Azure Minerals Limited
ABN 46 106 346 918
Annual Report and Financial Statements
for the year ended 30 June 2008
Azure Minerals Limited – Annual Report 2008
Corporate Information
ABN 46 106 346 918
Directors
Anthony Paul Rovira (Executive Chairman)
Dr Wolf Martinick (Non-Executive Director)
John Walter Saleeba (Non-Executive Director)
Company Secretary
Brett Dickson
Registered Office
Level 1, 30 Richardson Street
WEST PERTH WA 6005
(08) 9481 2555
Solicitors
Salter Power Pty Ltd
Level 2, 6 Kings Park Road
WEST PERTH WA 6005
Bankers
Commonwealth Bank of Australia Limited
Share Register
Computershare
Level 2, 45 St Georges Terrace
PERTH WA 6000
Telephone: (08) 9445 7000
Facsimile: (08) 9445 7677
Auditors
BDO Kendalls Audit & Assurance (WA) Pty Ltd
128 Hay Street
SUBIACO WA 6008
Internet Address
www.azureminerals.com.au
ASX Code
Shares
AZS
1
Azure Minerals Limited – Annual Report
Contents
Chairman’s Letter
Review of Operations
- 100 % owned Projects
- Joint Venture Projects
Directors' Report
Corporate Governance Statement
Financial Statements
- Income Statements
- Balance Sheets
- Statements of Changes in Equity (Consolidated)
- Statements of Changes in Equity (Company)
- Statement of Cash Flows
- Notes to the Financial Statements
- Directors' Declaration
- Independent Audit Report
- Auditors' Independence Declaration
ASX Additional Information
3
4
8
11
22
24
25
26
27
28
29
53
54
56
57
2
Dear Fellow Shareholders,
CHAIRMAN’S LETTER
On behalf of the Board of Azure Minerals Limited (“Azure”), it is my pleasure to present to you the Annual Report for 2008.
Our decision to focus on developing precious and base metal projects in the richly mineralised Sierra Madre Occidental
mining province in northern Mexico has been amply rewarded during the year with positive progress being achieved on
several fronts.
The strategy to identify and acquire high quality projects, and progress them through intensive exploration has been
successful. Azure gained its initial presence in Mexico in 2005 by entering into the joint venture with TSX-V listed
Geoinformatics Exploration Inc. We have continued to grow since then by identifying and staking a number of highly
prospective exploration properties which are 100% owned by Azure. In addition, the Company conducts an ongoing
surveillance program to identify and acquire advanced stage projects with near term cash flow potential, and this lead to the
successful acquisition of the Promontorio Project. Our project portfolio now covers an impressive 1,864 km2.
In May Azure achieved an important milestone in Mexico, with the signing of an agreement to acquire 100% of the high
grade Promontorio copper-gold-silver project. Promontorio has an impressive existing historical resource, known
mineralisation at several prospects, as well as exceptional mineral prospectivity across the property.
We moved quickly to capitalise on the opportunity at Promontorio by immediately commencing a scoping study. This will
include a substantial diamond drilling campaign produce a JORC compliant resource estimate by the end of the calendar year
and an initial metallurgical testwork program.
Initial drilling results have been excellent, easily exceeding our early expectations. Copper, gold and silver assays are
coming in significantly higher than historical results, indicating considerable upside potential for the deposit. We also see
potential for an expansion of the identified mineralised system both at depth and along strike to the north and south.
The acquisition of Promontorio realised a major corporate objective for Azure by adding to our portfolio an advanced stage
project with near term cash flow potential. Our focus is now on the rapid development of the project. We expect
Promontorio to contribute heavily towards our vision of becoming an independent minerals producer in Mexico.
In addition to Promontorio, Azure holds eight 100%-owned projects together with 13 projects in joint venture with
Geoinformatics. During 2008 Azure met its joint venture earn-in obligations and the Company now holds a 51% interest in
all 13 properties. Drilling has intersected promising mineralisation in molybdenum at Pozo de Nacho and silver, lead and
zinc at Los Chinos and further exploration on these projects is warranted.
Over the year, external market events have led to a difficult investment climate in North America. As a result, in
consultation with our Canadian corporate advisors, we postponed our TSX-V listing until market conditions improve.
However the North American markets remain a focus of our growth strategy as we develop our Mexican projects, and
substantial financial support was received from North American institutional investors during the year.
We welcomed Dr Wolf Martinick to the board in the first part of the year. Dr Martinick is an environmental scientist with
more than 35 years in the resources industry. His extensive project development experience will be particularly valuable in
working towards development of the Promontorio Project.
Our success in Mexico could not have been achieved without the significant contribution of our staff, and I thank them all for
their efforts. Mr Mark Styles’ two year tenure as Exploration Manager in Mexico finished on June 30 and I especially thank
him for successfully establishing and operating our Mexican office during that period. In June this year I was pleased to
announce the appointment of Mr Luis Chavez to the position of General Manager for Mexico. Mr Chavez is a Mexican
national and brings to our Company a wealth of operating experience in Mexico and North America.
Azure has placed itself in a strong position in Mexico, with an outstanding and extensive portfolio of projects and
opportunities ranging from first pass exploration to resource definition at Promontorio. The program of regional exploration,
target identification and tenement staking to acquire 100%-owned projects throughout Mexico is continuing, and our ongoing
drilling at Promontorio will lead to the announcement of further results, which I encourage you to follow at our website –
www.azureminerals.com.au.
The acquisition of Promontorio is an important next stage in the growth of Azure in Mexico and I invite you to continue to
participate in our future success over the coming years as we develop our vision of becoming an independent minerals
producer.
Tony Rovira
Executive Chairman
3
REVIEW OF OPERATIONS
100% AZURE PROJECTS
Azure, through its wholly-owned Mexican subsidiary Minera Piedra Azul SA de CV, continues to conduct its extensive
program of regional exploration, target identification and project acquisition in northern Mexico to acquire 100%-owned
properties prospective for economic precious and base metal deposits. The program’s effectiveness is enhanced by Azure’s
permanent presence in Hermosillo, the capital of Sonora, where the Company has based its exploration team and
administration centre.
The Company recently achieved a major milestone by reaching agreement to acquire 100% of the high grade copper-gold-
silver Promontorio Project in Chihuahua, Mexico. Promontorio has the potential to be successfully developed into a
producing mine in the short to medium term. To expedite Promontorio into the feasibility study stage, Azure immediately
commenced a scoping study comprising an 8,000 metre diamond drilling program to produce an initial JORC (Joint Ore
Reserve Committee) compliant mineral resource and a metallurgical testwork program.
Promontorio is located in a highly mineralised district with nearby mining operations including the Ocampo Mine (reserves
of 2.5Moz gold and 113Moz silver), the Pinos Altos Mine (reserves of 2.5Moz gold and 73Moz silver), the Dolores Mine
(reserves of 2.4Moz gold and 127Moz silver), and the Palmarejo Project (resources of 1.7Moz gold and 150Moz silver).
During the year, Azure also staked three new 100% owned properties in areas which contain strong evidence of mineralisation
including historical mine workings, anomalous surface geochemistry, and mineralised drill intercepts. In particular, staking of
the El Carnero property is considered a significant success for Azure.
Based upon considerable historical and current mining and exploration activity in the local district, Azure identified the El
Carnero property as highly prospective with potential to host economic zinc, copper, lead and silver mineralisation. However
no modern exploration has occurred on the property, as the local landowners have denied access to El Carnero for over 80
years. Azure’s on-ground exploration team in Mexico was able to successfully negotiate exploration access to the property
and work was commenced.
Azure is continuing its program of project acquisition, while also reviewing opportunities to farm-out or joint venture some
of its other properties in order to focus expenditures on its higher priority projects.
PROMONTORIO (Copper-Gold-Silver)
Azure entered into agreement for an option to purchase the Promontorio Project in May 2008. The property covers 187
hectares and is located about 400 kilometres east of Hermosillo. This is an advanced stage project, containing the high grade
Promontorio copper-gold-silver deposit, the Cascada gold prospect, and other metal occurrences indicative of an extensive
mineralisation system. The acquisition fulfils Azure’s strategic objective to secure a high quality, advanced stage asset with
early cash flow potential.
A substantial historical database (including 118 drillholes for 15,267m of drilling) has highlighted the exceptional mineral
prospectivity of the property, including an historical resource estimate which was announced by Azure to the ASX on 6 May
2008.
Promontorio comprises three granted mining leases – Hidalgo, Promontorio & Magistral. To acquire the Hidalgo and
Promontorio concessions, Azure has agreed to pay US$2.5 million staged over four years with the choice to advance full
payment at any time within that period for full ownership. The surrounding Magistral concession may be acquired on
similar terms, with payments totaling $US1.5 million over four years. Azure is able to withdraw from the agreements at any
time. No royalties are payable to either the vendors or the government for either acquisition.
Promontorio is a high sulphidation epithermal deposit consisting of multiple massive and semi-massive sulphide veins
containing very high grades of copper, gold and silver. From west to east there are three main veins – Santiago, Mina Vieja
and Veta Grande – interspersed with several other, un-named, mineralised veins. All veins strike approximately north-south,
dip steeply to the west, and demonstrate good geological continuity. Surrounding the sulphide veins is a siliceous alteration
halo containing lower grade gold and silver mineralisation.
Azure commenced a 50 hole / 8,000 metre diamond drilling program in May 2008 to enable the completion of a JORC (Joint
Ore Reserve Committee) compliant mineral resource, expand the resource along strike and at depth, and test for other
mineralisation within the project area. Design of the resource delineation drill program and calculation of the mineral
resources are under the guidance of the respected international mining consultancy, Coffey Mining Pty Ltd.
Initial results from the drilling program have been excellent, with massive, semi-massive or disseminated sulphide
mineralisation intersected in all holes drilled to date, confirming excellent internal continuity within the mineralised system.
Azure’s drilling has demonstrated that the mineralised veins are continuous over a strike length of at least 200 metres, with
potential for the mineralised system to extend for more than 850 metres.
4
Significant drilling results received to date include:
DRILL HOLE
FROM
APR-DD-001
APR-DD-001
(m)
52.00
94.65
including
103.40
APR-DD-002
APR-DD-003
APR-DD-005
including
APR-DD-008
including
APR-DD-009
including
and
18.00
42.00
72.00
51.85
57.65
70.75
85.20
85.20
82.00
86.00
90.25
130.60
including
130.60
APR-DD-010
104.95
TO
(m)
58.00
108.00
105.75
18.70
62.00
72.80
58.70
58.20
72.40
88.00
86.40
91.40
86.50
90.75
132.40
131.00
115.00
INTERVAL
COPPER
(m)
6.00
13.35
2.35
0.70
20.00
0.80
6.85
0.55
1.65
2.80
1.20
9.40
0.50
0.50
1.40
0.40
10.05
(%)
7.5
5.7
20.5
8.1
2.3
1.2
8.1
25.3
11.8
10.2
23.2
12.5
43.9
46.6
20.7
44.2
5.3
GOLD
(g/t)
5.0
2.2
5.4
2.8
0.7
5.3
2.7
3.1
5.8
1.8
3.9
3.9
5.1
7.2
1.2
1.4
1.2
SILVER
(g/t)
113
108
303
203
45
44
98
223
216
120
268
266
686
873
270
508
45
Intersections selected are based on sulphide intercepts using a 0.5% copper lower cut‐off, no upper cut, with maximum 4m
internal dilution. Samples are all HQ quarter core.
Sample preparation was undertaken by ALS‐Chemex (Hermosillo) and analysed by ALS‐Chemex (Vancouver) using 4 acid
digest / ICP‐AES (for silver and base metals) and Fire Assay / AAS (for gold) methods.
Certified Reference Standards and blank check samples are inserted at regular intervals to provide assay quality checks.
Review of the standard and blank samples are within acceptable limits.
All mineralised intervals are length-weighted and are reported as downhole lengths – true widths are not known.
Potential for depth extensions to the Promontorio deposit (past the depth limit of the historical resource estimate of 150
metres) exists, as highlighted by several deep drill intercepts, including 3.5m @ 12.6% copper, 4.1g/t gold & 357g/t silver
from 252.5m and 3m @ 7.5% copper, 6.82g/t gold & 88g/t silver from 247.0m. These intercepts are more than 200 metres
below surface, demonstrating the potential for deep mineralised extensions to the deposit.
Interestingly, gold and silver assays from Azure’s drilling program are much higher than historical results, indicating a
general underestimation of precious metal grades by previous explorers. Azure now believes there is clear potential for
Promontorio to develop into a significant copper deposit with substantial precious metals credits, rather than the more
conventional copper-only deposit targeted by prior explorers.
Copper mineralisation within the Promontorio deposit mostly comprises enargite and chalcopyrite, with lesser amounts of
bornite, covellite, and chalcocite. Enargite is a copper-arsenic sulphide mineral while the others are copper (+/- iron)
sulphides. The elevated levels of arsenic associated with the mineralisation will require investigation, as arsenic can be a
deleterious element when treating copper-rich concentrates. Other mines which produce a similar product include the
Chelopech Mine in Bulgaria (Dundee Precious Metals Inc) and the Furtei Mine in Sardinia (Buffalo Gold Ltd). Both of
these mines have long term off-take agreements, selling their copper-arsenic concentrate to specialist smelter operations.
Also present within the project area is the Cascada prospect which hosts a near-surface zone of gold and silver
mineralisation, with historical drilling intersecting wide zones (>10m) of moderate grade gold (1-2g/t) indicating the
potential for a bulk tonnage gold deposit. A best intercept of 7.6m @ 19.8g/t gold highlights the prospect for bonanza-grade
gold mineralisation. Cascada hosts mostly gold and silver mineralisation, with little or no copper and arsenic. This is a high
priority exploration target which Azure will drill test during 2009.
5
By acquiring the Magistral concession, which surrounds the main leases, Azure has ensured that the project area completely
covers the mineralised alteration zone. Azure’s geological mapping has revealed that the mineralised structures which host
the massive sulphides at Promontorio extend into the Magistral lease. The potential for significant mineralisation is high with
the property also containing old mine workings, outcropping oxide and sulphide mineralisation, and gold, silver and copper
anomalies from surface sampling. Regional exploration to develop drill targets will be carried out during the forthcoming
year.
With high grades, multiple ore zones and excellent potential to expand the existing resources, Azure believes that
Promontorio has all the characteristics of a deposit ready to be developed into a successful mining operation. The Company
has commenced a formal program of metallurgical testwork and other requirements necessary to implement a feasibility
study.
EL CARNERO (Polymetallic: silver-zinc-lead-copper)
El Carnero was staked by Azure in November 2007, with the lease granted in February 2008. The property covers
approximately 90km2 and is located only 60 kilometres northwest of Hermosillo.
Lying in the heart of Sonora’s prolific skarn mineralisation belt, and containing extensive surface mineralisation and historical
mine workings, El Carnero is highly prospective for economic zinc, copper, lead and silver mineralisation. Importantly,
access to this area has been denied to the exploration and mining industry for more than eight decades, as the family which
owns the cattle ranch and associated surface rights has previously refused all access to mineral explorers and Government
geologists.
Azure’s Mexican personnel successfully negotiated with the landowner to allow full access to this highly prospective district,
confirming the benefit of having an exploration team based in Mexico full time, engaging with the local community.
With no exploration undertaken in the area for at least 80 years, modern exploration techniques have not been applied to the
area. However Azure’s initial exploration program identified historical mine workings dating back more than two centuries
which exploited numerous strongly mineralised structures, confirming the excellent prospectivity of the property.
The historical mining activity was developed on replacement-style mineralisation at the contacts between limestone and
intrusive felsic dykes. Individual mine workings selectively mined high grade zones, some with widths in excess of three
metres. Workings extend for over 200 metres along strike and continue to depths of at least 30 metres below surface.
Surrounding these old workings are wide zones of strong alteration, indicating potential for substantial mineralisation.
To date, Azure has completed an exploration program comprising reconnaissance geological mapping, mine dump and rock
chip sampling, and a geophysical survey. Samples collected from around the old mine workings returned high grade results,
with 15 out of the 18 samples assaying greater than 1% lead and 1% zinc, and seven samples assaying greater than 1% copper
and 30g/t silver. Best grades included 17.55% zinc, 11.45% lead, 419g/t silver, 4.29% copper, 0.28% molybdenum and
0.39g/t gold.
The geophysical survey utilised the NSAMT technique. NSAMT (Natural Source Audio-Frequency Magneto-Telluric) is a
resistivity technique which can detect even relatively weak conductors, in particular zones of sphalerite-rich (zinc) sulphide
mineralisation, to depths of up to 700 metres below surface. Data interpretation revealed several significant conductor bodies,
possibly representing sizeable zones of sulphide mineralisation, beneath the old mine workings.
El Carnero is considered to be an excellent acquisition in a strongly mineralised district. With initial exploration returning
very positive results, Azure will undertake the first ever drilling program on this property during the coming year.
LA TORTUGA & LOS NIDOS (Copper-Zinc-Gold)
La Tortuga and the adjoining Los Nidos properties are located about 90 kilometres northwest of Hermosillo and together
cover 100km2. They are situated within Sonora’s skarn mineralisation district, adjacent to the previously mined, high grade
Tecolote deposit (1.6Mt @ 1.8% copper, 6.9% zinc & 50g/t silver). There is abundant evidence of mineralisation within
both projects, with potential for porphyry copper, skarn copper-zinc, and gold-silver veins.
La Tortuga was previously held by Teck Cominco, who drilled at least seven Reverse Circulation (RC) holes into the
mineralised system. Significant drill intercepts include:
• Porphyry hosted mineralisation: 110 metres @ 0.2% copper from surface;
• Porphyry hosted mineralisation: 20 metres @ 0.06% molybdenum from 20 metres;
• Porphyry hosted mineralisation: 3 metres @ 1.65% copper from 30 metres; and
• Skarn mineralisation: 30 metres @ 0.5% copper & 0.5% zinc from 80 metres.
Azure initiated exploration at La Tortuga with a program of surface sampling and geological mapping. Soil sampling
returned highly anomalous results, including an impressive copper-zinc anomaly identified over an area of 1,000m x 200m
covering the contact between a limestone unit and a porphyry intrusion (typical skarn environment).
6
Soil samples returned assays up to 3,970ppm copper and 3,100ppm zinc, and rock chip sampling returned strongly
anomalous grades up to 8.5% copper, 12.8% zinc, 3.4% lead, 106g/t silver, 0.94% molybdenum, and 0.17% tungsten.
The geology and anomalous geochemistry in this area are characteristic of a mineralised skarn environment, and Azure will
be continuing exploration on this property through geophysical surveys and drilling.
Los Nidos adjoins the southern boundary of La Tortuga and contains numerous historical mine workings which exploited
northwest trending gold-silver veins hosted in a hydrothermally altered porphyry. Initial surface sampling returned abundant
indications of mineralisation, including gold (up to 12g/t), silver (up to 1,100g/t), copper (up to 3.7%) and lead (up to
1.2%). Further work will be carried out in conjunction with programs on La Tortuga.
EL CUERVO (Copper-Zinc-Molybdenum)
El Cuervo is located 50 kilometres north of Chihuahua City, the capital of the state of Chihuahua. This is a large property of
258km2 located towards the northern end of the Chihuahua Trough, a major geological feature containing numerous base
metal mines including the nearby giant limestone-hosted Santa Eulalia and Naica silver-lead-zinc mines.
El Cuervo is situated five kilometres north of the Terrazas zinc-copper deposit (90Mt @ 1.37% zinc & 0.32% copper), which
is currently under feasibility study. More than 20 strike kilometres of the limestone and associated felsic intrusive sequence
that hosts Terrazas and other contact skarn deposits in the district are contained within the property. El Cuervo has potential
for repetitions of Terrazas-style deposits and for massive sulphide silver-lead-zinc mineralisation similar to Santa Eulalia and
Naica.
The El Cuervo property surrounds the Peña Blanca mineral field which is held by the Mexican Government. Peña Blanca
hosts several shallow, high grade molybdenum deposits, which are reported to contain a total of 9.3Mt @ 0.13% molybdenum
for approximately 11,700 tonnes (25.8Mlbs) of molybdenum. El Cuervo contains more than 100km2 of the same geological
sequence that hosts the Peña Blanca deposits, and Azure considers El Cuervo to have potential for hosting molybdenum
deposits of the Peña Blanca style.
No known drilling has been completed within the El Cuervo property, with all historical exploration being focused on the
neighbouring occurrences at Peña Blanca and Terrazas. Azure intends to carry out surface exploration and drilling during
2009.
OTHER PROJECTS
Azure also holds four other 100%-owned projects which are located in the states of Sonora (La Providencia and San
Eduardo), Chihuahua (Coronado) and Coahuila (Las Viboras). These early stage properties host numerous occurrences of
old mine workings and surface evidence of base metal mineralisation. They are prospective for replacement and porphyry
style mineralisation hosting copper, gold, silver, zinc and lead. Azure will be looking to add value to these properties by
initiating first pass exploration during the forthcoming year.
7
JOINT VENTURE PROJECTS
Azure holds a 51% interest in 13 properties in Sonora in joint venture with Canadian-listed Geoinformatics Exploration Inc
(TSX-V: GXL). During the year Azure completed its earn-in expenditure obligations of US$4 million thereby earning its
interest and the joint venture was formally established. The joint venture work program and budget for the remainder of 2008
has been finalised and approved. Geoinformatics has elected not to contribute to the 2008 exploration budget and
consequently Azure’s interest in the joint venture will increase in accordance with standard industry formulae. The joint
venture’s project portfolio is now well developed, with an appropriate mix of early to advanced stage exploration properties.
POZO DE NACHO (Molybdenum)
Pozo de Nacho is located 95 kilometres southeast of Hermosillo in the richly mineralised Sierra Madre Occidental region,
which contains several large molybdenum deposits including the Cumobabi mine (46.5Mt @ 0.12% Mo) and the El Creston
deposit (177Mt @ 0.08% Mo).
Previous exploration drilling by Azure identified a substantial body of molybdenum-rich mineralisation within an intrusive
porphyry system and the surrounding sediments. Mineralisation was identified over an area of 800 by 250 metres, and from
surface to depths in excess of 300 metres, and it remains open-ended in most directions.
Mineralisation is present as veins and coarse to fine disseminations of molybdenite (molybdenum sulphide: MoS2) hosted
within strongly altered quartz porphyry and surrounding sediments (sandstones and siltstones). Copper and silver
mineralisation is also present in moderate amounts throughout the system.
During the year Azure carried out a program of ore grade analyses on sample pulps from the 2007 drilling programs using the
X-Ray Fluorescence (XRF) analytical technique. This technique provides a more accurate reading of total molybdenum
content within the sulphide mineralisation than conventional exploration analytical techniques. This work resulted in a 29%
increase to the average molybdenum grades, with grades of individual drill intercepts increasing by up to 51%.
Significant drill intercepts utilising the XRF technique are presented below.
Drill Hole
Mineralised Intercept Molybdenum Grade Increase
PDN-DD-01#
including
102.8m @ 294ppm Mo
5.0m @ 1,382ppm Mo
PDN-DD-03
including
124.2m @ 304ppm Mo
14.0m @ 859ppm Mo
PDN-DD-04#
183.7m @ 303ppm Mo
PDN-DD-06#
138.9m @ 439ppm Mo
PDN-RC-02A#
including
198.1m @ 438ppm Mo
19.9m @ 736ppm Mo
17%
11%
38%
51%
20%
29%
30%
23%
# denotes drill hole ended while still within mineralisation
These latest assay results confirm the potential of Pozo de Nacho to host a large body of economic molybdenum
mineralisation. Many of the drill holes ended while still within the mineralised zone, providing an indication of the
significant depth extent and overall size potential of the mineralised system.
Azure has planned follow-up diamond drilling at Pozo de Nacho to define the extent of this potentially economic
molybdenum mineralisation. Molybdenum-rich porphyry deposits often have a high grade core surrounded by a large halo of
lower grade mineralisation. The planned drilling will test for these higher grade zones at depths while also defining the
overall extent of the mineralised system. In addition, drilling will investigate the porphyry copper potential at depth beneath
the molybdenum-rich zone.
8
What is Molybdenum?
Molybdenum is a high melting point alloying metal used to improve the hardness and
corrosion resistance of steel, and as a high temperature lubricant in greases and
bearings.
Molybdenum occurs most commonly as molybdenite (Molybdenum Sulphide – MoS2).
The main regions of molybdenum production are North and South America and China,
and mines usually operate in rocks with molybdenum grades between 0.01% - 0.30%.
Annual consumption of molybdenum is currently more than 400 million pounds and
increasing at approximately 10% per annum. World-wide production is struggling to
maintain sufficient supply, which has led to significantly higher prices. Since 2003,
molybdenum prices have increased from US$5 per pound to greater than US$30 per
pound in 2008.
Prices are expected to continue to grow until at least 2010, due to significantly
increased demand and ongoing supply-side constraints.
LOS CHINOS (Polymetallic: silver-zinc-lead-copper)
Los Chinos, located 80 kilometres north of Hermosillo, is prospective for replacement style mineralisation associated with
mineralised porphyry intrusions. Azure’s first pass exploration this year comprised extensive geological mapping, soil, mine
dump and rock chip sampling. This work identified numerous historical mine workings throughout the property,
demonstrating widespread base metal mineralisation within zones of strong hydrothermal alteration. Assay results outlined
three very strong multi-element (zinc, lead, silver, copper, gold and molybdenum anomalies, confirming the prospective
character of the property.
Following this initial encouragement, Azure undertook a very successful diamond drilling program of 12 holes for 1,561
metres, identifying extensive zinc-rich polymetallic mineralisation. Silver, lead, gold and copper credits are present
throughout the area, occasionally in very high grades.
Ten of the holes were drilled into the 550 x 200m eastern anomaly with two holes drilled into the 400 x 200m northern
anomaly. Every drillhole intersected significant base metal and silver mineralisation. Highlights from the drilling include:
DRILL HOLE
LCH-DD-001
LCH-DD-003
LCH-DD-005
LCH-DD-007
including
“
LCH-DD-008
including
LCH-DD-009
LCH-DD-010
FROM
(m)
2.0
26.0
70.0
4.0
47.0
51.0
61.0
16.0
18.0
8.0
3.0
55.0
TO
(m)
5.0
31.0
73.0
8.0
67.0
56.0
66.0
29.0
22.0
22.0
25.0
59.0
INTERVAL
(m)
3.0
5.0
3.0
4.0
SILVER
(g/t Ag)
355
55
14
236
20.0
5.0
5.0
13.0
4.0
14.0
22.0
4.0
37
18
78
17
17
23
20
52
ZINC
(%)
0.38
1.54
4.23
2.17
1.94
5.61
1.28
2.69
7.13
1.53
1.40
0.26
LEAD
(%)
1.54
0.66
0.38
0.77
0.61
0.99
0.35
0.51
0.66
1.16
0.96
1.52
COMMENTS
Incl: 3m @ 2.39g/t Au
Incl: 4m @ 1.00% Cu
& 4m @ 0.69g/t Au
Incl: 1m @ 11.20% Zn
Incl: 1m @ 14.15% Zn
Incl: 1m @ 5.80% Zn
& 1m @ 7.92% Pb
Samples were all sawn half HQ core. Sample preparation was undertaken by ALS-Chemex (Hermosillo) and analysed by ALS-Chemex
(Vancouver) using 4 acid digest / ICP-AES (for silver and base metals) and fire assay / AAS (for gold) methods. All mineralised intervals
are length-weighted and are reported as downhole lengths – true widths are not known.
This first ever drilling program at Los Chinos has delivered excellent results, giving Azure great confidence in the potential
of the polymetallic system discovered. The multiple mineralised horizons are all replacement-style mineralisation indicating
a large system with potential to host significant polymetallic sulphide deposits. It is considered likely that this
mineralisation is peripheral to a copper-molybdenum mineralised porphyry intrusion.
9
To follow-up this excellent drilling result and to help identify the next generation of drill targets, Azure carried out a
geophysical survey utilising the NSAMT technique. NSAMT (Natural Source Audio-Frequency Magneto-Telluric) is a
resistivity technique which can detect relatively weak conductors, in particular zones of sphalerite-rich sulphide
mineralisation, to depths of up to 700 metres below surface. Geophysical modeling identified several significant conductor
bodies, possibly representing sizeable zones of sulphide mineralisation, beneath the main area of interest. Further diamond
drilling to test these targets is planned.
JAGÜEY (Silver-Lead-Zinc)
Jagüey is located in the western foothills of the Sierra Madre Occidental mountain range, about 190 kilometres east of
Hermosillo. The property is prospective for porphyry copper and associated styles of mineralisation. Historical mine
workings exploited silver-lead-zinc veins and copper-gold skarns.
Drilling by Azure in 2006 and 2007 intersected high grade silver-lead-zinc mineralisation hosted in massive sulphide veins,
including:
• 0.7 metres @ 3,180g/t silver, 12.8% lead & 6.2% zinc;
• 0.5 metres @ 400g/t silver, 4.8% lead & 3.1% zinc; and
• 2.5 metres @ 322g/t silver, 2.7% lead & 2.1% zinc.
Mineralisation is hosted in a sheeted vein system comprising numerous massive sulphide veins of sphalerite and galena
containing high grades of silver, lead and zinc. The vein system has an open-ended north-south strike length of at least 150
metres and an overall width of about 50 metres.
Jagüey has potential to host a substantial quantity of this style of mineralisation. It is also likely that a copper-molybdenum
mineralised porphyry system, from which the sulphide mineralisation was sourced, is located nearby.
BATACOSA (Copper-Molybdenum)
Batacosa is located 225 kilometres southeast of Hermosillo and is situated some 60 kilometres along strike from the Piedras
Verdes copper oxide mine, operated by Canadian company, Frontera Copper Corporation. The Batacosa property contains a
classic porphyry copper-molybdenum signature over a 3 kilometre x 1 kilometre area.
Previous exploration on the property by several major mining companies delineated a strong soil geochemical and alteration
anomaly directly overlying an IP chargeability high and coincident resistivity low, indicative of disseminated sulphide
mineralisation. Follow-up RC drilling returned an intercept of 300 metres @ 0.1% copper from surface to end of hole.
Azure is considering its exploration options on this property.
OTHER PROJECTS
The Joint Venture also has nine other, mostly early stage, projects prospective for copper, gold, silver, zinc and lead. During
the next year Azure will investigate ways in which value may be realised for these projects.
10
Directors' Report
Azure Minerals Limited - Financial Statements
DIRECTORS
The following persons were directors of Azure Minerals Limited during the whole of the financial year and up to the date of this report.
Anthony Rovira
John Saleeba
Wolf Martinick was appointed as a director on 1 September 2007 and continues in office at the date of this report.
Michael Fowler was a director from the beginning of the financial year until his resignation on 1 September 2007.
PRINCIPAL ACTIVITIES
During the year the principal continuing activity of the Group was exploration for precious and base minerals in Mexico. Following the
decision in the 2006/07 financial year to concentrate the Groups activity in Mexico all Australian projects were relinquished or sold
during the year.
DIVIDENDS
No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.
REVIEW OF OPERATIONS
Group Overview
Azure Minerals Limited was incorporated on 19 September 2003 and listed on the ASX in December 2003. At the time of incorporation
the company was called Nickel Australia Limited and was actively exploring for nickel sulphide deposits in Western Australia. In early
2006 the company broadened its focus and entered into a joint venture to explore for gold, copper, silver and zinc in Mexico. As a result
of this change in focus the company received shareholders approval at the 2006 AGM to change its name to Azure Minerals Limited and
on 20 December 2006 this name change became effective. In early 2007, the company’s focus shifted to the point where its principal
activities were based in Mexico; as a result a decision was made by the directors to sell or joint venture all Australian exploration
projects.
Operating Results for the Year
The operating loss after income tax of the company for the year ended 30 June 2008 was $4,481,150 (2007: $4,879,213). Included in this
loss figure is $2,305,586 (2007: $3,512,273) of exploration expenditure written off. Refer notes to the financial statements note 1(d).
Summarised operating results are as follows:
Geographic segment
Australia
Mexico
Revenues and loss from ordinary activities before income tax expense
Shareholder Returns
Basic loss per share (cents)
Diluted loss per share (cents)
2008
Revenues
$
Results
$
146,089
644
146,733
(2,190,768)
(2,290,382)
(4,481,150)
2008
(3.3)
(3.3)
2007
(4.8)
(4.8)
11
Directors' Report
Azure Minerals Limited - Financial Statements
Investments for Future Performance
The future performance of the group is dependant upon exploration success and the continued progress of development of those projects
where precious and base metals are already present. To this end the group has budgeted to continue exploration at its Mexico projects.
Review of Financial Condition
The consolidated entity has a sound capital structure and is in an excellent position to progress its mineral properties. During the year,
$4,800,000 was raised through the issue of 36,666,668 shares via private placements.
Risk Management
The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with the
risks and opportunities identified by the board.
The group believes that it is crucial for all board members to be a part of this process, and as such the board has not established a separate
risk management committee. The Board has adopted a Risk Management Policy.
The board has a number of mechanisms in place to ensure that management's objectives and activities are aligned with the risks identified by
the board. These include the following:
h Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders’ needs and manage business
risk.
h Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets.
The company undertakes risk review meetings as required with the involvement of senior management. Identified risks are weighed with
action taken to mitigate key risks.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Significant changes in the state of affairs of the Group during the financial year were as follows:
(a) An increase in contributed equity of $4,800,000 (from $20,329,782 to $25,129,782) as a result of:
Issue of 20,000,000 fully paid ordinary shares at $0.15 each
Issue of 16,666,668 fully paid ordinary shares at $0.12 each
Less expenses associated with the above issue of shares
Total
2008
$
3,000,000
2,000,000
5,000,000
(200,000)
4,800,000
(b) Net cash received from the increase is contributed equity amounting to $4,800,000 was used principally to continue the company’s
exploration programme in Mexico.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Since the end of the financial year Azure Minerals Limited completed a share purchase plan whereby it offered shareholders registered at
the close of business on 4 August 2008 the opportunity to subscribe for up to $5,000 worth of Azure Minerals Limited share at $0.125 per
share. 10,765,600 shares were issued under the plan raising $1,345,700. In addition a further 9,600,000 shares were issued by way of a
private placement at $0.125 each to raise a further $1,200,000.
No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly affect the
operations of the group, the results of those operations, or the state of affairs of the group in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The group expects to maintain the present status and level of operations.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The company is subject to significant environmental regulation in respect to its exploration activities.
The company aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in
compliance with all environmental legislation. The directors of the company are not aware of any breach of environmental legislation for
the year under review.
12
Azure Minerals Limited - Financial Statements
Directors' Report
INFORMATION ON DIRECTORS
Your directors present their report on the consolidated entity (referred to hereafter as “the Group”) consisting of Azure Minerals Limited
and the entities it controlled at the end of or during the year ended 30 June 2008.
Names, qualifications, experience and special responsibilities
Mr. Anthony Paul Rovira, BSc Flinders University, BSc (Hons) Flinders University, MAusIMM (Appointed Executive Chairman 6
June 2007)
Experience and Expertise
Tony Rovira has 25 years technical and management experience in the mining industry, as an exploration and mining geologist, and as a
company executive at Board level. Since graduating from Flinders University in South Australia in 1983, Tony has worked for
companies both large and small, including BHP, Barrack Mines, Pegasus Gold and Jubilee Mines.
From 1997-2003 Tony was the General Manager of Exploration with Jubilee Mines, during which time he led the team that discovered
and developed the world class Cosmos and Cosmos Deeps nickel sulphide deposits in Western Australia. In the year 2000, the
Association of Mining and Exploration Companies awarded Tony the “Prospector of the Year Award” for these discoveries.
Tony joined Azure Minerals as the inaugural CEO in December 2003 and was appointed Executive Chairman in June 2007. He is
responsible for the decision to focus Azure Minerals' activities on the world class mineral provinces in Mexico, where the company has
been operating since 2005.
Other Current Directorships
None.
Former Directorships in the last 3 years
None.
Special Responsibilities
Chairman of the Board and Managing Director
Interests in Shares and Options
2,000,000 ordinary shares in Azure Minerals Limited
6,500,000 options over ordinary shares in Azure Minerals Limited
Dr Wolf Martinick, PhD, BSc (agric) (Appointed 1 September 2007)
Experience and Expertise
Dr Martinick is a Fellow of the AusIMM and founding director of the Perth-based consultancy, MBS Environmental Pty Ltd, to the
mineral resource industry, especially in Australasia.
Dr Martinick has been involved with mineral exploration and mining projects around the world, especially Australasia, Africa, China,
India, Eastern Europe and parts of the former Soviet Union. He has participated in numerous due diligence studies on mining projects
around the world on behalf of international financial institutions and mineral resource companies for a variety of transactions, including
listings on international stock exchanges, mergers and debt financing.
Other Current Directorships
Sun Resources NL – Non-Executive Director since February 1996
Ezenet Limited – Chairman since January 2003
Weatherly International Plc – Chairman since July 2005
Uran Limited – Non-Executive Director since November 2006
Windimurra Vanadium Limited – Chairman since December 2006
Carbine Resources Limited – Non-Executive Director since December 2006
Former Directorships in the last 3 years
Nil
Special Responsibilities
Chairman Remuneration Committee
Member of Audit Committee
13
Azure Minerals Limited - Financial Statements
Directors' Report continued
Interests in Shares and Options
500,000 ordinary shares in Azure Minerals Limited
1,000,000 options over ordinary shares in Azure Minerals Limited
Mr. John Walter Saleeba, BCom, LLB, CPA, FAICD (Non-Executive Director, chairman audit committee, remuneration committee
member)
Experience and Expertise
Mr Saleeba was formerly a partner in the law firm Clayton Utz. He is a Fellow of the Australian Institute of Company Directors and is
currently Chairman of Repcol Limited and VDM Group Limited. Mr Saleeba has held directorships with a number of other public
companies, covering a wide range of business activities.
Other Current Directorships
Repcol Limited – Non-Executive Director and Chairman since February 2002.
VDM Group Limited – Non-Executive Director and Chairman since October 2005.
Former Directorships in the last 3 years
Centrepoint Alliance Limited from May 2002 – November 2007
Special Responsibilities
Chairman of Audit Committee
Member of Remuneration Committee
Interests in Shares and Options
770,000 ordinary shares in Azure Minerals Limited
1,000,000 options over ordinary shares in Azure Minerals Limited
Company Secretary
Brett Dickson, BBus, CPA (Appointed 21 November 2006)
Mr Dickson is a Certified Practising Accountant with a Bachelors degree in Economics and Finance from Curtin University and has over
20 years experience in the financial management of companies, principally companies in early stage development of its resource or
product, and offers broad financial management skills. He has been Chief Financial Officer for a number of successful resource
companies listed on the ASX. In addition he has had close involvement with the financing and development of a number of greenfield
resources projects.
DIRECTORS' MEETINGS
The number of directors' meetings held (including meetings of committees of directors) and number of meetings attended
by each of the directors of the company during the financial year are:
Directors'
Meetings
A
8
8
6
2
B
8
8
6
2
Meetings of Committees
Audit
A
*
2
2
-
B
*
2
2
-
Remuneration
B
A
*
-
-
-
*
-
-
-
Anthony Paul Rovira
John Walter Saleeba
Wolf Gerhard Martinick
Michael John Fowler
Notes
A - Number of meetings attended.
B - Number of meetings held during the time the director held office or was a member of the committee during the year.
* - Not a member of the relevant committee.
Retirement, Election And Continuation In The Office Of Directors
Michael Fowler resigned as a director on 1 September 2007.
Wolf Martinick was appointed a director on 1 September 2007 to fill the vacancy caused by the resignation of Michael Fowler. Wolf
Martinick was elected as a director at the 2007 Annual General meeting.
John Saleeba is the director retiring by rotation who, being eligible offers himself for re-election.
14
Azure Minerals Limited - Financial Statements
Directors' Report continued
REMUNERATION REPORT (AUDITED)
The remuneration report is set out under the following main headings:
A Principles used to determine the nature and amount of remuneration
B Details of remuneration
C Service agreements
D Share-based compensation
E Additional Information
The information provided in this remuneration report has been audited as required by section 308 (3C) of the Corporation Act 2001.
A Principles used to determine the nature and amount of remuneration
The remuneration policy of Azure Minerals Limited has been designed to align director and executive objectives with shareholder and
business objectives by providing a fixed remuneration component and where appropriate offering specific long-term incentives based on
key performance areas affecting the Groups results. At present the Company’s has not implemented any specific long-term incentives
and as such the remuneration policy is not impacted by the Groups performance, including earnings in shareholder wealth (dividends,
changes in share price or return on capital to shareholders). The board of Azure Minerals Limited believes the remuneration policy to be
appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Group.
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, was developed by the
board. All executives receive a base salary (which is based on factors such as length of service and experience) and superannuation. The
board reviews executive packages annually by reference to the Groups performance, executive performance and comparable information
from industry sectors and other listed companies in similar industries.
The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract the highest
calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.
Executives are also entitled to participate in the employee share and option arrangements.
The executive directors and executives receive a superannuation guarantee contribution required by the government, which is currently
9% of cash salary, and do not receive any other retirement benefits. Some individuals, however, may choose to sacrifice part of their
salary to increase payments towards superannuation.
All remuneration paid to directors and executives is valued at the cost to the company and expensed. Shares given to directors and
executives are valued as the difference between the market price of those shares and the amount paid by the director or executive; to date
no shares have been awarded to directors of executives. Options are valued using either the Black-Scholes or Binomial methodologies.
The board policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and
responsibilities. The board determines payments to the non-executive directors and reviews their remuneration annually based on market
practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that
can be paid to non-executive directors is subject to approval by shareholders at the Annual General Meeting (currently $200,000). Fees
for non-executive directors are not linked to the performance of the economic entity. However, to align directors’ interests with
shareholder interests, the directors are encouraged to hold shares in the company and are able to participate in employee option plans.
In the 2005/2006 financial year Azure Minerals Limited established a Directors Retirement Benefit Policy whereby each non-executive
director is entitled to a retirement benefit in accordance with the maximum amount ascertained pursuant to section 200G(2)(b) of the
Corporations Act 2001. In the 2006/2007 financial year the Directors Retirement Benefit Policy was terminated and the retirement
benefit entitlement has been frozen as of 30 June 2006.
B Details of remuneration
Amount of remuneration
Details of the remuneration of the directors and key management personnel (as defined in AASB124 Related Party Disclosures) of Azure
Minerals Limited are set out below in the following tables.
The key management personnel of Azure Minerals Limited includes the directors as disclosed earlier in this report and the following who
have authority and responsibility for planning, directing and controlling the exploration activities of the entity.
Mr P Manouge Exploration Manager – Australia
Mr M Styles Exploration Manager – Mexico (until 30 June 2008)
In addition the Company Secretary, Mr B Dickson is an executive whose remuneration must be disclosed under the Corporations Act
2001.
15
Azure Minerals Limited - Financial Statements
Directors' Report continued
Key management personnel of the Group
Cash, salary
& fees
Short-Term
Cash
bonus
Post Employment
Non monetary
benefits
Super-
annuation
Retirement
benefits
Name
Share-based
Payments
Options
Total
Directors
Anthony Paul Rovira – Executive Chairman
2008
2007
244,792
235,000
-
-
John Walter Saleeba – Non executive
-
-
22,031
21,150
2008
2007
-
32,500
-
32,500
Wolf Gerhard Martinick –Non Executive (Appointed 1 September 2007)
-
27,083
-
-
2008
2007
-
-
-
-
Michael John Fowler – Non Executive (Resigned 1Sepember 2007)
2008
2007
5,416
32,500
-
-
Campbell Theodore Ansell – Non Executive (Resigned 6 June 2007)
2008
2007
Executives
Brett Dickson – Company Secretary
-
80,000
2008
2007
125,000
90,000
-
-
-
-
Dennis Wilkins – Company Secretary (Resigned 21 November 2006)
2008
2007
-
23,913
Patrick Manouge – Exploration Manager
-
-
2008
2007
162,500
156,000
Mark Styles – Exploration Manager Mexico (Resigned 30 June 2008)
155,015
143,084
2008
2007
-
-
-
-
Total
2008
2007
752,306
792,997
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,925
2,925
2,437
-
487
2,925
-
3,375
-
-
-
-
14,625
14,040
-
-
-
-
-
-
-
-
-
-
-
60,000
-
-
-
-
-
-
-
-
-
54,150
266,823
310,300
-
-
35,425
35,425
103,830
-
133,350
-
-
-
-
-
5,903
35,425
-
143,375
172,212
11,160
297,212
101,160
-
-
43,053
23,901
28,702
29,250
-
23,913
220,178
193,941
183,717
172,334
42,505
44,415
-
60,000
347,797
118,461
1,142,608
1,015,873
Retirement benefits provided for the non-executive directors in the financial statements do not form part of the above remuneration until
such time as the amount is paid to the retiring director.
Apart from the issue of options The company currently has no performance based remuneration component built into director and
executive remuneration (2007: Nil)
C Service Agreements
Remuneration and other terms of employment for the following key management personnel are formalised in service agreements, the
terms of which are set out below:
Anthony Rovira, Managing Director:
h Term of agreement - 5 years commencing 16 December 2003.
h Base salary, exclusive of superannuation, of $258,500 to be reviewed annually by the remuneration committee.
h Payment of termination benefit on early termination by the employer, other than for gross misconduct, includes an amount equal to the
amounts due for the balance of the term of the contract from the date of termination.
Brett Dickson, Company Secretary/Chief Financial Officer:
h Term of agreement – 2 years commencing 1 October 2006
h Fixed fee, $11,000 per month.
h Payment of termination benefit on early termination by the employer, other than for gross misconduct, includes an amount equal to the
amounts due for the balance of the term of the contract from the date of termination.
16
Azure Minerals Limited - Financial Statements
Directors' Report continued
Patrick Manouge, Exploration Manager :
h Term of agreement – no fixed term.
h Base salary, exclusive of superannuation, of $171,600 to be reviewed annually by the remuneration committee.
h The agreement can be terminated by giving three months notice.
Mark Styles, Exploration Manager - Mexico:
h Term of agreement – 2 years commencing 1 July 2006.
h Base salary, exclusive of superannuation, of $156,000 to be reviewed annually by the remuneration committee.
h The agreement can be terminated by giving three months notice.
Retirement Benefits
Other retirement benefits may be provided directly by the company if approved by shareholders.
D Share based compensation
Options over shares in Azure Minerals Limited may be issued to directors and executives under the Employee Option Plan. The options
are not issued based on performance criteria, but are issued to directors and executives of Azure Minerals Limited; where appropriate, to
increase goal congruence between executives, directors and shareholders. There are no standard vesting conditions to options awarded
with vesting conditions, if any, at the discretion of Directors at the time of grant. Options are granted for nil consideration. Options granted
in the year ended 30 June 2008 vested immediately at time of grant. The following options were issued or vested during the year to key
management personnel:
Granted
Number
Vested
Number
Grant Date Value per
option at
grant date
(cents)
Exercise
Price per
share
(cents)
First Exercise
Date
Last Exercise
Date
% of
Remun-
eration
Year ended 30 June 2008
Directors
Wolf Gerhard Martinick
Wolf Gerhard Martinick
Wolf Gerhard Martinick
Executives
Mark Styles
Patrick Manouge
Brett Dickson
Total
200,000
400,000
400,000
200,000 24 Dec 2007
400,000 24 Dec 2007
400,000 24 Dec 2007
200,000
300,000
1,200,000
200,000
300,000
1,200,000
3 Aug 2007
3 Aug 2007
3 Aug 2007
2,700,000 2,700,000
Year Ended 30 June 2007
Directors
Anthony Paul Rovira
Anthony Paul Rovira
Anthony Paul Rovira
Executives
Mark Styles
Mark Styles
Brett Dickson
Total
500,000
500,000
500,000
500,000
500,000
500,000
6 Dec 2006
6 Dec 2006
6 Dec 2006
500,000
500,000
1,200,000
500,000 10 Jan 2007
500,000 10 Jan 2007
6 Dec 2006
1,200,000
3,700,000 3,700,000
8.2
10.2
11.7
14.3
14.3
14.3
3.7
3.6
3.5
3.0
2.8
0.9
25.0
25.0
25.0
15.0
15.0
15.0
17.5
25.0
35.0
25.0
35.0
15.0
24 Dec 2007
24 Dec 2007
24 Dec 2007
31 Jan 2010
31 Jan 2011
31 Jan 2012
3 Aug 2007
3 Aug 2007
3 Aug 2007
30 Nov 2009
30 Nov 2009
30 Nov 2009
6 Dec 2006
6 Dec 2006
6 Dec 2006
30 Nov 2011
30 Nov2012
30 Nov 2013
10 Jan 2007
10 Jan 2007
6 Dec 2006
30 Nov 2012
31 Jan 2013
30 Nov 2009
12.3%
30.5%
35.0%
15.6%
19.6%
57.9%
6.0%
5.9%
5.6%
8.8%
8.2%
11.0%
* During the year 300,000 options granted in 2006 exercisable at $0.25 and which expire on 31 January 2012 to Patrick Manouge vested.
No options were exercised during the financial year and no options have been exercised since the end of the financial year. During the year
1,250,000 options exercisable at $0.25 with various expiry dates lapsed. The value of the options at lapse date was nil as the exercise price
of the option was significantly in excess of the market price of the underlying share. The value is determined at the time of lapsing, but
assuming the condition was satisfied.
The Company’s remuneration policy prohibits executives from entering into transactions or arrangements which limit the “at risk” aspect
of participating in unvested entitlements.
17
Azure Minerals Limited - Financial Statements
Directors' Report continued
Fair value of options granted
The weighted average fair value of the options granted during the year was 12.9 cents (2007: 2.6cents). The price was calculated by using
the Binominal Option valuation methodology applying the following inputs:
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Risk free interest rate
2008
18.7
2.74
21.0
90%
2007
23.4
4.02
10.7
70%
6.1%
6.0%
Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative of future trends,
which may not eventuate.
The life of the options is based on historical exercise patterns, which may not eventuate in the future.
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
Options issued to directors and employees
365,127
134,395
365,127
134,395
E Additional Information
Performance based remuneration
Details of remuneration: options
For each grant of options included in the tables in Sections B & D above the percentage that was forfeited because the person did not meet
the service and performance criteria is nil for the reasons described below.
All options granted this financial period vested immediately therefore there is no portion that may be forfeited due to not meeting service
and performance criteria. All service and performance criteria for options granted in prior periods have been met therefore there is no
portion of those options that may be forfeited due to not meeting those criteria.
The company currently has no performance based remuneration component built into director and executive remuneration packages.
Performance Income as a proportion of total compensation
No performance based bonuses have been paid to key management personnel during the financial year. It is the intent of the board to
review the inclusion of performance bonuses as part of remuneration packages during the 2008/09 financial year.
LOANS TO DIRECTORS AND EXECUTIVES
No loans have been provided to directors or executives.
18
Azure Minerals Limited - Financial Statements
Directors' Report continued
SHARES UNDER OPTION
At the date of this report there are 14,850,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Share option movements during the year Issued Lapsed1
Exercisable at 25 cents, on or before 30 November 2008 (250,000)
Exercisable at 25 cents, on or before 30 November 2009 (500,000)
Exercisable at 25 cents, on or before 1 January 2010 (500,000)
Exercisable at 25 cents, on or before 30 January 2010 200,000
Exercisable at 25 cents, on or before 30 January 2011 400,000
Exercisable at 25 cents, on or before 30 January 2012 400,000
Exercisable at 15 cents, on or before 30 November 2009 1,750,000
Total options issued and lapsed in the year to 30 June 2008
Total number of options outstanding as at 30 June 2008 and at the date of this report
Total Number of
options
13,350,000
(250,000)
(500,000)
(500,000)
200,000
400,000
400,000
1,750,000
1,500,000
14,850,000
1. Pursuant to the terms and conditions of issued options, options will lapse if not exercised within 90 days of the holder of the options
c
easing to be an employee, officer or contractor of the Company. Those options listed as lapsing above lapsed for this reason.
The balance is comprised of the following:
Expiry date
30 Nov 2008
30 Nov 2009
1 Jan 2010
30 Jan 2010
30 Jan 2011
30 Jan 2012
31 Jan 2011
31 Jan 2012
31 Jan 2013
30 Nov 2009
Total number of options outstanding at the date of this report
Exercise price (cents)
25.0
25.0
25.0
25.0
25.0
25.0
17.5
25.0
35.0
15.0
Number of
options
1,500,000
3,000,000
3,000,000
200,000
400,000
400,000
800,000
1,300,000
1,300,000
2,950,000
14,850,000
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of
any other body corporate.
No options were exercised during the financial year and since the end of the financial year no options have been exercised.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, Azure Minerals Limited paid a premium of $21,000 to ensure the directors and secretary of the company and
its Australian based controlled entities.
The liabilities insured and legal costs that may be incurred in defending civil or criminal proceedings that mat 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.
19
Azure Minerals Limited - Financial Statements
Directors' Report continued
Proceedings on behalf of the company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the
company, or to intervene in any proceedings to which the company is a party, for the purpose of taking responsibility on behalf of the
company for all or part of those proceedings.
No Proceedings have been brought or intervened in on behalf of the company with leave of the Court under section 237 of the
Corporations Act 2001.
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with the company and/or the Group are important.
Details of the amount paid or payable to the auditor (BDO Kendalls) for audit and non-audit services provided during the year are set out
below.
The Board of directors has considered the position and, in accordance with advice received from the audit committee, is satisfied that the
provisions of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations
Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the
auditor independence requirements of the Corporations Act 2001 for the following reasons:
• All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of
the auditor
• None of the services underline the general principals relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and
non-audit firms:
1. Audit Services
BDO Kendalls
Audit and review of financial reports
2. Non audit Services
Audit-related services
BDO Kendalls
Report for inclusion in a prospectus for a capital raising in Canada
Taxation Services
BDO Kendalls
Tax compliance services
Total remuneration for non-audit services
Consolidated
2008
$
2007
$
25,527
10,992
31,412
-
10,699
42,111
9,830
9,830
AUDITOR INDEPENDENCE
A copy of the auditors independence declaration as required under section 307c of the Corporations Act 2001 is set out on page 56.
AUDITOR
BDO Kendalls continues in office in accordance with section 327 of the Corporations Act 2001.
This report is made in accordance with a resolution of the directors.
Anthony Paul Rovira
Executive Chairman
Perth, 26 September 2008
20
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
Azure Minerals Limited ("Company") has made it a priority to adopt systems of control and accountability as the basis for the
administration of corporate governance. Some of these policies and procedures are summarised in this statement. Commensurate with
the spirit of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations ("Principles &
Recommendations"), the Company has followed each recommendation where the Board has considered the recommendation to be an
appropriate benchmark for its corporate governance practices. Where, after due consideration, the Company's corporate governance
practices depart from a recommendation, the Board has offered full disclosure and reason for the adoption of its own practice, in
compliance with the "if not, why not" regime.
Further information about the Company's corporate governance practices including the relevant information on the Company's charters,
code of conduct and other policies and procedures is set out on the Company's website at www.azureminerals.com.au.
DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES
During the Company's 2007 / 2008 financial year ("Reporting Period") the Company has followed each of the Principles &
Recommendations other than in relation to the matters specified below.
Principle 2
Recommendation 2.2: The chairperson should be an independent director.
Notification of Departure: The chair is not an independent director.
Explanation for Departure: Mr Rovira is not independent by virtue of his executive role. The Board considers that Mr Rovira is the
most appropriate person for the position of Chair given his industry experience, the size and current activities of the Company. The
Board also believes that Mr Rovira's appointment as Chair is in line with shareholder expectations.
Recommendation 2.3: The roles of the chair and managing director should not be exercised by the same individual
Notification of Departure: The roles of chair and managing director are exercised by Mr Rovira.
Explanation for Departure: While the Board recognises the importance of the need for the division of responsibilities between the chair
and the managing director, the existing structure is considered appropriate to the Company's present circumstances. It provides a unified
leadership structure which the Board believes is important given the Company's early stage of exploration. Further, the Board believes
this structure is in line with shareholder expectation.
Recommendations 2.4: The Board should establish a Nomination Committee
Notification of Departure: There is no separate Nomination Committee.
Explanation for Departure: The full Board considers those matters that would usually be the responsibility of a nomination committee.
Given that the Board comprises only 3 directors, the Board considers that no efficiencies or other benefits would be gained by
establishing a separate committee. The Board has adopted a Nomination Committee Charter which it applies, as relevant.
Principle 4
Recommendation: 4.2: Structure the Audit Committee so that it consists of only non-executive directors, a majority of
independent directors, an independent chairperson, who is not chairperson to the Board and at least 3 members.
Notification of Departure: The Audit Committee comprises 2 members.
Explanation for Departure: Given the size and structure of the Board, the Company is unable to meet the composition requirements
under the recommendation. The Audit Committee is comprised of the two independent, non executive directors. The Board has adopted,
and the Audit Committee applies, an Audit Committee Charter.
NOMINATION COMMITTEE
The full Board carries out the role of the Nomination Committee. The full Board did not officially convene as a Nomination Committee
during the Reporting Period, however nomination related discussions occurred from time to time during the year as required. To assist
the Board to fulfil its function as the Nomination Committee, it has adopted a Nomination Committee Charter (available on the
Company's website).
21
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
AUDIT COMMITTEE
The Audit Committee held two meetings during the Reporting Period. The following table identifies those directors who are members of
the Audit Committee and shows their attendance at Committee meetings:
Name
Wolf Martinick
John Saleeba (Chair)
No. of meetings attended
2
2
Details of each of the Audit Committee member's qualifications are set out in the Director's Report. Both members of the Audit
Committee consider themselves to be financially literate and have industry knowledge. Further, Mr John Saleeba has a Bachelor of
Commerce and is a Certified Practicing Accountant. Mr Saleeba's qualifications bring financial expertise to the Audit Committee.
REMUNERATION COMMITTEE
Details of remuneration, including the Company’s policy on remuneration, are contained in the “Remuneration Report” which forms of
part of the Directors’ Report.
The Remuneration Committee did not convene during the year however remuneration related discussions occurred from time to time
during the year as required.
OTHER
Skills, Experience, Expertise and term of office of each Director
A profile of each director containing their skills, experience and expertise is set out in the Directors' Report.
Assurances to the Board
The Board has received assurance from management that the Company's management of its material business risks are effective.
Further, the Chief Executive Officer (or equivalent) and the Chief Financial Officer (or equivalent) have provided a declaration in
accordance with section 295A of the Corporations Act and have assured the Board that such declaration is founded on a sound system of
risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting
risk.
Identification of Independent Directors and the Company's Materiality Thresholds
In considering the independence of directors, the Board refers to its Policy on Assessing the Independence of Directors (available on the
Company's website).
The Board has agreed on the following guidelines for assessing the materiality of matters, as set out in the Company's Board Charter
(available on the Company's website):
•
•
•
Balance sheet items are material if they have a value of more than 5% of pro-forma net asset.
Profit and loss items are material if they will have an impact on the current year operating result of 5% or more.
Items are also material if they impact on the reputation of the Company, involve a breach of legislation, are outside the ordinary
course of business, they could affect the Company’s rights to its assets, if accumulated they would trigger the quantitative tests,
involve a contingent liability that would have a probable effect of 5% or more on balance sheet or profit and loss items, or they will
have an effect on operations which is likely to result in an increase or decrease in net income or dividend distribution of more than
5%.
Contracts will be considered material if they are outside the ordinary course of business, contain exceptionally onerous provisions
in the opinion of the Board, impact on income or distribution in excess of the quantitative tests, there is a likelihood that either
party will default, and the default may trigger any of the quantitative or qualitative tests, are essential to the activities of the
Company and cannot be replaced, or cannot be replaced without an increase in cost of such a quantum, triggering any of the
quantitative tests, contain or trigger change of control provisions, they are between or for the benefit of related parties, or otherwise
trigger the quantitative tests.
•
The independent directors of the Company are Dr Wolf Martinick and Mr John Saleeba.
22
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
Statement concerning availability of Independent Professional Advice
To assist directors with independent judgement, it is the Board's Policy that if a director considers it necessary to obtain independent
professional advice to properly discharge the responsibility of their office as a director then, provided the director first obtains approval
for incurring such expense from the Chair, the Company will pay the reasonable expenses associated with obtaining such advice.
Confirmation whether performance Evaluation of the Board and its members have taken place and how conducted
During the reporting period an evaluation of the performance of the Board, its committees and individual directors was carried out. Board
members are required to complete a questionnaire regarding individual knowledge, satisfaction, reporting and performance on a range of
topics that are responsibilities of the Board and Committees. Each director was required to rank performance according to a defined scale
for each activity or area. Results of the questionnaires were collated and statistically analysed to rank collective board performance
against each topic. Comparative analysis between individual director response and the overall board response was completed. Once the
analysis was completed the Chairman reviewed the results with each director. In addition, the Board reviewed and discussed the
outcomes of the performance review and implemented a range of initiatives to address significant issues where improvement could be
monitored. In addition to the collective review, directors also discussed specific issues where the assessment by directors had been
significantly different to the collective mean assessment. These strategies allow the Board's performance to be measured against both
measurable and qualitative indicators.
The Board reviews the Managing Director and key executive performances annually against the Company's performance objectives.
Existence and Terms of any Schemes for Retirement Benefits for Non-Executive Directors
In the 2005/2006 financial year Azure Minerals Limited established a Directors Retirement Benefit Policy whereby each non-executive
director is entitled to a retirement benefit in accordance with the maximum amount ascertained pursuant to section 200G(2)(b) of the
Corporations Act 2001. In the 2006/2007 financial year the Directors Retirement Benefit Policy was terminated and the retirement
benefit entitlement has been frozen as of 30 June 2006.
23
Azure Minerals Limited - Financial Statements
Income Statements
YEAR ENDED 30 JUNE 2008
Notes
Consolidated
Parent Entity
REVENUE FROM CONTINUING OPERATIONS
EXPENDITURE
Depreciation expenses
Salaries and employee benefits expense
Directors fees
Exploration expenses
Travel and promotion expenses
Office expenses
Consulting expenses
Insurance expenses
Funds misappropriated
Share based payment expense
Preparation for TSX Listing
Other expenses from ordinary activities
5
6
6
6
27
2008
$
2007
$
2008
$
2007
$
146,733
146,785
146,089
135,914
(49,057)
(606,923)
(64,999)
(2,305,586)
(301,448)
(94,275)
(59,950)
(31,419)
-
(365,127)
(602,804)
(146,295)
(59,552)
(489,239)
(145,000)
(3,512,273)
(223,071)
(73,187)
(70,926)
(41,482)
(110,396)
(134,395)
-
(166,478)
(27,873)
(606,923)
(64,999)
(35,738)
(301,448)
(94,275)
(59,950)
(31,419)
-
(365,127)
(602,804)
(146,301)
(44,893)
(489,239)
(145,000)
(1,445,177)
(223,071)
(73,187)
(70,926)
(41,482)
-
(134,395)
-
(158,135)
LOSS BEFORE INCOME TAX EXPENSE
(4,481,150)
(4,879,213)
(2,190,768)
(2,689,590)
INCOME TAX BENEFIT / (EXPENSE)
7
-
-
-
-
NET LOSS ATTRIBUTABLE TO MEMBERS OF AZURE
MINERALS LIMITED
(4,481,150)
(4,879,213)
(2,190,768)
(2,689,590)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
22
(3.3)
(3.3)
(4.8)
(4.8)
The above Income Statements are to be read in conjunction with the Notes to the Financial Statements.
24
Azure Minerals Limited - Financial Statements
Balance Sheets
AT 30 JUNE 2008
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
Capitalised exploration expenditure
Other financial assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Notes
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
18
8
9
10
11
13
14
1,420,067
154,067
1,574,134
196,892
193,270
22,308
412,470
737,646
236,276
973,922
190,095
-
22,308
212,403
1,371,278
4,692,599
6,063,877
686,889
2,384,605
3,071,494
76,291
-
22,535
98,826
110,692
-
22,535
133,227
1,986,604
1,186,325
6,162,703
3,204,721
513,124
174,123
687,247
315,260
235,077
550,337
182,434
174,123
356,557
137,857
235,077
372,934
687,247
550,337
356,557
372,934
1,299,357
635,988
5,806,146
2,831,787
15
16(a)
16(b)
25,129,782
876,908
(24,707,333)
1,299,357
20,329,782
532,389
(20,226,183)
635,988
25,129,782
903,692
(20,227,328)
5,806,146
20,329,782
538,565
(18,036,560)
2,831,787
The above Balance Sheets are to be read in conjunction with the Notes to the Financial Statements
25
Azure Minerals Limited - Financial Statements
Statements of Changes in Equity
CONSOLIDATED
30 JUNE 2008
Issued
Share Capital
Share Option
Reserve
$
$
Foreign
Currency
Translation
Reserve
$
Accumulated
(Losses)
Total
$
$
Balance at 1 July 2007
20,329,782
538,565
(6,176)
(20,226,183)
635,988
Changes
Foreign Currency
Net income recognised directly in equity
Loss for the period
Total income and expense recognised for the year
Shares issued during the period
Transaction costs
Employee options
Sub-total
Balance at 30 June 2008
-
-
-
-
5,000,000
(200,000)
-
4,800,000
25,129,782
-
-
-
-
-
-
365,127
365,127
903,692
(20,608)
(20,608)
-
(20,608)
-
-
-
(20,608)
(26,784)
-
-
(4,481,150)
(4,481,150)
-
-
-
(4,481,150)
(24,707,333)
(20,608)
(20,608)
(4,481,150)
(4,501,758)
5,000,000
(200,000)
365,127
663,369
1,299,357
30 JUNE 2007
Issued
Share Capital
Share Option
Reserve
$
$
Foreign
Currency
Translation
Reserve
$
Accumulated
(Losses)
Total
$
$
Balance at 1 July 2006
17,952,332
404,170
(15,346,970)
3,009,532
Changes
Foreign currency
Net income recognised directly in equity
Loss for the period
Total income and expense recognised for the year
Shares issued during the period
Transaction costs
Employee options
Sub-total
Balance at 30 June 2007
-
-
-
-
2,516,000
(138,550)
-
2,377,450
20,329,782
-
-
-
-
-
-
134,395
134,565
538,565
(6,176)
(6,176)
-
(61,76)
-
-
-
(6,176)
(6,176)
-
-
(4,879,213)
(4,879,213)
-
-
-
(4,879,213)
(20,226,183)
(6,176)
(6,176)
(4,879,213)
(4,885,389)
2,516,000
(138,550)
134,395
(2,373,544)
635,988
The above consolidated statement in of Changes in Equity should be read in conjunction with the accompanying notes.
26
Azure Minerals Limited - Financial Statements
Statements of Changes in Equity
PARENT ENTITY
30 JUNE 2008
Issued
Share Capital
$
Share Option
Reserve
$
Accumulated
(Losses)
$
Total
$
Balance at 1 July 2007
20,329,782
538,565
(18,036,560)
2,831,787
Changes
Loss for the period
Total income and expense recognised for the year
Shares issued during the period
Transaction costs
Employee options
Sub-total
Balance at 30 June 2008
-
-
5,000,000
(200,000)
-
4,800,000
25,129,782
-
-
-
-
365,127
365,127
903,692
(2,190,768)
(2,190,768)
-
-
-
(2,190,768)
(20,227,328)
(2,190,768)
(2,190,768)
5,000,000
(200,000)
365,127
2,974,359
5,806,146
30 JUNE 2007
Issued
Share Capital
$
Share Option
Reserve
$
Accumulated
(Losses)
$
Total
$
Balance at 1 July 2006
17,952,332
404,170
(15,346,970)
3,009,532
Changes
Loss for the period
Total income and expense recognised for the year
Shares issued during the period
Transaction costs
Employee options
Sub-total
Balance at 30 June 2007
-
-
2,516,000
(138,550)
-
2,377,450
20,329,782
(2,689,590)
(2,689,590)
-
-
(2,689,590)
(18,036,560)
(2,689,590)
(2,689,590)
2,516,000
(138,550)
134,395
(177,745)
2,831,787
-
-
134,395
134,395
538,565
The above company Statements of Changes in Equity should be read in conjunction with the accompanying notes.
27
Azure Minerals Limited - Financial Statements
Statements of Cash Flows
YEAR ENDED 30 JUNE 2008
Notes
Consolidated
Parent Entity
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Expenditure on mining interests
NET CASH (OUTFLOW) INFLOW FROM
OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Funds misappropriated
Payments for plant and equipment
Payments for security deposits
Proceeds from sale of equipment
Option payments for projects
Loans to controlled entities
NET CASH (OUTFLOW) INFLOW FROM
INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of ordinary shares
Share issue costs
Preparation for TSX listing
NET CASH (OUTFLOW) INFLOW FROM
FINANCING ACTIVITIES
2008
$
2007
$
2008
$
2007
$
(1,394,028)
122,658
(2,070,682)
(1,264,567)
137,905
(3,967,354)
(1,394,028)
122,014
(33,706)
(1,256,225)
127,034
(1,846,966)
18(b)
(3,342,052)
(5,094,016)
(1,305,720)
(2,976,157)
-
(85,927)
-
25,000
(193,270)
-
(110,396)
(95,608)
(108)
7,955
-
-
-
(18,390)
-
25,000
-
(2,313,697)
-
(2,485)
(108)
7,955
-
(2,362,592)
(254,197)
(198,157)
(2,307,087)
(2,357,230)
5,000,000
(200,000)
(502,804)
2,516,000
(138,550)
-
5,000,000
(200,000)
(502,804)
2,516,000
(138,550)
-
4,297,196
2,377,450
4,297,196
2,377,450
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
Cash and cash equivalents at the beginning of the
financial year
Effect of exchange rate changes on cash and cash
equivalents
CASH AND CASH EQUIVALENTS AT END OF YEAR
700,947
(2,914,723)
684,389
(2,955,937)
737,646
3,642,826
686,889
3,642,826
18(a)
(18,526)
1,420,067
9,543
737,646
-
1,371,278
-
686,889
The above Statements of Cash Flows are to be read in conjunction with the Notes to the Financial Statements.
28
Azure Minerals Limited - Financial Statements
Notes to the Financial Statements
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial report includes separate financial statements for
Azure Minerals Limited as an individual entity and the consolidated entity consisting of Azure Minerals Limited and its subsidiaries.
BASIS OF PREPARATION
This general purpose financial report has been prepared in accordance with the Australian Accounting Standards, other authoritive
pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Interpretations and the Corporations Act 2001.
Compliance with AIFRSs
Australian Accounting Standards include Australian equivalents to International Financial reporting Standards (AIFRSs). Compliance
with AIFRSs ensures that the financial report, of Azure Minerals Limited complies with the 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, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of
property, plant and equipment and investment property.
Critical accounting estimates
The preparation of financial statements in conformity with AIFRS requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.
(a) Principles of consolidation
The consolidated financial statements are those of the consolidated entity, comprising Azure Minerals Limited (the parent entity) and all
entities which Azure Minerals Limited controlled from time to time during the year and at balance date (“the Group”). A controlled entity
is any entity Azure Minerals Limited has the power to control the financial and operating policies of so as to obtain benefits from its
activities.
Information from the financial statements of subsidiaries is included from the date the parent company obtains control until such time as
control ceases. Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the
reporting period during which the parent company has control.
Subsidiary acquisitions are accounted for using the purchase method of accounting.
The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting
policies. Adjustments are made to bring into line any dissimilar accounting policies which may exist.
All intercompany balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in
full. Unrealised losses are eliminated unless costs cannot be recovered.
Investments in subsidiaries are accounted for at cost in the individual financial statements of Azure Minerals Limited.
(b) Property, plant and equipment
Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and
impairment losses.
Plant and equipment
Plant and equipment are measured on the cost basis. The carrying amount of plant and equipment is reviewed annually by directors to
ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected
net cash flows which will be received from the assets employment and subsequent disposal. The expected net cash flows have been
discounted to their present values in determining recoverable amounts. The cost of fixed assets constructed within the economic entity
includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.
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 Group and the cost of the item can be measured reliably. All other
repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
29
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Depreciation
Depreciation of plant and equipment is calculated on a reducing balance basis so as to write off the net costs of each asset over the
expected useful life. The rates vary between 20% and 40% per annum.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet 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.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.
When revalued assets are sold, it is group policy to transfer the amounts included in other reserves in respect of those assets to retained
earnings.
(c) Impairment of assets
At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any
indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the
asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over
its recoverable amount is expensed to the income statement.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash-
generating unit to which the asset belongs.
(d) Exploration and evaluation costs
Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs which are carried forward where
right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and
exploitation of the area of interest or, where exploration and evaluation activities in the area of interest have not reached a stage that
permits reasonable assessment of the existence of economically recoverable reserves.
Where an area of interest is abandoned or the directors decide that it is not commercial, any accumulated acquisition costs in respect of
that area are written off in the financial period the decision is made. Each area of interest is also reviewed at the end of each accounting
period and accumulated costs written off to the extent that they will not be recoverable in the future.
Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until production commences.
(e) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset, but not the legal ownership
that are transferred to entities in the economic entity are classified as finance leases.
Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased
property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated
between the reduction of the lease liability and the lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over their estimated useful lives.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the
periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.
(f) Income tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is
calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial
recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred
tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred
tax is adjusted directly against equity.
Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible
temporary differences can be utilised.
30
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(f) Income tax (Cont’d)
The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will
occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable
the benefit to be realised and comply with the conditions of deductibility imposed by the law.
(g) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable
from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an
item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.
Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities,
which are disclosed as operating cash flows.
(h) Foreign currency translation
Functional and presentation currency
The functional currency of each of the group's entities is measured using the currency of the primary economic environment in which that
entity operates. The consolidated financial statements are presented in Australian dollars which is Azure Minerals Limited’s functional
and presentation currency. The functional currency of Australian subsidiary (Azure Mexico Pty Ltd) is the Australian dollar. The
functional currency of the Mexican overseas subsidiary (Minera Piedra Azul CV de SA) is the Mexican Peso.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction.
Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to
be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate
at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity
as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss
is directly recognised in equity; otherwise the exchange difference is recognised in the income statement.
Group companies
The financial results and position of foreign operations whose functional currency is different from the group's presentation currency are
translated as follows:
•
•
•
assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;
income and expenses are translated at average exchange rates for the period; and
retained profits are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the group's foreign currency translation
reserve in the balance sheet. These differences are recognised in the income statement in the period in which the operation is disposed.
(i) Trade and other payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for
goods and services received, whether or not billed to the consolidated entity.
Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an
accrual basis.
(j) Employee benefits
Provision is made for employee benefits accumulated as a result of employees rendering services up to the reporting date. These benefits
include wages and salaries, annual leave, and long service leave.
Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve
months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the
liability is settled. All other employee benefit liabilities are measured at the present value of the estimated future cash outflow to be made
in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the
market yield as at the reporting date on national government bonds, which have terms to maturity approximating the terms of the related
liability, are used.
31
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Share-based payments
The Group provides benefits to employees (including directors) of the Group 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 by an internal valuation using a Black-Scholes or Binomial option pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting
date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which
the vesting period has expired and (ii) the number of options that, in the opinion of the directors of the Group, will ultimately vest. This
opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised
for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement
award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award.
(k) Revenue recognition
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.
(l) Contributed Equity
Ordinary shares are classified as equity.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds
received.
(m) Earnings per share (EPS)
Basic earnings per share
Basic EPS is calculated as the profit attributable to equity holders of the company, excluding any costs of servicing equity other than
ordinary shares, divided by the weighted average number of ordinary shares outstanding during the financial year, adjusted for any bonus
elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted EPS adjusts the figures used in the determination of basic EPS to take into account the after income tax effect of interest and
other financing costs associated with 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.
(n) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on
the balance sheet.
(o) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current
financial year.
(p) Interests in joint ventures
The Groups share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the
consolidated income statement and balance sheet.
(q) Segment reporting
A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks
and returns that are different to those of other business segments. A geographical segment is identified when products or services are
provided within a particular economic environment subject to risk and returns that are different from those of segments operating in other
economic environments.
32
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(r) Investments and other financial assets
Classification
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments
were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as
held-to-maturity, re-evaluates this designation at each reporting date.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as
hedges. Assets in this category are classified as current assets.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are
classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet (note 8).
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant
amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity
financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are
classified as current assets.
(iv) Available-for-sale financial assets
Available-for-sale financial assets, comprising principally equity securities, are non-derivatives that are either designated in this category
or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the
investment within 12 months of the balance sheet date.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell the
asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit
or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed
in the income statement. Financial assets are derecognised when the right to receive cash flows from the financial assets have expired or
have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the
income statement as gains and losses from investment securities.
Subsequent measurement
Loans and receivables and held-to-maturity investments are carried at amortised cost using effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Gains or
losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the
income statement within other income or other expenses in the period in which they arise. Dividend income from financial assets at fair
value through profit and loss is recognised in the income statement as part of revenue from continuing operations when the Group’s right
to receive payments is established.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed
between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the
security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in carrying
amount are recognised in equity. Changes in the fair value of other monetary and non-monetary securities classified as available-for-sale
are recognised in equity.
Fair Value
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted
securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions,
reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models making maximum
use of market inputs and relying as little as possible on entity-specific inputs.
33
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired.
In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its
cost is considered as an indicator that the securities are impaired. If any such evidence exists for available-for-sale financial assets, the
cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that
financial asset previously recognised in profit or loss – is removed from equity and recognised in the income statement. Impairment losses
recognised in the income statement on equity instruments classified as available-for-sale are not reversed through the income statement.
(s) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivative, and trading and available-for-sale
securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group
is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined
using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at
each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other
techniques, such as estimated discounted cash flow, are used to determined fair value for the remaining financial instruments. The fair
value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange
contracts is determined using forward exchange market rates at the balance sheet date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their
short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash
flows at the current market interest rate that is available to the Group for similar financial instruments.
(t) Provisions
Provisions for legal claims, service warranties and make good obligations are recognised when the Group 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.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering
the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in
the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at
the balance sheet 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.
(u) Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method,
less provision for impairment. Trade receivables are generally due for settlement within 30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing
the carrying amount directly.
(v) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2008 reporting periods. The
Groups and parent entity’s assessment of the impact of these new standards and interpretations is set out below.
AASB
Amendment:
Affected
Standard(s):
Applies to:
AASB
123
(revised Jun
2007)
Borrowing
Costs
To the extent that borrowing costs are
directly attributable to the acquisition,
construction or production of a
qualifying asset, the option of
recognising borrowing costs
immediately as an expense has been
removed. Consequently all borrowing
costs for qualifying assets will have to
be capitalised.
34
Application
date of
amendment:
Periods
commencing on
or after 1
January 2009.
Impact on Initial
Application
The transitional provisions of this
standard only require capitalisation of
borrowing costs on qualifying assets
where commencement date of
capitalisation is on or after 1 January
2009. As such, there will be no impact
on prior period financial statement
when this standard is adopted.
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
AASB
Amendment:
Affected
Standard(s):
Applies to:
127
AASB
(reissued
March 2008)
Consolidated
and Separate
Financial
Statements
The revised standard clarifies that
changes in ownership interest which
result in a change of control being
retained are accounted for within
equity as transactions with owners.
Losses will be attributed to the non-
controlling interest even if this results
in a debt balance for the non-
controlling interest. Investments
retained where there has been a loss of
control will be recognised at fair value
at date of sale.
AASB 2008-
1
(issued
February
2008)
AASB 8
(issued Feb
2007)
Amendments
to AASB2 –
Share Based
Payments –
Vesting
Conditions
and
Cancellations
The definition of vesting conditions
has changed and the accounting
treatment clarified for cancellations to
share-based payment arrangements by
the counterparty. This is to ensure that
conditions other than performance
conditions do not result in a “true up”
of the share-based payment expense
and are treated in a manner similar to
market conditions.
Operating
Segments
Replaces the disclosure requirements
of AASB 114: Segment Reporting.
ASSB
101
(revised Oct
2007)
Presentation
of Financial
Statements
Amendments to presentation and
naming of the financial statements
Application
date of
amendment:
Periods
commencing on
or after 1
January 2009
Periods
commencing on
or after 1
January 2009
Impact on Initial
Application
As there is no requirement to
retrospectively restate the effect of
these revisions, there is unlikely to be
any impact on the financial statements
when this revised standard is adopted.
However Minera Piedra Azul , SA de
CV is incurring losses. To the extent
that Minera Piedra Azul, SA de CV
incurs losses for the financial years
ending 30 June 2010/31 December
2010, such losses will be attributed to
the non-controlling interest (if any).
No adjustment will be made to
comparatives for losses not previously
attributed to the non-controlling
interest.
To date the entity has not issued any
options to employees that include non-
vesting conditions and as such there
will be no impact on the financial
statements when this revised standard
is adopted for the first time
Periods
commencing on
or after 1
January 2009
Annual
reporting
periods
commencing on
or after 1
January 2009.
As this is a disclosure standard only,
there will be no impact on amounts
recognised in the financial statements.
However, disclosures required for the
operating segments will be
significantly different to what is
currently reported (business and
geographical segment).
As this is a disclosure standard only,
there will be no impact on amounts
recognised in the financial statements.
However, there will be various
changes to the way financial
statements are presented and various
changes to names of individual
financial statements.
2 .
FINANCIAL RISK MANAGEMENT
Overview
The Company and Group have exposure to the following risks from their use of financial instruments:
•
•
•
credit risk
liquidity risk
market risk
This note presents information about the Company’s and Group’s exposure to each of the above risks, their objectives, policies and
processes for measuring and managing risk, and the management of capital.
The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework. Management
monitors and manages the financial risks relating to the operations of the group through regular reviews of the risks.
35
Azure Minerals Limited - Financial Statements
Notes continued
2 .
FINANCIAL RISK MANAGEMENT (Cont’d)
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group’s receivables from customers and investment securities. For the Company it arises
from receivables due from subsidiaries.
The Group manages its credit risk on financial instruments, including cash, by only dealing with banks licensed to operate in Australia.
Trade and other receivables
As the Group operates in the mining exploration sector, it does not have trade receivables and therefore is not exposed to credit risk in
relation to trade receivables.
Presently, the Group undertakes exploration and evaluation activities exclusively in Mexico. At the balance sheet date there were no
significant concentrations of credit risk.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit
risk at the reporting date was:
Trade and other receivables
Cash and cash equivalents
Impairment losses
Note
8
18
Carrying amount
2008
154,067
1,420,067
2007
236,276
737,646
None of the Company’s other receivables are past due (2007: nil).
The allowance accounts in respect of other receivables is used to record impairment losses unless the Group is satisfied that no recovery
of the amount owing is possible; at that point the amount is considered irrecoverable and is written off against the financial asset directly.
At 30 June 2008 the Group does not have any collective impairments on its other receivables (2007: nil).
Guarantees
Group policy is to provide financial guarantees only to wholly-owned subsidiaries. There are no guarantees outstanding (2007: Nil)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both
normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation.
The Group manages liquidity risk by maintaining adequate reserves by continuously monitoring forecast and actual cash flows.
The Company anticipates a need to raise additional capital in the next 12 months to meet forecasted operational activities. The decision
on how the Company will raise future capital will depend on market conditions existing at that time.
Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 180 days,
including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be
predicted, such as natural disasters.
The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of
netting agreements:
Consolidated
30 June 2008
Trade and other payables
30 June 2007
Trade and other payables
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12 mths
1-2 years
2-5 years
More than
5 years
513,124
315,260
-
-
513,124
315,260
36
-
-
-
-
-
-
-
-
Azure Minerals Limited - Financial Statements
Notes continued
2 .
FINANCIAL RISK MANAGEMENT (Cont’d)
Company
30 June 2008
Trade and other payables
30 June 2007
Trade and other payables
Market Risk
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12 mths
1-2 years
2-5 years
More than
5 years
182,434
137,857
-
-
182,434
137,857
-
-
-
-
-
-
-
-
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the
Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return.
Currency risk
The Group is exposed to currency risk on purchases and borrowings that are denominated in a currency other than the respective
functional currencies of Group entities, primarily the United Sates Dollar (USD) and Mexican Peso (MxP). The currencies in which these
transactions primarily are denominated are USD and MxP.
The Group has not entered into any derivative financial instruments to hedge such transactions and anticipated future receipts or
payments that are denominated in a foreign currency.
Group’s investments in its subsidiaries are not hedged as those currency positions are considered to be long term in nature.
Exposure to currency risk
The Group’s exposure to foreign currency risk at balance date was as follows, based on notional amounts:
Trade receivables
Trade payables
Gross balance sheet
exposure
Forward exchange
contracts
Net exposure
30 June 2008
30 June 2007
USD
68,765
165,345
234,110
MxP
68,765
165,345
234,110
Total
137,530
330,690
468,220
USD
107,018
88,702
MxP
107,018
88,701
195,720
195,719
Total
214,036
177,403
391,439
-
-
-
-
-
-
2,234,110
2,234,110
4,468,220
1,231,061
1,231,060
2,462,121
The Company’s exposure to foreign currency risk at 30 June 2008 was nil (2007:Nil), based on notional amounts.
37
Azure Minerals Limited - Financial Statements
Notes continued
2 .
FINANCIAL RISK MANAGEMENT (Cont’d)
The following significant exchange rates applied during the year:
AUD
USD
MxP
Sensitivity analysis
Average rate
2008
2007
Reporting date spot rate
2008
2007
0.89646
9.65031
0.78592
8.60294
0.96150
9.91400
0.84880
9.16950
A 10 percent strengthening of the Australian dollar against the following currencies at 30 June would have increased (decreased) equity
and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
The analysis is performed on the same basis for 2007.
30 June 2008
USD
MxP
30 June 2007
USD
MxP
Consolidated
Company
Equity
Profit or loss
Equity
Profit or loss
103,534
103,534
103,534
103,534
198,368
198,368
198,638
198,368
-
-
-
-
-
-
-
-
A 10 percent weakening of the Australian dollar against the above currencies at 30 June would have had the equal but opposite effect on
the above currencies to the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk
Interest rate risk is the risk that the Groups financial position will be adversely affected by movements in interest rates that will increase
the costs of floating rate debt or opportunity losses that may arise on fixed rate borrowings in a falling interest rate environment. The
Group does not have any borrowings therefore is not exposed to interest rate risk in this area. Interest rate risk on cash and short term
deposits is not considered to be a material risk due to the short term nature of these financial instruments.
Profile
At the reporting date the interest rate profile of the Company’s and the Group’s interest-bearing financial instruments was:
Consolidated
Carrying amount
Company
Carrying amount
2008
2007
2008
2007
1,442,375
759,955
1,393,586
709,197
Variable rate instruments
Short term cash deposits
Cash flow sensitivity analysis for variable rate instruments
Group Sensitivity
At 30 June 2008 if interest rates had changes +/- 100 basis points from year end rates with all other variables held constant, equity and
post tax profit would have been $14,424 higher /lower (2007 – change of 100 basis points: $7,700 higher/lower).
Parent Sensitivity
At 30 June 2008 if interest rates had changes +/- 100 basis points from year end rates with all other variables held constant, equity and
post tax profit would have been $13,936 higher /lower (2007 – change of 100 basis points: $7,092 higher/lower).
38
Azure Minerals Limited - Financial Statements
Notes continued
2 .
FINANCIAL RISK MANAGEMENT (Cont’d)
Fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:
Consolidated
Trade and other receivables
Cash and cash equivalents
Other financial assets
Trade and other payables
Company
Trade and other receivables
Cash and cash equivalents
Other Financial assets
Trade and other payables
30 June 2008
30 June 2007
Carrying
amount
154,067
1,420,067
22,308
Fair value
154,067
1,420,067
22,308
Carrying
amount
236,276
737,646
22,308
Fair value
236,276
737,646
22,308
(513,124)
(513,124)
(315,260)
(315,260)
30 June 2008
30 June 2007
Carrying
amount
4,692,599
1,371,278
22,535
Fair value
4,692,599
1,371,278
22,535
Carrying
amount
2,384,605
686,889
22,535
Fair value
2,384,605
686,889
22,535
(182,434)
(182,434)
(137,857)
(137,857)
The methods and assumptions used to estimate the fair value of instruments are:
Cash
The carrying amount is fair value due to the liquid nature of these assets
Trade receivables/payables
Due to the short term nature of these financial rights and obligations, their carrying amounts are estimated to represent their fair values.
Other financial assets/liabilities
For financial assets and liabilities traded in active markets fair value is based on quoted market prices at the balance sheet date. For
financial assets and liabilities that are not traded in an active market fair value is determined using market accepted valuation techniques.
Estimated discounted cash flows are used to determined fair value for the remaining financial instruments such as interest rate swaps.
Capital Management
The Group’s objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can continue to provide
returns for shareholders and benefits of other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets.
There were no changes in the Group’s approach to capital management during the year.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
3.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key
estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities
within the next annual reporting period are:
Share based payment transactions
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 or Binomial option pricing model.
Exploration and evaluation costs
Exploration and evaluation costs are written off in the year they are incurred apart from acquisition costs which 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 sheet date reached a stage that permits reasonable assessment of the
existence of economically recoverable reserves.
39
Azure Minerals Limited - Financial Statements
Notes continued
4.
SEGMENT INFORMATION
Segment products and locations The consolidated entity’s operations are in the mining industry. Geographically, the group operates in two
predominant segments, being Australia and Mexico. The head office and investment activities of the group take place in Australia.
Geographic segments
Australia
Mexico
Eliminations
Consolidated
2008
$
2007
$
2008
$
2007
$
2008
$
2007
$
2008
$
2007
$
Segment Revenue
Sales to external customers
Other revenues from external customers
Intersegment revenues
Share of net profit of equity accounted
investments
Total segment revenue
Non-segment revenues
Unallocated revenue
Total consolidated revenue
Segment Results
Segment result
-
146,089
-
135,914
-
-
-
146,089
135,914
644
-
-
644
-
10,871
-
-
10,871
-
-
-
-
-
-
-
-
-
-
-
146,733
-
146,785
146,733
146,785
146,733
146,785
(2,190,768)
(2,689,590)
(2,290,382) (2,189,623)
-
- (4,481,150)
(4,879,213)
Non-segment expenses
Unallocated expenses
Consolidated entity loss before income
tax expense
Income tax expense
Consolidated entity loss after income tax
expense
Segment Assets and Liabilities
Segment assets
Unallocated assets
Total assets
-
-
(4,481,150)
-
(4,879,213)
-
(4,481,150)
(4,879,213)
6,168,906
3,204,721
500,190
343,969
(4,682,492) (2,362,365) 1,986,604
1,186,325
-
-
1,986,604
1,186,325
Segment liabilities
(356,557)
(372,934)
(5,000,648) (2,539,768) 4,669,958 2,362,365
(687,247)
(550,337)
Non-allocated liabilities
Total liabilities
Other segment information:
Equity accounted investments included
in segment assets
Acquisition of property, plant and
equipment, intangible assets and other
non-current assets
Depreciation
Non-cash expenses other than
depreciation and amortisation
-
-
-
-
18,390
27,873
110,692
44,893
254,154
21,184
79,403
14,659
365,127
134,395
-
-
-
-
-
-
-
-
(687,247)
(550,337)
-
-
-
-
-
272,544
49,057
190,095
59,552
-
365,127
134,395
40
Azure Minerals Limited - Financial Statements
Notes continued
5.
REVENUE FROM CONTINUING OPERATIONS
Other revenues
Interest
Bank interest
Proceeds from equipment sales
Total revenues from continuing operations
6.
EXPENSES
Profit before income tax includes the following
specific expenses
Depreciation of plant and equipment
Exploration expenditure
Operating lease expenses
Notes
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
121,733
25,000
146,733
138,830
7,955
146,785
121,089
25,000
146,089
127,959
7,955
135,914
49,057
59,552
2,305,586
93,537
3,512,273
73,722
27,873
35,738
93,537
44,893
1,445,177
73,722
Misappropriated Funds
During the 2007 year $220,792 was fraudulently misappropriated from the bank account of Minera Piedra Azul Sa De CV, a 100%
subsidiary of the company, held in Hermosillo, the capital of the state of Sonara in Mexico. Investigations by both the bank and local
police failed to identify those responsible. While the bank claimed no responsibility a settlement was reached with the bank whereby in
an act of good faith it refunded half of the amount misappropriated. As a result of this, a loss of $110,396 was been provided for in the
accounts in 2007.
7.
INCOME TAX
(a) Income tax expense
Current tax
Deferred tax
Adjustment for current tax of prior periods
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(b) Numerical reconciliation of income tax expense to prima
facie tax payable
Loss from continuing operations before income tax expense
(4,481,150)
(4,879,213)
(2,190,768)
(2,689,590)
Tax at the Australian tax rate of 30% (2007: 30%)
(1,344,345)
(1,463,764)
(657,231)
(806,878)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Share-based payments
Preparation for TSX listing
Tenement acquisition costs
Sundry items
109,538
180,841
-
74,788
40,319
-
20,456
6,027
109,538
180,841
-
74,788
40,319
-
20,456
6,027
(979,178)
(1,396,962)
(292,064)
(740,076)
Movement in unrecognised temporary differences
1,635,088
110,537
1,051,442
(679,953)
Adjustment for prior periods
(1,841,104)
(133,604)
(1,206,994)
Tax effect of current year foreign tax losses for which no deferred
tax asset has been recognised
Tax effect of current year tax losses for which no deferred tax
asset has been recognised
Income tax expense
-
-
737,579
-
-
447,615
1,420,029
447,616
1,420,029
-
-
-
-
41
Azure Minerals Limited - Financial Statements
Notes continued
30 JUNE 2008
7.
INCOME TAX (Cont’d)
(c) Unrecognised temporary differences
Deferred Tax Assets (at 30%)
On Income Tax Account
Capital raising costs
Prepayments
Depreciation of plant and equipment
Provisions
Carry forward tax losses
Carry forward tax losses – foreign
Other – tenement
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
78,935
(4,684)
18,900
52,237
2,285,830
583,646
981,266
3,996,130
-
6,269
17,866
70,523
2,266,384
-
-
2,361,042
78,935
(4,684)
18,900
52,237
2,285,830
-
981,266
3,412,484
-
6,269
17,866
70,523
2,266,384
-
-
2,361,042
Deferred Tax Liabilities (at 30%)
-
-
-
-
Deferred income tax assets have not been recognised as it is not probable that future profit will be available against which deductible
temporary differences can be utilised.
In addition to the above Australian estimated future income tax benefits the consolidated entity has incurred significant expenditure in
Mexico, some of which should give rise to taxable deductions. At this stage the company is unable to reliably estimate the quantity of
such future tax benefits.
There are no franking credits available.
The company and its controlled entities have not formed a tax consolidation group as at 30 June 2008.
8.
TRADE AND OTHER RECEIVABLES
CURRENT
Prepayments
Sundry receivables (a)
Receivable from controlled entity (b)
16,594
137,473
-
154,067
20,986
215,290
-
236,276
15,612
925
4,676,062
4,692,599
20,986
1,254
2,362,365
2,384,605
(a) These amounts generally arise from activities outside the usual operating activities. Interest is not usually charged and
collateral is not obtained. For the Group the receivable principally arises from consumption taxes paid to third party suppliers
for which a refund from tax authorities is expected.
(b) The fair value of receivable from the controlled entity is the same as the carrying value. The loan is non-interest bearing with
no other terns agreed.
(c) Refer to note 2 for information on the risk management policy of the Group and the credit quality of the Groups receivables.
9.
PLANT AND EQUIPMENT
Plant and equipment
Cost or fair value
Accumulated depreciation
Net book amount
Notes
466,927
(270,035)
196,892
9(a)
442,575
(252,480)
190,095
312,919
(236,628)
76,291
349,452
(238,758)
110,692
42
Azure Minerals Limited - Financial Statements
Notes continued
30 JUNE 2008
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
PLANT AND EQUIPMENT (Cont’d)
9.
(a) Reconciliations
Movement in the carrying amounts for each class of property, plant and equipment between the
beginning and the end of the current financial year
Plant and equipment
Opening net book amount
Additions
Disposals
Depreciation on disposals
Depreciation charge
Closing net book amount
190,095
79,276
(54,923)
31,501
(49,057)
196,892
157,991
95,608
(24,920)
20,968
(59,552)
190,095
110,692
18,390
(54,923)
30,005
(27,873)
76,291
157,991
2,485
(24,920)
20,029
(44,893)
110,692
10. CAPITALISED EXPLORATION EXPENDITURE (NON-CURRENT)
At Cost
Reconciliations
Movement in the carrying amounts of capitalised exploration expenditure between the
beginning and end of the current financial year
193,270
Opening net book amount
Additions
Disposals
Closing net book amount
-
193,270
-
193,270
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Recovery of the capitalised amount is dependent upon successful development and commercial exploitation, or alternatively, sale.
11. OTHER FINANCIAL ASSETS (NON-CURRENT)
Security Deposit
Shares in subsidiaries – at cost
Notes
12
22,308
-
22,308
22,308
-
22,308
22,308
227
22,535
22,308
227
22,535
These financial assets are carried at cost. The fair value unlisted financial assets cannot be reliably measured as variability in the range of
reasonable fair value estimates is significant.
12. 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(a):
Name
Country of incorporation
Class of shares
Equity Holding*
Azure Mexico Pty Ltd
Minera Piedra Azul, S.A. de C.V
Australia
Mexico
Ordinary
Ordinary
*Percentage of voting power is in proportion to ownership
2008
%
100
100
2007
%
100
100
13. TRADE AND OTHER PAYABLES (CURRENT)
Trade payables
513,124
315,260
182,434
137,857
Information about the Groups financial risk management policies is disclosed in note 2.
43
Azure Minerals Limited - Financial Statements
Notes continued
30 JUNE 2008
14. PROVISIONS (CURRENT)
Employee benefits
Non-executive directors retirement benefits
15. CONTRIBUTED EQUITY
(a) Share capital
Ordinary shares fully paid
Total consolidated contributed equity
(b) Movements in ordinary share capital
1 July opening balance
Issue at $0.15 per share
Issue at $0.12 per share
Issue at $0.10 per share
Issue at $0.085 per share
Share issue expenses
30 June closing balance
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
97,112
77,011
174,123
81,055
154,022
235,077
97,112
77,011
174,123
81,055
154,022
235,077
Consolidated and Parent Entity
2008
Number of shares
149,016,672
149,016,672
$
25,129,782
25,129,782
2007
Number of shares
112,350,004
112,350,004
$
20,239,782
20,239,782
2008
2007
Number of
shares
112,350,004
20,000,000
16,666,668
-
-
-
149,016,672
$
20,329,782
3,000,000
2,000,000
-
-
(200,000)
25,129,782
Number of
shares
85,000,004
-
-
12,750,000
14,600,000
-
112,350,004
$
17,952,332
-
-
1,275,000
1,241,000
(138,550)
20,329,782
Funds raised from the two share issues during the year were used to progress the company’s exploration in activities and for general
working capital.
(c) Movements in unlisted options on issue
1 July Opening Balance
Issued during the year
- Exercisable at 17.5 cents, on or before 31 Jan 2011
- Exercisable at 25 cents, on or before 31 Jan 2012
- Exercisable at 35 cents, on or before 31 Jan 2013
- Exercisable at 15 cents, on or before 30 Nov 2009
Forfeited during the year
- Exercisable at 25 cents, on or before 30 Nov 2008
- Exercisable at 25 cents, on or before 30 Nov 2009
- Exercisable at 25 cents, on or before 30 Nov 2010
- Exercisable at 17.5 cents, on or before 31 Jan 2011
- Exercisable at 25 cents, on or before 31 Jan 2012
- Exercisable at 25 cents, on or before 30 Jan 2010
- Exercisable at 25 cents, on or before 30 Jan 2011
- Exercisable at 25 cents, on or before 30 Jan 2012
- Exercisable at 35 cents, on or before 31 Jan 2013
30 June closing balance
Further information on options issued is set out in note 27.
44
Number of options
2008
2007
13,350,000
10,400,000
-
-
-
1,750,000
(250,000)
(500,000)
(500,000)
-
-
200,000
400,000
400,000
500,000
1,000,000
1,000,000
1,200,000
(30,000)
(60,000)
(60,000)
(200,000)
(200,000)
-
-
-
-
(200,000)
14,850,000
13,350,000
Azure Minerals Limited - Financial Statements
Notes continued
30 JUNE 2008
15. CONTRIBUTED EQUITY (cont’d)
(d) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the
number of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll
each share is entitled to one vote.
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
903,692
(26,784)
876,908
538,565
(6,176)
532,389
538,565
365,127
903,692
(6,176)
(20,608)
(26,784)
404,170
134,395
538,565
-
(6,176)
(6,176)
903,692
-
903,692
538,565
365,127
903,692
-
-
-
538,565
-
538,565
404,170
134,395
538,565
-
-
-
(20,226,183)
(15,346,970)
(18,036,560)
(15,346,970)
(4,481,150)
(24,707,333)
(4,879,213)
(20,226,183)
(2,190,768)
20,227,328
(2,689,590)
(18,036,560)
16. RESERVES AND RETAINED PROFITS
(a) Reserves
Share-based payments reserve
Foreign currency translation reserve
Movements:
Share-based payments reserve
Balance at 1 July
Option expense
Balance at 30 June
Foreign currency translation reserve
Balance at 1 July
Currency translation differences
Balance at 30 June
(b) Accumulated losses
Balance at 1 July
Net loss attributable to members of Azure Minerals
Limited
Balance at 30 June
(c) Nature and purpose of reserves
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the statements of foreign
subsidiaries.
17. DIVIDENDS PAID OR PROVIDED FOR ON
ORDINARY SHARES
No dividends were paid or declared since the start of the financial year. No recommendation for payment of dividends has been made.
45
Azure Minerals Limited - Financial Statements
Notes continued
30 JUNE 2008
18. STATEMENT OF CASH FLOWS
(a) Cash and cash equivalents
Cash and cash equivalents comprises:
− cash at bank and in hand
− short-term deposits
Closing cash and cash equivalents balance
Notes
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
63,502
1,356,565
1,420,067
77,713
659,933
737,646
14,713
1,356,565
1,371,278
28,956
657,933
686,889
Cash at bank and in hand earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of
the Group, and earn interest at the respective short-term deposit rates.
(b) Reconciliation of the net loss after income tax to
the net cash flows from operating activities
Net loss
(4,879,213)
(2,689,590)
(2,190,768)
(4,481,150)
Depreciation of non-current assets
Share based payment expense
Profit on equipment sales
Foreign currency translation
Preparation for TSX listing
Changes in operating assets and liabilities
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Net cash outflow from operating activities
49,057
365,127
(82)
5,691
502,804
59,552
134,395
(3,064)
96,246
-
27,873
365,127
(82)
-
502,804
44,893
134,395
(3,064)
-
-
62,529
(4,393)
158,365
-
(3,342,052)
(197,017)
1,489
(181,829)
(124,577)
(5,094,016)
330
(5,374)
(5,630)
-
(1,305,720)
31,681
1,489
(371,385)
(124,576)
(2,976,157)
(c) Non-cash financing and investing activities
There have been no non-cash financing and investing activities during the 2008 year (2007:Nil).
19. COMMITMENTS
(a) Exploration commitments
The company has certain commitments to meet minimum expenditure requirements on the mineral exploration assets it has an interest in
outstanding exploration commitments are as follows:
Not later than one year
744,796
744,796
78,800
78,800
(b) Lease expenditure commitments
Operating leases (non-cancellable):
Minimum lease payments
− not later than one year
− later than one year and not later than five years
Aggregate lease expenditure contracted for at
reporting date
89,018
44,509
69,389
75,801
89,018
44,509
69,389
75,801
133,527
145,190
133,527
145,190
The property lease is a non-cancellable lease with a three-year term ending 31 December 2009, with rent payable monthly in advance.
The lease allows for subletting of all leased areas.
(c) Remuneration commitments
Amounts disclosed as remuneration commitments include commitments arising from the service contracts of key management personnel
referred to in note 24 that are not recognised as liabilities and are not included in the key management personnel compensation.
Not later than one year
later than one year and not later than five years
163,461
-
163,461
376,150
148,601
524,751
163,461
-
163,461
376,150
148,601
524,751
46
Azure Minerals Limited - Financial Statements
Notes continued
20. CONTINGENCIES
There are no material contingent liabilities or contingent assets of the company at balance date.
21. EVENTS OCCURING AFTER BALANCE SHEET DATE
Since the end of the financial year Azure Minerals Limited completed a share purchase plan whereby it offered shareholders registered at
the close of business on 4 August 2008 the opportunity to subscribe for up to $5,000 worth of Azure Minerals Limited share at $0.125 per
share. 10,765,600 shares were issued under the plan raising $1,345,700. In addition a further 9,600,000 shares were issued by way of a
private placement at $0.125 each to raise a further $1,200,000.
No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly affect the
operations of the group, the results of those operations, or the state of affairs of the group in future financial years.
22. LOSS PER SHARE
(a) Reconciliation of earnings to profit or loss
Net loss
Loss used in calculating basic loss per share
(b) Weighted average number of ordinary shares
outstanding during the year used in calculating
basic loss per share
Weighted average number of ordinary shares used in
calculating basic loss per share
2008
$
2007
$
(4,481,150)
(4,481,150)
(4,879,213)
(4,879,213)
CONSOLIDATED
Number of
shares
2008
Number of
shares
2007
134,977,509
100,899,182
(c) Effect of dilutive securities
Options on issue at balance date could potentially dilute basic earnings per share in the future. The effect in the current year is to
decrease the loss per share hence they are considered antidilutive. Accordingly diluted loss per share has not been disclosed.
23. AUDITORS’ REMUNERATION
Amounts received or due and receivable by BDO
Kendalls or associated entities for:
Tax Services
Independent Financial Reports
An audit or review of the financial report of the entity
Consolidated
Parent Entity
2008
$
2007
$
2008
$
2007
$
10,699
31,412
28,527
70,638
9,830
-
10,992
20,822
10,699
31,412
28,527
70,638
9,830
-
10,992
20,822
47
Azure Minerals Limited – Financial Statements
Notes continued
24. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Compensation of key management personnel by compensation
Short-term
Post employment
Retirement benefits
Share-based payment
Consolidated
Parent Entity
2008
$
752,306
42,505
-
347,797
1,142,608
2007
$
792,997
44,415
60,000
118,461
1,015,873
2008
$
752,306
42,505
-
347,797
1,142,608
2007
$
792,997
44,415
60,000
118,461
1,015,873
(b) Shares issued on exercise of compensation options
There were no shares issued on exercise of compensation options during the year.
(c) Option holdings of key management personnel
2008
Balance at
beginning of
year
1 July 2007
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance at end
of year
30 June 2008
Vested at 30 June 2008
Unvested
Vested &
Exercisable
Directors
Wolf Gerhard Martinick
Campbell Theodore Ansell
Anthony Paul Rovira
Michael John Fowler
- Resigned 1 Sep 2007
John Walter Saleeba
Executives
Brett Dickson
Patrick Manouge
Mark Styles
Total
2007
-
1,250,000
6,500,000
1,000,000
1,000,000
1,000,000
-
-
-
-
1,200,000
1,400,000
1,000,000
1,200,000
300,000
200,000
13,350,000
2,700,000
-
-
-
-
-
-
-
-
-
-
(1,250,000)
-
1,000,000
-
6,500,000
1,000,000
-
6,500,000
-
-
-
-
-
1,000,000
1,000,000
1,000,000
1,000,000
2,400,000
1,700,000
1,200,000
2,400,000
1,700,000
1,200,000
-
-
-
-
-
-
-
-
(1,250,000)
14,800,000
14,800,000
-
Balance at
beginning of
year
1 July 2006
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance at end
of year
30 June 2007
Directors
Campbell Theodore Ansell
- Resigned 6 June 2007
Anthony Paul Rovira
Michael John Fowler
John Walter Saleeba
Executives
Dennis Wilkins
- Resigned 21 Nov 2006
Patrick Manouge
Brett Dickson
Mark Styles
1,250,000
5,000,000
1,000,000
1,000,000
-
1,500,000
-
-
-
-
-
-
-
-
-
-
1,250,000
6,500,000
1,000,000
1,000,000
-
1,400,000
-
-
-
-
1,200,000
1,000,000
-
-
-
-
- -
- -
-
1,400,000
1,200,000
1,000,000
Vested at 30 June 2007
Unvested
Vested &
Exercisable
1,250,000
6,500,000
1,000,000
1,000,000
-
1,100,000
1,200,000
1,000,000
-
-
-
-
-
300,000
-
-
Total
9,650,000
3,700,000
-
-
13,350,000
13,050,000
300,000
48
Azure Minerals Limited - Financial Statements
Notes continued
24. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont’d)
(d) Shareholdings of key management personnel
2008
Balance
1 July
Ord
Granted
Ord
On Exercise
of Options
Ord
Net Change
Other
Ord
Balance
30 June
Balance
Indirectly Held
Ord
Ord
2008
Directors
Wolf G Martinick
Anthony Paul Rovira
Michael John Fowler
John Walter Saleeba
Executives
Brett Dickson
Patrick Manouge
Mark Styles
Total
2007
Directors
Campbell T Ansell
Anthony Paul Rovira
Michael John Fowler
John Walter Saleeba
Executives
Brett Dickson
Mark Styles
Dennis Wilkins
Patrick Manouge
Total
-
2,000,000
1,008,000
770,000
200,000
10,000
-
3,988,000
408,000
1,800,000
1,008,000
770,000
-
-
500,000
10,000
4,496,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
500,000
2,000,000
1,008,000
770,000
200,000
10,000
-
200,000
770,000
100,000
-
-
-
-
500,000
4,488,000
1,070,000
200,000
408,000
2,000,000
1,008,000
770,000
200,000
200,000
-
500,000
10,000
200,000
770,000
100,000
-
-
-
-
-
400,000
4,896,000
1,070,000
25. RELATED PARTY DISCLOSURES
(a) Parent entity
The ultimate parent entity within the Group is Azure Minerals Limited.
(b) Subsidiaries
Loans to subsidiaries
Beginning of the year
Loans advanced
Loans Repaid
End of year
Consolidated
Parent Entity
2008
$
-
-
-
-
2007
$
-
-
-
-
2008
$
2,362,235
2,313,827
-
4,676,062
2007
$
-
2,362,365
-
2,362,235
No provision for doubtful debts have been raised in relation to any outstanding balances, and no expense has been recognised in respect
of bad or doubtful debts due from related parties.
(c) Key management personnel
Disclosures relating to key management personnel are set out in note 24.
49
Azure Minerals Limited - Financial Statements
Notes continued
26.
INTERESTS IN JOINT VENTURES
The company has interests in the following joint ventures:
Joint Venture
Activities
Interest
Carrying Value $
(a) Bounty
Nickel/Base Metals
Earning up to 80%
(c) Sonora, Mexico
Gold/Copper
51% and increasing
NIL
NIL
(a) The company has entered into a joint venture agreement with private company Montague Resources Pty Ltd on the Bounty Project in
the Forrestania Greenstone Belt of Western Australia. Under the agreement signed in May 2004, Azure Minerals can earn a 70% interest
in all metals (except gold and silver) by sole funding exploration through to completion of a Bankable Feasibility Study (BFS) by June
2014. Azure Minerals has a further option to increase its interest by 10%, to a total of 80%, by paying to Montague the sum of $4 million
following the completion of the BFS. On 16 May 2007 the company announced it has reached agreement witrh Australian Mines Limited
to sell its interests in the Bounty joint venture for a cash payment of $75,000. At 30 June 2008 settlement on the sale had not occurred.
(b) Azure Minerals is exploring a portfolio of 13 projects in the Mexican state of Sonora in joint venture with Geoinformatics
Exploration Inc (TSX-V: GXL). Under the terms of the agreement, during the year Azure Minerals earned a 51% interest in all 13
projects. In the current joint venture year, ending 31 December 2008, GXL elected not to contribute to joint venture expenditure,
accordingly Azure Minerals interest will increase and GFX’s interest will decrease according to standard industry dilution formula.
27. SHARE-BASED PAYMENTS
The group has issued options pursuant to an Employee Share plan and also Director Options Issued pursuant to approval obtained by shareholders
at a General Meeting. Details of each issue is set out below:
(a) Employee and consultants option plan
The establishment of the Azure Minerals Limited – Employees and Contractors Option Incentive Plan (“Plan”) was approved by shareholders at
the 2004 Annual General Meeting. The plan is designed to provide long-term incentives for employees and certain contractors to deliver long
term shareholder returns. Participation in the plan is at the Boards discretion and no individual has a contractual right to participate in the plan or
to receive guaranteed benefits. In addition, under the Plan, the Board determines the terms of the options including exercise price, expiry date and
vesting conditions, if any.
Options granted under the plan carry no dividend or voting rights. When exercised, each option is convertible into an ordinary share of the
company with full dividend and voting rights.
Set out below are summaries of options granted under the plan.
Grant Date
Expiry Date
Exercise
Price
(cents)
Value per
option at
grant date
(cents)
Balance of
the start of
the year
Number
Granted
during
the year
Number
Exercised
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the year
Number
Vested and
exercisable at
end of the year
Number
Consolidated and parent entity – 2008
30 Nov ‘08
30 Nov ‘03
30 Nov ‘09
30 Nov ‘03
30 Nov ‘10
30 Nov ‘03
31 Jan ‘11
22 Mar ‘06
31 Jan ‘12
22 Mar ‘06
31 Jan ‘13
22 Mar ‘06
31 Jan ‘11
6 Dec ‘06
31 Jan ‘12
6 Dec ‘06
31 Jan ‘13
6 Dec ‘06
31 Jan ‘12
10 Jan ‘07
31 Jan ‘13
10 Jan ‘07
30 Nov ‘09
6 Dec ‘06
30 Nov ‘09
3 Aug ‘07
25.0
25.0
25.0
17.5
25.0
35.0
17.5
25.0
35.0
25.0
35.0
15.0
15.0
-
-
-
6.81
6.60
6.47
3.74
3.64
3.45
3.03
2.82
0.93
14.3
Weighted average exercise price
100,000
200,000
200,000
300,000
300,000
300,000
500,000
500,000
500,000
500,000
500,000
1,200,000
-
5,100,000
$0.24
-
-
-
-
-
-
-
-
-
-
-
-
1,750,000
1,750,000
$0.15
50
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
200,000
200,000
300,000
300,000
300,000
500,000
500,000
500,000
500,000
500,000
1,200,000
1,750,000
6,850,000
$0.217
100,000
200,000
200,000
300,000
300,000
300,000
500,000
500,000
500,000
500,000
500,000
1,200,000
1,750,000
6,850,000
$0.217
Azure Minerals Limited - Financial Statements
Notes continued
27. SHARE-BASED PAYMENTS (cont’d)
Consolidated and parent entity – 2007
30 Nov ‘08
30 Nov ‘03
30 Nov ‘09
30 Nov ‘03
30 Nov ‘10
30 Nov ‘03
31 Jan ‘11
22 Mar ‘06
31 Jan ‘12
22 Mar ‘06
31 Jan ‘13
22 Mar ‘06
31 Jan ‘11
6 Dec ‘06
31 Jan ‘12
6 Dec ‘06
31 Jan ‘13
6 Dec ‘06
31 Jan ‘12
10 Jan ‘07
31 Jan ‘13
10 Jan ‘07
30 Nov ‘09
6 Dec ‘06
25.0
25.0
25.0
17.5
25.0
35.0
17.5
25.0
35.0
25.0
35.0
15.0
-
-
-
6.81
6.60
6.47
3.74
3.64
3.45
3.03
2.82
0.93
Weighted average exercise price
130,000
260,000
260,000
500,000
500,000
500,000
-
-
-
-
-
-
2,150,000
$0.256
-
-
-
-
-
500,000
500,000
500,000
500,000
500,000
1,200,000
3,700,000
$0.234
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(30,000)
(60,000)
(60,000)
(200,000)
(200,000)
(200,000)
-
-
-
-
-
-
(750,000)
$0.257
100,000
200,000
200,000
300,000
300,000
300,000
500,000
500,000
500,000
500,000
500,000
1,200,000
5,100,000
$0.240
100,000
200,000
200,000
300,000
300,000
-
500,000
500,000
500,000
500,000
500,000
1,200,000
4,800,000
$0.233
No options expired nor were any options exercised during the periods covered by the above tables.
The weighted average remaining contractual life of share options outstanding at the end of the period was 2.58 years (2007: 3.98 years).
Fair value of options granted.
Options are granted for no consideration. The weighted average fair value of the options granted during the year was 14.3 cents (2007:2.6 cents).
The price was calculated by using the Binominal Option valuation methodology applying the following inputs:
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Risk free interest rate
2008
15.0
2.3
22.5
90%
6.05%
2007
23.4
4.02
10.7
70%
6.0%
Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative of future trends, which
may not eventuate.
The life of the options is based on historical exercise patterns, which may not eventuate in the future.
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Options issued to employees
Consolidated
Parent Entity
2008
$
2007
$
2008
$
365,127
134,395
365,127
2007
$
134,395
51
Azure Minerals Limited - Financial Statements
Notes continued
27.
SHARE-BASED PAYMENTS (cont’d)
(b) Directors options
Set out below are summaries of Directors options granted.
Grant Date
Expiry Date
Exercise
Price
(cents)
Value per
option at
grant date
(cents)
Balance of
the start of
the year
Number
Granted
during
the year
Number
Exercised
during the
year
Number
Forfeited
during the
year
Number
Balance at
end of the year
Number
Vested and
exercisable at
end of the year
Number
Consolidated and parent entity – 2008
30 Nov ‘08
30 Nov ‘03
30 Nov ‘09
30 Nov ‘03
30 Nov ‘10
30 Nov ‘03
31 Jan ‘10
24 Dec ‘07
31 Jan ‘11
24 Dec ‘07
31 Jan ‘12
24 Dec ‘07
25.0
25.0
25.0
25.0
25.0
25.0
-
-
-
8.2
10.2
11.7
Weighted average exercise price
Consolidated and parent entity – 2007
30 Nov ‘08
30 Nov ‘03
30 Nov ‘09
30 Nov ‘03
30 Nov ‘10
30 Nov ‘03
25.0
25.0
25.0
-
-
-
Weighted average exercise price
1,650,000
3,300,000
3,300,000
-
-
-
8,250,000
$0.25
1,650,000
3,300,000
3,300,000
8,250,000
$0.25
-
-
-
200,000
400,000
400,000
1,000,000
$0.25
-
-
-
-
-
-
-
-
-
-
(250,000)
(500,000)
(500,000)
-
-
-
(1,250,000)
$0.25
1,400,000
2,800,000
2,800,000
200,000
400,000
400,000
8,000,000
$0.25
1,650,000
3,300,000
3,300,000
8,250,000
$0.25
-
1,400,000
2,800,000
2,800,000
200,000
400,000
400,000
8,000,000
$0.25
1,650,000
3,300,000
3,300,000
8,250,000
$0.25
Fair value of director options granted.
Options are granted for no consideration. The weighted average fair value of the options granted during the year was 10.4 cents (2007: none
issued). The price was calculated by using the Binominal Option valuation methodology applying the following inputs:
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Risk free interest rate
2008
25.0
3.3
18.5
90%
6.25%
2007
-
-
-
-
-
Historical volatility has been the basis for determining expected share price volatility as it assumed that this is indicative of future trends, which
may not eventuate.
The life of the options is based on historical exercise patterns, which may not eventuate in the future.
Total expenses arising from share-based payment transactions recognised during the period were as follows:
Options issued to directors
Consolidated
Parent Entity
2008
$
103,049
2007
$
-
2008
$
103,049
2007
$
-
52
Azure Minerals Limited - Financial Statements
Directors' Declaration
The directors of the company declare that:
(1)
The financial statements, comprising the income statement, balance sheet, cash flow statement, statement of changes in equity,
accompanying notes, are in accordance with the Corporations Act 2001 and:
(a)
(b)
comply with Accounting Standards and the Corporations Regulations 2001; and
give a true and fair view of the financial position as at 30 June 2008 and of the performance for the year ended on
that date of the company and the consolidated entity.
(2)
(3)
(4)
In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they
become due and payable.
The remuneration disclosures included in pages 15 to 18 of the director’s report (as part of the audited Remuneration Report) for
the year ending 30 June 2008, comply with section 300A of the Corporations Act 2001.
The directors have been given the declaration by the chief executive officer and chief financial officer as required by section
295A.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the directors by:
Anthony Paul Rovira
Executive Chairman
Perth, 26 September 2008
53
BDO Kendalls Audit & Assurance (WA) Pty Ltd
128 Hay Street
SUBIACO WA 6008
PO Box 700
WEST PERTH WA 6872
Phone 61 8 9380 8400
Fax 61 8 9380 8499
aa.perth@bdo.com.au
www.bdo.com.au
ABN 79 112 284 787
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF AZURE MINERALS LTD
We have audited the accompanying financial report of Azure Minerals Limited, which comprises the balance
sheet as at 30 June 2008, and the income statement, statement of changes in equity and cash flow statement for
the year ended on that date, a summary of significant accounting policies, other explanatory notes and the
directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the year’s
end or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial report in
accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the
preparation and fair presentation of the financial report that is free from material misstatement, whether due to
fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are
reasonable in the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard
AASB 101 Presentation of Financial Statements, that compliance with the Australian equivalents to International
Financial Reporting Standards ensures that the financial report, comprising the financial statements and notes,
complies 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. These Auditing Standards require that we comply with relevant
ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable
assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the
risks of material misstatement of the financial report, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
54
BDO Kendalls is a national association of
separate partnerships and entities
Auditor’s Opinion
In our opinion:
(a)
the financial report of Azure Minerals Limited is in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June
2008 and of their performance for the year ended on that date; and
complying with Australian Accounting Standards
Interpretations) and the Corporations Regulations 2001; and
(including
the Australian Accounting
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2008. 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.
Auditor’s Opinion
In our opinion, the Remuneration Report of Azure Minerals Limited for the year ended 30 June 2008, complies
with section 300A of the Corporations Act 2001.
Yours faithfully,
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Glyn O’Brien
Director
Perth, Western Australia
Dated this 26th day of September 2008
55
BDO Kendalls Audit & Assurance (WA) Pty Ltd
128 Hay Street
SUBIACO WA 6008
PO Box 700
WEST PERTH WA 6872
Phone 61 8 9380 8400
Fax 61 8 9380 8499
aa.perth@bdo.com.au
www.bdo.com.au
ABN 79 112 284 787
26 September 2008
The Directors
Azure Minerals Limited
Level 1, 30 Richardson Street
West Perth WA 6005
Dear Sirs
DECLARATION OF INDEPENDENCE BY GLYN O’BRIEN TO THE DIRECTORS OF
AZURE MINERALS LIMITED
As lead auditor of Azure Minerals Limited for the year ended 30 June 2008, I declare that, to the best
of my knowledge and belief, there have been no contraventions of:
•
the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
and
• any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Azure Minerals Limited and the entities it controlled during the year.
Glyn O’Brien
Director
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Perth, Western Australia
56
BDO Kendalls is a national association of
separate partnerships and entities
Azure Minerals Limited - Annual Report
ASX Additional Information
Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows. The
information is current as at 23 September 2006.
(a) Distribution of equity securities
The number of shareholders, by size of holding, in each class of share are:
1
1,001
5,001
10,001
100,001
-
-
-
-
1,000
5,000
10,000
100,000
and over
The number of shareholders holding less than a marketable parcel of shares are:
(b) Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Yandal Investments Pty Ltd
HSBC Custody Nominees
ANZ Nominees Limited
Mr Robert Hastings Smythe
S & M French Investments Pty Ltd
Mr Peter Murray Nicholas
Mrs Joan Hall
Rovira Geoservices Pty Ltd
Stadjoy Pty Ltd
Mr Richard Eric James + Mrs Margaret Anne James
Total Corporate Solutions Pty Ltd
Mr Mark Edwin Lee
Dr Lyndsay George McDonald Gordon
Mr Sean Delaney
Mr Michael Holmes
Dr Norman William Coles
Mr Ronald John Gilchrist
Forty Traders Limited
Seydor Limited
Vanwhile Pty Ltd
Ordinary shares
Number of holders Number of shares
28
298
947
1,432
261
2966
174
6,268
1,112,479
8,477,756
57,455,525
92,730,244
159,782,272
405,409
Listed ordinary shares
Number of shares
Percentage of
ordinary shares
10,845,000
8,364,484
2,942,844
2,000,000
1,750,000
1,140,000
1,060,000
1,040,000
1,040,000
1,030,000
1,010,000
1,005,700
1,002,023
1,000,000
1,000,000
900,000
900,000
841,468
833,333
800,000
40,504,852
6.79
5.23
1.84
1.25
1.10
0.71
0.66
0.65
0.65
0.64
0.63
0.63
0.63
0.63
0.63
0.56
0.56
0.53
0.52
0.50
25.34
(c) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001
are:
Yandal Investments Pty Ltd
Dundee Corporation and each of its associates
Number of Shares
10,845,000
8,333,334
57
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
Cumobabi
(e) Schedule of interests in mining tenements
Location
El Llano del Nogal Llano del Nogal - Fraccion 1
Llano del Nogal - Fraccion 2
Llano del Nogal - Fraccion 3
Llano del Nogal 2
Llano del Nogal 3
El Apuro (Reduction)
La Calma
Potrerito
El Ermitaño 1
El Ermitaño 2
Mark 1
Mark 2
Mark 3
Tabisco - Fraccion 2
Tabisco 2 - Fraccion 1
Tabisco 2 - Fraccion 2
Beatriz - Fraccion 2
Beatriz - Fraccion 3
Beatriz - Fraccion 4
Jagüey
Pozo de Nacho
Pozo de Nacho 2 - Fracc. 1
Pozo de Nacho 2 - Fracc. 2
Pozo de Nacho 3
Cardeleña
Cardeleña 2
San Nicolas
Batacosa
Pozo de Nacho
Cardeleña
Tabisco
Jagüey
San Nicolas
Batacosa
Arroyo Amarillo Arroyo Amarillo
Estacion Llano
Los Chinos
La Ramada
La Tortuga
La Providencia
El Cuervo
Coronado
Los Nidos
El Carnero
Las Viboras
San Eduardo
Promontorio
Estacion Llano
Los Chinos
La Ramada
La Tortuga
La Providencia
El Cuervo
Coronado
Los Nidos
Carnero
Viboras
San Eduardo
Hidalgo
Promontorio
El Magistral
Tenement
224717
224718
224719
230186
232390
228838
221119
229051
230421
Pending
Pending
Pending
Pending
220663
229008
229009
218062
218063
218064
225314
222873
225057
225058
228563
220716
228176
225315
225402
223191
227017
229035
229820
230422
230462
231704
231432
231051
231326
232429
232387
14966
28521
218881
Percentage held / earning
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
51%
100%
100%
100%
100%
100%
100%
100%
100%
100%*
100%*
100%*
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All
Minerals
All Minerals
All Minerals
All
Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
All Minerals
58