Azure Minerals Limited
ABN 46 106 346 918
Annual Report and Financial Statements
for the year ended 30 June 2009
Azure Minerals Limited – Annual Report 2009
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 2009
Highlights
Highlights for the 2009 year include:
• Completion of the first JORC Code compliant Mineral Resource at Promontorio of:
502,000 tonnes @ 4.7% Copper, 2.1g/t Gold & 99g/t Silver, containing:
(cid:131) 23,400 tonnes of Copper
(cid:131) 34,000 ounces of Gold
(cid:131) 1.6 million ounces of Silver
•
Initial metallurgical testwork program on Promontorio mineralisation completed, with excellent metal recoveries
achieved from flotation testwork, including:
(cid:131) Copper: 99.4%
(cid:131) Gold:
(cid:131) Silver:
97.6%
98.9%
• High level evaluation of the economic potential of Promontorio finds that:
(cid:131) The project has the potential to be developed and operated at a profit
(cid:131) The high grade mineralisation provides a significant positive margin over operating costs
(cid:131) There is a noticeable trend of increasing grade with depth
(cid:131) Further cash flow modelling show a substantial potential increase in project value with additional resources
• Azure enters into a Joint Venture with the Japanese Government corporation JOGMEC to explore for major copper
deposits on the La Tortuga Project.
(cid:131) JOGMEC may earn a 51% interest in the project by sole-funding US$3 million on exploration expenditure
within 3 years.
(cid:131) Exploration to date includes geology, geochemical sampling, airborne and ground geophysics, and drilling
of one 500m deep diamond drill hole.
(cid:131) Results have been very positive, identifying strongly altered rocks containing anomalous copper,
molybdenum and zinc mineralisation associated with several strong Induced Polarisation (IP) anomalies
outlined in an 8km long structural corridor.
2
Azure Minerals Limited – Annual Report
Contents
Chairman’s Letter
Review of Operations
- Promontorio
- La Tortuga
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
- Auditor’s Independence Declaration
ASX Additional Information
4
5
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8
17
25
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27
28
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58
60
61
Competent Person Statement:
Information in this report that relates to Exploration Results is based on information compiled by Mr Tony Rovira, who is a Member of The
Australasian Institute of Mining and Metallurgy. Mr Rovira is a full-time employee of Azure Minerals Limited. Mr Rovira has sufficient
experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves”. Mr Rovira consents to the inclusion in the documents of the matters based on his
information in the form and context in which it appears.
3
Azure Minerals Limited – Annual Report 2009
Chairman’s Letter
Dear Fellow Shareholders,
On behalf of the Board of Azure Minerals, it is my pleasure to present to you the Annual Report for 2009.
This has been a difficult year for all mineral explorers following the fallout from the Global Financial Crisis however, I am
pleased to report that Azure has been able to undertake a significant level of positive exploration and value adding activity in
Mexico, whilst prudently managing and preserving our financial resources.
Great progress has been made at our flagship project Promontorio, where we have begun to move beyond the pure
exploration phase towards project scoping and development. A significant milestone was reached with the publication of the
initial JORC resource at Promontorio. Excellent metal recoveries and a high level evaluation shows significant promise for
the project.
Importantly, the high level evaluation shows that potential returns to shareholders from Promontorio can be substantially
enhanced with the definition of further mineral resources. We believe the potential for further resources being defined at
Promontorio remains excellent, with wildcat holes to the North of the existing resource intersecting additional high grade
mineralisation. The mineralisation remains open to the North and South, with further 650m of untested strike potential
before becoming obscured under cover rocks.
Against the backdrop of difficult market conditions, Azure has followed a prudent course towards managing available
working capital. Equity markets were very challenging for a significant portion of the year just past, with further
development funds for early stage exploration being very difficult to obtain. Accordingly, Azure has struck a balance
between preserving potentially scarce development funds and continuing its mandate from shareholders to advance
exploration, in order to realise its vision of becoming an independent minerals producer.
In line with this balanced approach, at La Tortuga we have been able to attract a major joint venture partner, allowing us to
apply and expend a significant level of exploration spending. A very significant exploration program has been underway at
no cost to Azure, as our joint venture partner earns into the project. Azure continues to manage the project, utilising its in-
house exploration team based in Hermosillo, Mexico.
At Promontorio, work has focused on high value-adding activities, including metallurgy and an initial high level economic
study. These activities have substantially enhanced the future potential of the project, for relatively modest expenditure.
Fortunately, we are now seeing market conditions improving with renewed support for explorers operating in prospective
ground with quality exploration teams and that offer the opportunity for high impact returns, leveraged to exploration
success. Azure continues to offer this opportunity to shareholders both through the upside from further development at
Promontorio and the potential for significant discovery at projects such as La Tortuga, where a substantial exploration
program is underway.
Azure’s outstanding exploration portfolio in Mexico has been maintained, with only very low holding costs required. Azure
currently holds seven 100%-owned projects and a further 13 projects in joint venture with Kiska Metals Corp (previously
Geoinformatics), in which Azure holds a 60% interest. Azure’s project portfolio now covers an impressive area of 175,424
hectares (1,754 km2). These projects continue to provide substantial future potential for Azure as the Company looks to
progress them through exploration activities or by corporate means.
Shareholders can look forward to a robust level of activity in the coming year, at both Promontorio and La Tortuga.
Promontorio continues to progress on the path towards development, with a new stage of metallurgical testwork underway in
Mexico. Ongoing development activities over the year ahead will continue to add value to the project. A substantial
exploration program continues at La Tortuga with further geophysical surveys and drill testing of a number of the previously
identified highly prospective targets.
Our activities and prudent management in 2008/2009 have left Azure well placed to emerge from the difficult economic
conditions seen worldwide, and capitalise on the nascent recovery in the world commodity markets. As we continue towards
our vision of becoming an independent minerals producer and advancing Promontorio to production, I look forward to
updating shareholders with the progress to be made in the year ahead.
Tony Rovira
Executive Chairman
4
Azure Minerals Limited – Annual Report 2009
Review of Operations
This year Azure Minerals continued value adding activities on its Mexican projects, focusing principally on its two flagship
properties – Promontorio and La Tortuga.
PROMONTORIO (Copper – Gold – Silver)
The high grade Promontorio copper-gold-silver project comprises a central group of three contiguous mining concessions,
Hidalgo, Promontorio and Magistral, totaling 187 hectares and a surrounding mining concession, Promontorio Regional,
covering 10,500 hectares. Promontorio is located in the northern Mexican state of Chihuahua within the richly mineralised
Sierra Madre Occidental mining province, which is known for its prolific copper, gold and silver mines.
Azure has entered into agreements to purchase the three central mining concessions. Under the terms of the agreements, the
Company will pay the vendors a total of US$4 million staged over four years to gain 100% ownership of the concessions.
Azure has the choice to advance full payment at any time within that period for immediate full ownership. Azure is able to
withdraw from the agreements at any time. No royalties are payable to either the vendors or the government for any mineral
production. During the year Azure was also granted 100% ownership of the surrounding Promontorio Regional concession.
During the year, the Company:
• completed a 38 diamond drill hole, 6,695m resource definition drilling program;
• published a JORC Code-compliant Mineral Resource of:
502,000 tonnes @ 4.7% copper, 2.1g/t gold & 99g/t silver;
• conducted a metallurgical testwork program on a representative bulk sample of Promontorio ore;
• undertook a high level evaluation study on the economics of developing and bringing into production a 150,000
tonne per annum mining operation;
staked the 105km2 Promontorio Regional mining concession which surrounds the core mining leases; and
•
• carried out the first reconnaissance exploration program over the Promontorio Regional concession.
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. 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.
The drill program defined high grade mineralisation over a strike length exceeding 200 metres. Importantly, the high grade
copper-gold-silver mineralized system remains open to the north and south with at least a further 650 metres of untested
potential before becoming obscured under cover rocks. Drilling confirmed the mineralisation extends to depths in excess of
150 metres with good three-dimensional continuity throughout the deposit. Two wildcat drillholes located 120 metres and
340 metres to the north of the northern resource boundary intersected further high grade copper, gold and silver
mineralisation, demonstrating potential for significant expansion of the resources in these areas.
Some of the more spectacular intercepts returned from Azure’s drilling program include:
APR-DD-001
•
13.35 metres @ 5.7% copper, 2.2 g/t gold & 108 g/t silver from 94.6m depth
APR-DD-008
•
2.8 metres @ 10.2% copper, 1.8 g/t gold & 120 g/t silver from 85.2m depth
APR-DD-009
•
•
9.4 metres @ 12.5% copper, 3.9 g/t gold & 266 g/t silver from 82.0m depth
1.4 metres @ 20.7% copper, 1.2 g/t gold & 270 g/t silver from 130.6m depth
APR-DD-010
•
10.05 metres @ 5.3% copper, 1.2 g/t gold & 45 g/t silver from 104.9m depth
APR-DD-015
•
2.30 metres @ 23.1% copper, 3.1g/t gold & 253g/t silver from 91.6m depth
APR-DD-023
•
•
3.0 metres @ 15.4% copper, 2.1 g/t gold & 170 g/t silver from 132.5m depth
4.2 metres @ 15.3% copper, 3.4 g/t gold & 192 g/t silver from 190.1m depth.
5
Azure Minerals Limited – Annual Report 2009
Review of Operations
On the basis of this resource definition drill program and using a 1% copper cut-off, Azure calculated a JORC Code
compliant Mineral Resource estimate of:
Classification
Tonnes
Copper
Gold
Silver
Reported above 1.0% copper
Indicated
Inferred
Total
290,000
212,000
502,000
4.2%
5.3%
4.7%
2.1g/t
2.1g/t
2.1g/t
94g/t
106g/t
99g/t
Contained Metal
23,400 tonnes
34,000 ounces
1,600,000 ounces
In preparation for a pre-feasibility study, Azure commissioned initial metallurgical testwork on a bulk sample of Promontorio
ore. The metallurgical testing program included head grade analysis, mineralogical examination, comminution testing,
sulphide flotation testwork, a recommendation on the optimum process route to produce a copper concentrate, and
preliminary evaluation of various downstream processing options for treatment of the copper concentrate. Very promising
results were returned.
First stage flotation tests produced a “rougher” concentrate grade of 23.1% copper, with a recovery of 99.4% of the total
copper. Further flotation testing upgraded the rougher concentrate to produce a “cleaner” concentrate grade of 33.9% copper
with a recovery of 98.2% of the total copper. Detailed results are shown in the accompanying table.
Product
Mass
Recovery
(%)
Rougher Concentrate
Cleaner Concentrate
48
34
Copper
Gold
Silver
Grade
(%)
23.1
33.9
Recovery
(%)
Grade
(g/t)
Recovery
(%)
Grade
(g/t)
Recovery
(%)
99.4
98.2
6.7
6.9
97.6
83.2
365
377
98.9
93.5
These results confirmed the Company’s view that very high metal recoveries are achievable from commercial scale
production through the application of the conventional well proven processing technologies of crushing, grinding and
flotation, thereby reducing overall project risk.
Towards the end of the year, Azure completed a high level evaluation of the economic potential of the Promontorio project
(“Study”).
It found that:
• Promontorio has potential to be developed and operated at a profit;
• Based on typical costs for similar mining projects in Mexico, the high grade of mineralisation provides a significant
positive margin over operating costs; and
• There is a noticeable trend of increasing grade with depth.
The Study was an initial conceptual analysis designed to provide an order of magnitude estimate of capital and operating
costs, financial return and overall economic viability. It was based upon the existing Mineral Resources and assumed a
selective underground mining operation at approximately 150,000 tonnes per annum followed by treatment using
conventional crushing, grinding and flotation technology. This would produce a high grade copper-gold-silver concentrate to
be on-sold to a smelter.
Operating revenue was estimated at US$2361 per tonne of processed plant feed. Operating costs were estimated to be
approximately US$96 per tonne of processed plant feed. Capital costs for a standard crushing, grinding and flotation
treatment plant, other surface infrastructure and pre-mining development are estimated to be US$27 million.
Cashflow modelling was carried out based on the assumption that additional mineralisation will be discovered through
continued exploration. These results provided further encouragement with the NPV increasing significantly.
1 Metals prices used: Copper @ US$2.00/lb, Gold @ US$875/oz, Silver @ US$12.40/oz
6
Azure Minerals Limited – Annual Report 2009
Review of Operations
The Study assumed processing tonnages and used preliminary metallurgical data, and as such should be regarded with
appropriate caution. This high level Study is early stage and it should be noted there is no certainty that the estimates of the
Study will be realised in the future.
Work is continuing at Promontorio with reconnaissance exploration in progress on the Promontorio Regional concession.
This has comprised geological mapping and geochemical sampling and several new occurrences of epithermal veining and
mineralisation have been identified. The next stage of exploration will be geophysical surveys and the defining of targets
for follow-up drilling.
In addition, Azure has commenced a new stage of metallurgical testwork. A 50kg representative bulk sample of
Promontorio ore has been submitted to a mineral processing laboratory in Mexico to investigate the effectiveness of alkaline,
ferric acid and bacterial leaching on removing contaminant elements from the high grade copper-gold-silver concentrate.
Results from this work are due late in 2009.
Work during the past year has delivered excellent results and has provided Azure with encouragement to advance
Promontorio into the pre-feasibility study stage. This will enable the Company to be ready able to make a production
decision when metals prices and capital market funding have improved. Signs of recovery are already evident, with the
copper price in particular rebounding sharply. Consequently Azure is continuing to progress Promontorio towards
development.
LA TORTUGA – LOS NIDOS (Copper – Gold – Molybdenum – Zinc)
Azure holds 100% ownership of the La Tortuga – Los Nidos properties which together consist of five mining concessions
covering 258 square kilometres. In late 2008, the Japanese Oil, Gas and Metals National Corporation (“JOGMEC”)
recognised significant potential for large copper deposits on La Tortuga and the adjoining Los Nidos properties and
approached Azure with a farm-in offer. A Joint Exploration Agreement was entered into and exploration commenced in
December 2008. Under the terms of the agreement JOGMEC will earn a 51% interest in the project by sole funding the first
US$3 million of exploration expenditure within three years.
JOGMEC is a Japanese Government corporation established to assist in the stable supply of oil, gas and mineral resources to
the Japanese economy. JOGMEC seeks to gain entry into high-potential mineral exploration projects through providing
funding and technical assistance, with a view to the later introduction of commercial Japanese interests.
La Tortuga is located 90 kilometres northwest of Hermosillo, the capital of Sonora State, where Azure has its exploration and
administration base. The joint venture is operated and staffed by Azure with management and technical assistance from
JOGMEC.
The joint venture has implemented an intensive exploration program, including:
• geological mapping and surface geochemical sampling;
• an airborne magnetic and radiometric survey;
•
• drilling one 502m deep diamond core hole.
Induced Polarisation (IP) and resistivity surveys; and
Exploration results have been very positive with ten priority targets being identified. Five of these are in areas of outcrop
where encouraging indications of mineralised porphyry and skarn systems were recognised by the mapping and sampling. In
addition, a further five targets were identified by the geophysical surveys in areas covered by alluvium.
Target A is a 2km x 1km area in eastern La Tortuga containing outcrops of strongly altered intrusive and sedimentary rocks
which hosts visible copper and molybdenum mineralisation at surface. This area was tested by diamond drill hole TOR-DD-
001 which encountered disseminated and veinlet sulphide mineralisation hosted in over 400m of strongly altered porphyry
rocks. Highly anomalous metals values were returned, confirming the presence of a mineralised porphyry system in this area.
Follow-up exploration will comprise 1,500m of diamond core drilling to further test this target.
Further to the north, Targets H and I were identified by the IP, resistivity and magnetic surveys as having geophysical
signatures characteristic of sulphide-rich skarn and porphyry copper deposits. There are no outcropping rocks in the vicinity
of these targets, with both covered by an unknown thickness of transported alluvial sands and gravels. However they have
been recognised as high priority targets and will by drill tested during the forthcoming year.
7
Directors' Report
Azure Minerals Limited - Financial Statements
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 2009.
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
PRINCIPAL ACTIVITIES
During the year the principal continuing activity of the Group was exploration for precious and base minerals in Mexico.
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. Its principal focus on exploration for gold, copper, silver and zinc in
Mexico. The company has thirteen projects in joint venture with TSX-V listed company Kiska Metals Corporation Inc, a joint venture
with Japanese corporation JOGMEC and a number of projects owned 100%. The company’s principal project is the Promontorio project
where a modest size but high grade copper-gold—silver deposit has been identified. The Company will continue to seek opportunities
either 100% owned or in joint venture in Mexico.
Operating Results for the Year
The operating loss after income tax of the company for the year ended 30 June 2009 was $3,355,760 (2008: $4,481,150). Included in this
loss figure is $3,241,555 (2008: $2,305,586) of exploration expenditure written off. Refer notes to the financial statements note 1(d).
Shareholder Returns
Basic loss per share (cents)
Diluted loss per share (cents)
2009
(1.9)
(1.9)
2008
(3.3)
(3.3)
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,
$4,329,766 was raised through the issue of 68,195,817 shares via private placements, share purchase plan and an entitlements issue to
shareholders.
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 covers 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.
8
Directors' Report
Azure Minerals Limited - Financial Statements
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 $4,329,766 (from $25,129,782 to $29,459,548) as a result of:
Issue of 20,365,600 fully paid ordinary shares at $0.125 each
Issue of 47,830,217 fully paid ordinary shares at $0.04 each
Less expenses associated with the above issue of shares
Total
2008
$
2,545,700
1,913,209
4,458,909
(129,143)
4,329,766
(b) Net cash received from the increase is contributed equity amounting to $4,329,766 was used principally to continue the company’s
exploration programme in Mexico.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
No 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. The directors have considered compliance with the National Greenhouse and Energy Reporting Act 2007 which
requires entities to report annual greenhouse gas emissions and energy use. For the first measurement period from 1 July 2008 to 30 June
2009 the directors have assessed that the Company has no current reporting requirements, but may be required to report in the future.
INFORMATION ON DIRECTORS
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
2,982,000 ordinary shares in Azure Minerals Limited
5,500,000 options over ordinary shares in Azure Minerals Limited
9
Azure Minerals Limited - Financial Statements
Directors' Report
INFORMATION ON DIRECTORS (cont’d)
Names, qualifications, experience and special responsibilities (cont’d)
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
Interests in Shares and Options
1,100,000 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
1,050,000 ordinary shares in Azure Minerals Limited
800,000 options over ordinary shares in Azure Minerals Limited
10
Azure Minerals Limited - Financial Statements
Directors' Report
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
8
B
8
8
8
Meetings of Committees
Audit
A
*
2
2
B
*
2
2
Remuneration
B
A
*
2
2
*
2
2
Anthony Paul Rovira
John Walter Saleeba
Wolf Gerhard Martinick
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
Wolf Martinick is the director retiring by rotation who, being eligible offers himself for re-election.
11
Azure Minerals Limited - Financial Statements
Directors' Report
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 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 or 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 AASB 124 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 appointed 5 January 2004 (resigned 30 March 2009)
In addition the Company Secretary, Mr B Dickson is an executive whose remuneration must be disclosed under the Corporations Act
2001.
12
Azure Minerals Limited - Financial Statements
Directors' Report
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
2009
2008
264,935
244,792
-
-
-
-
John Walter Saleeba – Non executive
2009
2008
-
32,500
-
32,500
Wolf Gerhard Martinick –Non Executive (Appointed 1 September 2007)
-
-
-
27,083
2009
2008
-
-
-
-
Michael John Fowler – Non Executive (Resigned 1Sepember 2007)
2009
2008
-
5,416
Executives
Brett Dickson – Company Secretary
2009
2008
132,000
125,000
-
-
-
-
Patrick Manouge – Exploration Manager(resigned 30 March 2009)
2009
2008
152,152
162,500
Mark Styles – Exploration Manager Mexico (Resigned 30 June 2008)
-
-
2009
2008
Total
2009
2008
-
155,015
-
-
581,587
752,306
-
-
-
-
-
-
-
-
-
-
-
-
60,177
22,031
2,925
2,925
35,425
2,437
-
487
-
-
13,694
14,625
-
-
112,221
42,505
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
325,112
266,823
35,425
35,425
-
103,830
35,425
133,350
-
-
-
5,903
-
172,212
-
43,053
-
28,702
132,000
297,212
165,846
220,178
-
183,717
-
347,797
693,808
1,142,608
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 (2008: 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 - 2 years commencing 1 July 2009.
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 July 2009
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.
13
Azure Minerals Limited - Financial Statements
Directors' Report
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.
No options were granted or vested in the year ended 30 June 2009.
No options were exercised during the financial year and no options have been exercised since the end of the financial year. During the year
4,300,000 options exercisable at various prices 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.
E Additional Information
Performance based remuneration
Details of remuneration: options
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 2009/10 financial year.
End of Audited Remuneration Report
14
Azure Minerals Limited - Financial Statements
Directors' Report
LOANS TO DIRECTORS AND EXECUTIVES
No loans have been provided to directors or executives.
SHARES UNDER OPTION
At the date of this report there are 10,550,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Share option movements during the year Issued Lapsed
Total Number of
options
14,850,000
Exercisable at 25 cents, on or before 30 November 2008 (1,500,000)
(1,500,000)
Exercisable at 25 cents, on or before 30 November 2009 (200,000)1
Exercisable at 25 cents, on or before 30 November 2010 (200,000)1
Exercisable at 17.5 cents, on or before 31 January 2011 (300,000)1
Exercisable at 25 cents, on or before 31 January 2012 (800,000)1
Exercisable at 35 cents, on or before 31 January 2013 (800,000)1
Exercisable at 15 cents, on or before 30 November 2009 (500,000)1
Total options issued and lapsed in the year to 30 June 2009
Total number of options outstanding as at 30 June 2009 and at the date of this report
(200,000)
(200,000)
(300,000)
(800,000)
(800,000)
(500,000)
(4,300,000)
10,550,000
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
ceasing 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 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
Exercise price (cents)
25.0
25.0
25.0
25.0
25.0
17.5
25.0
35.0
15.0
Number of
options
2,800,000
2,800,000
200,000
400,000
400,000
500,000
500,000
500,000
2,450,000
Total number of options outstanding at the date of this report
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.
10,550,000
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 $18,792 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.
15
Azure Minerals Limited - Financial Statements
Directors' Report
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
2009
$
2008
$
36,657
25,527
-
31,412
10,916
10,699
10,916
42,111
AUDITOR INDEPENDENCE
A copy of the auditors independence declaration as required under section 307c of the Corporations Act 2001 is set out on page 60.
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, 25 September 2009
16
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
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 the Company's corporate governance practices follow a
recommendation, the Board has made appropriate statements reporting on the adoption of the recommendation. 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.
Disclosure of Corporate Governance Practices
Summary Statement
Recommendation 1.1
Recommendation 1.2
Recommendation 1.3³
Recommendation 2.1
Recommendation 2.2
Recommendation 2.3
Recommendation 2.4
Recommendation 2.5
Recommendation 2.6³
Recommendation 3.1
Recommendation 3.2
Recommendation 3.3³
Recommendation 4.1
Recommendation 4.2
ASX P & R1
(cid:51)
If not, why not2
(cid:51)
n/a
(cid:51)
(cid:51)
n/a
(cid:51)
(cid:51)
n/a
(cid:51)
n/a
(cid:51)
(cid:51)
(cid:51)
n/a
n/a
(cid:51)
Recommendation 4.3
Recommendation 4.4³
Recommendation 5.1
Recommendation 5.2³
Recommendation 6.1
Recommendation 6.2³
Recommendation 7.1
Recommendation 7.2
Recommendation 7.3
ASX P & R1
(cid:51)
If not, why not2
n/a
n/a
n/a
n/a
(cid:51)
n/a
(cid:51)
n/a
(cid:51)
(cid:51)
(cid:51)
Recommendation 7.4³
n/a
n/a
Recommendation 8.1
Recommendation 8.2
(cid:51)
(cid:51)
Recommendation 8.3³
n/a
n/a
1
2
3
Indicates where the Company has followed the Principles & Recommendations.
Indicates where the Company has provided "if not, why not" disclosure.
Indicates an information based recommendation. Information based recommendations are not adopted or reported against using "if
not, why not" disclosure – information required is either provided or it is not.
Website Disclosures
Further information about the Company's charters, policies and procedures may be found at the Company's website at
www.azureminerals.com.au, under the section marked Corporate Governance. A list of the charters, policies and procedures which are
referred to in this Corporate Governance Statement, together with the Recommendations to which they relate, are set out below.
Charters
Board
Audit Committee
Nomination Committee
Remuneration Committee
Policies and Procedures
Policy and Procedure for Selection and (Re)Appointment of Directors
Process for Performance Evaluation
Policy on Assessing the Independence of Directors
Policy for Trading in Company Securities (summary)
Code of Conduct (summary)
Policy on ASX Listing Rule Compliance (summary)
Procedure for the Selection, Appointment and Rotation of External Auditor
Shareholder Communication Strategy
Risk Management Policy (summary)
17
Recommendation(s)
1.3
4.4
2.6
8.3
2.6
1.2, 2.5
2.6
3.2, 3.3
3.1, 3.3
5.1, 5.2
4.4
6.1, 6.2
7.1, 7.4
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
Disclosure – Principles & Recommendations
The Company reports below on how it has followed (or otherwise departed from) each of the Principles & Recommendations during the
2008/2009 financial year ("Reporting Period").
Principle 1 – Lay solid foundations for management and oversight
Recommendation 1.1:
Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions.
Disclosure:
The Company has established the functions reserved to the Board and has set out these functions in its Board Charter. The Board is
collectively responsible for promoting the success of the Company through its key functions of overseeing the management of the
Company, providing overall corporate governance of the Company, monitoring the financial performance of the Company, engaging
appropriate management commensurate with the Company's structure and objectives, involvement in the development of corporate
strategy and performance objectives and reviewing, ratifying and monitoring systems of risk management and internal control, codes of
conduct and legal compliance.
The Company has established the functions delegated to senior executives and has set out these functions in its Board Charter. Senior
executives are responsible for supporting the Managing Director and assisting the Managing Director in implementing the running of the
general operations and financial business of the Company, in accordance with the delegated authority of the Board.
Senior executives are responsible for reporting all matters which fall within the Company's materiality thresholds at first instance to the
Managing Director or, if the matter concerns the Managing Director, then directly to the Chair or the lead independent director, as
appropriate.
Recommendation 1.2:
Companies should disclose the process for evaluating the performance of senior executives.
Disclosure:
The Chair/Managing Director is responsible for evaluating the senior executives. The Chair/Managing Director reviews the performance
of the senior executives by completing written performance appraisals for each senior executive; the Chair/Managing Director then meets
with the senior executives to discuss their performance appraisals and provide feedback to the senior executives.
Recommendation 1.3:
Companies should provide the information indicated in the Guide to reporting on Principle 1.
Disclosure:
During the Reporting Period there were no performance evaluations for senior executives, however, the Company expects to conduct
performance evaluations in the forthcoming reporting period in accordance with the process disclosed at Recommendation 1.2.
Principle 2 – Structure the board to add value
Recommendation 2.1:
A majority of the Board should be independent directors.
Disclosure:
The Board has a majority of directors who are independent.
The independent directors of the Board are Wolf Martinick and John Saleeba. The non independent director of the Board is Anthony
Rovira.
Recommendation 2.2:
The Chair should be an independent director.
Notification of Departure:
The Chair is not an independent director.
18
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
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, and 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 the same individual, 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 expectations.
Recommendation 2.4:
The Board should establish a Nomination Committee.
Notification of Departure:
The Company has not established a 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. Items that are usually required to be discussed by a Nomination Committee are marked as separate agenda items at Board
meetings when required. When the Board convenes as the Nomination Committee it carries out those functions which are delegated in
the Company’s Nomination Committee Charter. The Board deals with any conflicts of interest that may occur when convening in the
capacity of Nomination Committee by ensuring the director with conflicting interests is not party to the relevant discussions.
Recommendation 2.5:
Companies should disclose the process for evaluating the performance of the Board, its committees and individual directors.
Disclosure:
The Chair is responsible for evaluation of the Board and, when deemed appropriate, Board committees and individual directors. The
Nomination Committee is responsible for evaluating the Managing Director.
Given the current size and composition of the Company believes that the most efficient way to conduct these evaluations is by way of
informal discussions as required.
Recommendation 2.6:
Companies should provide the information indicated in the Guide to reporting on Principle 2.
Disclosure:
Skills, Experience, Expertise and term of office of each Director
A profile of each director containing their skills, experience, expertise and term of office is set out in the Directors' Report.
Identification of Independent Directors
The independent directors of the Company are Wolf Martinick and John Saleeba. These directors are independent as they are non-
executive directors who are not members of management and who are free of any business or other relationship that could materially
interfere with, or could reasonably be perceived to materially interfere with, the independent exercise of their judgment.
Independence is measured having regard to the relationships listed in Box 2.1 of the Principles & Recommendations and the Company's
materiality thresholds. The materiality thresholds are set out below.
Company's Materiality Thresholds
The Board has agreed on the following guidelines for assessing the materiality of matters, as set out in the Company's Board Charter:
•
•
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.
19
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
•
•
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.
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 another director, the Company will pay the reasonable expenses associated with obtaining such
advice.
Nomination Matters
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 the Board discussed nomination-related matters 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.
The explanation for departure set out under Recommendation 2.4 above explains how the functions of the Nomination Committee are
performed.
Performance Evaluation
During the Reporting Period there were no performance evaluations conducted except a performance evaluation of the whole Board,
which evaluation occurred in accordance with the process disclosed at Recommendation 2.5.
The Company expects to conduct performance evaluations in the forthcoming reporting period in accordance with the process disclosed
at Recommendation 2.5.
Selection and (Re)Appointment of Directors
In determining candidates for the Board, the Nomination Committee (or equivalent) follows a prescribed procedure whereby it considers
the balance of independent directors on the Board as well as the skills and qualifications of potential candidates that will best enhance the
Board's effectiveness.
The Board recognises that Board renewal is critical to performance and the impact of Board tenure on succession planning. At every
annual general meeting one-third of the directors (other than alternate directors and the Managing Director) shall retire from office. No
director (other than alternate directors and the Managing Director) may hold office for more than 3 years without retiring from office. A
retiring director is eligible for re-election. Re-appointment of directors is not automatic.
Principle 3 – Promote ethical and responsible decision-making
Recommendation 3.1:
Companies should establish a Code of Conduct and disclose the code or a summary of the code as to the practices necessary to maintain
confidence in the company's integrity, the practices necessary to take into account their legal obligations and the reasonable expectations
of their stakeholders and the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.
Disclosure:
The Company has established a Code of Conduct as to the practices necessary to maintain confidence in the Company's integrity,
practices necessary to take into account their legal obligations and the expectations of their stakeholders and responsibility and
accountability of individuals for reporting and investigating reports of unethical practices.
Recommendation 3.2:
Companies should establish a policy concerning trading in company securities by directors, senior executives and employees, and
disclose the policy or a summary of that policy.
Disclosure:
The Company has established a policy concerning trading in the Company's securities by directors, senior executives and employees.
20
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
Recommendation 3.3:
Companies should provide the information indicated in the Guide to reporting on Principle 3.
Disclosure:
Please refer to the section above marked Website Disclosures.
Principle 4 – Safeguard integrity in financial reporting
Recommendation 4.1:
The Board should establish an Audit Committee.
Disclosure:
The Company has established an Audit Committee.
Recommendation 4.2:
The Audit Committee should be structured so that it:
•
•
•
•
consists only of non-executive directors
consists of a majority of independent directors
is chaired by an independent Chair, who is not Chair of the Board
has at least three members.
Notification of Departure:
The Audit Committee comprises 2 members, Wolf Martinick and John Saleeba.
Explanation for Departure:
Given the size and structure of the Board, the Company is unable to meet the composition requirements under Recommendation 4.2. The
Audit Committee is comprised of the two independent, non executive directors.
Recommendation 4.3:
The Audit Committee should have a formal charter.
Disclosure:
The Company has adopted an Audit Committee Charter.
Recommendation 4.4:
Companies should provide the information indicated in the Guide to reporting on Principle 4.
Disclosure:
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
No. of meetings attended
2
2
Details of each of the director's qualifications are set out in the Directors' 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.
The Company has established procedures for the selection, appointment and rotation of its external auditor. The Board is responsible for
the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises, as recommended by
the Audit Committee (or its equivalent). Candidates for the position of external auditor must demonstrate complete independence from the
Company through the engagement period. The Board may otherwise select an external auditor based on criteria relevant to the Company's
business and circumstances. The performance of the external auditor is reviewed on an annual basis by the Audit Committee (or its
equivalent) and any recommendations are made to the Board.
21
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
Principle 5 – Make timely and balanced disclosure
Recommendation 5.1:
Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure
accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.
Disclosure:
The Company has established written policies designed to ensure compliance with ASX Listing Rule disclosure and accountability at a
senior executive level for that compliance.
Recommendation 5.2:
Companies should provide the information indicated in the Guide to reporting on Principle 5.
Disclosure:
Please refer to the section above marked Website Disclosures.
Principle 6 – Respect the rights of shareholders
Recommendation 6.1:
Companies should design a communications policy for promoting effective communication with shareholders and encouraging their
participation at general meetings and disclose their policy or a summary of that policy.
Disclosure:
The Company has designed a communications policy for promoting effective communication with shareholders and encouraging
shareholder participation at general meetings.
Recommendation 6.2:
Companies should provide the information indicated in the Guide to reporting on Principle 6.
Disclosure:
Please refer to the section above marked Website Disclosures.
Principle 7 – Recognise and manage risk
Recommendation 7.1:
Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.
Disclosure:
The Board has adopted a Risk Management Policy, which sets out the Company's risk profile. Under the policy, the Board is responsible
for approving the Company's policies on risk oversight and management and satisfying itself that management has developed and
implemented a sound system of risk management and internal control.
Under the policy, the Board delegates day-to-day management of risk to the Managing Director, who is responsible for identifying,
assessing, monitoring and managing risks. The Managing Director is also responsible for updating the Company's material business risks to
reflect any material changes, with the approval of the Board.
In fulfilling the duties of risk management, the Managing Director may have unrestricted access to Company employees, contractors and
records and may obtain independent expert advice on any matter they believe appropriate, with the prior approval of the Board.]
The Board has established a separate Audit Committee to monitor and review the integrity of financial reporting and the Company's
internal financial control systems and risk management systems.
In addition, the following risk management measures have been adopted by the Board to manage the Company's material business risks:
•
•
•
the Board has established authority limits for management which, if exceeded, will require prior Board approval;
the Board has adopted a compliance procedure for the purpose of ensuring compliance with the Company's continuous
disclosure obligations; and
the Board has adopted a corporate governance manual which contains other policies to assist the Company to establish and
maintain its governance practices
22
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
The Company does not have a formalised and documented risk management system in place. The board does receive a detailed report from
management each month which enables an assessment by the board of activities that may impact on the risk profile of the company.
Specific areas of risk that are identified in the report include operational activities, asset management (including title to exploration and
mining leases) and staff. Any matter identified from the monthly report is then discussed at the following board meeting. In September
2009, the Board resolved to review, formalise and document the management of its material business risks and expects to implement this
system in the second quarter of the 2009/2010 financial year. This system is expected to include the preparation of a risk register by
management to identify the Company's material business risks and risk management strategies for these risks. In addition, the process of
management of material business risks will be allocated to members of senior management. The risk register will be reviewed quarterly
and updated, as required.
Recommendation 7.2:
The Board should require management to design and implement the risk management and internal control system to manage the Company's
material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management
has reported to it as to the effectiveness of the Company's management of its material business risks.
Disclosure:
The Board has required management to design, implement and maintain risk management and internal control systems to manage the
Company's material business risks. The Board also requires management to report to it confirming that those risks are being managed
effectively. Further, the Board has received a report from management as to the effectiveness of the Company's management of its material
business risks.
Recommendation 7.3:
The Board should disclose whether it has received assurance from the Chief Executive Officer (or equivalent) and the Chief Financial
Officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system
of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting
risks.
Disclosure:
The Managing Director and the Chief Financial Officer (or equivalent) have provided a declaration to the Board 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 risk.
Recommendation 7.4:
Companies should provide the information indicated in the Guide to reporting on Principle 7.
Disclosure:
The Board has received the report from management under Recommendation 7.2.
The Board has received the assurance from the Managing Director and the Chief Financial Officer (or equivalent) under Recommendation
7.3.
Principle 8 – Remunerate fairly and responsibly
Recommendation 8.1:
The Board should establish a Remuneration Committee.
Disclosure:
The Company has established a Remuneration Committee.
Recommendation 8.2:
Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior
executives.
Disclosure:
Non-executive directors are remunerated at market rates (for comparable companies) for time, commitment and responsibilities.
Remuneration for non-executive directors is not linked to the performance of the Company. From time to time the Company may grant
options to non-executive directors, which grant is designed to attract and retain appropriately qualified non-executive directors to the
Board.
23
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
Pay and rewards for executive directors and senior executives consists of a base salary and performance incentives. Long term performance
incentives may include options granted at the discretion of the Remuneration Committee and subject to obtaining the relevant approvals.
The grant of options is designed to recognise and reward efforts as well as to provide additional incentive and may be subject to the
successful completion of performance hurdles.
Recommendation 8.3:
Companies should provide the information indicated in the Guide to reporting on Principle 8.
Disclosure:
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 held two meetings during the Reporting Period. The following table identifies those directors who are
members of the Remuneration Committee and shows their attendance at Committee meetings:
Name
Wolf Martinick
John Saleeba
No. of meetings attended
2
2
In the 2005/2006 financial year the Company 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 (Cth). In the 2006/2007 financial year, however, the Directors Retirement Benefit Policy was terminated and the retirement benefit
entitlement does not apply to any non-executive director appointed from 30 June 2006.
The Company's Remuneration Committee Charter includes a statement of the Company's policy on prohibiting transactions in associated
products which limit the risk of participating in unvested entitlements under any equity based remuneration schemes.
24
Azure Minerals Limited - Financial Statements
Income Statements
YEAR ENDED 30 JUNE 2009
Notes
Consolidated
Parent Entity
REVENUE
EXPENDITURE
Depreciation
Salaries and employee benefits expense
Directors fees
Exploration expenses
Exploration expenses reimbursed
Travel and promotion expenses
Office expenses
Consulting expenses
Insurance expenses
Impairment on loan to subsidiary
Share based payment expense
Preparation for TSX Listing
Other expenses
5
6
6
27
2009
$
2008
$
2009
$
2008
$
64,881
146,733
54,549
146,089
(46,655)
(493,583)
(65,000)
(3,241,555)
957,042
(118,544)
(135,156)
(5,000)
(46,857)
-
-
(3,075)
(222,259)
(49,057)
(606,923)
(64,999)
(2,305,586)
-
(301,448)
(94,275)
(59,950)
(31,419)
-
(365,127)
(602,804)
(146,295)
(16,710)
(493,583)
(65,000)
(11,094)
957,042
(118,544)
(135,156)
(5,000)
(29,294)
(4,636,848)
-
(3,075)
(200,778)
(27,873)
(606,923)
(64,999)
(35,738)
-
(301,448)
(94,275)
(59,950)
(31,419)
-
(365,127)
(602,804)
(146,301)
LOSS BEFORE INCOME TAX EXPENSE
(3,355,760)
(4,481,150)
(4,703,491)
(2,190,768)
INCOME TAX BENEFIT / (EXPENSE)
7
-
-
-
-
NET LOSS ATTRIBUTABLE TO MEMBERS OF AZURE
MINERALS LIMITED
(3,355,760)
(4,481,150)
(4,703,491)
(2,190,768)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
22
(1.9)
(1.9)
(3.3)
(3.3)
The above Income Statements are to be read in conjunction with the Notes to the Financial Statements.
25
Azure Minerals Limited - Financial Statements
Balance Sheets
AT 30 JUNE 2009
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
2009
$
2008
$
2009
$
2008
$
18
8
9
10
11
13
14
1,345,997
130,407
1,476,404
1,420,067
154,067
1,574,134
1,272,504
4,244,210
5,516,714
1,371,278
4,692,599
6,063,877
143,398
709,602
22,308
875,308
196,892
193,270
22,308
412,470
57,561
-
22,535
80,096
76,291
-
22,535
98,826
2,351,712
1,986,604
5,596,810
6,162,703
136,819
126,472
263,291
513,124
174,123
687,247
37,917
126,472
164,389
182,434
174,123
356,557
263,291
687,247
164,389
356,557
2,088,421
1,299,357
5,432,421
5,806,146
15
16(a)
16(b)
29,459,548
691,966
(28,063,093)
2,088,421
25,129,782
876,908
(24,707,333)
1,299,357
29,459,548
903,692
(24,930,819)
5,432,421
25,129,782
903,692
(20,227,328)
5,806,146
The above Balance Sheets are to be read in conjunction with the Notes to the Financial Statements
26
Azure Minerals Limited - Financial Statements
Statements of Changes in Equity
CONSOLIDATED
30 JUNE 2009
Issued
Share Capital
Share Option
Reserve
$
$
Foreign
Currency
Translation
Reserve
$
(Accumulated
Losses)
Total
$
$
Balance at 1 July 2008
25,129,782
903,692
(26,784)
(24,707,333)
1,299,357
Exchange differences arising on translation of foreign
subsidiaries
Net income recognised directly in equity
Loss for the period
Total income and expense recognised for the year
Transactions with equity holders in their capacity as
equity holders
Shares issued during the period
Transaction costs
Sub-total
Balance at 30 June 2009
30 JUNE 2008
-
-
-
-
-
-
-
-
(184,942)
(184,942)
-
(184,942)
-
-
(3,355,760)
(3,355,760)
(184,942)
(184,942)
(3,355,760)
(3,540,702)
4,458,909
(129,143)
4,329,766
29,459,548
-
-
-
903,692
-
-
(184,942)
(211,726)
-
-
(3,355,760)
(28,063,093)
4,458,909
(129,143)
789,064
2,088,421
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
Exchange differences arising on translation of foreign
subsidiaries Foreign currency
Net income recognised directly in equity
Loss for the period
Total income and expense recognised for the year
Transactions with equity holders in their capacity as
equity holders
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)
(20,608)
(20,608)
(4,481,150)
(4,501,758)
-
-
-
(4,481,150)
(24,707,333)
5,000,000
(200,000)
365,127
663,369
1,299,357
The above consolidated statement in of Changes in Equity should be read in conjunction with the accompanying notes.
27
Azure Minerals Limited - Financial Statements
Statements of Changes in Equity
PARENT ENTITY
30 JUNE 2009
Balance at 1 July 2008
25,129,782
903,692
(20,227,328)
5,806,146
Issued
Share Capital
$
Share Option
Reserve
$
Accumulated
(Losses)
$
Total
$
Loss for the period
Total income and expense recognised for the year
Transactions with equity holders in their capacity as
equity holders
Shares issued during the period
Transaction costs
Sub-total
Balance at 30 June 2009
-
-
-
-
(4,703,491)
(4,703,491)
(4,703,491)
(4,703,491)
4,458,909
(129,143)
4,329,766
29,459,548
-
-
-
903,692
-
-
(4,703,491)
(24,930,819)
4,458,909
(129,143)
(373,725)
5,432,421
30 JUNE 2008
Balance at 1 July 2007
20,329,782
538,565
(18,036,560)
2,831,787
Issued
Share Capital
$
Share Option
Reserve
$
Accumulated
(Losses)
$
Total
$
Loss for the period
Total income and expense recognised for the year
Transactions with equity holders in their capacity as
equity holders
Shares issued during the period
Transaction costs
Employee options
Sub-total
Balance at 30 June 2008
-
-
-
-
(2,190,768)
(2,190,768)
(2,190,768)
(2,190,768)
5,000,000
(200,000)
-
4,800,000
25,129,782
-
-
365,127
365,127
903,692
-
-
-
(2,190,768)
(20,227,328)
5,000,000
(200,000)
365,127
2,974,359
5,806,146
The above company Statements of Changes in Equity should be read in conjunction with the accompanying notes.
28
Azure Minerals Limited - Financial Statements
Statements of Cash Flows
YEAR ENDED 30 JUNE 2009
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
Payments for plant and equipment
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
2009
$
2008
$
2009
$
2008
$
(1,163,739)
47,587
(2,492,575)
(1,394,028)
122,658
(2,070,682)
(1,146,176)
47,587
952,810
(1,394,028)
122,014
(33,706)
18(b)
(3,608,727)
(3,342,052)
(145,779)
(1,305,720)
(16,791)
11,432
(530,131)
-
(85,927)
25,000
(193,270)
-
-
1,100
-
(4,180,786)
(18,390)
25,000
-
(2,313,697)
(535,490)
(254,197)
(4,179,686)
(2,307,087)
4,458,909
(129,143)
(103,075)
5,000,000
(200,000)
(502,804)
4,458,909
(129,143)
(103,075)
5,000,000
(200,000)
(502,804)
4,226,691
4,297,196
4,226,691
4,297,196
NET INCREASE (DECREASE) 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
82,474
700,947
(98,774)
684,389
1,420,067
737,646
1,371,278
686,889
18(a)
(156,544)
1,345,997
(18,526)
1,420,067
-
1,272,504
-
1,371,278
The above Statements of Cash Flows are to be read in conjunction with the Notes to the Financial Statements.
29
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, Australian Accounting Interpretations and the Corporations Act 2001.
Going Concern
This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the
realisation of assets and settlement of liabilities in the normal course of business.
The Consolidated Entity has incurred a net loss after tax for the year ended 30 June 2009 of $3,355,760 (2008:$4,481,150) and
experienced net cash outflows from operating activities of $3,608,727 (2008: $3,342,052). At 30 June 2009, the Company and
Consolidated Entity had net current assets of $1,213,113 (30 June 2008: net current assets of $886,887).
The Directors believe there are sufficient funds to meet the Consolidated Entity’s working capital requirements and as at the date of this
report the Company and Consolidated Entity believe they can meet all liabilities as and when they fall due. However the Directors
recognise that additional funding either through the issue of further shares, convertible notes or a combination of both will be required for
the Company and Consolidated Entity to continue to actively explore its mineral properties.
The Directors have reviewed the business outlook and the assets and liabilities of the Company and Consolidated Entity and are of the
opinion that the use of the going concern basis of accounting is appropriate as they believe the Company will continue to be successful in
securing additional funds through debt or equity issues as and when the need to raise working capital arises.
Should the directors not achieve the matters set out above, there is significant uncertainty whether the Company and the Consolidated
Entity will continue as a going concern and therefore whether it will realise its assets and liabilities in the normal course of business.
The financial report does not include any adjustments that may be necessary if the Company and Consolidated Entity are unable to
continue as a going concern.
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.
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.
30
Azure Minerals Limited - Financial Statements
Notes continued
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
1.
(b) Property, plant and equipment
Each class of property, plant and equipment is carried at cost 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.
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.
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 assets.
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 on a straight line
basis over the period of the lease.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.
31
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(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.
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.
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; and
income and expenses are translated at average exchange rates for the period.
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 are recognised initially at fair value and subsequently at amortised cost.
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.
32
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(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.
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 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)
(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.
33
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(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.
(r) Financial assets
Classification
The Group classifies its financial assets in the following categories: loans and receivables. The classification depends on the purpose for
which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and
are recognised at fair value on initial recognition. 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).
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 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.
Subsequent measurement
Loans and receivables are carried at amortised cost using effective interest method.
Impairment
The Group assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired.
Impairment losses are recognised in the income statement. Debts which are known to be uncollectible are written off by reducing the
carrying amount directly.
(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.
34
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(u) New accounting standards and interpretations
Australian Accounting Standards and interpretations that have recently been issued or amended but are not yet effective have not been
adopted by the Company for the annual reporting period ending 30 June 2009. These are outlined below.
Reference Title
Summary
AASB Int.
16
Hedges of a
Net
Investment in
a Foreign
Operation
AASB 8
and
AASB
2007-3
AASB
101
(Revised),
AASB
2007-8
and
AASB
2007-10
AASB
2008-1
Operating
Segments and
consequential
amendments
to other
Australian
Accounting
Standards
Presentation
of Financial
Statements
and
consequential
amendments
to other
Australian
Accounting
Standards
Amendments
to Australian
Accounting
Standard –
Share-based
Payments:
Vesting
Conditions
and
Cancellations
This Interpretation requires that the hedged
risk in a hedge of a net investment in a foreign
operation is the foreign currency risk arising
between the functional currency of the net
investment and the functional currency of any
parent entity. This also applies to foreign
operations in the form of joint ventures,
associates or branches.
New Standard replacing AASB 114 Segment
Reporting, which adopts a management
reporting approach to segment reporting.
Application
date of
standard*
1 October
2008
1 January
2009
Introduces a statement of comprehensive
income.
1 January
2009
Other revisions include impacts on the
presentation of items in the statement of
changes in equity, new presentation
requirements for restatements or
reclassifications of items in the financial
statements, changes in the presentation
requirements for dividends and changes to the
titles of the financial statements.
1 January
2009
The amendments clarify the definition of
“vesting conditions”, introducing the term
“non-vesting conditions” for conditions other
than vesting conditions as specifically defined
and prescribe the accounting treatment of an
award that is effectively cancelled because a
non-vesting condition is not satisfied.
35
Application
date for
Group*
1 July 2009
1 July 2009
1 July 2009
1 July 2009
Impact on Group
financial report
To date the company
does not have any
investments in a foreign
operation and as such
there will be no impact
on the financial
statements when this
standard is adopted.
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.
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
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Reference Title
Summary
AASB 3
(Revised)
Business
Combinations
AASB
127
(Revised)
Consolidated
and Separate
Financial
Statements
AASB
2008-3
AASB
2008-5
Amendments
to Australian
Accounting
Standards
arising from
AASB 3 and
AASB 127
Amendments
to Australian
Accounting
Standards
arising from
the Annual
Improvements
Project
The revised Standard introduces a number of
changes to the accounting for business
combinations, the most significant of which
includes the requirement to have to expense
transaction costs and a choice (for each
business combination entered into) to measure a
non-controlling interest (formerly a minority
interest) in the acquiree either at its fair value or
at its proportionate interest in the acquiree’s net
assets. This choice will effectively result in
recognising goodwill relating to 100% of the
business (applying the fair value option) or
recognising goodwill relating to the percentage
interest acquired. The changes apply
prospectively.
There are a number of changes arising from the
revision to AASB 127 relating to changes in
ownership interest in a subsidiary without loss
of control, allocation of losses of a subsidiary
and accounting for the loss of control of a
subsidiary. Specifically in relation to a change
in the ownership interest of a subsidiary (that
does not result in loss of control) – such a
transaction will be accounted for as an equity
transaction.
Amending Standard issued as a consequence of
revisions to AASB 3 and AASB 127. Refer
above.
The improvements project is an annual project
that provides a mechanism for making non-
urgent, but necessary, amendments to IFRSs.
The IASB has separated the amendments into
two parts: Part 1 deals with changes the IASB
identified resulting in accounting changes; Part
II deals with either terminology or editorial
amendments that the IASB believes will have
minimal impact.
This was the first omnibus of amendments
issued by the IASB arising from the Annual
Improvements Project and it is expected that
going forward, such improvements will be
issued annually to remove inconsistencies and
clarify wording in the standards.
The AASB issued these amendments in two
separate amending standards; one dealing with
36
Application
date for
Group*
1 July 2009
Application
date of
standard*
1 July 2009
Impact on Group
financial report
There will be no
impact on the
financial statements
when this revised
standard is adopted
for the first time
1 July 2009
1 July 2009
There will be no
impact on the
financial statements
when this revised
standard is adopted
for the first time
1 July 2009 There will be no
1 July 2009
impact on the financial
statements when this
revised standard is
adopted for the first
time
There will be no
impact on the financial
statements when this
revised standard is
adopted for the first
time
1 July 2009
1 January
2009
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d
Reference Title
Summary
AASB
2008-5
Continued
AASB
2008-6
AASB
2008-9**
AASB
2009-2
Further
Amendments
to Australian
Accounting
Standards
arising from
the Annual
Improvements
Project
Amendments
to AASB
1049 for
consistency
with AASB
101
Amendments
to Australian
Accounting
Standards –
Improving
Disclosures
about
Financial
Instruments
[AASB 4,
AASB 7,
AASB 1023
& AASB
1038]
the accounting changes effective from 1 January
2009 and the other dealing with amendments to
AASB 5, which will be applicable from 1 July
2009 [refer below AASB 2008-6].
This was the second omnibus of amendments
issued by the IASB arising from the Annual
Improvements Project.
Refer to AASB 2008-5 above for more details.
Application
date of
standard*
Impact on Group
financial report
Application
date for
Group*
1 July 2009
1 July 2009
There will be no
impact on the financial
statements when this
revised standard is
adopted for the first
time
1 July 2009
1 July 2009
There will be no
impact on the financial
statements when this
revised standard is
adopted for the first
time
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.
Reflects the revised requirements of AASB 101
and AASB 2007-8 with clarification to apply the
requirements in a government context.
1 January
2009
Annual
reporting
periods
beginning
on or after 1
January
2009 that
end on or
after 30
April 2009.
The main amendment to AASB 7 requires fair
value measurements to be disclosed by the source
of inputs, using the following three-level
hierarchy:
► quoted prices (unadjusted) in active markets
for identical assets or liabilities (Level 1);
►
inputs other than quoted prices included in
Level 1 that are observable for the asset or
liability, either directly (as prices) or
indirectly (derived from prices) (Level 2);
and
►
inputs for the asset or liability that are not
based on observable market data
(unobservable inputs) (Level 3).
These amendments arise from the issuance of
Improving Disclosures about Financial
Instruments (Amendments to IFRS 7) by the IASB
in March 2009.
The amendments to AASB 4, AASB 1023 and
AASB 1038 comprise editorial changes resulting
from the amendments to AASB 7.
37
Azure Minerals Limited - Financial Statements
Application
date of
standard*
1 July 2009
Application
date for
Group*
1 July 2009
Impact on Group
financial report
There will be no
impact on the financial
statements when this
revised standard is
adopted for the first
time
1 January
2010
1 July 2010
There will be no
impact on the financial
statements when this
revised standard is
adopted for the first
time
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d
Reference Title
Summary
AASB
2009-4
AASB
2009-5
Amendments
to Australian
Accounting
Standards
arising from
the Annual
Improvements
Project
[AASB 2 and
AASB 138
and AASB
Interpretations
9 & 16]
Further
Amendments
to Australian
Accounting
Standards
arising from
the Annual
Improvements
Project
[AASB 5, 8,
101, 107, 117,
118, 136 &
139]
The amendments to some Standards result in
accounting changes for presentation,
recognition or measurement purposes, while
some amendments that relate to terminology
and editorial changes are expected to have no
or minimal effect on accounting.
The main amendment of relevance to
Australian entities is that made to IFRIC 16
which allows qualifying hedge instruments to
be held by any entity or entities within the
group, including the foreign operation itself, as
long as the designation, documentation and
effectiveness requirements in AASB 139 that
relate to a net investment hedge are satisfied.
More hedging relationships will be eligible for
hedge accounting as a result of the
amendment.
These amendments arise from the issuance of
the IASB’s Improvements to IFRSs. The
amendments pertaining to IFRS 5, 8, IAS 1,7,
17, 36 and 39 have been issued in Australia as
AASB 2009-5 (refer below).
The amendments to some Standards result in
accounting changes for presentation,
recognition or measurement purposes, while
some amendments that relate to terminology
and editorial changes are expected to have no
or minimal effect on accounting.
The main amendment of relevance to
Australian entities is that made to AASB 117
by removing the specific guidance on
classifying land as a lease so that only the
general guidance remains. Assessing land
leases based on the general criteria may result
in more land leases being classified as finance
leases and if so, the type of asset which is to
be recorded (intangible v property, plant and
equipment) needs to be determined.
These amendments arise from the issuance of
the IASB’s Improvements to IFRSs. The
AASB has issued the amendments to IFRS 2,
IAS 38, IFRIC 9 as AASB 2009-4 (refer
above).
38
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d
Reference
Title
Summary
Amendments
to Australian
Accounting
Standards
[AASB 5, 7,
107, 112, 136
& 139 and
Interpretation
17]
Amendments
to IFRS 2
AASB
2009-Y
Amendments
to
International
Financial
Reporting
Standards
These comprise editorial amendments and are
expected to have no major impact on the
requirements of the amended pronouncements.
The amendments clarify the accounting for group
cash-settled share-based payment transactions, in
particular:
►
the scope of AASB 2; and
the interaction between IFRS 2 and other
standards.
►
An entity that receives goods or services in a
share-based payment arrangement must account
for those goods or services no matter which entity
in the group settles the transaction, and no matter
whether the transaction is settled in shares or cash.
A “group” has the same meaning as in IAS 27
Consolidated and Separate Financial Statements,
that is, it includes only a parent and its
subsidiaries.
The amendments also incorporate guidance
previously included in IFRIC 8 Scope of IFRS 2
and IFRIC 11 IFRS 2—Group and Treasury Share
Transactions. As a result, IFRIC 8 and IFRIC 11
have been withdrawn.
Applicatio
n date of
standard*
1 July 2009
1 January
2010
Application
date for
Group*
1 July 2009
1 July 2010
Impact on
Group financial
report
There will be no
impact on the
financial
statements when
this revised
standard is
adopted for the
first time
There will be no
impact on the
financial
statements when
this revised
standard is
adopted for the
first time
2 .
FINANCIAL RISK MANAGEMENT
Overview
The Company and Group have exposure to the following risks from their use of financial instruments:
h credit risk
h
h market risk
liquidity 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.
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.
39
Azure Minerals Limited - Financial Statements
Notes continued
2 .
FINANCIAL RISK MANAGEMENT (Cont’d)
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
Security deposits
Trade and other receivables
Receivable from controlled entity
Allowance for impairment from controlled entity
Cash and cash equivalents
Security deposit
Impairment losses
Consolidated
Carrying amount
Note
2009
8
18
11
114,125
1,345,997
22,308
2008
137,473
1,420,067
22,535
Parent Entity
Carrying amount
Note
2009
8
25
25
18
11
4,230,815
8,850,744
(4,630,744)
1,272,504
22,308
2008
4,676,987
4,676,062
-
1,371,278
22,538
None of the Company’s other receivables are past due (2008: nil).
The Group operates in the mining exploration sector and generally does not have trade receivables and is therefore not materially exposed
to credit risk in relation to trade receivables. Other receivables are principally value added taxes withheld by third parties and due to the
Group from sovereign governments, as such the Group does not consider it is exposed to any significant credit risk.
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.
Refer to note 25 for more information on the receivable from controlled entity. At 30 June 2009 the Group does not have any collective
impairments on its other receivables (2008: nil).
Guarantees
Group policy is to provide financial guarantees only to wholly-owned subsidiaries. There are no guarantees outstanding (2008: 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.
40
Azure Minerals Limited - Financial Statements
Notes continued
2 .
FINANCIAL RISK MANAGEMENT (Cont’d)
The following are the contractual maturities of financial liabilities at amortised cost:
Consolidated
30 June 2009
Trade and other payables
30 June 2008
Trade and other payables
Company
30 June 2009
Trade and other payables
30 June 2008
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
136,819
513,124
-
-
136,819
513,124
-
-
-
-
-
-
-
-
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12 mths
1-2 years
2-5 years
More than
5 years
37,917
182,434
-
-
37,917
182,434
-
-
-
-
-
-
-
-
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 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 the 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
30 June 2009
USD
51,655
49,452
30 June 2008
USD
68,765
165,345
Gross balance sheet exposure
101,107
234,110
Forward exchange contracts
-
-
Net exposure
101,107
234,110
The Company’s exposure to foreign currency risk at 30 June 2009 was nil (2008:Nil).
The following significant exchange rates applied during the year:
AUD
USD
Average rate
2009
2008
Reporting date spot rate
2009
2008
0.74803
0.89646
0.80480
0.96150
41
Azure Minerals Limited - Financial Statements
Notes continued
2 .
FINANCIAL RISK MANAGEMENT (Cont’d)
Sensitivity analysis
Over the reporting period there have been significant movements in the Australian dollar when compared to other currencies, it is
therefore considered reasonable to review sensitivities base on a 10% movement in the Australian dollar. 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 2008.
30 June 2009
USD
30 June 2008
USD
Consolidated
Company
Equity
Profit or loss
Equity
Profit or loss
10,111
10,111
23,411
23,411
-
-
-
-
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:
Variable rate instruments
Short term cash deposits
Consolidated
Carrying amount
Company
Carrying amount
2009
2008
2009
2008
1,368,606
1,442,375
1,295,112
1,393,586
Cash flow sensitivity analysis for variable rate instruments
The Group has reviewed the likely movements in interest rates and considers that a movement of +/- 100 basis points is reasonable,
though in the current economic environment interest rates are unlikely to decrease any further.
Group Sensitivity
At 30 June 2009 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 $13,686 higher /lower (2008 – change of 100 basis points: $14,424 higher/lower).
Parent Sensitivity
At 30 June 2009 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 $12,951 higher /lower (2008 – change of 100 basis points: $13,936 higher/lower).
42
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 2009
30 June 2008
Carrying
amount
130,047
1,345,997
22,308
Fair value
130,047
1,345,997
22,308
Carrying
amount
154,067
1,420,067
22,308
Fair value
154,067
1,420,067
22,308
(136,819)
(136,819)
(513,124)
(513,124)
30 June 2009
30 June 2008
Carrying
amount
4,244,210
1,272,504
22,535
Fair value
4,244,210
1,272,504
22,535
Carrying
amount
4,692,599
1,371,278
22,535
Fair value
4,692,599
1,371,278
22,535
(37,917)
(37,917)
(182,434)
(182,434)
The methods and assumptions used to estimate the fair value of instruments are:
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 SIGNIFICANT 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 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. The future recoverability of exploration and evaluation expenditure is dependant on a number of
factors, including whether the Group decides to exploit the related lease itself, or, if not, whether it successfully recovers the related
exploration and evaluation assets through sale.
Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, which
could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to
commodity prices.
To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and net
assets will be reduced in the period in which this determination is made.
Loan to subsidiary company
In the current financial year the Parent Entity made a significant judgement about the impairment of its loan to its Mexican based subsidiary.
Refer to note 25 for further information.
43
Azure Minerals Limited - Financial Statements
Notes continued
4.
SEGMENT INFORMATION
Segment products and locations: The consolidated entity’s operations are in the mining exploration 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
Segment Revenue
Sales to external customers
Other revenues from external customers
Intersegment revenues
Total segment revenue
Non-segment revenues
Unallocated revenue
Total consolidated revenue
Segment Results
Segment result
2009
$
-
54,549
-
54,549
2008
$
2009
$
2008
$
2009
$
2008
$
2009
$
2008
$
-
146,089
-
146,089
-
10,332
10,332
-
644
-
644
-
-
-
-
-
-
-
-
-
64,881
-
146,733
64,881
146,733
-
-
64,881
146,733
(4,703,491)
(2,190,768)
(3,289,118) (2,290,382) 4,636,848
-
(3,355,760)
(4,481,150)
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
-
-
(3,355,760)
-
(4,481,150)
-
(3,355,760)
(4,481,150)
5,603,013
6,168,906
975,129
500,190
(4,226,430) (4,682,492)
2,351,712
1,986,604
-
-
2,351,712
1,986,604
Segment liabilities
(170,492)
(356,557)
(8,949,647) (5,000,648) 8,856,847 4,669,958
(263,291)
(687,247)
Non-allocated liabilities
Total liabilities
Other segment information:
Acquisition of property, plant and
equipment, intangible assets and other
non-current assets
Depreciation
Non-cash expenses other than
depreciation and amortisation
-
-
(263,291)
(687,247)
-
16,710
18,390
27,873
546,872
29,945
254,154
21,184
-
365,127
-
-
-
-
-
-
-
-
546,872
46,655
272,544
49,057
-
365,127
44
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
Loss before income tax includes the following
specific expenses
Depreciation of plant and equipment
Exploration expenditure
Exploration expenditure reimbursement
Operating lease expenses
Superannuation
7.
INCOME TAX
(a) Income tax expense
Current tax
Deferred tax
Adjustment for current tax of prior periods
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
53,449
11,432
64,881
121,733
25,000
146,733
53,449
1,100
54,549
121,089
25,000
146,089
46,655
49,057
16,710
3,241,555
(957,042)
98,739
49,955
2,305,586
-
93,537
46,411
11,094
(957,042)
98,739
49,955
27,873
35,738
-
93,537
46,411
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(b) Numerical reconciliation of income tax expense to prima
facie tax payable
Loss from continuing operations before income tax expense
(3,355,760)
(4,481,150)
(4,703,491)
(2,190,768)
Tax at the Australian tax rate of 30% (2008: 30%)
(1,006,728)
(1,344,345)
(1,411,047)
(657,231)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Share-based payments
Preparation for TSX listing
Sundry items
-
923
21,824
109,538
180,841
74,788
-
923
21,824
109,538
180,841
74,788
(983,981)
(979,178)
(1,388,300)
(292,064)
Movement in unrecognised temporary differences
(108,901)
1,635,088
1,282,154
1,051,442
Adjustment for prior periods
Tax effect of current year foreign tax losses for which no deferred
tax asset has been recognised
Difference in overseas tax rates
Tax effect of current year tax losses for which no deferred tax
asset has been recognised
Income tax expense
-
(1,841,104)
986,736
(19,534)
737,579
(14,751)
-
-
(1,206,994)
-
125,680
462,366
106,146
447,616
-
-
-
-
45
Azure Minerals Limited - Financial Statements
Notes continued
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
2009
$
2008
$
2009
$
2008
$
86,278
(4,019)
21,413
34,942
2,919,242
1,570,382
915,933
5,544,621
78,935
(4,684)
18,900
52,237
2,285,830
583,646
981,266
3,996,130
86,278
(4,019)
21,413
34,942
2,919,242
-
915,933
3,974,239
78,935
(4,684)
18,900
52,237
2,285,830
-
981,266
3,412,484
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.
8.
TRADE AND OTHER RECEIVABLES
CURRENT
Prepayments
Sundry receivables (a)
Receivable from controlled entity (b) – at cost
- allowance for non-
recovery
16,282
114,125
-
-
130,407
16,594
137,473
-
13,395
10,815
8,850,744
15,612
925
4,676,062
-
154,067
(4,630,744)
4,244,210
-
4,692,599
(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.
There are no impaired sundry receivables and no past due but not impaired receivables.
(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 terms agreed. Refer to note 25 for further information.
(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
Accumulated depreciation
Net book amount
Notes
434,406
(291,008)
143,398
9(a)
466,927
(270,035)
196,892
299,384
(241,823)
57,561
312,919
(236,628)
76,291
46
Azure Minerals Limited - Financial Statements
Notes continued
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
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
Foreign exchange translation adjustment
Closing net book amount
196,892
16,791
(41,727)
20,797
(46,655)
(2,700)
143,398
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
709,602
190,095
79,276
(54,923)
31,501
(49,057)
-
196,892
193,270
Opening net book amount
Additions
Disposals
Closing net book amount
193,270
516,332
-
709,602
-
193,270
-
193,270
76,291
-
(13,536)
11,516
(16,710)
-
57,561
110,692
18,390
(54,923)
30,005
(27,873)
-
76,291
-
-
-
-
-
-
-
-
-
-
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.
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
2009
%
100
100
2008
%
100
100
13. TRADE AND OTHER PAYABLES (CURRENT)
Trade payables
136,819
513,124
37,917
182,434
Information about the Groups financial risk management policies is disclosed in note 2.
47
Azure Minerals Limited - Financial Statements
Notes continued
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 $0.125 per share
Issue at $0.04 per share
Share issue expenses
30 June closing balance
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
49,461
77,011
126,472
97,112
77,011
174,123
49,461
77,011
126,472
97,112
77,011
174,123
Consolidated and Parent Entity
2009
Number of shares
217,212,489
217,212,489
$
29,459,548
29,459,548
2008
Number of shares
149,016,672
149,016,672
$
25,129,782
25,129,782
2009
2008
Number of
shares
149,016,672
-
-
20,365,600
47,830,217
-
217,212,489
$
25,129,782
-
-
2,545,700
1,913,209
(129,143)
29,459,548
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
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 15 cents, on or before 30 Nov 2009
Forfeited during the year
- Exercisable at 15 cents on or before 30 Nov 2009
- 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.
48
Number of options
2009
2008
14,850,000
13,350,000
-
1,750,000
(500,000)
(1,500,000)
(200,000)
(200,000)
(300.000)
(800,000)
-
-
-
(800,000)
-
(250,000)
(500,000)
(500,000)
-
-
200,000
400,000
400,000
-
10,550,000
14,850,000
Azure Minerals Limited - Financial Statements
Notes continued
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
2009
$
2008
$
2009
$
2008
$
903,692
(211,726)
691,966
903,692
(26,784)
876,908
903,692
-
903,692
903,692
-
903,692
16. RESERVES AND RETAINED PROFITS
(a) Reserves
Share-based payments reserve
Foreign currency translation reserve
(b) Nature and purpose of reserves
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued but not exercised.
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.
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
146,011
1,199,986
1,345,997
63,502
1,356,565
1,420,067
72,518
1,199,986
1,272,504
14,713
1,356,565
1,371,278
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.
49
Azure Minerals Limited - Financial Statements
Notes continued
Notes
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
18. STATEMENT OF CASH FLOWS (cont’d)
(b) Reconciliation of the net loss after income tax to
the net cash flows from operating activities
Net loss
Depreciation of non-current assets
Share based payment expense
Loss (Profit) on equipment sales
Foreign exchange differences
Preparation for TSX listing included in Financing
Activities
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
(3,355,760)
(4,481,150)
(4,703,491)
(2,190,768)
46,656
-
12,069
(26,005)
49,057
365,127
(82)
5,691
16,710
-
920
-
27,873
365,127
(82)
-
103,075
502,804
103,075
502,804
(115,460)
4,194
(325,147)
47,651
62,529
(4,393)
158,365
-
(9,891)
2,218
(239,819)
4,684,499
330
(5,374)
(5,630)
-
Net cash outflow from operating activities
(3,608,727)
(3,342,052)
(145,779)
(1,305,720)
(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 which are expected to be met in the normal course of business are as follows:
Not later than one year
1,500,962
78,800
78,800
-
(b) Option payments
The company has entered into option agreements to acquire a 100% interest in the Promontorio project located in the northern Mexican
state of Chihuahua within the richly mineralised Sierra Madre Occidental mining province. In order to retain the right to acquire the
Promontorio project option payments must be made as follows:
Not later than one year
Later than one year and not later than five years
397,614
4,348,907
397,614
4,746,521
-
-
-
-
(c) 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
4,746,521
5,144,135
-
-
44,509
-
89,018
44,509
44,509
-
89,018
44,509
44,509
133,527
44,509
133,527
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.
(d) 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
390,500
390,500
781,000
163,461
-
163,461
-
-
-
163,461
-
163,461
50
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
No 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
2009
$
2008
$
(3,355,760)
(3,355,760)
(4,481,150)
(4,481,150)
CONSOLIDATED
Number of
shares
2009
Number of
shares
2008
175,080,909
134,977,509
(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 compliance services
Independent Financial Reports
An audit or review of the financial report of the entity
24. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Compensation of key management personnel by compensation
Short-term
Post employment
Share-based payment
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
12,008
-
37,200
49,208
10,699
31,412
28,527
70,638
12,008
-
37,200
49,208
10,699
31,412
28,527
70,638
Consolidated
Parent Entity
2009
$
581,587
112,221
-
693,808
2008
$
752,306
42,505
347,797
1,142,608
2009
$
581,587
112,221
-
693,808
2008
$
752,306
42,505
347,797
1,142,608
(b) Shares issued on exercise of compensation options
There were no shares issued on exercise of compensation options during the year.
51
Azure Minerals Limited – Financial Statements
Notes continued
24. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont’d)
(c) Option holdings of key management personnel
2009
Directors
Wolf Gerhard Martinick
Anthony Paul Rovira
John Walter Saleeba
Executives
Brett Dickson
Patrick Manouge
- Resigned 31 March 2009
Total
2008
Balance at
beginning of
year
1 July 2008
1,000,000
6,500,000
1,000,000
2,400,000
1,700,000
12,600,000
Balance at
beginning of
year
1 July 2007
Granted as
Remuneration
Options
Exercised
Options
Lapsed
Balance at end
of year
30 June 2009
Vested at 30 June 2009
Vested &
Exercisable
Unvested
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,000,000)
(200,000)
1,000,000
5,500,000
800,000
1,000,000
5,500,000
800,000
-
2,400,000
2,400,000
(1,700,000)
-
-
(2,900,000)
9,700,000
9,700,000
-
-
-
-
-
-
Granted as
Remuneration
Options
Exercised
Options
Lapsed
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
- Resigned 30 June 2008
Total
-
1,250,000
6,500,000
1,000,000
-
-
1,000,000
1,000,000
-
-
1,200,000
1,400,000
1,200,000
300,000
1,000,000
200,000
13,350,000
2,700,000
(d) Shareholdings of key management personnel
-
-
-
-
-
-
-
-
-
-
(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
2,400,000
1,700,000
1,200,000
1,200,000
-
-
-
-
-
-
-
-
(1,250,000)
14,800,000
14,800,000
-
Balance
1 July
Ord
Granted
Ord
On Exercise
of Options
Ord
Net Change
Other
Ord
Balance
30 June
Balance
Indirectly Held
Ord
Ord
2009
Directors
Wolf G Martinick
Anthony Paul Rovira
John Walter Saleeba
Executives
Brett Dickson
Patrick Manouge
-resigned 31 March 2009
Total
500,000
2,000,000
770,000
200,000
10,000
3,480,000
-
-
-
-
-
-
600,000
982,000
280,000
1,100,000
2,982,000
1,050,000
-
1,880,000
1,050,000
74,000
274,000
210,000
-
1,936,000
10,000
5,416,000
-
3,140,000
-
-
-
-
-
-
52
Azure Minerals Limited - Financial Statements
Notes continued
24. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont’d)
(d) Shareholdings of key management personnel (cont’d)
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
-
2,000,000
1,008,000
770,000
200,000
10,000
-
3,988,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
-
-
-
-
-
-
500,000
2,000,000
1,008,000
770,000
200,000
10,000
-
-
1,800,000
-
770,000
100,000
-
-
500,000
4,488,000
2,670,000
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
Allowance for impairment
End of year
Consolidated
Parent Entity
2009
$
-
-
-
-
-
2008
$
-
-
-
-
-
2009
$
4,676,062
4,1780,786
-
(4,636,848)
4,220,000
2008
$
2,362,235
2,313,827
-
-
4,676,062
It is the intention of each subsidiary to repay outstanding loans through the successful exploitation or sale of its mineral assets. General
market conditions have deteriorated over the last 18 months which led to a review of the value of the mineral assets held by Minera
Piedra Azul S.A. de C.V. As a result of that review the Parent Entity made an allowance of $4,636,848 against loans advanced to its
Mexican subsidiary Minera Piedra Azul , S.A. de C.V..
No other provision for doubtful debts have been raised in relation other outstanding balances, and no other 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.
26.
INTERESTS IN JOINT VENTURES
The company has interests in the following joint ventures:
Joint Venture
(a) Sonora, Mexico
(b)
JOGMEC
Activities
Gold/Copper
Copper
Interest
60%
100%
Carrying Value $
NIL
NIL
(a) The Group is exploring a portfolio of 13 projects in the Mexican state of Sonora in joint venture with Geoinformatics Exploration Inc
During 2008 Azure Minerals earned a 51% interest in all 13 projects. In the current joint venture year GXL elected not to contribute
to joint venture expenditure, accordingly Azure Minerals interest will increase to 60% and GFX’s interest will decrease to 40%.
(b) During the year the Group entered into a joint venture with Japan Oil, Gas and Metals Corporation (JOGMEC) covering the La
Tortuga and Los Nidos projects. Pursuant to the joint venture agreement JOGMEC may earn a 51% interest in the projects by
spending US$3 million by 31 March 2009. At 30 June 2009 JOGMEC had spend approximately US$656,938.
53
Azure Minerals Limited - Financial Statements
Notes continued
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
Consolidated and parent entity – 2009
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
Weighted average exercise price
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
Weighted average exercise price
-
-
-
6.81
6.60
6.47
3.74
3.64
3.45
3.03
2.82
0.93
14.3
-
-
-
6.81
6.60
6.47
3.74
3.64
3.45
3.03
2.82
0.93
14.3
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
-
5,100,000
$0.24
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,750,000
1,750,000
$0.15
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Forfeited
during the
year
Number
100,000
200,000
200,000
300,000
300,000
300,000
-
-
-
500,000
500,000
-
500,000
2,900,000
$0.253
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at
end of the year
Number
Vested and
exercisable at
end of the year
Number
-
-
-
-
-
-
500,000
500,000
500,000
-
-
1,200,000
1,250,000
3,950,000
$0.191
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
-
-
-
-
-
-
500,000
500,000
500,000
-
-
1,200,000
1,250,000
3,950,000
$0.191
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
No options were exercised during the periods covered by the above tables. During the 2009 financial year 2,900,000 options were forfeited due to
employees leaving the Group and not exercising their options with 90 days of their resignation date.
The weighted average remaining contractual life of share options outstanding at the end of the period was 2.58 years (2008: 3.98 years).
54
Azure Minerals Limited - Financial Statements
Notes continued
27. SHARE-BASED PAYMENTS (cont’d)
Fair value of options granted.
Options are granted for no consideration. No options were granted during the 2009 financial year. During the 2008 financial year the weighted
average fair value of the options granted was 14.3 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
2009
-
-
-
-
-
2008
15.0
2.3
22.5
90%
6.05%
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
(b) Directors options
Set out below are summaries of Directors options granted.
Consolidated
Parent Entity
2009
$
-
2008
$
365,127
2009
$
-
2008
$
365,127
Grant Date
Expiry Date
Exercise
Price
(cents)
Value per
option at
grant date
(cents)
Balance at
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 – 2009
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
Weighted average exercise price
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
Weighted average exercise price
-
-
-
8.2
10.2
11.7
-
-
-
8.2
10.2
11.7
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
-
-
-
-
-
-
-
-
-
-
200,000
400,000
400,000
1,000,000
$0.25
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,400,000)
-
-
-
-
-
(1,400,000)
$0.25
-
2,800,000
2,800,000
200,000
400,000
400,000
6,600,000
$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
-
2,800,000
2,800,000
200,000
400,000
400,000
6,600,000
$0.25
1,400,000
2,800,000
2,800,000
200,000
400,000
400,000
8,000,000
$0.25
The weighted average remaining contractual life of share options outstanding at the end of the period was 1.5 years (2008: 1.8 years).
55
Azure Minerals Limited - Financial Statements
Notes continued
27. SHARE-BASED PAYMENTS (cont’d)
Fair value of director options granted.
Options are granted for no consideration. No options were granted during the 2009 financial year. During the 2008 financial year the weighted
average fair value of the options granted was 10.4 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
2009
-
-
-
-
-
2008
25.0
3.3
18.5
90%
6.25%
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
2009
$
-
2008
$
103,049
2009
$
-
2008
$
103,049
56
Azure Minerals Limited - Financial Statements
Directors' Declaration
The directors of the company declare that:
(1)
The financial statements, comprising the consolidated income statement, balance sheet, statement of cash flows, 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 2009 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 12 to 14 of the director’s report (as part of the audited Remuneration Report) for
the year ending 30 June 2009, 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, 25 September 2009
57
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 LIMITED
We have audited the accompanying financial report of Azure Minerals Limited, which comprises the balance sheet as at 30
June 2009, and the income statement, statement of changes in equity and statement of cash flows 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 disclosing entity 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 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. We confirm
that the independence declaration required by the Corporations Act 2001 would be in the same terms if it had been given
to the directors at the time that this auditor’s report was made.
58
BDO Kendalls is a national association of
separate partnerships and entities.
Liability limited by a scheme approved under
Professional Standards Legislation.
Auditor’s Opinion
In our opinion:
(a)
the financial report of Azure Minerals Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2009
and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and
the Corporations Regulations 2001.
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Material Uncertainty Regarding Continuation as a Going Concern
Without qualifying our opinion, we draw attention to note 1 in the financial report which indicates that the company
incurred a net loss of $3,355,760 for the year ended 30 June 2009, and, as at that date, the company experienced net cash
outflows from operating activities of $3,608,727. These conditions along with other matters as set forth in note 1 of the
financial report indicate the existence of a material uncertainty which may cast significant doubt on the entity’s ability to
continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course
of business and at the amounts stated in the financial report.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2009. 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 2009, complies with section
300A of the Corporations Act 2001.
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Glyn O’Brien
Director
Signed in Perth, Western Australia
Dated this 25th day of September 2009.
59
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
25 September 2009
Board of 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 2009, 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 period.
Glyn O’Brien
Director
BDO Kendalls Audit & Assurance (WA) Pty Ltd
Signed in Perth, Western Australia
BDO Kendalls is a national association of
separate partnerships and entities.
Liability limited by a scheme approved under
Professional Standards Legislation.
60
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 14 September 2009.
(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
Investec Bank (Australia) Ltd
ANZ Nominees Limited
Mr David Alistair Cadwallader
Dr Lyndsay George McDonald Gordon
Mr Robert Hastings Smythe
S & M French Investments Pty Ltd
Mr Peter Murray Nicholas
Stadjoy Pty Ltd
Toltec Holdings Pty Ltd
Mr Anthony Paul Rovira
Vanwhile Pty Ltd
Dr Wolf Gerhard Martinick
Mr Christian Merli
Rovira Geoservices Pty Ltd
Mr Richard Eric James + Mrs Margaret Anne James
C Z Dataland Pty Ltd
Mrs Wan Hui Chen
Mr Sean Delaney
Ordinary shares
Number of holders Number of shares
32
240
790
1,480
346
2,888
614
5,734
888,842
7,023,410
58,219,477
151,075,026
217,212,489
3,443,175
Listed ordinary shares
Number of shares
17,423,000
16,307,817
5,600,000
4,369,578
3,508,000
2,232,833
2,000,000
1,750,000
1,500,000
1,456,000
1,440,000
1,320,000
1,120,000
1,100,000
1,096,800
1,040,000
1,030,000
1,013,926
1,000,000
1,000,000
67,307,954
Percentage of
ordinary shares
8.02
7.51
2.58
2.01
1.62
1.03
0.92
0.81
0.69
0.67
0.66
0.61
0.52
0.51
0.50
0.48
0.47
0.47
0.46
0.46
31.00
(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
17,423,000
16,307,817
61
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
(e) Schedule of interests in mining tenements
Common Name
Tenement
Percentage held / earning
El Llano del Nogal
Cumobabi
Tabisco
Jagüey
Pozo de Nacho
Cardeleña
San Nicolas
Batacosa
Arroyo Amarillo
Estacion Llano
Los Chinos
La Ramada
La Tortuga
La Providencia
El Cuervo
Coronado
Los Nidos
El Carnero
Las Viboras
San Eduardo
Promontorio
All Minerals
All Minerals
All Minerals
Llano del Nogal - Fraccion
1
Llano del Nogal - Fraccion
2
Llano del Nogal - Fraccion
3
All Minerals
Llano del Nogal 2
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Llano del Nogal 3
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El Apuro (Reduction)
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La Calma
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Potrerito
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El Ermitaño 1
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El Ermitaño 2
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Mark 1
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Mark 1 – Fraccion 1
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Mark 2
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Mark 3
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Tabisco - Fraccion 2
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Tabisco 2 - Fraccion 1
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Tabisco 2 - Fraccion 2
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Beatriz - Fraccion 2
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Beatriz - Fraccion 3
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Beatriz - Fraccion 4
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Jagüey
Pozo de Nacho
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Pozo de Nacho 2 - Fracc. 1All Minerals
Pozo de Nacho 2 - Fracc. 2All Minerals
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Pozo de Nacho 3
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Cardeleña
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Cardeleña 2
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San Nicolas
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Batacosa
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Arroyo Amarillo
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Estacion Llano
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Los Chinos
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La Ramada
La Tortuga
La Providencia
El Cuervo
Coronado
Los Nidos
Carnero
Viboras
San Eduardo
Hidalgo
Promontorio
El Magistral
Promontorio Regional
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* Denotes option to acqire 100%
62
224717
224718
224719
230186
232390
228838
221119
229051
230421
Pending
232857
232858
232856
232855
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
Pending
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
60%
100%
100%
100%
100%
100%
100%
100%
100%
100%*
100%*
100%*
100%