2,929,086
2,929,086
(8,966,167)
(4,754,504)
(2,689,850)
(1,426,351)
(2,062,663)
464,995
7,394,081
5,670,308
-
(1,779,866)
2,641,568
2,929,086
-
339,140
14,477
117,644
471,261
698,539
150,912
-
91,239
940,690
(4,562,669)
(5,016,006)
(70,445)
-
(4,633,114)
(5,016,006)
(4,161,853)
(4,075,316)
(4,075,316)
(1,146,230)
(86,537)
(2,929,086)
(4,161,853)
(4,075,316)
7.
INCOME TAX EXPENSE
Amounts recognised in profit and loss
Current tax paid
Current tax payable
Deferred tax expense
Income tax expense
Reconciliation of effective tax rate
Loss before tax
Prima facie income tax benefit calculated at 30% on the loss
Difference due to overseas tax rate
Non-deductible expenses
Temporary differences not brought into account
Income tax expense
Deferred tax balances
Deferred tax assets
Tax loss carried forward
Accrual for mine closure
Leasing assets
Accrual for vacations
Total deferred tax assets
Deferred tax liabilities
Mining concessions
Other receivables
Total deferred tax liabilities
Net deferred tax liabilities
Movement in deferred tax balances
Opening balance
Charged to profit or loss
Closing balance
42
8. EARNINGS PER ShARE
Classification of securities as ordinary shares
Ordinary shares have been included in basic earnings per share.
Earnings reconciliation
Net loss attributable to owners
Net profit attributable to non-controlling interests
Net loss
Weighted average number of shares used as the denominator
Number for basic earnings per share
Number for diluted earnings per share
Basic earnings per ordinary share (cents)
Diluted earnings per ordinary share (cents)
9. SEGMENTS
Consolidation
30 June 2014
US$
30 June 2013
US$
(11,681,223)
(7,683,590)
73,488
-
(11,607,735)
(7,683,590)
170,138,779
169,139,739
170,138,779
169,139,739
(6.82)c
(6.82)c
(4.50)c
(4.50)c
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.
2014
2013
Australia
US$
South America
US$
Consolidated
US$
Australia
US$
South America
US$
Consolidated
US$
-
66,147,537
66,147,537
-
64,106,070
64,106,070
2,617
-
11,401
214,603
14,018
214,603
1,972
-
3,268
98,005
5,240
98,005
2,617
66,373,541
66,376,158
1,972
64,207,343
64,209,315
-
(32,115,429)
(32,115,429)
-
(36,269,466)
(36,269,466)
(1,227,840)
(5,493,906)
(6,721,746)
(968,305)
(4,766,487)
(5,734,792)
-
-
-
545,299
545,299
(6,338,580)
190,081
(6,148,499)
(7,500,000)
(7,500,000)
(10,000,000)
(10,000,000)
-
-
-
-
(1,738,752)
(1,738,752)
revenue from gold
and silver sales
Interest revenue
Other
Total segment
revenue
Cost of sales
Administration
expenses
Gain/(loss) from
foreign exchange
royalty agreement
exit fee
Impairment of assets
Finance costs
(2,225,707)
(144,201)
(2,369,908)
(1,873,253)
(306,892)
(2,180,145)
Amortisation
Depreciation
-
(11,290,874)
(11,290,874)
-
(11,360,598)
(11,360,598)
(1,418)
(5,888,249)
(5,889,667)
(1,577)
(5,529,990)
(5,531,567)
Income tax expense
-
(2,641,568)
(2,641,568)
-
(2,929,086)
(2,929,086)
Segment (loss)/
profit
(3,452,348)
(8,155,387)
(11,607,735)
(9,179,743)
1,496,153
(7,683,590)
Segment assets
1,791,062
82,054,349
83,845,411
2,527,679
98,746,666
101,274,345
Segment liabilities
53,288,757
16,458,282
69,747,039
55,735,224
11,707,829
67,443,053
Acquisition of non-
current assets
-
4,849,924
4,849,924
-
-
-
43
2014 ANNUAL REPORT 10. CASh ANd CASh EquIvAlENTS
Cash at call and in hand
Short-term bank deposits
Total cash and cash equivalents
Reconciliation of Cash
2014
US$
4,202,553
144,522
4,347,075
Consolidated
2013
US$
2,787,250
1,799,063
4,586,313
2012
US$
470,214
7,133
477,347
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
4,347,075
4,586,313
477,347
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.
11. INvENTORIES
Materials and supplies – at cost
Gold bullion and gold in process– at net realisable value
Total inventories
12. TRAdE ANd OThER RECEIvABlES
CURRENT
Trade receivables
Other current receivables
Pre-payments
GST/VAT receivable
Total current receivables
NON CURRENT
GST/VAT receivable
Pre-payments
Other
Total non-current receivables
TRADE DEBTORS
2014
US$
2,749,369
1,185,563
3,934,932
Consolidated
2013
US$
1,620,670
1,792,534
3,413,204
Consolidated
2014
US$
2013
US$
480,294
419,231
937,450
1,538,910
4,980,827
2,964,230
1,844,583
537,972
3,375,885
10,327,612
2012
US$
1,109,544
2,502,653
3,612,197
2012
US$
390,867
637,881
1,509,963
598,394
3,137,105
116,910
472,066
606
94,312
64,091
1,550,032
3,824,999
–
–
589,582
1,644,344
3,889,090
The ageing of trade receivables is 0 – 30 days
480,294
4,980,827
390,867
44
12.1 Past due but not impaired
There were no receivables past due at 30 June 2014 (2013: 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.
13. FInAnCIAL Assets
CURRENT
Bonds – level 1
Total current financial assets at fair value
NON CURRENT
Listed equity securities – level 1
Total non-current financial assets at fair value
Consolidated
2013
US$
–
–
2014
US$
278,072
278,072
2012
US$
–
–
6,339,952
6,339,952
47,002
47,002
345,519
345,519
The table above sets out the Group’s assets and liabilities that are measured and recognised at fair value at 30 June 2014.
Bonds are US$ Argentina government bonds maturing in October 2015, but with the ability to redeem at any time, and with a fixed interest
rate of 7% payable biannually.
Listed equity securities represents the fair value of the Company’s 19.9% investment in Argentex Mining (TSX-V: ATX) and 15% investment in
Goldrock Mines (TSX-V: GrM), both acquired during 2014. A fair value movement of US$3.9 million relating to these investments has been
recognised in other comprehensive income.
Fair value hierachy
refer to Note 1.4 of these financial statements for details of the fair value hierarchy.
Transfers
During the year ended 30 June 2014, the consolidated entity had no level 2 or level 3 financial instruments. As such, there were no transfers
between the financial instrument levels of hierarchy.
45
2014 ANNUAL REPORT 14. INTANGIBlE ASSETS
Development assets-Guanaco
Cost
Accumulated amortisation
Consolidated
2014
US$
2013
US$
2012
US$
65,273,913
73,377,220
72,232,386
(29,947,134)
(14,549,881)
(3,189,283)
Carrying value - Development assets-Guanaco
35,326,779
58,827,339
69,043,103
Goodwill
Cost
Carrying value - Goodwill
Total intangible assets
Cost
Accumulated amortisation
1,021,995
1,021,995
-
-
66,295,908
73,377,220
72,232,386
(29,947,134)
(14,549,881)
(3,189,283)
Total Carrying Value – Intangible assets
36,348,774
58,827,339
69,043,103
MOVEMENTS IN CARRYING VALUE – Development assets – Guanaco
Carrying amount at beginning of the year
58,827,339
69,043,103
Foreign exchange movements from change of accounting policy
(4,829,339)
-
restated carrying amount at beginning of the year
Additions for the year
reclassification to plant and equipment
Write-off
Amortisation for the year
Impairment
Carrying amount at end of the year
MOVEMENTS IN CARRYING VALUE – Goodwill
Carrying amount at beginning of the year
Additions for the year
Carrying amount at end of the year
Impairment – Guanaco
53,998,000
69,043,103
8,249,887
7,011,619
(5,568,154)
(5,866,785)
(62,080)
-
(11,290,874)
(11,360,598)
(10,000,000)
-
35,326,779
58,827,339
-
1,021,995
1,021,995
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 that is an intrinsic part of the mine and its structure (included in note 15) are included in determining the carrying
value of the CGU for the purposes of assessing for impairment.
Management have assessed the fair value and book value of the Guanaco project to be US$59 million (2013: US$75m) which resulted in a
US$10 million impairment charge, due largely to the drop in the gold price assumptions used in the valuation. The fair value is based on an
independent valuation using a discounted cash flow model and the following assumptions:
• Gold price: US$1,278/oz – US$1,228/oz (2013: US$1,498/oz – US$1,230/oz)
•
Life of Mine: 5 years (2013: 6 years)
• Discount rate (post-tax): 7% (2013: 7.2%)
Royalty agreement exit fee
In September 2013, the Company exercised the exit option of the royalty agreement with Compañia Minera Kinam Guanaco by which the
company paid US$7,500,000 as an exit-fee in three quarterly instalments to 30 June 2014. This eliminates the need to pay any future royalties
that had in the past been calculated monthly as a percentage of Guanaco mine gold production. This amount has been fully expensed in the
Statement of Profit or Loss and Other Comprehensive Income, which is in addition to the impairment of US$10 million detailed above.
Goodwill
Goodwill has arisen on the acquisition of a subsidiary. For further details refer to Note 28.
The recoverable amount of the goodwill arising from the Cachinalito business has been determined by a value-in-use calculation using a
discounted cash flow model, based on a 5 year projection period approved by management, together with a terminal value.
Key assumptions are those to which the recoverable amount of an asset or cash-generating units is most sensitive.
46
The following key assumptions were used in the discounted cash flow model for Cachinalito:
•
7% post-tax discount rate;
• Average 3% per annum projected growth rate; and
•
2% growth rate for terminal value.
The discount rate of 7% reflects management’s estimate of the time value of money and the consolidated entity’s weighted average cost of
capital adjusted for the Cachinalito business, the risk free rate and the volatility of the share price relative to market movements.
Management have estimated a 2 – 3% growth in accordance with the acquisition strategy and has no reason to revise this estimation based on
current performance.
Sensitivity
Should these judgements and estimates not occur the resulting goodwill carrying amount may decrease. The sensitivities are as follows:
a) The discount rate would be required to increase by 5% before goodwill would need to be impaired, with all other assumptions
remaining constant.
b) Negative growth rate of at least 1.25% per annum before goodwill would need to be impaired, with all other assumptions
remaining constant.
15. PlANT ANd EquIPMENT
Plant and equipment - at cost
Accumulated depreciation
Carrying amount at end of year
MOVEMENTS IN CARRYING VALUE
Carrying amount at beginning of year
Consolidated
2014
US$
2013
US$
2012
US$
43,797,029
31,245,395
24,087,677
(15,672,608)
(9,163,562)
(3,633,454)
28,124,421
22,081,833
20,454,223
22,081,833
20,454,223
Foreign exchange movements from change of accounting policy
(124,644)
-
Restated carrying amount at beginning of the year
21,957,189
20,454,223
Additions for the year
reclassification from intangible assets
Disposals for the year
Depreciation for the year
Movement attributable to foreign currency translation
6,488,638
5,568,154
-
1,318,510
5,866,785
(25,610)
(5,889,667)
(5,531,568)
107
(507)
-
-
-
-
-
-
-
-
Carrying amount at end of year
28,124,421
22,081,833
20,454,223
Part of the plant and equipment has been included in the Guanaco cash generating unit. refer to note 14 for discussion on impairment.
Plant and equipment that does not form part of the Guanaco cash generating unit are being carried at the lower of their book value and
recoverable amount.
The Group leases production equipment under a number of finance leases. At 30 June 2014, the net carrying amount of lease equipment was
US$2,601,931 (2013: nil).
16. EXPlORATION ANd EvAluATION EXPENdITuRE
Costs carried forward in respect of areas of interest:
Carrying amount at the beginning of the year
Additions for the year
Movement attributable to foreign currency translation
Carrying amount at end of year
Consolidated
2014
US$
2013
US$
346,698
160,020
-
506,718
174,554
156,455
15,689
346,698
2012
US$
-
-
-
174,554
The recovery of the carrying amount of the exploration and evaluation assets is dependent on the successful development and commercial
exploration or sale of the areas of interest.
47
2014 ANNUAL REPORT 17. tRADe AnD otHeR PAYABLes
CURRENT
Trade payables
Accrued expenses
Income tax payable
Other payables
Consolidated
2014
US$
2013
US$
1,953,896
4,054,560
559,264
1,746,165
1,361,257
500,671
-
166,973
2012
US$
4,219,263
1,503,277
-
30,169
Total current trade and other payables
5,620,582
4,722,204
5,752,709
NON CURRENT
Other payables
refer to note 24 for detailed information on financial instruments.
1,127,280
-
-
18. PROvISIONS
CURRENT
Employee entitlements
MOVEMENT IN CURRENT PROVISIONS
Opening balance
Charged to the profit or loss
Movement attributable to foreign currency translation
Closing balance
Consolidated
2014
US$
2013
US$
2012
US$
595,969
480,604
288,624
480,604
115,365
-
595,969
288,624
193,725
(1,745)
480,604
-
-
-
288,624
The current provision for employee entitlements 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. The entire balance of employee
benefits is expected to be settled within the next 12 months.
NON CURRENT
Mine closure
MOVEMENT IN NON CURRENT PROVISIONS
Opening balance
Charged to the profit or loss
Closing balance
Consolidated
2014
US$
2013
US$
2012
US$
1,695,702
831,297
754,562
831,297
864,405
1,695,702
754,562
76,735
831,297
-
-
754,562
48
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$2,076,000;
• remaining life of Mine: 5 years; and
• Discount rate (post-tax) of 7%
19. BORROwINGS
CURRENT
Lease liability
royalty payable
Total current borrowings
NON-CURRENT
Lease liability
Loan – IFISA
Total non-current borrowings
LOAN IFISA
Balance at beginning of year
repayments of principal and interest
Interest
Balance at end of year
Consolidated
2014
US$
2013
US$
1,248,671
1,022,704
2,271,375
-
1,719,223
1,719,223
2012
US$
-
733,467
733,467
1,078,478
-
-
53,195,800
55,614,409
58,263,946
54,274,278
55,614,409
58,263,946
55,614,409
58,263,946
(4,644,316)
(4,521,883)
2,225,707
1,872,346
-
-
-
53,195,800
55,614,409
58,263,946
refer to note 24 for detailed information on financial instruments.
19.1 Loan Inversiones Financieras del Sur SA (IFISA)
The borrowings are unsecured. Interest is charged at 4%. The loan comprises principal of US$42,529,119 (30 June 2013: US$44,529,120)
and capitalised interest of $10,666,681 (30 June 2013: US$11,085,289). 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 31 December 2015.
The fair value of the above loan is dependent on the actual date of settlement per options (i) to (iv) above and the comparable market
interest rate. Therefore, the fair value may be different to the carrying value of US$53,195,800.
19 .2 Royalty payable
In accordance with the signed agreement with Compania Minera Kinam Guanaco, the Company was required to pay quarterly amounts
determined as the greater between;
i The equivalent of US$75,000 or
ii The “NPI”, that is approximately 5% of the income from the sale of concentrate less the necessary costs to produce the concentrate.
As described in note 14, the Company exercised the exit option of the royalty agreement which, as from September 2013, eliminated the need
to pay or accrue any future royalties. The royalty payable above reflects royalties owing to Kinam prior to exercising the exit option.
19 .3 Lease liabilities
refer to note 15 for further information on plant and equipment secured under finance leases.
49
2014 ANNUAL REPORT 20. ISSuEd CAPITAl
Fully paid ordinary shares (US$)
Consolidated
2014
2013
2012
39,803,088
39,003,832
39,003,832
Number of ordinary shares at year end
170,831,137
169,139,739
169,139,739
Movements in ordinary share capital
Balance at 30 June 2012
Balance at 30 June 2013
Date
Number of
ordinary shares
US$
169,139,739
39,003,832
169,139,739
39,003,832
Foreign exchange movements from change of accounting policy
1 July 2013
-
1,547,366
Balance at 1 July 2013
169,139,739
40,551,198
Share-based payment to Chief Operating Officer
27 December 2013
1,691,398
12 December 2013
-
185,756
(933,866)
170,831,137
39,803,088
return of Capital to shareholders
Balance at 30 June 2014
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.
Return of capital to shareholders
A payment of US$933,866 in the form of a return of capital was made to shareholders on 12 December 2013.
Share-based payment
On 27 December 2013, after approval at the Annual General Meeting, a share-based payment of 1,691,398 new ordinary shares was issued
to Stabro Kasaneva, for his services as an Executive Director and Chief Operating Officer of the Company. The shares were issued for nil
consideration at the share price at that date for a total value of US$185,756, which has been included as part of administration expenses in the
statement of profit or loss and other comprehensive income.
21. RETAINEd EARNINGS/ (ACCuMulATEd lOSSES)
(Accumulated losses)/retained earnings at beginning of year
(12,698,850)
(5,015,260)
11,430,878
Foreign exchange movements from change of accounting policy - AGD functional
currency change from AUD to USD
Net loss for the year
Accumulated losses at end of year
344,323
-
-
(11,681,223)
(7,683,590)
(16,446,138)
(24,035,750)
(12,698,850)
(5,015,260)
Consolidated
2014
US$
2013
US$
2012
US$
50
22. NON CONTROllING INTEREST
Non controlling interest in subsidiaries comprise:
Acquired as part of subsidiary
1,638,406
40
56
Consolidated
2014
US$
2013
US$
2012
US$
23. RESERvES
FOREIGN CURRENCY TRANSLATION RESERVE
Balance at beginning of year
Foreign exchange movements from change of accounting policy
Foreign exchange movements from translation of financial statement to US dollars
Balance at end of year
SHARE OPTION RESERVE
Balance at beginning of year
Options issued November 2011
Balance at end of year
ASSET REVALUATION RESERVE
Balance at beginning of year
Fair value movement during the year
Balance at end of year
Total Reserves
Nature and purpose of reserves
Foreign Currency Translation Reserve
Consolidated
2014
US$
2013
US$
7,513,029
(6,845,744)
(17,862)
649,423
191,731
-
7,321,298
7,513,029
13,241
-
13,241
-
(3,970,036)
(3,970,036)
13,241
-
13,241
-
-
-
2012
US$
-
-
-
191,731
-
13,241
13,241
-
-
-
(3,307,372)
7,526,270
204,972
Exchange differences arising on translation of the non US$ denominated non-monetary balances of Group Companies are recognised in the
foreign currency translation reserve. The reserve is recognised in profit or loss when the net investment is disposed of.
Share Option Reserve
Options granted / issued as share-based payments are recognised in the share option reserve. No options were granted during the year ended
30 June 2014.
Asset Revaluation Reserve
The reserve is used to recognise increments and decrements in the fair value of equity securities.
51
2014 ANNUAL REPORT 24. FINANCIAl INSTRuMENTS
Financial risk management objectives
The Group’s principal financial instruments comprise borrowings, receivables, listed equity securities, cash and short-term deposits. These
activities expose the Group to a variety of financial risks: market risk (interest rate risk and foreign currency risk), credit risk, price risk and
liquidity risk.
The Group recognises the importance of risk management, and has adopted a risk Management and Internal Compliance and Control policy
which describes the role and accountabilities of management and of the Board. The Directors manage the different types of risks to which
the Group is exposed by considering risk and monitoring levels of exposure to the main financial risks by being aware of market forecasts for
interest rates, foreign exchange rates, commodity and market prices. The Group does not have significant exposure to credit risk and liquidity
risk is monitored through general business budgets and forecasts.
Interest Rate Risk
The Group’s main interest rate risk arises from long term borrowings. The Group’s borrowings are at a fixed rate of 4% (2013: 4%) and therefore
do not carry any variable interest rate risk.
Foreign Currency risk
The Group undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign currency
exchange rate fluctuations.
Foreign exchange rate risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a
currency that is not the functional currency of the Group. The risk is measured using cash flow forecasting. Foreign currency risk is minimal as
most of the transactions are settled in US$.
Price Risk
The Group’s revenues are exposed to fluctuations in the price of gold and other prices. Gold and silver produced is sold at prevailing market
prices in US dollars.
The Group has resolved that for the present time the production should remain unhedged. The Group considers exposure to commodity price
fluctuations within reasonable boundaries to be an integral part of the business.
2000
1800
1600
1400
1200
1000
Historical gold price
(US$ per gold ounce)
2011
2012
2013
2014
1,000,000
920,000
840,000
760,000
680,000
600,000
Source: Blomberg
Financial Market Risk
Historical gold price
(CLP per gold ounce)
2011
2012
2013
2014
Source: Blomberg
The financial market risk is the risk that the fair value or future cash flows of the financial instruments will fluctuate because of changes in market
prices, which occurs due to the Group’s investment in listed securities where share prices can fluctuate over time. This risk however is not
deemed to be significant as these investments are held for long term strategic purposes and therefore movement in the market prices do not
impact the short-term profit or loss or cash flows of the Group.
Credit Risk
The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any allowance for
doubtful debts, as disclosed in the statement of financial position and notes to the financial statements.
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.
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.
52
Financing arrangements
Under the funding agreement with IFISA, the Group had access to the following undrawn US dollar denominated borrowing facilities at the
reporting date:
Consolidated
2014
US$
2013
US$
2012
US$
Total facility
Total used
59,000,000
59,000,000
59,000,000
42,529,119
44,529,119
49,051,002
Amount available
16,470,881
14,470,881
9,948,998
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.
< 6 months
US$
6–12 months
US$
1–5 years
US$
>5 years
US$
Total
US$
Consolidated
YEAR ENDED 30 JUNE 2014
FINANCIAL LIABILITIES
Trade and other payables
Lease liabilities
royalty payable
Loan - IFISA
5,620,582
676,070
1,022,704
-
-
676,069
-
-
1,127,280
1,147,456
-
53,195,800*
Total 2014 liabilities
7,319,356
676,069
55,470,536
YEAR ENDED 30 JUNE 2013
FINANCIAL LIABILITIES
Trade and other payables
royalty payable
Loan - IFISA
4,722,204
-
-
-
1,719,223
-
-
-
55,614,409*
Total 2013 liabilities
4,722,204
1,719,223
55,614,409
*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 31 December 2015 and is not repaid or converted into equity by IFISA; and
iii interest of US$10,666,681 (2013: US$11,085,289) calculated using rates disclosed in note 19.
-
-
-
-
-
-
-
-
-
6,747,862
2,499,595
1,022,704
53,195,800
63,465,961
4,722,204
1,719,223
55,614,409
62,055,836
Defaults and breaches
During the current and prior years, there were no defaults or breaches on the loan or any of the other financial liabilities.
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 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.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
53
2014 ANNUAL REPORT
25. dIvIdENdS
No dividends were paid or proposed during the year (2013: Nil).
A payment of US$933,866 in the form of a return of capital was made to shareholders on 12 December 2013.
26. COMMITMENTS
LEASE COMMITMENTS – FINANCE
Committed at the reporting date and recognised as liabilities, payable:
Within one year
One to five years
Total commitment
Less: Future finance charges
Net commitment recognised as liabilities
representing:
Lease liability – current
Lease liability – non-current
27. SuBSIdIARIES
PARENT ENTITY
Austral Gold Limited
SUBSIDIARIES
2014
US$
2013
US$
2012
US$
1,352,139
1,147,456
2,499,595
(172,446)
2,327,149
1,248,671
1,078,478
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Country of
Incorporation
2014
% owned
2013
% owned
2012
% owned
Australia
Guanaco Mining Company Limited
British Virgin Islands
Guanaco Compañía Minera SpA
Austral Gold Argentina S.A.
Ingenieria y Mineria Cachinalito Limitada
Chile
Argentina
Chile
100.000
99.998
99.930
51.000
100.000
99.998
99.852
–
100.000
99.998
99.750
–
28. ACquISITION OF SuBSIdIARY
On 3 June 2014, the Group acquired 51% of the shares and voting interest in Humberto reyes. As a result, the Group obtained control of
Humberto reyes, now Ingenieria y Mineria Cachinalito Limitada.
This is a key strategic investment for the Group since it provides flexibility to accelerate mining of the Guanaco mine resource; allows greater
control over safety and production practices at the Guanaco mine and ensures a continued competitive cost for future underground development.
In June 2014, Ingenieria y Mineria Cachinalito Limitada contributed revenue of US$280,066 and profit of US$149,976 to the Group’s
results. If the acquisition had occurred on 1 July 2013, management estimates that the profit or loss before tax would have improved by
US$770,749. In determining this, management has assumed that the fair value adjustments, determined provisionally, that arose on the
acquisition date would have been the same if the acquisition had occurred on 1 July 2013.
28.1 Consideration transferred
The purchase price is approximately US$2.7 million to be paid in an upfront payment of US$450,000 and the remainder in monthly cash
instalments over three years from existing cash reserves (to be paid partially in Chilean pesos, partially in US$).
The Group also has the possibility to acquire the remaining 49% in 2.5 years at a price to be agreed upon by both parties.
28.2 Acquisition-related costs
The Group incurred acquisition-related costs of US$56,000 on legal fees and due diligence costs. These costs have been included in
‘administrative expenses’.
54
28.3 Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities assumed at the acquisition date.
Plant and equipment – owned
Plant and equipment – leased
Cash and cash equivalents
Trade receivables
Other receivables
Lease liabilities
Other liabilities
Total identifiable net assets acquired
Measurement of fair values
US$
2,584,478
2,265,446
283,026
268,422
211,479
(2,013,540)
(405,825)
3,193,486
The valuation techniques used for measuring the fair value of material assets acquired were as follows:
Assets acquired
Plant and equipment – owned
Plant and equipment – leased
Valuation technique
Quoted marked prices for similar items
Quoted marked prices for similar items
28.4 Goodwill
Goodwill arising from the acquisition has been recognised as follows:
Consideration transferred/transferrable
NCI, based on their proportionate interest in the recognised amounts of the assets and liabilities of Ingenieria y
Mineria Cachinalito Limitada
Fair value of identifiable net assets
Goodwill
Note
28.1
28.3
14
US$
2,650,673
1,564,808
(3,193,486)
1,021,995
The goodwill is attributable to the strategic and cost advantages to the Group that are expected to be realised as a result of controlling the
Guanaco underground mine operator.
28.5 Cash used to acquire subsidiary, net of cash acquired
Acquisition date fair value of total consideration
Less: Consideration payable at reporting date
Cash consideration to acquire subsidiary
Less: Cash and cash equivalents acquired
Net cash paid to acquire subsidiary
US$
2,650,673
(2,202,617)
448,056
(315,710)
132,346
55
2014 ANNUAL REPORT 29. CASh FlOw INFORMATION
Reconciliation of cash flow from operations with loss after income tax:
Loss after income tax
Non-cash flows in loss
Interest expense capitalised
royalty agreement exit fee
Impairment loss
Interest received
Equity-settled share-based payment transaction
Foreign exchange translation (gain)/ loss
Depreciation and amortisation
Net cash from operating activities before change in assets and liabilities
Changes in assets and liabilities:
Decrease / (increase) in inventory
Decrease / (increase) in trade and other receivables
Increase / (decrease) in trade and other payables
Increase / (decrease) in tax payable
Movement attributable to foreign currency translation
Cash flow from operations
30. PARent entItY InFoRmAtIon
Information relating to Austral Gold Limited
Current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Accumulated losses
reserves
Total shareholders’ equity
Consolidated
2014
US$
2013
US$
(11,607,735)
(7,683,590)
2,225,707
7,500,000
1,872,346
-
10,000,000
1,738,752
(14,018)
185,756
(5,240)
-
(545,299)
6,148,499
17,180,541
16,892,265
24,924,952
18,963,032
(521,728)
198,993
5,288,401
(2,608,376)
(1,920,374)
3,098,691
1,664,383
-
583,808
794,565
30,019,442
20,446,905
Consolidated
2014
US$
2013
US$
114,404
2,523,105
2012
US$
62,889
75,880,676
75,144,628
85,219,825
11,548,361
4,151,698
717,487
64,744,162
59,766,107
58,981,433
11,136,514
15,378,521
26,238,392
39,803,088
39,003,832
39,003,832
(28,661,951)
(26,944,062)
(17,766,383)
(4,623)
3,318,751
5,000,943
11,136,514
15,378,521
26,238,392
Loss of the parent entity
(3,476,033)
(9,179,715)
(14,320,150)
Total comprehensive income of the parent entity
(3,476,033)
(9,179,715)
(14,320,150)
Details of any guarantees entered into by the parent entity in relation to the debts
of its subsidiaries
Details of any contingent liabilities of the parent entity
Details of any contractual commitments by the parent entity for the acquisition of
property, plant or equipment.
None
None
None
None
None
None
None
None
None
56
31. SuBSEquENT EvENTS
Acquisition of Amancaya project in Chile
Final closing of this transaction took place on 8 August 2014 and the first payment of US$3 million was made to the escrow agent, a
Canadian law firm, on that date. The payment has subsequently been released from escrow and all the mining properties have been duly
transferred to the Group.
On 17 June 2014, the Company and its subsidiary Guanaco, entered into an asset transfer agreement with a 100%-owned subsidiary
of yamana Gold Inc. Minera Meridian Ltda (the Seller) to acquire the Amancaya exploration property (Amancaya) located 70km east of
the city of Tatal in Northern Chile. Amancaya is a low sulphidation epithermal gold-silver deposit consisting of eight mining exploration
concessions covering 1,755 hectares. As part of the acquisition, the Company also secures the rights to exploration projects currently
under application, as well as water rights, underlying property and necessary easements.
Consideration for Amancaya will be an aggregate amount of US$12 million of cash instalments. In addition to the US$3 million paid on
closing, payments of US$1 million, US$3 million, US$3 million and US$2 million are payable within each successive six-month period. A
royalty agreement has also been entered into on closing whereby the Company will pay 2.25% of the net smelter return (NSr) to the Seller on
production from the Amancaya mining concessions.
32. ReLAteD PARtY tRAnsACtIons
32 .1 Directors holdings of shares and share options
The names of each person holding the position of Director during the year are; Eduardo Elsztain, Saul Zang, Wayne Hubert, Pablo Vergara del
Carril, robert Trzebski, Stabro Kasaneva and Ben Jarvis. Amounts paid to Directors are set out in the table below.
mr eduardo elsztain holds 144,817,951 shares indirectly in Austral Gold Limited.
mr saul Zang holds 1,435,668 shares indirectly in Austral Gold Limited.
mr Pablo Vergara del Carril holds 68,119 shares directly in Austral Gold Limited.
e elsztain and s Zang are directors of IFISA which holds 115,842,415 shares according to the last substantial holder notice lodged in
September 2014.
P Vergara del Carril, e elsztain and s Zang are directors of Guanaco Capital Holding Corp which holds 24,289,330 shares according to the
last substantial holder notice lodged in September 2014.
mr stabro Kasaneva holds 1,691,398, shares either directly or indirectly in Austral Gold Limited.
mr Wayne Hubert holds 1,750,000 shares indirectly in Austral Gold Limited.
32.2 Directors and Key Management Personnel Remuneration
The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:
Short-term employment benefits
Post-employment benefits
Share-based payments
Total
32.3 Borrowings from majority shareholder
Amount payable at end of year
Interest incurred
Funds repaid
Consolidated
2014
US$
854,938
11,587
185,756
2013
US$
746,120
17,707
-
1,052,281
763,827
IFISA 2014
US$
IFISA 2013
US$
IFISA 2012
US$
53,195,800
55,614,409
58,263,946
2,225,707
1,872,346
(4,644,316)
(4,521,883)
-
-
32.4 Ultimate parent entity
The Parent Entity is controlled by IFISA with a 68% interest in Austral Gold Limited and is incorporated in Uruguay.
The ultimate beneficial owner of IFISA is Eduardo Elsztain.
57
2014 ANNUAL REPORT DIRECTORS’ DECLARATION
The Directors of Austral Gold Limited declare that:
1 . The financial statements, comprising the statement of profit or loss and other 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 Act 2001; and
ii give a true and fair view of the consolidated entity’s financial position as at 30 June 2014 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:
Robert trzebski
Director
Sydney
30 September 2014
58
59
2014 ANNUAL REPORT
60
ADDITIONAL INFORMATION
Corporate Governance Statement
FOR THE YEAR ENDED 30 JUNE 2014
Austral Gold Limited (the Company) and its controlled entities (the Group) have adopted the corporate governance framework and practices set
out in this statement. The framework and practices have been in place throughout the financial year, and comply with the second edition of the
ASX Corporate Governance Council’s Corporate Governance Principles and recommendations (recommendations), unless otherwise stated
in the table below.
Listing rule 4.10.3 requires a company to identify any 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 company must state the period during which it has been followed.
This statement has been approved by the Board, and the information provided remains current as at 31 August 2014. Company policies and
charters are available in the Corporate Governance section of the Company’s website at www .australgold .com .au.
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.
Comply.
The 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.
A Board Charter has been adopted which sets out the respective roles and responsibilities of the
Board and senior management.
The specific responsibilities of the Board include:
•
the appointment, evaluation, remuneration and if necessary the removal of senior executives;
• developing corporate objectives, strategy and operations plans, in conjunction with
management;
• approving and monitoring the progress of major capital expenditure, capital management,
acquisitions, divestitures and major funding activities;
• monitoring the performance of senior management including the implementation of strategy
and ensuring appropriate resources are available;
• maintaining an appreciation of areas of significant business risk and reviewing risk
management systems;
• overseeing the management of safety, occupational health and environmental matters;
• satisfying itself that the financial statements of the Company fairly and accurately set out the
financial position and financial performance of the Company, and reviewing other reporting to
shareholders;
• satisfying itself that there are appropriate reporting systems and internal controls in place; and
• satisfying itself that frameworks are in place to ensure the Company acts legally and
responsibly on all matters and remains consistent with the code of conduct.
1 .2
Disclose the process for evaluating the
performance of senior executives.
Comply.
The Board annually reviews senior management performance against key performance indicators,
including strategic, operational and financial indicators.
1 .3
2 .1
Provide the information indicated in
Guide to reporting on Principle 1.
A majority of the Board should be
independent directors.
2 .2
The chair should be an independent
director.
Comply.
A copy of the Board Charter can be found on the Company’s website.
Do not comply.
The Board regularly assesses the independence of its non-executive directors.
Of the Company’s seven directors, Eduardo Elsztain, Saul Zang and Pablo Vergara del Carril
are not considered independent due to their relationship with IFISA, the Company’s majority
shareholder. Stabro Kasaneva is not independent due to his executive role. Wayne Hubert, robert
Trzebski and Ben Jarvis are considered to be independent non-executive directors.
The Board believes that it has an appropriate composition given the nature, size and operations of
the Company. The composition of the Board has remained unchanged throughout the year and at
the date of this statement.
Do not comply.
Eduardo Elsztain is the ultimate beneficial holder of IFISA, the Company’s majority shareholder.
Therefore the Chairman of the Board is not considered to be independent.
The Board believes that Mr Elzstain’s beneficial interests in the Company’s shares help to align his
interests with those of other shareholders.
61
2014 ANNUAL REPORT No
Recommendation
Compliance or Explanation for Non-compliance
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.
2 .6
Provide the information indicated in the
Guide to reporting on Principle 2.
3 .1
Establish a code of conduct and
disclose the code or a summary
addressing:
•
•
•
the practices necessary to maintain
confidence in the company’s
integrity
the practices necessary to take into
account their legal obligations and
the reasonable expectations of their
stakeholders;
the responsibility and accountability
of individuals for reporting and
investigating reports of unethical
behaviour.
62
Comply.
The Chairman is Eduardo Elsztain.
The Board has not appointed a chief executive officer; rather it has appointed director Stabro
Kasaneva as the Chief Operating Officer.
The Chairman’s responsibilities include leadership of the Board and the efficient organisation and
conduct of the functioning of the Board.
There is a clear division of responsibilities between the Chairman and the Chief Operating Officer.
The Board has delegated to the Chief Operating Officer the authority to manage the day-to-
day affairs of the Company. The Board ensures that the Chief Operating Officer is appropriately
qualified and experienced to discharge his responsibilities.
Do not comply.
The Board has not established a nomination committee, as 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.
Do not comply.
The Board intends to develop a process for reviewing its overall performance, the performance of
the Audit Committee and performance of individual directors within the next 12 months.
Do not comply.
A performance evaluation review of the Board, Audit Committee and directors did not take place
during the year. The Board intends to conduct these reviews within the next 12 months.
Details of the directors’ skills, experience, expertise, tenure, special responsibilities and attendance
at Board meetings are set out in the Directors’ report.
Directors have the right, in connection with their duties and responsibilities, to seek independent
professional advice at the Company’s expense. Prior approval of the Chairman is required.
All directors have access to the Company Secretary.
The Board considers the following factors when selecting new directors and when recommending
directors to shareholders for re-election:
• whether between them the current directors have the appropriate skill sets, expertise,
experience and diversity to meet the current and future requirements of the Company;
•
the value to stakeholders of having independent directors on the Board;
• whether the director has sufficient time to meet his/her commitments as a director of the
Company;
•
the duration of each director’s tenure; and
• whether the size of the Board is appropriate to facilitate effective discussions and efficient
decision making.
In the circumstances where the Board believes there is a need to appoint another director, certain
procedures will be followed, including to:
• determine the skills and experience appropriate for the appointee;
• agree the process and timetable for seeking such a person, which may involve an external
search firm; and
• consider a short list of candidates for interview.
The Board currently comprises seven directors and is considered to have an appropriate balance
of skills and experience.
Comply.
The Company’s code of conduct is an ethical framework. It provides that directors, officers,
employees and contractors of the Company are expected to act with integrity and to strive to
enhance the reputation of the Company. In doing so, they must:
• act honestly, in good faith and in the best interests of the Company;
• use due care and diligence in fulfilling the functions of their position;
• not take advantage of their position for their personal gain or the gain of their associates;
• preserve the confidentiality of information received in the course of their duties, which remains
the property of the Company and can only be released or used with specific permission from
the Company;
• comply with the spirit as well as the letter of the law, and with the principles of the code; and
•
report any breaches of the code to the Company Secretary. The Company Secretary has the
responsibility to arrange an investigation and to advise the relevant employee of the outcome
and actions implemented.
No
Recommendation
Compliance or Explanation for Non-compliance
3 .2
3 .3
3 .4
Establish a policy concerning diversity
and disclose the policy or a summary
of that policy. The policy should include
requirements for the Board to establish
measurable objectives for achieving
gender diversity and for the Board to
assess annually both the objectives and
progress in achieving them.
Disclose the measurable objectives
for achieving gender diversity set by
the Board and its progress towards
achieving them.
Disclose the proportion of women
employees in the whole organisation,
women in senior executive positions
and women on the Board.
3 .5
Provide the information indicated in the
Guide to reporting on Principle 3.
Do not comply.
The Board is aware of the benefits that come with gender diversity in the workforce, but due to the
Company’s size and nature of operations, has not yet established a diversity policy or measurable
objectives for achieving gender diversity.
Do not comply.
refer to 3.2.
Comply.
Description
Whole Group
Senior executives
Board members
Comply.
Number of
women
2014
Proportion of
women
2014
10
1
0
3%
8%
0%
The Company’s code of conduct is published on the Company’s website under Corporate
Governance.
4 .1
The Board should establish an audit
committee.
Comply.
The Company has an Audit Committee.
The Board has established the Committee primarily to assist with fulfilling the Board’s accounting
and reporting responsibilities, and to maintain oversight of the external audit arrangements.
4 .2
Structure the audit committee so that it:
Comply.
• 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.
The Audit Committee comprises Pablo Vergara del Carril (non-executive director and Committee
Chairman), robert Trzebski (independent non-executive director), and Wayne Hubert (independent
non-executive director).
The members of the Audit Committee possess the requisite financial expertise and industry
experience necessary to effectively carry out the Committee’s mandate.
The composition of the Committee has remained unchanged throughout the year and at the date
of this statement.
4 .3
The Audit Committee should have a
formal charter.
Comply.
The Audit Committee has a charter approved by the Board. Its main responsibilities include:
•
•
•
•
reviewing half yearly and preliminary financial reports and other financial information distributed
externally;
reviewing the implementation of major accounting changes;
reviewing the adequacy of the reporting and accounting controls of the Company;
reviewing the results and findings of the external auditor, the adequacy of accounting and
financial controls, and monitoring the implementation of any recommendations made;
• considering whether non-audit services provided by the external auditor are consistent with
maintaining the external auditor’s independence and, if non-audit services are provided,
reporting to the Board on whether the Committee is satisfied that the auditor’s independence
has not been compromised;
• determining the independence and effectiveness of the external auditor;
• making recommendations to the Board on the appointment, replacement and remuneration of
the external auditor;
•
reviewing the scope of the external audit, including identified areas of risk; and
• annually monitoring the performance of the external auditor.
The Board has retained responsibility for reviewing risk management and internal control systems.
Audit Committee meetings are also attended by the external auditors and management
representatives as required.
63
2014 ANNUAL REPORT No
Recommendation
Compliance or Explanation for Non-compliance
4 .4
Provide the information indicated in the
Guide to reporting on Principle 4.
5 .1
and
5 .2
6 .1
and
6 .2
7 .1
7 .2
Establish written policies designed to
ensure compliance with ASX Listing
rule disclosure requirements and
to ensure accountability at a senior
executive level for that compliance and
disclose those policies or a summary.
Provide the information indicated in the
Guide to reporting on Principle 5.
Design a communications policy for
promoting effective communication with
shareholders and encouraging their
participation at general meetings and
disclose the policy or a summary of the
policy.
Provide the information indicated in the
Guide to reporting on Principle 6.
Establish policies for the oversight and
management of material business
risks and disclose a summary of those
policies.
The Board should require management
to design and implement a risk
management and internal control
system to manage the company’s
material business risks and report to
it on whether those risks are being
managed effectively. The Board should
disclose that management has reported
to it as to the effectiveness of the
Company’s management of its material
business risks.
Comply.
A copy of the Audit Committee Charter can be found on the Company’s website.
Details of the Committee members’ qualifications and attendance at Audit Committee meetings
are set out in the Directors’ report.
Should a change in auditor be considered necessary, a formal tendering process will be
undertaken. The Committee will identify the attributes required of an auditor and ensure that
prospective auditors have been provided with a sufficiently detailed understanding of the
Company, its operations, its key personnel and any other information that will have a direct bearing
on each firm’s ability to develop an appropriate proposal and fee estimate.
The Committee and the Board will consider the appointment in conjunction with senior
management.
In selecting an external auditor, particular consideration will be given to determining whether the
fee quoted is sufficient for the work required, that the work is to be undertaken by people with an
appropriate level of seniority, skill and knowledge and whether the work proposed is sufficient to
meet the Company’s needs and expectations.
The audit engagement partner will be rotated periodically, as required by the Corporations Act.
Comply.
The Company has a Continuous Disclosure Policy, which is available on the Company’s website.
The policy promotes timely and balanced disclosure of material information concerning the
Company.
Comply.
The Company has a Shareholder Communications Policy, which is available on the Company’s
website.
The Board aims to ensure that the shareholders are well informed of the Company’s activities.
Annual reports, quarterly reports and notices of general meetings are posted on the Company’s
website, along with other announcements made to the ASX.
The Board encourages full participation of shareholders at annual general meetings. Shareholders
who are unable to attend are encouraged to lodge proxy appointments in advance of the meeting.
A representative of the auditor attends each annual general meeting to answer any questions
concerning the audit of the Group and the contents of the auditor’s report.
Comply.
The Company recognises the importance of risk management, and has adopted a risk
Management and Internal Compliance and Control policy which describes the role and
accountabilities of management and of the Board.
Comply.
Management determines the Company’s risk profile and is responsible for identifying emerging
risks and formulating risk management strategies to manage identified risks. Since the year-end,
the Company has been formalising its processes for documenting the Group’s risk profile.
The Board seeks external advice when considering new or significant transactions, so that risks
can be identified and addressed in a timely manner.
Key elements of the Group’s internal control systems include:
•
the code of conduct, which sets out an ethical framework for directors, officers, employees
and contractors in the conduct of the Group’s business;
• financial reporting and budgeting systems, to provide timely, relevant and reliable information
to management and the Board; and
• clearly defined guidelines for capital expenditure.
Management provides directors and officers with a weekly and monthly report discussing
operations and material business risks the Group is currently facing and details how they are being
effectively managed.
64
No
Recommendation
Compliance or Explanation for Non-compliance
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.
7 .4
Provide the information indicated in the
Guide to reporting on Principle 7.
Comply.
The Board requires that the Chief Operating Officer and Finance Managers of both South America
and Australia annually confirm in writing that the declaration provided in accordance with section
295A of the Corporations Act 2001 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. The Board has received such a confirmation from the Chief Operating
Officer and both Finance Managers in respect of this financial year.
Comply.
The Company’s risk Management and Internal Compliance and Control Policy is available on the
Company’s website.
8 .1
Establish a remuneration committee
Do not comply.
Due to the size of the Company, it is more efficient for the full Board to review remuneration policy
matters.
The Board considers:
• executive remuneration and incentive policies;
•
the Company’s recruitment, retention and termination policies and procedure for senior
management;
• superannuation arrangements; and
•
the remuneration of executive directors, with Mr Kasaneva excusing himself from the
deliberations.
8 .2
Structure the remuneration committee
so that it:
refer to 8.1 - not applicable.
• consists of a majority of
independent directors
•
is chaired by an independent chair
• has at least three members
8 .3
Clearly distinguish the structure of non-
executive directors’ remuneration from
that of executive directors and senior
executives.
8 .4
Provide the information indicated in the
Guide to reporting on Principle 8.
Comply.
The structure of non-executive directors’ remuneration is clearly distinguished from the structure
of executive director and senior management remuneration, in that non-executive directors’
remuneration is not linked to the performance of the Group.
remuneration of non-executive directors is determined within the maximum amount approved by
shareholders from time to time.
The remuneration report contained in the Directors’ report details the remuneration of Directors
and senior executives.
Comply.
The non-executive directors receive no retirement benefits, other than statutory superannuation
contributions for Australian resident directors.
The Company has no equity based remuneration schemes, therefore employees cannot enter into
transactions which limit the economic risk of their unvested entitlements.
65
2014 ANNUAL REPORT Statement of Issued Capital
As at 31 August 2014 the total issued capital of Austral Gold Limited was 170,831,137 ordinary shares. 170,831,137 shares were quoted on
the Australian Securities Exchange under the code AGD. The only shares of the Company on issue are fully paid ordinary shares. None of these
shares are restricted securities or securities subject to voluntary escrow 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,
by proxy, by attorney or by representative shall have one vote. On a poll, every member present in person, by proxy, by attorney or by
representative shall have one vote for every share held.
As at 31 August 2014, there exist 140,949 unlisted options as set out below:
No of options
140,949
Exercise Price
AU$0.30
Expiry Date
15 Nov 2016
No of Holders
1
Options do not carry any voting rights.
These options were issued to Chad Williams, a consultant providing financial advisory and corporate finance services to the Group.
Distribution of fully paid ordinary shares
as at 31 August 2014
Size of Holding
1 – 100
101 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 50,000
50,001 – 100,000
>100,001
Holders
Shares held
% of issued
capital
188
427
271
80
55
18
26
9,365
236,127
722,996
651,711
1,247,331
1,221,072
166,742,535
1,065
170,831,137
0.01
0.14
0.42
0.38
0.73
0.71
97.61
100 .00
The number of members holding less than a marketable parcel of 4,167 ordinary shares (based on a market price of AUD $0.12 on 31 August
2014) is 853. They hold a total of 807,707 ordinary shares.
Substantial Shareholders
The Company has been notified of the following substantial shareholdings as at 24 September 2014:
Registered Holder
Citicorp Nominees
Beneficial Holder
Inversiones Financieras Del SUr SA (IFISA)
HSBC Custody Nominees
Inversiones Financieras Del SUr SA (IFISA)
HSBC Custody Nominees
Guanaco Capital Holding Corp
Citicorp Nominees
Eduardo Sergio Elsztain
Shares Held
115,066,915
775,500
24,289,330
4,686,206
144,817,951
66
Top twenty shareholders as at 31 August 2014
Rank Name
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
HSBC CUSTODy NOMINEES (AUSTrALIA) LIMITED LIMITED
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