AVZ Minerals Limited
ABN 81 125 176 703
Annual Report 2015
Contents
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
Corporate Governance Statement
Schedule of Mineral Tenements
1
2
10
11
12
13
14
15
34
35
37
39
45
AVZ Minerals Limited |
Corporate Directory
Directors
Patrick Flint (Non-Executive Chairman)
Klaus Eckhof (Managing Director)
Gary Steinepreis (Non-Executive Director)
Company Secretary
Gary Steinepreis
Principal Place of Business
& Registered Office
Level 1
33 Ord Street
WEST PERTH
Western Australia 6005
Telephone: (08) 9420 9300
Facsimile: (08) 9420 9399
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
APPLECROSS WA 6153
Telephone: (08) 9315 2333
Facsimile: (08) 9315 2233
Email: registrar@securitytransfer.com.au
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
SUBIACO WA 6008
Telephone: (08) 6382 4600
Securities Exchange Listing
Australian Securities Exchange
(Home branch: Perth, Western Australia)
ASX Code: AVZ
Website Address
www.avzminerals.com.au
AVZ Minerals Limited | 1
Directors’ Report
Your directors submit their report on the consolidated entity consisting of AVZ Minerals Limited (ASX: AVZ)
(“AVZ”) and the entities it controlled for the financial year ended 30 June 2015. In order to comply with the
provisions of the Corporations Act 2001, the directors report as follows:
Directors
1.
The names of directors who held office during or since the end of the year and until the date of this report are
as follows. Directors were in office for the entire period unless otherwise stated.
Patrick Flint
Klaus Eckhof
Gary Steinepreis
Non-Executive Chairman
Managing Director
Non-Executive Director
Company Secretary
2.
The Company Secretary is Gary Steinepreis.
Principal Activities
3.
The principal activity of the consolidated entity during the financial year was mineral exploration. There were
no significant changes in the nature of the consolidated entity’s principal activities during the financial year.
4. Operating Results
The loss of the consolidated entity after income tax amounted to $657,426 (2014: $1,031,442 loss).
Dividends Paid or Recommended
5.
The directors do not recommend the payment of a dividend and no amount has been paid or declared by way
of a dividend to the date of this report.
Review of Operations
6.
During the year, AVZ continued its business of mineral exploration in Namibia and AVZ is seeking new
opportunities in the exploration and mining sector. In addition to evaluating new mineral projects, the Board
will also consider business opportunities in other sectors.
The Company is primarily engaged in mineral exploration in Namibia. Activities undertaken in Namibia during
the year involved planning, on-going reporting and applying for a number of licence renewals.
The Company’s financial position, financial performance and use of funds information for the financial year is
provided in the financial statements that follow this Directors’ Report.
As an exploration entity, the Company has no operating revenue or earnings and consequently the
Company’s performance cannot be gauged by reference to those measures. Instead, the Directors’ consider
the Company’s performance based on the success of exploration activity, acquisition of additional prospective
mineral interests and, in general, the value added to the Company’s mineral portfolio during the course of the
financial year.
Whilst performance can be gauged by reference to market capitalisation, that measure is also subject to
numerous external factors. These external factors can be specific to the Company, generic to the mining
industry and generic to the stock market as a whole and the Board and management would only be able to
control a small number of these factors.
The Company’s business strategy for the financial year ahead and, in the foreseeable future, is to continue
exploration activity on the Company’s existing mineral projects, identify and assess new mineral project
opportunities and review development strategies where individual projects have reached a stage that allows
for such an assessment.
AVZ Minerals Limited | 2
Directors’ Report
6.
Review of Operations (continued)
Due to the inherent risky nature of the Company’s activities, the Directors are unable to comment on the
likely results or success of these strategies.
The Company’s activities are also subject to numerous risks, mostly outside the Board’s and management’s
control. These risks can be specific to the Company, generic to the mining industry and generic to the stock
market as a whole. The key risks, expressed in summary form, affecting the Company and its future
performance include but are not limited to:
geological and technical risk posed to exploration and commercial exploitation success;
security of tenure including licence renewal (no assurance can be given that the licence renewals and
licence applications that have been submitted will be successful), and inability to obtain regulatory or
landowner consents;
change in commodity prices and market conditions;
environmental and occupational health and safety risks;
government policy changes;
retention of key staff; and
capital requirement and lack of future funding.
This is not an exhaustive list of risks faced by the Company or an investment in it. There are other risks
generic to the stock market and the world economy as whole and other risks generic to the mining industry,
all of which can impact on the Company.
Significant Changes in the State of Affairs
7.
There have been no significant changes in the state of affairs of the group to the date of this report, not
otherwise disclosed in this report.
Events Occurring after the Reporting Date
8.
There has been no matter or circumstance that has arisen that has significantly affected, or may significantly
affect:
the group’s operations in future financial years, or
the results of those operations in future financial years, or
the group’s state of affairs in future financial years.
Likely Developments and Expected Results of Operations
9.
The group will continue its mineral exploration activity at and around its exploration projects as well as
seeking new opportunities in the exploration and mining sector with the objective of identifying commercial
resources.
10. Environmental Regulation
The group is aware of its environmental obligations with regards to its exploration activities and ensures that
it complies with all regulations when carrying out any exploration work.
AVZ Minerals Limited | 3
Directors’ Report
11.
this report)
Information on Directors and Company Secretary (including Director’s interests at the date of
Patrick Flint
Qualifications
Experience
Independent Non-Executive Chairman
B.Com, CA, MAICD
Mr Flint has been involved in the resources sector as a director or company
secretary of ASX and Toronto Stock Exchange listed companies with mineral
projects in Australia, Africa and Asia for the last 20 years. He is a Chartered
Accountant and has significant experience with project acquisitions, joint venture
negotiations and management, fundraisings and corporate matters.
Interest in Securities
Fully Paid Ordinary Shares
Performance Rights
4,000,000
4,000,000
Directorships in last 3 years
Nemex Resources Ltd (since 8 September 2010)
Explaurum Limited (since 27 November 2013)
Former Directorships in the Last Three Years:
Mount Magnet South NL (15 April 2011 to 22 December 2014)
Klaus Eckhof
Qualifications
Experience
Managing Director
Dip. Geol. TU, AusIMM
Mr Eckhof is a geologist with more than 20 years of experience identifying, exploring
and developing mineral deposits around the world. Mr Eckhof worked for Mount
Edon Gold Mines Ltd as Business Development Manager before it was acquired by
Canadian mining company Teck. In 1994, he founded Spinifex Gold Ltd and Lafayette
Mining Ltd, both of which successfully delineated gold and base metal deposits. In late
2003, Mr Eckhof founded Moto Goldmines which acquired the Moto Gold Project in
the Democratic Republic of the Congo. There, Mr Eckhof and his team delineated
more than 20 million ounces of gold and delivered a feasibility study within four
years from the commencement of exploration. Moto Goldmines was subsequently
acquired by Randgold Resources who poured first gold in September 2013.
Interest in Securities
Fully Paid Ordinary Shares
8,000,000
Directorships in last 3 years
Burey Gold Ltd (since 6 February 2012)
Cardinal Resources Limited (appointed 1 February 2013)
Former Directorships in the Last Three Years:
Carnavale Resources Ltd (1 January 2008 to 20 July 2015)
Panex Resources Inc. (30 May 2006 to 24 July 2014)
Explaurum Limited (24 August 2011 to 4 October 2013)
Gary Steinepreis
Qualifications
Non-Executive Director / Company Secretary
B.Com, CA
Experience
Mr Steinepreis is a Chartered Accountant and holds a Bachelor of Commerce
Degree from the University of Western Australia.
Interest in Securities
Fully Paid Ordinary Shares
20,495,533
AVZ Minerals Limited | 4
Directors’ Report
11.
this report) (continued)
Information on Directors and Company Secretary (including Director’s interests at the date of
Directorships in last 3 years
Monto Minerals Ltd (since 16 June 2009)
Norseman Gold Plc (since 3 December 2007)
New Horizon Coal Ltd (since 4 June 2010)
Former Directorships in the Last Three Years:
Intercept Minerals Ltd (8 April 2014 to 2 February 2015)
WAG Limited (2 November 2006 to 23 May 2013)
Audited Remuneration Report
12.
This report details the nature and amount of remuneration for all key management personnel of AVZ Minerals
Limited and its subsidiaries. The information provided in this remuneration report has been audited as required
by section 308(C) of the Corporations Act 2001. For the purposes of this report, key management personnel of
the Group are defined as those persons having authority and responsibility for planning, directing and
controlling the major activities of the Company and the Group, directly or indirectly, including any Director
(whether executive or otherwise) of the Group.
The individuals included in this report are:
Patrick Flint
Klaus Eckhof
Gary Steinepreis
Non-Executive Chairman
Managing Director
Non-Executive Director
Appointment date:
12 May 2014
12 May 2014
30 November 2012
All of the key management personnel held their positions for the entire financial year and up to the date of the
report except as noted above.
Remuneration Policy
(a)
The remuneration policy of AVZ Minerals Limited has been designed to align director objectives with
shareholder and business objectives by providing a fixed remuneration component which is assessed on an
annual basis in line with market rates. By providing components of remuneration that are indirectly linked to
share price appreciation (in the form of options and/or performance rights), executive, business and
shareholder objectives are aligned. The board of AVZ Minerals Limited believes the remuneration policy to be
appropriate and effective in its ability to attract and retain the best directors to run and manage the company,
as well as create goal congruence between directors and shareholders. The board’s policy for determining the
nature and amount of remuneration for board members is as follows:
(i)
Executive Directors & Other Key Management Personnel
The remuneration policy and the relevant terms and conditions has been developed by the full Board of
Directors as the company does not have a Remuneration Committee due to the size of the Company
and the Board. In determining competitive remuneration rates, the Board reviews local and international
trends among comparative companies and industry generally. It examines terms and conditions for
employee incentive schemes, benefit plans and share plans. Reviews are performed to confirm that
executive remuneration is in line with market practice and is reasonable in the context of Australian
executive reward practices.
If entitled, the executive directors and other key management personnel receive a superannuation
guarantee contribution required by the government, which is currently 9.25% and do not receive any
other retirement benefits.
The Company is an exploration entity, and therefore speculative in terms of performance. Consistent
with attracting and retaining talented executives, directors and senior executives are paid market rates
associated with individuals in similar positions, within the same industry.
(a)
Remuneration Policy (continued)
The Managing Director, Mr Eckhof, is responsible for managing the Company’s mineral projects in
Namibia, as well as identifying new project opportunities. Mr Eckhof will receive annual remuneration
of $180,000 through a consulting letter agreement with an entity which will provide his services. The
arrangement can be terminated by either party on a month’s notice. There are no other service or
consulting agreements in place with key management personnel. At this stage due to the size of the
Company, no remuneration consultants have been used. The Board’s remuneration policies are outlined
below:
AVZ Minerals Limited | 5
Directors’ Report
Fixed Remuneration
All executives receive a base cash salary which is based on factors such as length of service and
experience as well as other fringe benefits. If entitled, all executives also receive a superannuation
guarantee contribution required by the government, which is currently 9.25% and do not receive any
other retirement benefits.
Short-term Incentives (STI)
Under the group’s current remuneration policy, executives can from time to time receive short-term
incentives in the form of cash bonuses. However, as the company is awaiting renewal of its licences in
Namibia and evaluating new project opportunities, there are currently no short-term incentives
anticipated and therefore no key performance targets determined. Pending the securing of new
projects, the Board will determine the criteria of eligibility for short-term incentives and set key
performance indicators to appropriately align shareholder wealth and executive remuneration.
Long-term Incentives (LTI)
Executives are encouraged by the Board to hold shares in the company and it is therefore the Group’s
objective to provide incentives for participants to partake in the future growth of the group and, upon
becoming shareholders in the Company, to participate in the group’s profits and dividends that may be
realised in future years.
The Board considers that this equity performance linked remuneration structure is effective in aligning
the long-term interests of group executives and shareholders as there exists a direct correlation
between shareholder wealth and executive remuneration.
(ii) Non-Executive Directors
The board policy is to remunerate non-executive directors at market rates for comparable companies
for time, commitment and responsibilities. In determining competitive remuneration rates, the Board
review local and international trends among comparative companies and the industry generally.
Typically the Company will compare non-executive remuneration to companies with similar market
capitalisations in the exploration and resource development business group.
These on-going reviews are performed to confirm that non-executive remuneration is in line with
market practice and is reasonable in context of Australian executive reward practices. Non-executive
directors’ fees are determined within an aggregate directors’ fee pool limit, which will be periodically
recommended for approval by shareholders. The maximum currently stands at $250,000 per annum as
per the Group’s constitution and may be varied by ordinary resolution of the shareholders in general
meeting. Fees for non-executive directors are not linked to the performance of the Company.
However, to align directors’ interests with shareholder interests, the directors are encouraged to hold
shares in the company and from time to time, non-executive’s may receive options or performance
rights subject to shareholder approval, to further align directors’ interests with shareholders.
The non-executive remuneration is set at $3,000 per month for the Chairman, $2,000 per month for
Directors and a daily rate is payable on additional work performed.
(b)
Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration
No relationship exists between the Company performance, earnings, shareholder wealth and Directors’ and
Executive Remuneration for this financial period and the previous 4 financial periods. With the exception of the
Managing Director, no executive is receiving any base remuneration however, this will be reassessed should the
Company secure a new project. No remuneration is currently performance related.
Voting and comments made at the company’s 2014 Annual General Meeting
At the 2014 Annual general Meeting the Company remuneration report was passed by the requisite majority of
shareholders (100% by a show of hands).
AVZ Minerals Limited | 6
Directors’ Report
(c) Details of Key Management Personnel Remuneration
2015
Name
Executive Director:
Klaus Eckhof
Non-Executive
Directors:
Gary Steinepreis
Patrick Flint
TOTAL
2014
Name
Executive Director:
Klaus Eckhof 2
Non-Executive
Directors:
Roger Steinepreis 1
David Riekie 1
Gary Steinepreis
Patrick Flint 2
TOTAL
Short term employee
benefits
Salary
$
-
Consulting
fees
$
180,000
Post-employment benefits
Superannuation
$
-
Share
Based
Payment
Total
$
-
180,000
-
32,877
32,877
26,000
-
206,000
-
3,123
3,123
-
17,200
17,200
26,000
53,200
259,200
Short term employee
benefits
Salary
$
-
-
-
-
4,517
4,517
Consulting
fees
$
25,000
20,000
20,000
24,000
-
89,000
Post-
employment
benefits
Superannuation
$
-
-
-
-
418
418
Total
$
25,000
20,000
20,000
24,000
4,935
93,935
1: Mr David Riekie and Mr Roger Steinepreis resigned as Non-Executive Directors on 12 May 2014.
2: Mr Klaus Eckhof and Mr Patrick Flint were appointed on 12 May 2014.
(d) Key Management Personnel Compensation
(i)
No options were provided as remuneration during the year.
Options provided as remuneration and shares issued on exercise of such options
Loans to key management personnel
(ii)
No loans were made to any director or other key management personnel of the group, including their
personally related parties during the financial year.
(iii) Other transactions with key management personnel
Transactions with Director Related Parties
The following transactions occurred with related parties:
Payment to Steinepreis Paganin for legal fees
Payment to Ascent Capital – rent
Outstanding balances arising from recharges/purchases with Director Related Parties
Current payables (purchases)
Consolidated
2015
$
-
-
-
2014
$
200
26,250
3,045
Terms and conditions of related party transactions
Transactions between related parties are on commercial terms and conditions, no more favourable than those
available to other parties unless otherwise stated.
AVZ Minerals Limited | 7
Directors’ Report
Ordinary shareholdings
(v)
The number of shares in the company held during the financial year by each director of AVZ Minerals
Limited and other key management personnel of the group, including their personally related parties, are
set out below. There were no shares granted during the period as remuneration.
Balance at the
start of the year
Placement and
entitlement issue
participation
Other Changes Balance at the end
of the year
2015
Directors of AVZ Minerals Limited
Patrick Flint
Klaus Eckhof
Gary Steinepreis
-
-
15,371,649
4,000,000
8,000,000
5,123,884
-
-
-
4,000,000
8,000,000
20,495,533
(vi)
Share-based Payments
There have been no options issued to current directors and executives as part of their remuneration.
On 8 August 2014, 4,000,000 Performance Rights were issued to Mr Flint. The Performance Rights are convertible to
ordinary shares if the closing price of the shares on the ASX is $0.015 or higher (as adjusted) for 10 consecutive
Business Days at nil consideration. These Performance Rights have a term of 3 years from the date of issue. The
Company has valued these rights using a Black-Scholes option pricing model. The volatility for these rights has been
determined to be 120% and the interest free rate at 2%. Details of the performance shares issued are as follows:
Director and
Other KMP
Number
Issued
Grant Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Underlying
Share Price on
Grant Date ($)
Total
Fair
Value ($)
%
Vested
PatrickFlint
4,000,000
08/08/2014
Nil
08/08/2017
0.008
17,200
-
This is the end of the audited remuneration report.
13. Meetings of Directors
The number of directors' meetings held during the financial year and the number of meetings attended by each
director is:
Director
P Flint
K Eckhof
G Steinepreis
Directors Meetings
Number Eligible to Attend
3
3
3
Meetings Attended
3
3
3
The company does not have a formally constituted audit committee as the board considers that the company’s
size and type of operation do not warrant such a committee.
Insurance of Officers
14.
During the financial year, AVZ Minerals Limited paid a premium of $8,666 (2014: $13,140) to insure the
directors and secretary of the company and its controlled entities.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be
brought against the officers in their capacity as officers of entities in the Group, and any other payments arising
from liabilities incurred by the officers in connection with such proceedings. This does not include such
liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the
officers of their position or of information to gain advantage for themselves or someone else or to cause
detriment to the company. It is not possible to apportion the premium between amounts relating to the
insurance against legal costs and those relating to other liabilities.
AVZ Minerals Limited | 8
Directors’ Report
Shares under Option
15.
At the date of this report, all options over unissued ordinary shares in the Company have expired. Details of
these expired shares are as follows:
Expiry
date
30 Nov 14
31 Oct 14
Exercise
price
20.0 cents
11.0 cents
Balance at
start of year
2,000,000
1,900,000
3,900,000
Cancelled/
lapsed during
the year
Balance at
end of the
year
2,000,000
1,900,000
3,900,000
-
-
-
16. Proceedings on behalf of the Company
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 any part of these proceedings. The company was not a party to any such proceedings during the year.
17. Auditor’s Independence Declaration
Section 307c of the Corporations Act 2001 requires our auditors, BDO Audit (WA) Pty Ltd, to provide the
directors of the Company with an Independence Declaration in relation to the audit of the annual report. This
Independence Declaration is set out on page 10 and forms part of this directors’ report for the year ended 30
June 2015.
18. Non-Audit Services
Details of the non-audit services provided by the Company’s external auditor BDO Audit (WA) Pty Ltd during
the year ended 30 June 2015 are outlined in the following table. Based on advice from the Company’s Audit and
Governance Committee, the Directors are satisfied that the provision of non-audit services is compatible with
the general standard of independence for auditors imposed by the Corporations Act 2001. The nature and the
scope of each type of non-audit service provided means that auditor independence was not compromised.
During the year the following fees were paid or payable for services provided by the auditor of the parent entity,
its related practices and non-related audit firms:
Taxation services
Total remuneration for other services
Consolidated
2014
$
-
-
2015
$
2,000
2,000
Signed in accordance with a resolution of the Board of Directors.
Gary Steinepreis
Non-Executive Director
West Perth
29 September 2015
AVZ Minerals Limited | 9
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY DEAN JUST TO THE DIRECTORS OF AVZ MINERALS LIMITED
As lead auditor of AVZ Minerals Limited for the year ended 30 June 2015, I declare that, to the best of
my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of AVZ Minerals Limited and the entities it controlled during the period.
Dean Just
Director
BDO Audit (WA) Pty Ltd
Perth, 29 September 2015
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the Year Ended 30 June 2015
Revenue from continuing operations
3
44,800
42,619
Note
Consolidated
2015
$
2014
$
Administrative costs
Consultancy expenses
Employee benefits expense
Occupancy expenses
Compliance and regulatory expenses
Insurance expenses
Depreciation expense
Exploration impaired
Loss before income tax
Income tax expense
(87,652)
(258,583)
(42,795)
(28,500)
(70,160)
(14,267)
(1,560)
(198,709)
(29,118)
(94,282)
(46,975)
(57,000)
(56,741)
(9,855)
(9,421)
(770,669)
(657,426)
(1,031,442)
-
-
9
10
6
Loss after income tax for the year
(657,426)
(1,031,442)
Other comprehensive income:
Items that may be reclassified to profit or loss
Exchange differences arising on translation of foreign operations
Other comprehensive income
1,695
1,695
(123,877)
(123,877)
Total comprehensive loss for the year
(655,731)
(1,155,319)
Loss for the year is attributable to:
Owners of AVZ Minerals Limited
Non-controlling interests
Total comprehensive loss for the year attributable to:
Owners of AVZ Minerals Limited
Non-controlling interests
(654,626)
(2,800)
(657,426)
(902,725)
(128,717)
(1,031,442)
(653,016)
(2,715)
(655,731)
(1,020,406)
(134,913)
(1,155,319)
Basic and diluted loss per share (cents per share)
16
(0.14)
(0.33)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction
with the accompanying notes.
AVZ Minerals Limited | 11
Consolidated Statement of Financial Position
As at 30 June 2015
Current Assets
Cash and cash equivalents
Trade and other receivables
Total Current Assets
Non-Current Assets
Property, plant and equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Total Current Liabilities
Total Liabilities
Net Assets
Note
7
8
9
Consolidated
2015
$
2014
$
1,998,037
27,402
1,986,678
29,978
2,025,439
2,016,656
4,444
5,763
4,444
2,029,883
5,763
2,022,419
11
46,279
57,017
46,279
46,279
1,983,604
57,017
57,017
1,965,402
13,996,848
661,078
(12,479,003)
2,178,923
(195,319)
13,340,115
642,268
(11,824,377)
2,158,006
(192,604)
1,983,604
1,965,402
Equity
Contributed equity
Reserves
Accumulated losses
Capital and reserves attributable to owners of AVZ Minerals Ltd
Non-controlling interests
12
14
Total Equity
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
AVZ Minerals Limited | 12
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2015
Consolidated
Contributed
Equity
Accumulated
Losses
Option
Reserve
Share-based
Payment
Reserve
$
$
$
$
Foreign
Currency
Translation
Reserve
$
Total
Non-
controlling
Interests
Total
Equity
$
$
$
Balance at 1 July 2014
Total comprehensive
income for the year:
Loss for the year
Exchange differences on
translation of foreign
operations
Transactions with owners
in their capacity as
owners:
Contributions of equity
(net of transaction costs)
Share based payment
13,340,115
(11,824,377) 1,310,448
-
(668,180)
2,158,006
(192,604) 1,965,402
-
-
-
(654,626)
-
(654,626)
656,733
-
656,733
-
-
-
-
-
-
-
-
-
-
-
-
-
(654,626)
(2,800)
(657,426)
1,610
1,610
1,610
(653,016)
85
(2,715)
1,695
(655,731)
-
17,200
17,200
-
-
-
656,733
17,200
673,933
-
-
-
656,733
17,200
673,933
Balance at 30 June 2015
13,996,848
(12,479,003) 1,310,448
17,200
(666,570)
2,178,923
(195,319) 1,983,604
12,941,083
(10,833,700) 1,310,448
-
(550,499)
2,867,332
(145,643) 2,721,689
Balance at 1 July 2013
Total comprehensive
income for the year:
Loss for the year
Exchange differences on
translation of foreign
operations
Transactions with owners
in their capacity as
owners:
Contributions of equity
(net of transaction costs)
-
-
-
(990,677)
-
(990,677)
399,032
399,032
-
-
-
-
-
-
-
Balance at 30 June 2014
13,340,115
(11,824,377) 1,310,448
-
-
-
-
-
-
-
(990,677)
(40,765) (1,031,442)
(117,681)
(117,681)
(117,681)
(1,108,358)
(6,196)
(123,877)
(46,961) (1,155,319)
-
-
399,032
399,032
-
-
399,032
399,032
(668,180)
2,158,006
(192,604) 1,965,402
The above consolidated statement of changes in equity should be read in conjunction with the
accompanying notes.
AVZ Minerals Limited | 13
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2015
Note
Consolidated
2015
$
2014
$
Cash Flows from Operating Activities
Payments to suppliers and employees (inclusive of GST)
Interest received
(491,464)
44,800
(219,480)
42,619
Net cash outflow from operating activities
17
(446,664)
(176,861)
Cash Flows from Investing Activities
Payments for exploration and evaluation
(198,709)
(70,236)
Net cash outflow from investing activities
(198,709)
(70,236)
Cash Flows from Financing Activities
Proceeds from issue of shares and other equity securities
Share issue transaction costs
681,854
(25,122)
428,001
(28,968)
Net cash inflow from financing activities
656,732
399,033
Net increase in cash and cash equivalents
11,359
151,936
Cash and cash equivalents at the start of the year
1,986,678
1,834,742
Cash and cash equivalents at the end of the year
7
1,998,037
1,986,678
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
AVZ Minerals Limited | 14
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
1.
Summary of Significant Accounting Policies
The principal accounting policies adopted in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated. These financial statements
present the financial information for AVZ Minerals Limited as a consolidated entity consisting of AVZ Minerals Limited
and the entities is controlled throughout the year (‘group’ or ‘consolidated entity’).
Basis of Preparation
(a)
The financial report is a general purpose financial report which has been prepared in accordance with the
requirements of Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting
Standards Board, Accounting Interpretations and the Corporations Act 2001.
(i)
(ii)
(b)
Statement of Compliance
The financial report complies with Australian Accounting Standards which include International Financial
Reporting Standards as adopted in Australia. Compliance with these standards ensures that the consolidated
financial statements and notes as presented comply with International Financial Reporting Standards (IFRS).
Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the
revaluation of available for sale financial assets.
Basis of Consolidation
Subsidiaries
(i)
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of AVZ Minerals
NL as at 30 June 2015 and the results of all subsidiaries for the year then ended. AVZ Minerals NL and its
subsidiaries together are referred to in this financial report as the group or the consolidated entity.
Subsidiaries are all entities (including structured entities) 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 Group. They are de-
consolidated from the date that control ceases.
Minority interests, being that portion of the profit or loss and net assets of subsidiaries attributable to equity interests held
by persons outside the Consolidated Entity, are shown separately within the Equity section of the consolidated Statement
of Financial Position and in the consolidated Statement of Profit or Loss and Other Comprehensive Income.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
(ii)
Joint arrangements
Under AASB 11 Joint Arrangements investments in joint arrangements are classified as either joint operations
or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather
than the legal structure of the joint arrangement.
(iii) Joint operations
The group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its
share of any jointly held or incurred assets, liabilities, revenues and expenses.
(iv) Joint ventures
Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in
the consolidated statement of financial position.
Segment reporting
(c)
Operating segments are reported in a manner that is 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.
AVZ Minerals Limited | 15
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
1.
Summary of Significant Accounting Policies (continued)
Revenue recognition
(d)
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are
net of returns, trade allowances and amounts collected on behalf of third parties. Revenue is recognised for the
business activities as follows:
Interest income
(i)
Interest income is recognised as the interest accrues (using the effective interest method, which is the rate that
exactly discounts estimated future cash receipts through the expected life of the financial instrument) to the
net carrying amount of the financial asset.
Income tax
(e)
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on
the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable
to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial
statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when
the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted
for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable
temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary
differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised
in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the
time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are
recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses. Deferred tax assets and liabilities are offset
when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances
relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also
recognised directly in equity.
Impairment of assets
(f)
At each reporting date the group assesses whether there is any indication that an asset may be impaired. An
impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of
assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows
which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units).
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the
impairment at each reporting date.
Cash and cash equivalents
(g)
For the purpose of presentation of the statement of cash flows, cash and cash equivalents includes cash on hand,
deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of
three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant
risk of changes in value, and bank overdrafts.
Trade and other receivables
(h)
Trade and other receivables are initially recognised initially at fair value and subsequently measured at amortised costs
using the effective interest method, less provision for impairment. Trade and other receivables are generally due for
settlement within 30 days. Collectability of trade receivables is reviewed on an ongoing basis. Amounts that are
known to be uncollectible are written off by reducing the carrying amount directly.
AVZ Minerals Limited | 16
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
1.
Summary of Significant Accounting Policies (continued)
Exploration and evaluation expenditure
(i)
Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of
interest. These costs are carried forward only if they relate to an area of interest for which rights of tenure are
current and in respect of which:
Such costs are expected to be recouped through successful development and exploitation or from sale of the
area: or
Exploration and evaluation activities in the area have not, at balance date, reached a stage which permits a
reasonable assessment of the existence or otherwise of economically recoverable reserves, and active
operations in, or relating to, the area are continuing.
Accumulated costs in respect of areas of interest which are abandoned are written off in full against profit in the year
in which the decision to abandon the area is made. 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.
Property, plant and equipment
(j)
All property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying
amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the company and the cost of the item can be measured reliably. All other repairs
and maintenance are charged to the statement of profit or loss and other comprehensive income during the financial
period in which they are incurred.
Depreciation on Australian assets is calculated using the straight line method (Namibian assets using diminishing value)
to allocate their cost, net of their residual values, over their estimated useful lives, as follows:
Plant and equipment - office
Furniture and equipment - office
Plant and equipment – field (Australia)
Plant and equipment – field (Namibia)
Motor Vehicles (Namibia)
40.0%
20.0%
20.0%
22.5%
22.5%
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date. An asset’s
carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount (note 1(f)). Gains and losses on disposals are determined by comparing proceeds
with carrying amount. These are included in the statement of profit or loss and other comprehensive income.
Trade and other payables
(k)
These amounts represent liabilities for goods and services provided to the company prior to the end of financial year
which are unpaid. Trade and other payables are presented as current liabilities unless payment is not due within 12
months.
Provisions
(l)
Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it
is probable that an outflow of resources will be required to settle the obligation and the amount has been reliably
estimated. Provisions are not recognised for future operating losses. Provisions are measured at the present value of
management’s best estimate of the expenditure required to settle the present obligation at the balance date. The
discount rate used to determine the present value reflects current market assessments of the time value of money
and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest
expense.
AVZ Minerals Limited | 17
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
1.
Summary of Significant Accounting Policies (continued)
(m)
Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12
months of the reporting date are recognised in respect of employee’s services up to the end of the reporting period
and are measured at the amounts expected to be paid when liabilities are settled. The liability for annual leave is
recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as
other payables.
(ii) Long service leave
The liability for long service leave and annual leave which is not expected to be settled within 12 months after the end
of the period in which the employees render the related service 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 corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows.
The obligations are presented as current liabilities in the statement of financial position if the entity does not have an
unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the
actual settlement is expected to occur.
(iii) Share-based payments
The company provides benefits to employees (including directors) of the company in the form of share-based payment
transactions, whereby employees render services in exchange for shares or rights over shares (‘equity-settled
transactions’).The cost of these equity-settled transactions with employees is measured by reference to the fair value
at the date at which they are granted.
The fair value is determined using an appropriate option pricing model that takes into account the exercise price, the
term of the option, the impact of dilution, the share price at grant date and expected volatility of the underlying share,
the expected dividend yield and the risk free interest rate for the term of the option. In valuing equity-settled
transactions, no account is taken of any performance conditions, other than conditions linked to the price of shares of
AVZ Minerals Limited (‘market conditions’).
(n) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in
equity as a deduction, net of tax, from the proceeds. Incremental costs directly attributable to the issue of new shares
for the acquisition of a business are not included in the cost of the acquisition as part of the purchase consideration.
(o)
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit/loss attributable to equity holders of the company
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.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the after tax effect of interest and other financing costs associated with the dilutive potential ordinary shares
and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive
potential ordinary shares.
(p) Goods and services tax (GST) and Value added tax (VAT)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as
part of the expense. Revenue, expenses and assets incurred in Namibia are recorded inclusive of VAT and no
receivable or payable is recorded as the recoverability of the VAT from the relevant taxation authority is uncertain.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement
of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from
investing or financing activities which are recoverable from, or payable to the taxation authority, are presented as
operating cash flows.
AVZ Minerals Limited | 18
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
1.
(q)
Summary of Significant Accounting Policies (continued)
Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the group’s entities are measured using the currency of the
primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial
statements are presented in Australian dollars, which is AVZ Mineral’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency 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 year end exchange rates of monetary assets and liabilities denominated in foreign currencies
are recognised in the statement of profit or loss and other comprehensive income, except when they are deferred in
equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net
investment in a foreign operation.
Translation differences on financial assets and liabilities carried at fair value are reported as part of the fair value gain
or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value
through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on
non-monetary financial assets such as equities classified as available for sale financial assets are included in the fair
value reserve in equity.
(iii) Group companies
Assets and liabilities for each statement of financial position presented are translated at the closing rate at the
The results and financial position of all the group entities (none of which has the currency of a hyperinflationary
economy) that have a functional currency different from the presentation currency are translated into the
presentation currency as follows:
date of that statement of financial position
Income and expenses for the statement of profit or loss and other comprehensive income are translated at
average exchange rates (unless this is not a reasonable approximation of the cumulative effect of the rates prevailing
on the transaction dates, in which case income and expenses are translated at the dates of the transactions), and
All resulting exchange differences are recognised as a separate component of comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of
borrowings and other financial instruments designated as hedges of such investments, are recognised in other
comprehensive income. When a foreign operation is sold or any borrowings forming part of the net investment are
repaid, a proportionate share of such exchange differences are recognised in the statement of profit or loss and other
comprehensive income, as part of the gain or loss on sale where applicable. Goodwill and fair value adjustments
arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities and translated at
the closing rate.
AVZ Minerals Limited | 19
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
1.
Summary of Significant Accounting Policies (continued)
(r) New accounting standards and interpretations
The following new accounting standards and interpretations have been issued, but are not mandatory for financial year
ended 30 June 2015. They have not been adopted in preparing the financial statements for the year ended 30 June
2015 and are expected to impact the entity in the period of initial application. The Group’s assessment of the impact
of these new standards and interpretations is set out below.
AASB 9 Financial Instruments. This standard and its consequential amendments are applicable to annual
•
reporting periods beginning on or after 1 January 2018 and completes phases I and III of the IASB’s project to replace
IAS 39 (AASB 139) ‘Financial Instruments: Recognition and Measurement’. This standard introduces new classification
and measurement models for financial assets, using a single approach to determine whether a financial asset is
measured at amortised cost or fair value. The accounting for financial liabilities continues to be classified and
measured in accordance with AASB 139, with one exception, being that the portion of a change of fair value relating
to the entity’s own credit risk is to be presented in other comprehensive income unless it would create an accounting
mismatch. Chapter 6 ‘Hedge Accounting’ supersedes the general hedge accounting requirements in AASB 139 and
provides a new simpler approach to hedge accounting that is intended to more closely align with risk management
activities undertaken by entities when hedging financial and non-financial risks. The consolidated entity will adopt this
standard and the amendments from 1 July 2018. As the entity does not have any financial liabilities measured at fair
value through profit or loss, the amendments will not require any changes in fair value attributable to liabilities.
AASB 15 Revenue from Contracts with Customers. This standard is applicable to annual reporting periods
•
beginning on or after 1 January 2018. The nature of the change is that an entity will recognise revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. This means that revenue will be recognised when
control of goods or services is transferred, rather than on transfer of risks and rewards as is currently the case under
IAS 18 Revenue. The Group is assessing the potential impact on its consolidated financial statements resulting from
the application of AASB 15 and due to the replacement of AASB 111. As the entity does not have any revenue from
contracts with customers, the amendments will not require any changes.
AASB 2015-1 Amendments to Australian Accounting Standards - Annual Improvements to Australian
•
Accounting Standards 2012-2014 Cycle (issued January 2015) – Effective for periods beginning on or after 1 January
2016. These amendments are applicable to annual periods beginning on or after 1 January 2016. The changes affect
two standards as follows: AASB 5 Non-current Assets Held for Sale and Discontinued Operations. The update
clarifies that if assets/disposal groups are reclassified from being held for sale to being held for distribution to owner
or vice versa, this is considered to be a continuation of the original plan for disposal. It also clarifies that if assets cease
to be held for distribution to owners, the usual AASB 5 requirements for assets that cease to be held for sale will
apply. The update also affects AASB 119: Employee benefits by clarifying that high quality corporate bonds or national
government bonds used to determine the discount rate for long service leave and defined benefit liabilities must be
denominated in the same currency as the benefits that will be paid to the employee.
Parent Entity Financial Information
(s)
The financial information for the parent entity, AVZ Minerals Limited, disclosed in note 23 has been prepared on the
same basis as the consolidated financial statements.
AVZ Minerals Limited | 20
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
2.
Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable
under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting
accounting estimates and judgements may differ from the related actual results and may have a significant effect on the
carrying amount of assets and liabilities within the next financial year and on the amounts recognised in the financial
statements. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below.
Impairment of deferred exploration and evaluation expenditure
(a)
Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current. These
costs are carried forward in respect of an area that has not at balance date reached a stage that permits reasonable
assessment of the existence of economically recoverable reserves. The Board and Management have assessed the
carrying value of the Exploration and Evaluation Expenditure to be impaired. Refer to the accounting policy stated in
note 1(i) and to note 10 for movements in the exploration and evaluation expenditure balance.
Share based payment transactions
(b)
The group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by an internal valuation using a Black-
Scholes option pricing model.
3.
Revenue
From continuing operations
Interest received
Total revenue from other revenue
4.
Loss for the Year
Depreciation of non-current assets
Plant and equipment - office
Plant and equipment - field
Total depreciation
Share-Based Payment Expense
5.
Auditor’s Remuneration
Remuneration of the auditors of the consolidated entity for:
Auditing or reviewing the financial statements:
BDO Audit (WA) Pty Ltd
-
Non-assurance services
Total remuneration of auditors
Consolidated
2015
$
2014
$
44,800
44,800
42,619
42,619
1,560
-
1,560
17,200
17,200
2,778
6,643
9,421
-
-
35,302
2,000
37,302
32,698
-
32,698
AVZ Minerals Limited | 21
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
6.
(a)
Income Tax Expense
Income tax expense
Current tax
Deferred tax
Total income tax expense
Deferred income tax expense included in income tax expense comprises:
Decrease/(Increase) in deferred tax assets (note 6(c))
Increase/(Decrease) in deferred tax liabilities (note 6(d))
Consolidated
2015
$
2014
$
-
-
-
-
-
-
-
-
-
-
-
-
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
Tax at the tax rate of 30.0% (2014: 30.0%)
(657,426)
(197,112)
(1,031,442)
(309,433)
Tax effect of amounts which are not deductible in calculating taxable
income:
Exploration
Share based payments
Other non-deductible amounts
Differences in overseas tax rates
Unrecognised tax losses
Income tax expense/(benefit)
(c) Deferred tax asset not recognised
Tax losses
Exploration and expenditure
Other
Net deferred tax not recognised
78,999
5,160
(1,031)
(4,200)
118,184
231,200
-
13,257
-
64,976
-
-
1,781,385
1,358,935
6,000
3,146,320
1,654,138
1,281,824
7,031
2,942,993
1: The deferred tax asset attributable to tax losses does not exceed taxable amounts arising from the reversal of
existing assessable temporary differences.
7.
(a)
Cash & Cash Equivalents
Cash & cash equivalents
Cash at bank & in hand
Total cash & cash equivalents
(b) Cash at bank and in hand
Consolidated
2015
$
2014
$
1,998,037
1,998,037
1,986,678
1,986,678
Cash on hand is non-interest bearing. Cash at bank bears interest rates between 0.00% and 2.26% (2014:
0.00% and 2.25 %). Refer to note 15 for the group’s exposure to interest rate and credit risk.
AVZ Minerals Limited | 22
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
Trade & Other Receivables
Current
Other receivables
Total current trade & other receivables
Consolidated
2015
$
27,402
27,402
2014
$
29,978
29,978
Past due and impaired receivables
As at 30 June 2015, there were no other receivables that were past due or impaired (2014: nil).
Effective interest rates and credit risk
Information concerning Liquidity risk of both current and non-current trade and other receivables is set out
in note 15.
8.
(a)
(b)
(c)
Property, Plant & Equipment
9.
(a) Year ended 30 June 2015
Opening net book amount
Additions
Disposals/write-offs/adjustments
Depreciation charge
Closing net book amount
At 30 June 2015
Cost
Disposals/write-offs/adjustments
Accumulated depreciation
Net book amount
(b) Year ended 30 June 2014
Opening net book amount
Additions
Disposals/write-offs/adjustments
Depreciation charge
Closing net book amount
At 30 June 2014
Cost
Disposals/write-offs/adjustments
Accumulated depreciation
Net book amount
Consolidated
Plant &
Office Field
$
Plant & Office
Equipment
$
4,002
-
241
-
4,243
58,896
2,429
(57,082)
4,243
11,068
-
(423)
(6,643)
4,002
58,896
2,188
1,761
-
-
(1,560)
201
28,544
-
(28,343)
201
4,539
-
-
(2,778)
1,761
28,544
-
(57,082)
4,002
(26,783)
1,761
Total
$
5,763
-
241
(1,560)
4,444
87,440
2,429
(85,425)
4,444
15,607
-
(423)
(9,421)
5,763
87,440
2,188
(83,865)
5,763
AVZ Minerals Limited | 23
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
Exploration & Evaluation Expenditure
10.
Exploration and evaluation phase
Opening balance
Exploration costs
Impairment expense1
Foreign Exchange Movement
Closing balance
Consolidated
2015
$
2014
$
-
198,709
(198,709)
-
-
867,567
-
(770,669)
(96,898)
-
1 Board and Management have assessed the carrying value of the Exploration and Evaluation Expenditure to
be impaired and have provided for an impairment expense to reduce the carrying value to the expected
recoverable amount.
The value of the group’s interest in exploration expenditure is dependent upon:
the continuance of the company’s rights to tenure of the areas of interest;
the results of future exploration; and
the recoupment of costs through successful development and exploitation of the areas of interest, or
alternatively, by their sale.
11. Trade & Other Payables
Current
Trade Payables
Total current trade & other payables
The group’s exposure to Liquidity risk is noted in note 15.
Consolidated
2015
$
2014
$
46,279
46,279
57,017
57,017
Consolidated
2015
Shares
2014
Shares
Consolidated
2015
$
2014
$
12. Contributed Equity
(a) Contributed Equity
Ordinary shares - fully paid
487,883,310
356,912,482
13,996,848
13,340,115
Total Contributed Equity
487,883,310
356,912,482
13,996,848
13,340,115
(b) Ordinary Shares
Ordinary shares participate in dividends and the proceeds on winding up of the company in proportion to
the number of shares held and in proportion to the amount paid up on the shares held. At shareholders
meetings each ordinary share is entitled to one vote in proportion to the paid up amount of the share when
a poll is called, otherwise each shareholder has one vote on a show of hands.
(c) Options
Information relating to options including details of options issued, exercised and lapsed during the financial
year and options outstanding at the end of the financial year, is set out in note 13.
(d) Performance incentive shares
Refer to Note 22 for further details in respect to the performance shares granted.
AVZ Minerals Limited | 24
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
12.
Contributed Equity (continued)
Date
Number of
Shares
$
Issue
Price
$
Total
$
(e) Movements in contributed equity
Opening Balance 1 July 2013
Issue of shares: Placement
Less: Transaction costs arising on share issues
Closing Balance at 30 June 2014
Opening Balance 1 July 2014
Issue of shares: Placement
Issue of shares: Rights entitlement
Less: Transaction costs arising on share issues
Closing Balance at 30 June 2015
21 May 2014
53,500,000 $0.008
303,412,482
356,912,482
356,912,482
08 August 2014
9,000,000 $0.008
23 September 2014 121,970,828 $0.005
487,883,310
12,941,083
428,000
(28,968)
13,340,115
13,340,115
72,000
609,854
(25,121)
13,996,848
Expiry
date
Exercise
price
Balance at
start of year
Granted
during the
year
Exercised
during the
year
Cancelled/
lapsed during
the year
Balance at
end of the
year
13. Share Options
(a) 2015 unlisted share option details
30 Nov 14
31 Oct 14
20.0 cents
11.0 cents
2,000,000
1,900,000
3,900,000
Expiry
date
Exercise
price
Balance at
start of year
(b) 2014 unlisted share option details
Granted
during the
year
31 Aug 13
31 Aug 13
31 Aug 13
31 Aug 13
31 Aug 13
14 Nov 13
31 Mar 14
22 May 14
22 May 14
22 May 14
31 May 14
31 May 14
31 May 14
30 Nov 14
31 Oct 14
15.0 cents
20.0 cents
25.0 cents
30.0 cents
45.0 cents
15.0 cents
10.0 cents
20.0 cents
30.0 cents
45.0 cents
11.0 cents
20.0 cents
25.0 cents
20.0 cents
11.0 cents
3,250,000
2,500,000
2,500,000
2,500,000
2,500,000
6,000,000
400,000
7,125,000
7,125,000
7,125,000
400,000
2,500,000
2,500,000
2,000,000
1,900,000
49,925,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exercised
during the
year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
1,900,000
3,900,000
-
-
-
Cancelled/
lapsed during
the year
Balance at
end of the
year
3,250,000
2,500,000
2,500,000
2,500,000
2,500,000
6,000,000
400,000
7,125,000
7,125,000
7,125,000
400,000
2,500,000
2,500,000
-
-
46,025,000
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
1,900,000
3,900,000
AVZ Minerals Limited | 25
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
14. Reserves
(a)
Unlisted option reserve
Opening balance
Unlisted options issued as remuneration during the year
Closing balance
Consolidated
2015
$
2014
$
1,310,448
-
1,310,448
1,310,448
-
1,310,448
The unlisted option reserve records items recognised on valuation of director, employee and
contractor share options as well as share options issued during the course of a business
combination. Information relating to the details of options issued, exercised and lapsed during the
financial year and options outstanding at the end of the financial year, is set out in note 13.
(b)
Share-based payment reserve
Opening balance
Performance Rights issued as remuneration during the year
Closing balance
-
17,200
17,200
-
-
-
4,000,000 Performance Rights were issued following the approval of shareholders at the general
meeting held on 6 August 2014. The Performance Rights shall vest if the closing price of Shares on
the ASX is $0.015 or higher (as adjusted) for 10 consecutive Business Days. The share based
payment reserve is used to recognise the fair value of performance rights issued to employees but
not converted into ordinary shares. The reserve is recognised in contributed equity when and if the
relevant milestone is attained within the specified period and as a result the performance rights
concerned convert to ordinary shares.
(c)
Foreign Currency Translation Reserve
Opening balance
Exchange difference arising on translation of foreign
operations
Closing balance
(668,180)
(550,499)
1,610
(666,570)
(117,681)
(668,180)
The foreign currency translation reserve records exchange differences arising on translation of
foreign controlled entities. The exchange differences arising are recognised in other comprehensive
income as detailed in note 1(q) and accumulated within a separate reserve within equity. The
cumulative amount is reclassified to the statement of profit or loss and other comprehensive
income when the net investment is disposed of.
(d)
Total reserves
Unlisted option reserve
Share-based payment reserve
Foreign currency translation reserve
Total reserves
1,310,448
17,200
(666,570)
661,078
1,310,448
-
(668,180)
642,268
AVZ Minerals Limited | 26
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
15. Financial Instruments, Risk Management Objectives and Policies
The consolidated entity’s principal financial instruments comprise cash and cash equivalents. The main purpose of the
financial instruments is to earn the maximum amount of interest at a low risk to the company. The consolidated entity
also has other financial instruments such as trade debtors and creditors which arise directly from its operations. For
the year under review, it has been the consolidated entity’s policy not to trade in financial instruments. The main risks
arising from the consolidated entity’s financial instruments are interest rate risk and credit risk. The board reviews
and agrees policies for managing each of these risks and they are summarised below:
(a)
Interest Rate Risk
The group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a
result of changes in market interest rates and the effective weighted average interest rate for each class of
financial assets and financial liabilities comprises:
Consolidated
2015
Financial assets
Cash and cash equivalents
Consolidated
2014
Financial assets
Cash and cash equivalents
Weighted
Average
Interest
Rate
%
Weighted
Average
Interest
Rate
%
Floating
Interest Rate
Fixed
Interest
Non-
interest
bearing
$
$
-
-
$
-
-
2.26%
1,998,037
1,998,037
Total
$
1,998,037
1,998,037
Total
Floating
Interest Rate
Fixed
Interest
Non-
interest
bearing
$
$
$
$
2.25%
1,986,678
1,986,678
-
-
-
-
1,986,678
1,986,678
The maturity date for all cash, current receivables and trade and other payable financial instruments included in
the above tables is one year or less from balance date. The maturity for the non-current receivables is
between 1 and 3 years from balance date.
(i)
Sensitivity analysis
The group’s main interest rate risk arises from cash equivalents with variable and fixed interest rates.
At 30 June 2015 and 30 June 2014, the group’s exposure to interest rate risk is not deemed material.
(b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the group. The group has adopted the policy of only dealing with credit worthy counterparties and
obtaining sufficient collateral or other security where appropriate, as a means of mitigating the risk of financial
loss from defaults. The group does not have any significant credit risk exposure to any single counterparty or
any group of counterparties having similar characteristics. The carrying amount of financial assets recorded in
the financial statements, net of any provisions for losses, represents the group’s maximum exposure to credit
risk. All cash equivalents are held with financial institutions with a credit rating of -AA or above, with the
exception of cash on hand of $NIL (2014: $NIL) which is not rated.
AVZ Minerals Limited | 27
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
15.
Financial Instruments, Risk Management Objectives and Policies (continued)
(c)
Foreign Currency Risk
The group is exposed to fluctuations in foreign currencies arising from exploration commitments in currencies
other than the group’s presentational currency (Australian Dollars).
The group operates internationally and is exposed to foreign exchange risk arising from currency exposures to
the Namibian Dollar (NAD). The group has not formalised a foreign currency risk management policy,
however it monitors its foreign currency expenditure in light of exchange rate movements, and retains the
right to withdraw from the foreign exploration commitments after the minimum expenditure targets have been
met.
(i)
Sensitivity analysis
The group’s main foreign currency risk arises from cash equivalents held in foreign currency
denominated bank accounts and other payable amounts denominated in currencies other than the
group’s functional currency. At 30 June 2015 and 30 June 2014, the group’s exposure to foreign
currency risk is not deemed material as the cash held in overseas financial institutions is not considered
material to the group.
(d)
Liquidity risk
The group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities. Due to the dynamic nature of the underlying businesses, the
group aims at ensuring flexibility in its liquidity profile by maintaining the ability to undertake capital raisings.
The current trade and other payables are due and payable within 3 to 6 months.
Contractual
maturities of
financial liabilities
At 30 June 2015
Trade and other
payables
At 30 June 2014
Trade and other
payables
Less than
6 months
$
6-12
months
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5
years
$
46,279
57,017
-
-
-
-
-
-
-
-
Total
contractual
cashflows
$
Carrying
amount
liabilities
$
46,279
46,279
57,017
57,017
(e) Net fair value
The carrying value and net fair values of financial assets and liabilities at balance date are:
Consolidated
Financial assets
Cash and cash equivalents
Trade & other receivables - current
Financial Liabilities
Trade and other payables - current
2015
2014
Carrying
Amount
$
Net fair
Value
$
Carrying
Amount
$
Net fair
Value
$
1,998,037
27,402
2,025,439
1,998,037
27,402
2,025,439
1,986,678
29,978
2,016,656
1,986,678
29,978
2,016,656
46,279
46,279
46,279
46,279
57,017
57,017
57,017
57,017
AVZ Minerals Limited | 28
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
15.
Financial Instruments, Risk Management Objectives and Policies (continued)
(f)
Fair value measurements
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or
for disclosure purposes. AASB 7 Financial Instruments: Disclosures requires disclosure of fair value measurements
by level of the following fair value measurement hierarchy:
i) Quoted prices in active markets for identical assets or liabilities (level 1)
ii)
Inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (level 2); and
Inputs for the asset or liability that are not based on observable market data (unobservable
inputs) (level 3).
iii)
Due to their short term nature, the carrying amount of the current receivables and current payables is
assumed to approximate their fair value. There are no financial assets or liabilities measured using the fair value
hierarchy.
16. Earnings per Share
(a)
Earnings/(Loss)
Earnings/(loss) used in the calculation of basic EPS
Consolidated
2015
$
2014
$
(657,426)
(1,031,442)
(b) Weighted average number of ordinary shares (‘WANOS’)
WANOS used in the calculation of basic earnings per share:
458,876,325
309,422,071
Basic loss per share
cents per share
(0.14)
cents per share
(0.33)
Diluted earnings per share is equal to basic loss per share as the company is in a loss position.
17. Cash Flow Information
(a)
Reconciliation of cash flows from operating activities with loss
from ordinary activities after income tax:
Loss for the year
Depreciation
Exploration written off
Employment Costs
Changes in assets and liabilities:
(Increase) in operating receivables & prepayments
(Decrease) in trade and other payables
Consolidated
2015
$
2014
$
(657,426)
(1,031,442)
1,560
198,709
18,655
2,576
(10,738)
9,421
770,669
43,679
(1,053)
31,865
Net cash outflows from Operating Activities
(446,664)
(176,861)
(b) Non-cash investing and financing activities
There are no non-cash investing and financing activities during the year (2014: nil).
AVZ Minerals Limited | 29
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
18. Segment Information
(a) Description of segments
Management has determined the operating segments based on the reports reviewed by the chief operating
decision maker that are used to make strategic decisions. For the purposes of segment reporting the chief
operating decision maker has been determined as the board of directors. The board monitors the entity
primarily from a geographical perspective, and has identified two operating segments, being exploration for
mineral reserves within Africa and the corporate/head office function.
(b)
Segment information provided to the board of directors
The segment information provided to the board of directors for the reportable segments for the year ended
30 June 2015 as follows:
Full- Year ended 30 June 2015
Total segment revenue
Total segment loss before income tax
Full- Year ended 30 June 2014
Total segment revenue
Total segment loss before income tax
Segment Assets
At 30 June 2015
At 30 June 2014
Segment Liabilities
At 30 June 2015
At 30 June 2014
Depreciation Expense
At 30 June 2015
At 30 June 2014
Africa
$
Corporate
$
Total
$
-
56,003
44,800
601,423
44,800
657,426
-
815,512
42,619
215,930
42,619
1,031,442
33,283
29,081
1,996,600
1,993,338
2,029,883
2,022,419
1,112
1,049
45,167
55,968
46,279
57,017
-
-
1,560
9,421
1,560
9,421
Measurement of segment information
All information presented in part (b) above is measured in a manner consistent with that in the financial statements.
(c) Measurement of segment information
All information presented in part (b) above is measured in a manner consistent with that in the financial
statements.
(d)
Segment revenue
No inter-segment sales occurred during the current or previous financial year. The entity is domiciled in
Australia. No revenue was derived from external customers in countries other than the country of domicile.
Revenues of $44,800 (2014: $42,619) were derived from one Australian financial institution during the period.
These revenues are attributable to the corporate segment.
18. Segment Information (continued)
(e)
Reconciliation of segment information
Total segment revenue, total segment profit/loss before income tax, total segment assets and total segment
liabilities as presented in part (b) above, equal total entity revenue, total entity profit/loss before income tax,
total entity assets and total entity liabilities respectively, as reported within the financial statements.
19. Commitments and Contingencies
There are no commitments or contingent liabilities outstanding at the end of the year.
AVZ Minerals Limited | 30
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
20. Subsidiaries and non-controlling entities
(a) Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries
in accordance with the accounting policy described in note 1(b):
Name of entity
Northam Resources Ltd2
Himba Iron Exploration (Pty) Ltd
Eris Mining (Pty) Ltd
Tumba Base Metals X (Pty) Ltd
Country of
incorporation
Australia
Namibia
Namibia
Namibia
Class
of shares
Ordinary
Ordinary
Ordinary
Ordinary
Equity holding1
2015
%
-
95
95
95
2014
%
100
95
95
95
1: The proportion of ownership interest is equal to the proportion of voting power held.
2: Company was deregistered during the financial period.
(b) Non-controlling entities
The following table sets out the summarised financial information for each subsidiary that has non-controlling
interests that are material to the group. Amounts disclosed are before intercompany eliminations (AASB 12.B11)
Summarised statement of
Financial Position
Himba Iron Exploration
(Pty) Ltd
Tumba Base Metals X
(Pty) Ltd
30 June 2015
30 June 2014
30 June 2015
30 June 2014
Eris Mining
(Pty) Ltd
30 June 2015 30 June 2014
Current Assets
Non-current Assets
Total Assets
Current Liabilities
Non-current Liabilities
Total Liabilities
Net Assets
Accumulated NCI
-
-
-
1,277,409
-
1,277,409
(1,277,409)
(63,870)
-
-
-
1,204,924
-
1,204,924
(1,204,924)
(60,246)
-
-
-
27,493
-
27,493
(27,493)
(1,375)
-
-
-
25,933
-
25,933
(25,933)
(1,297)
29,040
86,072
115,112
2,706,018
-
2,706,018
(2,590,906)
(130,074)
25,080
81,189
106,269
2,496,530
-
2,496,530
(2,390,261)
(119,513)
Summarised statement of
Profit or Loss and Other
Comprehensive Income
Himba Iron Exploration
(Pty) Ltd
Tumba Base Metals X
(Pty) Ltd
Eris Mining
(Pty) Ltd
30 June
2015
30 June
2014
30 June
2015
30 June
2014
30 June
2015
30 June
2014
Revenue
Profit for the period
Other comprehensive income
Total comprehensive income
Profit/(Loss) allocated to NCI
Dividends paid to NCI
-
-
-
-
-
-
-
(1,204,796)
-
(1,204,796)
(60,246)
-
-
-
-
-
-
-
-
(1,350)
-
(1,350)
-
-
-
(56,003)
-
(56,003)
(2,800)
-
-
(1,368,199)
-
(1,368,199)
(68,410)
-
Summarised cash flows
Himba Iron Exploration (Pty)
Ltd
Tumba Base Metals X (Pty)
Ltd
Eris Mining (Pty) Ltd
30 June
2015
30 June
2014
30 June
2015
30 June
2014
30 June
2015
30 June
2014
Cash flows from operating
activities
Cash flows from investing
activities
Cash flows from financing
activities
Net increase/(decrease) in cash
and cash equivalents
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(56,003)
(1,000)
-
-
-
-
(56,003)
(1,000)
AVZ Minerals Limited | 31
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
21. Related Party Information
(a)
(b)
(c)
Parent entity
The ultimate parent entity within the group is AVZ Minerals Limited.
Subsidiaries
Interests in subsidiaries are set out in note 20.
Key management personnel
The key management personnel compensation is as follows:
Key Management Personnel Compensation
Summary remuneration
Short-term employee benefits
Post-employment benefits
Share-based payments
Total key management personnel compensation
2015
$
238,877
3,123
17,200
259,200
2014
$
93,517
418
-
93,935
Details of remuneration disclosures are provided within the audited remuneration report which can be
found on pages 5 to 8 of the directors’ report.
(d) Other transactions with key management personnel
Transactions with Director Related Parties
The following transactions occurred with related parties:
Payment to Steinepreis Paganin for legal fees
Payment to Ascent Capital – rent
Outstanding balances arising from recharges/purchases with Director Related Parties
Current payables (purchases)
Consolidated
2015
$
-
-
-
2014
$
200
26,250
3,045
Terms and conditions of related party transactions
Transactions between related parties are on commercial terms and conditions, no more favourable than those
available to other parties unless otherwise stated.
22. Share Based Payments
There have been no options issued to current directors and executives as part of their remuneration.
On 8 August 2014, 4,000,000 Performance Rights were issued to Patrick Flint. The Performance Rights are
convertible to ordinary shares if the closing price of the shares on the ASX is $0.015 or higher (as adjusted) for 10
consecutive Business Days at nil consideration. These Performance Rights have a term of 3 years from the date of
issue. The Company has valued these rights using a Black-Scholes option pricing model. The volatility for these rights
has been determined to be 120% and the interest free rate at 2%. Details of the performance shares issued are as
follows:
Director
and Other
KMP
Number
Issued
Grant Date
Exercise
Price
Expiry Date of
Milestone
Achievements
Underlying
Share Price on
Grant Date ($)
Total
Fair
Value ($)
%
Vested
Patrick
Flint
4,000,000
08/08/2014
Nil
08/08/2017
0.008
17,200
-
AVZ Minerals Limited | 32
Notes to the Consolidated Financial Statements for the year ended 30 June 2015
23.
(a)
(b)
(c)
(d)
Parent Entity Information
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Equity
Contributed equity
Accumulated losses
Option reserve
Share based payment reserve
Total equity
Total Comprehensive loss for the year
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Company
2015
$
2014
$
1,970,124
58,647
2,028,771
1,991,577
1,761
1,993,338
45,167
45,167
55,967
55,968
13,996,848
(13,340,892)
1,310,448
17,200
1,983,604
13,340,115
(12,713,193)
1,310,448
-
1,937,370
(627,698)
-
(627,698)
(1,151,510)
-
(1,151,510)
The parent entity has not guaranteed any loans for any entity during the year. The parent entity does not have any
contingent liabilities, or capital commitments.
24. Events Occurring after the Reporting Date
There has been no matter or circumstance that has arisen that has significantly affected, or may significantly affect:
the group’s operations in future financial years, or
the results of those operations in future financial years, or
the group’s state of affairs in future financial years.
AVZ Minerals Limited | 33
Directors’ Declaration
In the directors’ opinion:
(a) the financial statements and notes set out on pages 11 to 33 are in accordance with the Corporations Act 2001,
including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(ii) giving a true and fair view of the group’s financial position as at 30 June 2015 and of its performance for
the financial year ended on that date; and
(b) the audited remuneration disclosures set out on pages 5 to 8 of the directors’ report comply with section 300A
of the Corporations Act 2001; and
(c) at the date of this declaration, there are reasonable grounds to believe that the Company will be able to pay its
debts as and when they become due and payable; and
(d) the financial statements and notes thereto are in accordance with International Financial Reporting Standards
issued by the International Accounting Standards Board.
The directors have been given 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.
Gary Steinepreis
Non-Executive Director
West Perth, Western Australia
29 September 2015
AVZ Minerals Limited | 34
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REPORT
To the members of AVZ Minerals Limited
Report on the Financial Report
We have audited the accompanying financial report of AVZ Minerals Limited, which comprises the
consolidated statement of financial position as at 30 June 2015, the consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, notes comprising a summary of
significant accounting policies and other explanatory information, and the directors’ declaration of the
consolidated entity comprising the company and the entities it controlled at the year’s end or from
time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 1(a)(i), the directors also state, in accordance with Accounting Standard AASB
101 Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’s internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the directors, as
well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275,
an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and
form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation other than for
the acts or omissions of financial services licensees
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of AVZ Minerals Limited, would be in the same terms if given to the
directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a)
the financial report of AVZ Minerals Limited is in accordance with the Corporations Act 2001,
including:
(i)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1(a)(i).
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2015. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of AVZ Minerals Limited for the year ended 30 June 2015
complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Dean Just
Director
Perth, 29 September 2015
Shareholder Information
Shareholding
The distribution of members and their holdings of equity securities
23 September 2015 is as follows:
in the holding company as at
Number Held
1- 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Holders of less than a marketable parcel: 212
Twenty Largest Shareholders
The names of the twenty largest ordinary fully paid shareholders are as follows:
Class of Equity Securities
Fully Paid Ordinary Shares
19
19
57
145
177
417
Shareholder
JP Morgan Nominees Australia Ltd
HSBC Custody Nominees Australia Ltd
Oakhurst Enterprises Pty Ltd
Leilani Inv Pty Ltd
Ranchland Holdings Pty Ltd
Seventy Three Pty Ltd
Croesus Mining Pty Ltd
David Hannon
J & J Bandy Nominees Pty Ltd
Merrill Lynch Australia Nominees Pty Ltd
Talltree Holdings Pty Ltd
Talltree Holdings Pty Ltd
Blueknight Pty Ltd
Aviemore Capital Pty Ltd
Manuela Reitmeier
Croesus Mining Pty Ltd
Piat Corp Pty Ltd
David Noel Riekie
Chifley Portfolios Pty Ltd
Symorgh Investments Pty Ltd
Substantial Shareholders
The names of the substantial shareholders:
Shareholder
Ranchland Holdings Pty Ltd
Chifley Portfolios Pty Ltd
N&J Mitchell Holdings Pty Ltd
On-Market Buy-Back
There is no current on-market buy-back.
Number
% Held of Issued
Ordinary Capital
37,373,208
28,853,752
20,495,533
20,089,276
19,235,256
17,920,308
15,162,199
13,605,495
11,120,308
10,390,131
10,000,000
10,000,000
9,333,334
8,994,638
8,333,400
8,252,262
8,000,000
7,500,000
7,386,193
7,210,000
279,255,293
Number
32,068,590
31,474,954
24,414,461
7.66%
5.91%
4.20%
4.12%
3.94%
3.67%
3.11%
2.79%
2.28%
2.13%
2.05%
2.05%
1.91%
1.84%
1.71%
1.69%
1.64%
1.54%
1.51%
1.48%
57.23%
%
6.57
6.45
5.00
AVZ Minerals Limited | 37
Shareholder Information
Restricted Securities
There are no restricted ordinary shares in escrow.
Unquoted equity securities – performance rights
Performance Rights shall vest if the closing price of Shares on the
ASX is $0.015 or higher (as adjusted) for 10 consecutive Business
Days
Holders of more than 20% of unlisted performance rights
Patrick Flint
Number
on issue
Number of
holders
4,000,000
1
Number of
performance
rights
Percentage
of performance
rights
4,000,000
100%
Voting Rights
The voting rights attaching to each class of equity securities are set out below:
(i)
(ii)
Ordinary Shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon
a poll each share shall have one vote.
Performance Rights
These securities have no voting rights.
AVZ Minerals Limited | 38
Corporate Governance Statement
AVZ Minerals Ltd, its wholly owned subsidiaries (the Group) and the Board are committed to achieving and
demonstrating the highest standards of corporate governance. The Board continues to review the framework and
practices to ensure they meet the interests of shareholders.
The disclosure of corporate governance practices can be viewed on the Company website at
www.avz minerals.com.au
The directors are responsible to the shareholders for the performance of the Group in both the short and the longer
term and seek to balance sometimes competing objectives in the best interests of the Group as a whole. Their focus is
to enhance the interests of shareholders and other key stakeholders and to ensure the Group is properly managed.
Day to day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives
are undertaken by the Board.
Corporate Governance Compliance
A description of the Group's main corporate governance practices are set out below. The Group has considered the
ASX Corporate Governance Principles and Recommendations (3rd edition) to determine an appropriate system of
control and accountability to best fit its business and operations commensurate with these guidelines.
Disclosure of Corporate Governance Practices
Summary Statement
Recommendation 1.1
Recommendation 1.2
Recommendation 1.3
Recommendation 1.4
Recommendation 1.5
Recommendation 1.6
Recommendation 1.7
Recommendation 2.1
Recommendation 2.2
Recommendation 2.3
Recommendation 2.4
Recommendation 2.5
Recommendation 2.6
Recommendation 3.1
Recommendation 4.1
Recommendation 4.2
Recommendation 4.3
Recommendation 5.1
Recommendation 6.1
Recommendation 6.2
Recommendation 6.3
Recommendation 6.4
Recommendation 7.1
Recommendation 7.2
Recommendation 7.3
Recommendation 7.4
Recommendation 8.1
Recommendation 8.2
Recommendation 8.3
“If not, why not”
ASX Principles and
Recommendations
Disclosure – Principles & Recommendations - financial year 2014/2015
Principle 1 – Lay solid foundations for management and oversight
Recommendation 1.1:
A listed entity should disclose the respective roles and responsibilities of its board and management and those matters expressly
reserved to the Board and those delegated to management and disclose those functions.
Disclosure:
AVZ Minerals Limited | 39
Corporate Governance Statement
The Directors are responsible to the shareholders for the performance of the Group in both the short and the longer
term and seek to balance sometimes competing objectives in the best interests of the Group as a whole. Their focus is
to enhance the interests of shareholders and other key stakeholders and to ensure the Group is properly managed.
Day to day management of the Group’s affairs and the implementation of the corporate strategy and policy initiatives
are undertaken by the Managing Director (who acts in the capacity as CEO).
The matters that the Board has specifically reserved for its decision are:
the appointment and management of the CEO;
approval of the overall strategy and annual budgets of the business;
overseeing the accounting and corporate reporting systems, including the external audit; and
compliance with constitutional documents.
The CEO is delegated the authority to ensure the effective day-to-day management of the business and the Board
monitors the exercise of these powers. The CEO is required to report regularly to the Board on the performance of
the Business.
Recommendation 1.2:
A listed entity should undertake appropriate checks before appointing a person, or putting forward to security holders a
candidate for election, as a director and provide security holders with all material information in its possession relevant to a
decision on whether or not to elect or re-elect a director.
Disclosure:
The Company undertakes checks on any person who is being considered as a director. These checks may include
character, experience, education and financial history and background.
All security holder releases will contain material information following the guidance contained in the ASX Corporate
Governance Principles and Recommendations (3rd edition) about any candidate to be elected for the first time or re-
elected to enable an informed decision to be made.
Recommendation 1.3:
A listed entity should have a written agreement with each director and senior executive setting out the terms of their
appointment.
Disclosure:
Each senior executive and executive director has a formal employment contract and the non-executive directors have
a letter of appointment including a director’s interest agreement with respect to disclosure of security interests.
Recommendation 1.4:
The Company Secretary should be accountable directly to the Board, through the chair, on all matters to do with the proper
functioning of the Board.
Disclosure:
The Company Secretary has a direct reporting line to the Board, through the Chair.
Recommendation 1.5:
A listed entity should establish a policy concerning diversity and disclose the policy or summary of the policy. The policy should
include requirements for the Board to establish measureable objectives for achieving gender diversity and for the Board to assess
annually both the objectives and progress in achieving them.
Disclosure:
The Board supports diversity but the Group has not yet developed a policy. It is the Board’s intention to develop a
policy at a time when the size of the Group and its activities warrants such a structure.
There are currently no women employees in the organisation.
Recommendation 1.6:
A listed entity should have and disclose a process for periodically evaluating the performance of the Board, its committees and
individual directors and whether a performance evaluation was undertaken in the reporting period in accordance with that
process.
Disclosure:
The Chairman is responsible for evaluating the performance of the Board, its committees and individual directors. This
is generally done through a meeting with the Chair.
The review is currently informal but is based on a review of goals for the Board and individual Directors. The goals
are based on corporate requirements and any areas for improvement that may be identified. The Chairman will
provide each Director with confidential feedback on his or her performance. There was no formal performance
evaluation during the financial year.
AVZ Minerals Limited | 40
Corporate Governance Statement
Recommendation 1.7:
A listed entity should have and disclose a process for periodically evaluating the performance of senior executives and whether a
performance evaluation was undertaken in the reporting period in accordance with that process.
Disclosure:
The Board is responsible for evaluating the senior executives. Induction procedures are in place and senior executives
have formal job descriptions which includes the process for evaluating their performance.
There was no formal performance evaluation of the senior executives during the financial year.
Principle 2 – Structure the board to add value
Recommendation 2.1:
The Board of a listed entity should establish a Nomination Committee which the majority should be independent directors
(including the Chair).
Disclosure:
A nomination committee has not been established. The role of the Nomination Committee has been assumed by the
full Board operating under the Nomination Committee Charter adopted by the Board.
Recommendation 2.2:
A listed entity should have and disclose a Board skills matrix setting out the mix of skills and diversity that the Board currently
has or is looking to achieve in its membership.
Disclosure:
The Board Charter provides that the Board will review capabilities, technical skills and personal attributes of its
directors. It will normally review the Board’s composition against those attributes and recommend any changes in
Board composition that may be required. An essential component of this will be the time availability of Directors.
Non-executive
chairman
Managing director
Leadership
Strategy / Risk
Communication
Fundraising
Mining Industry
Governance
Health,
environment
Financial acumen
safety
and
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Non-executive
director / Company
Secretary
X
X
X
X
X
X
X
X
Recommendation 2.3:
A listed entity should disclose the names of the directors considered to be independent directors and length of service of each
director.
Disclosure:
Patrick Flint is considered to be classified as an independent director.
The dates of appointment as a director are contained in the Directors’ Report.
Recommendation 2.4:
A majority of the Board of a listed entity should be independent directors.
Disclosure:
The Group does not have a majority of independent directors.
Consistent with the size of the Group and its activities, the Board is comprised of three (3) directors, one of which is
currently considered to be an independent director.
The Board's policy is that the majority of directors shall be independent, non-executive directors. The composition of
the Board does not currently conform to its policy. The Board considers that each of the directors possesses the skills
and experience suitable to building the Company and that the current composition of the Board is adequate for the
Company’s current size and operations. It is the Board’s intention to appoint additional directors at a time when the
size of the Group and its activities warrants such a structure.
AVZ Minerals Limited | 41
Corporate Governance Statement
Recommendation 2.5:
The Chair of the Board of a listed entity should be an independent director.
Disclosure:
Patrick Flint acts as Chair of the Board is independent.
Recommendation 2.6:
A listed entity should have a program for inducting new directors and provide appropriate professional development
opportunities for directors to develop and maintain the skills and knowledge needed to perform their role as directors effectively.
Disclosure:
The Board Charter provides for induction and professional development for the Board.
Principle 3 – Act ethically and responsibly
Recommendation 3.1:
A listed entity should have a Code of Conduct for its directors, senior executives and employees.
Disclosure:
The Company has a Code of Conduct that applies to all Directors, senior executives, employees and contractors.
Principle 4 – Safeguard integrity in corporate reporting
Recommendation 4.1
The Board of a listed entity should have an Audit Committee.
Disclosure:
An audit committee has not been established. The role of the Audit Committee has been assumed by the full Board
operating under the Audit Committee Charter adopted by the Board.
Recommendation 4.2
The Board of a listed entity should, before it approves the Company’s financial statements for a financial period, receive from its
CEO and CFO a declaration that, in their opinion, the financial records of the entity have been properly maintained and that the
financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position
and performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and
internal control which is operating effectively.
Disclosure:
This recommendation is included as part of the Audit Committee Charter adopted by the Board.
Recommendation 4.3
A listed entity should ensure that the external auditor is present at the AGM and be available to answer questions from security
holders relevant to the audit.
Disclosure:
The Company invites the auditor or representative of the auditor to the AGM.
Principle 5 – Make timely and balanced disclosure
Recommendation 5.1:
A listed entity should have a written policy for complying with its continuous disclosure obligations under the Listing Rules.
Disclosure:
The Board Charter contains the policies designed to ensure compliance with ASX Listing Rule disclosure.
Principle 6 – Respect the rights of security holders
Recommendation 6.1:
A listed entity should provide information about itself and its governance to investors via its website.
Disclosure:
The Company has a website for making this information available to shareholders and investors.
AVZ Minerals Limited | 42
Corporate Governance Statement
Recommendation 6.2:
A listed entity should design and implement an investor relations program to facilitate two-way communication with investors.
Disclosure:
The Company encourages shareholders to attend and participate in general meetings and will makes itself available to
meet shareholders and regularly responds to enquiries made via telephone and in writing.
Recommendation 6.3:
A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of
security holders.
Disclosure:
The Company encourages shareholders to attend and participate in general meetings. As a junior company the
shareholder attendance numbers are low however, if a shareholder wishes to provide a comment or question and is
not able to attend the meeting, the Company will address this as part of the meeting.
Recommendation 6.4:
A listed entity should give security holders the option to receive communications from, and send communications to, the entity
and its security registry electronically.
Disclosure:
The Company is currently reviewing and implementing a strategy to receive communications from, and send
communications, to its shareholders.
Principle 7 – Recognise and manage risk
Recommendation 7.1:
The Board of a listed entity should have a committee or committees to oversee risk.
Disclosure:
The Board has adopted a Risk Management Policy. There is no risk management committee and this role is
undertaken by the Board. The overall basis for risk management is to provide recommendations about:
1. Assessing the internal processes for determining and managing key risk areas, particularly:
non-compliance with laws, regulations, standards and best practice guidelines, including environmental
and industrial relations laws;
litigation and claims; and
relevant business risks other than those that are dealt with by other specific Board Committees.
2. Ensuring that the Group has an effective risk management system and that major risks to the Group are
reported at least annually to the Board.
3. Receiving from management reports on all suspected and actual frauds, thefts and breaches of laws.
4. Evaluating the process the Group has in place for assessing and continuously improving internal controls,
particularly those related to areas of significant risk.
5. Assessing whether management has controls in place for unusual types of transactions and/or any potential
transactions that may carry more than an acceptable degree of risk.
6. Meeting periodically with key management, internal and external auditors and compliance staff to understand
and discuss the Group’s control environment.
Recommendation 7.2:
The Board of a listed entity should review the entity’s risk management framework at least annually to satisfy itself that it
continues to be sound and disclose whether such a review has taken place.
Disclosure:
The Board considers risk and discusses risk management at each Board meeting. As part of this all risks are
considered including but not limited to strategic, operational, legal, reputation and financial risks. This is an on-going
process rather than an annual formal review.
Recommendation 7.3:
A listed entity should disclose if it has an internal audit function.
Disclosure:
The Company does not have an internal audit function but reviews its risk management and internal control processes
on a regular basis.
AVZ Minerals Limited | 43
Corporate Governance Statement
Recommendation 7.4:
The Company should disclose whether it has any material exposure to economic, environmental and social sustainability risks
and, if it does, how it manages or intends to manage those risks.
The Company is of the view that it has adequately disclosed the nature of its operations and relevant information on
exposure to economic, environmental and social sustainability risks. Other than general risks associated with the
mineral exploration industry, the Company does not currently have material exposure to environmental and social
sustainability risks.
Principle 8 – Remunerate fairly and responsibly
Recommendation 8.1:
The Board of a listed entity should have a Remuneration Committee.
Disclosure:
A Remuneration Committee has not been established. The role of the Remuneration Committee has been assumed
by the full Board operating under the Remuneration Committee Charter adopted by the Board.
Recommendation 8.2:
A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the
remuneration of executive directors and other senior executives.
Disclosure:
The Company provides disclosure of all Directors and executives remuneration in its annual report.
Non-executive directors are remunerated at a fixed fee for time, commitment and responsibilities. Remuneration for
non-executive directors is not linked to the performance of the Group. There are no documented agreements
providing for termination or retirement benefits to non-executive directors (other than for superannuation).
Executive directors and senior executives are offered a competitive level of base pay at market rates and are reviewed
annually to ensure market competitiveness. Long term performance incentives may include performance and
production bonus payments, shares and / or options granted at the discretion of the Board and subject to obtaining
the relevant approvals.
Recommendation 8.3:
A listed entity which has an equity based remuneration scheme should have a policy on whether participants are permitted to
enter into transactions (whether through the use of derivatives or otherwise) which limit the economic risk of participating in the
scheme and disclose that policy or summary of it.
Disclosure:
The Company does not have an equity based remuneration scheme which is affected by this recommendation.
AVZ Minerals Limited | 44
Schedule of Tenements
Information required under Listing Rule 5.3.3
All projects are located in Namibia.
List of current mining and exploration tenements:
Project
Tumba
Himba
Brandberg
Hammerhead/Thresher
Abenab
Key
EPL: Exploration Licence
Tenement
Interest
Status
EPL 4436
EPL 4286
EPL 4283
EPL 4284
EPL 4285
EPL 4788
EPL 5503
EPL 5502
95%
95%
95%
95%
95%
95%
95%
95%
Granted
(renewal lodged)
Granted
(renewal lodged)
Application
Application
Application
Application
Application
Application
AVZ Minerals Limited | 45