Azure Minerals Limited
ABN 46 106 346 918
Annual Report and Financial Statements
for the year ended 30 June 2010
Azure Minerals Limited – 2010 Annual Report
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 Audit (WA) Pty Ltd
38 Station Street
SUBIACO WA 6008
Internet Address
www.azureminerals.com.au
ASX Code
Shares
AZS
1
Azure Minerals Limited – 2010 Annual Report
Highlights
2010 was a strong year for Azure with significant progress achieved across the portfolio of projects.
The Company focused heavily on developing its portfolio of projects during the course of 2010 and undertook the following
activities:
Corporate
‐ Rationalised and terminated the Joint Venture with Kiska Metals Corp (formerly Geoinformatics Exploration Inc),
with full ownership of seven additional exploration properties transferred to Azure
‐ Entered Joint Venture over Azure’s fully owned San Eduardo Project with Australian copper miner OZ Minerals Ltd
‐ Entered into an option to sell Azure’s 100%-owned Tabisco Project to Canadian junior company StoneShield Capital
Corp
Promontorio
‐ Completed follow-up bulk metallurgical testwork which returned significantly higher concentrate grades for copper,
silver and gold
‐ Delivered bulk samples of Promontorio concentrate to third party smelters for evaluation
‐ Commenced discussions with smelters regarding potential concentrate off-take arrangements
‐
Identified new epithermal gold-silver vein systems at the Creston Colorado and Sehue prospects
‐ Designed diamond drilling programs to extend the Promontorio deposit and to test the gold-silver mineralised
epithermal veins systems at Creston Colorado, Sehue and Cascada prospects
‐ Commenced Environmental Base Line Study and Environmental Impact Statement required for further intensive
drilling operations and project development
La Tortuga (Joint Venture with JOGMEC)
‐ Completed six hole (2,245 m) diamond drilling program which intersected very encouraging zones of porphyry
copper and skarn copper-zinc mineralisation
‐ Continued field exploration with further mapping, sampling and geophysical activities identifying additional drill
targets
‐
IP survey and more diamond drilling undertaken in 2nd Half of 2010
San Eduardo (Joint Venture with OZ Minerals)
‐ OZ may spend US$13 million to earn 70% interest in San Eduardo Project with an initial budget of US$300,000 to
fund exploration activities in 2010
‐ Commenced field work comprising airborne magnetic and radiometric survey, and surface mapping and sampling
‐
IP survey and diamond drilling undertaken in 2nd Half of 2010
El Tecolote
‐ Acquired this property following rationalisation of JV with Kiska Metals
‐ El Tecolote is situated in a prime position between San Eduardo and La Tortuga properties
‐ Property has potential for porphyry-hosted copper and skarn copper-zinc mineralisation
‐ Reconnaissance exploration identifies outcropping porphyry copper mineralisation and also a large zone of shear-
hosted gold mineralisation
‐ Further exploration including drilling planned for 4th Quarter 2010 and 2011
2
Azure Minerals Limited – 2010 Annual Report
Contents
Chairman’s Letter
Review of Operations
Directors' Report
Corporate Governance Statement
Financial Statements
- Statement of Comprehensive Income
- Statement of Financial Position
- Statements of Changes in Equity (Consolidated)
- Statements of Changes in Equity (Parent Entity)
- Statement of Cash Flows
- Notes to the Financial Statements
- Directors' Declaration
- Independent Audit Report
- Auditor’s Independence Declaration
ASX Additional Information
4
5
9
18
26
27
28
29
30
31
55
56
58
59
Competent Person Statement:
Information in this report that relates to Exploration Results and Mineral Resources 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 – 2010 Annual Report
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 2010.
This has been a successful year for Azure at both the corporate and project level, with the establishment of a strong platform for future
exploration and project development success. The Company has proven its ability to withstand difficult economic and market conditions
and is now well positioned for future growth with a portfolio of high quality projects, strong interest from international mining companies,
and a healthy balance sheet.
Investment in Mexico
Our projects are located in Mexico, an accessible, under-explored and world class mineral destination. We are very pleased to be
conducting business in this country with low sovereign risk, an established mining culture, and strong public and government acceptance
and support of the mining industry. The attractiveness and stability of Mexico as an exploration and mining destination has been
highlighted by the recent and ongoing uncertainty regarding the taxation of the resources sector in Australia.
Active Project Portfolio Management
Over the last year we have made significant progress in consolidating our portfolio of projects, including the rationalisation of the Joint
Venture with Kiska Metals Corp which resulted in the transfer of seven additional projects to 100% Azure ownership.
A major development during the year was the partnership with Australian copper miner, OZ Minerals Ltd for the exploration and
development of the San Eduardo Project. This represents another significant step forward for Azure, strongly endorsing the Company’s
ability to recognise and acquire high quality exploration assets attractive to third parties, and reflecting our strategy of utilising third party
relationships and capital to explore greenfields projects.
Further highlighting the attractiveness of our projects to other companies keen to enter the Mexican mining scene, we entered into an
option to sell our 100%-owned Tabisco Project to the Canadian junior company StoneShield Capital Corp. To acquire the option, which is
open for six months, StoneShield issued 100,000 of its shares to Azure. To exercise the option StoneShield must pay Azure US$100,000
and issue up to a further 1,000,000 StoneShield shares.
These deals continue our approach of adding value to our non-core properties by attracting external sources of project funding. Azure’s
wider portfolio remains very prospective with a number of promising early stage projects poised for further exploration with drilling
planned in 2010 and 2011.
Promontorio
We continue to progress our flagship project, Promontorio, towards a development and production decision. Studies indicate the project is
financially robust, especially at current metals prices, and there is significant potential for a resource upgrade through further drilling. We
are well advanced in preparing an Environmental Impact Statement to submit to the Mexican Federal Government necessary to undertake
further development work.
El Tecolote District
We own a significant strategic holding in this district and have established Joint Ventures to accelerate the exploration and development of
two of our projects in this area. Earlier this year, Azure entered into the Joint Venture on the San Eduardo Project with OZ Minerals
Limited whereby OZ may earn a 70% interest in the project by sole funding US$13 million over 8 years.
We also entered into a similar agreement with JOGMEC in 2009 in relation to the nearby La Tortuga Project, whereby JOGMEC may earn
a 51% interest by sole funding US$3 million expenditure over three years. A second stage of diamond drilling program has commenced at
La Tortuga to follow up the previous year’s encouraging results.
The El Tecolote Project is situated between and adjoining La Tortuga and San Eduardo, and in its own right is very prospective for gold,
porphyry copper and skarn copper-zinc mineralisation. We are exploring this project ourselves, with very encouraging results to date.
Balance Sheet
Despite the very volatile nature of the capital markets during the last year, we were very pleased to successfully raise more than A$6.0
million in fresh capital to continue funding the Company’s exploration activities. The continuing support of our loyal shareholders and the
strong interest of new institutional backers will enable us to implement significant exploration activities on our 100% owned properties,
while continuing to advance greenfields projects such as San Eduardo and La Tortuga through funding raised by way of Joint Venture
agreements.
We are delighted to have the opportunity to report to shareholders the results of a very productive period, on both the corporate and project
development fronts. This continues our stated vision towards becoming an independent minerals producer through exploration success and
selective acquisition of new projects.
We thank our shareholders and partners for their ongoing support and look forward to continuing success in the coming year.
Tony Rovira
Executive Chairman
4
Azure Minerals Limited – 2010 Annual Report
Review of Operations
Promontorio (Copper-Gold-Silver)
The Promontorio Project, Azure’s most advanced project, is located in the richly mineralised Sierra Madre mining province
in Chihuahua, Mexico.
Promontorio contains a high grade copper-gold-silver deposit hosted in veins of massive and semi-massive sulphides, and has
outstanding further exploration potential. Using a 1% copper cut-off, the following JORC Code compliant mineral resource
has been produced.
CLASSIFICATION
TONNES
INDICATED
290,000
INFERRED
212,000
TOTAL
502,000
Copper
(%)
4.2
5.3
4.7
Gold
(g/t)
2.1
2.1
2.1
Silver
(g/t)
94
106
99
Using a bulk sample of Promontorio ore, Azure carried out a two stage program of metallurgical testwork. Initial bench-scale
work comprised head grade analysis, mineralogical examination, comminution testing and sulphide flotation testwork. The
second stage, operating at a pilot plant scale, produced a bulk copper concentrate for evaluation by commercial smelters. The
very positive metallurgical results returned from the Stage 2 testwork, detailed below, have attracted interest from 3rd party
smelters.
PRODUCT
MASS
COPPER
SILVER
GOLD
Recovery
(%)
Grade
(%)
Recovery
(%)
Grade
(g/t)
Recovery
(%)
Grade
(g/t)
Recovery
(%)
Copper
Concentrate
15
39.5
94.2
773
88.2
9.6
52.4
Comminution Testing Results
Optimum Grind Size: P80 @ 75µm (medium)
Rod Mill Work Index (kWh/t): 18.5 (moderate)
Ball Mill Work Index (kWh/t): 17.2 (moderate)
Abrasion Index: 0.6 (moderate)
Indicative Processing Route
Selective underground mining at 150,000tpa
Conventional crushing, grinding, flotation & filtration process
Transport & sale of copper concentrate to 3rd party smelter
Transport & sale of gold-rich pyrite concentrate to 3rd party gold treatment facility
The Promontorio Project comprises a central group of three granted mining concessions totalling 187 hectares (Promontorio
Central) which Azure maintains an option to purchase and a surrounding mining concession 100% owned by Azure covering
105km2 (Promontorio Regional).
As a portion of the Promontorio project area is located within the boundaries of a “Protected Natural Area” (an “ANP”), and
the project is advancing towards development, the Environment Department of the Mexican Federal Government
(“SEMARNAT”) has requested Azure submit an Environmental Impact Statement and an Environmental Base Line Study.
These studies are a necessary precursor to obtaining approval to carry out further intensive drilling operations and project
development, and are being undertaken by Clifton Associates Ltd, Mexico’s largest environmental consultancy. Azure
anticipates approvals necessary for further exploration work to be granted within the following quarter.
Azure has designed a diamond drilling program to extend the Promontorio resource and to test gold-silver mineralised
epithermal veins systems elsewhere within the project area. The program will commence upon receipt of requisite
environmental approvals.
5
Azure Minerals Limited – 2010 Annual Report
Review of Operations
During the past year, Azure has maintained its early stage exploration effort by undertaking a program of reconnaissance
mapping and sampling over the Promontorio leases. This work successfully identified several targets of gold and silver
mineralisation which warrant follow-up drilling.
A quartz-hematite breccia gossan after massive sulphides, located 50m north of the Promontorio resource boundary in an area
yet to be drilled, returned grades of 25.7g/t gold and 9.2g/t silver. Follow-up work will involve drilling to test this zone and
to extend the Promontorio resource further to the north.
A further 200m to the northwest is the Cascada prospect. Drilling by previous explorers intersected wide zones (>10m) of
moderate grade gold (1-2g/t) indicating the potential for a bulk tonnage gold deposit. A best intercept of 7.6m @ 19.8g/t gold
also highlights the potential for bonanza-grade gold mineralisation. This is a high priority drilling target.
The Creston Colorado and Sehue prospects, located approximately 3km southwest of Promontorio, are new targets. They
comprise zones of epithermal quartz veining containing gold and silver mineralisation which have never been drill tested.
These targets will be further explored and drilled during the forthcoming year.
San Eduardo (Copper & Zinc)
San Eduardo, a 238 km² property wholly-owned by Azure, is prospective for porphyry-hosted copper and skarn copper-zinc
mineralisation. During the year, Azure entered into a Joint Venture with Australian copper miner OZ Minerals Ltd (OZ) to
accelerate exploration on this key project. Under the terms of the agreement, OZ can sole fund the first US$13M million of
exploration and development expenditure to earn a 70% interest in the project. The Joint Venture is managed and staffed by
Azure with technical assistance from OZ.
Numerous occurrences of breccia and skarn mineralisation containing anomalous grades of copper, lead and zinc, indicative
of a porphyry copper association, occur throughout the property. Many have been exploited by small scale historical mine
workings.
The Joint Venture’s first phase of exploration focused on the very prospective south of the property, and comprised helicopter
borne magnetic and radiometric surveys and geological mapping and sampling. Two areas, El Venado and Plomosa, were
identified as having very good potential to host significant porphyry and skarn copper mineralisation, with surface sampling
returning grades up to 3.24% Copper and 11.30% Zinc. Further exploration on these prospects will comprise Induced
Polarisation surveys, to be followed by drilling in late 2010.
In the north of the property significant old mine workings are present at the Alejandra prospect. Historical sampling by the
Mexican Geological Survey at Alejandra collected a total of 40 channel samples of wall-rock, returning an average grade of
25 g/t silver, 78.34% lead and 1.89% zinc, with maximum values of 80.9 g/t silver, 20.04% lead and 5.45% zinc. Exploration
will be undertaken in this area during 2011.
La Tortuga (Copper & Zinc)
The La Tortuga Project consists of Azure’s 100% owned La Tortuga and Los Nidos properties which cover 213km2. The
project is in Joint Venture with the Japan Oil, Gas and Metals National Corporation (“JOGMEC”). Under the terms of the
agreement, JOGMEC can sole fund the first US$3 million of exploration expenditure to earn a 51% interest in the project,
and to date JOGMEC has funded approximately US$1.32 million of expenditure. The Joint Venture is managed and staffed
by Azure with technical assistance from JOGMEC.
JOGMEC is a wholly-owned Japanese Government corporation established to assist in the stable supply of oil, gas and
mineral resources to the Japanese economy. It 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. To assist
with those objectives it has entered into the La Tortuga joint venture with an objective to discover large copper deposits.
To date, the joint venture has completed 6 deep diamond drill holes totalling 2,245m. Drilling targets were identified by a
combination of geological mapping, surface sampling, and various geophysical surveys (aeromagnetic, radiometric and IP
surveys).
Drilling has intersected porphyry and limestone skarn rock types containing strong phyllic (quartz-sericite-pyrite) alteration
and stockworked quartz veining, together with significant amounts of oxide copper and disseminated copper, zinc and
molybdenum sulphide mineralisation. A best intercept of 26.9m @ 0.5% copper, 0.4% zinc & 12g/t silver was returned from
a depth of 130.0m, within an overall interval of 156.9m @ 0.2% copper and 0.2% zinc from surface. Highest grades include
2.0m @ 1.6% copper, 1.7% zinc & 48g/t silver. This skarn mineralisation is similar to the nearby El Tecolote Copper-Zinc-
Silver Mine.
6
Azure Minerals Limited – 2010 Annual Report
Review of Operations
LA TORTUGA SIGNIFICANT DRILL INTERCEPTS
HOLE NO.
FROM
(m)
TO
(m)
INTERVAL
(m)
COPPER
(%)
Comments
TOR-DD-001#
48.0
86.0
TOR-DD-001#
112.6
126.6
38.0
14.0
0.2
0.2
Copper oxide mineralisation hosted in strongly altered and
quartz vein stockworked porphyry
TOR-DD-002
Geophysical Target - Magnetite-rich conglomerate – no significant intercepts
TOR-DD-003
Geophysical Target - Pyrite-rich sediment - no significant intercepts
TOR-DD-004
152.2
182.1
29.9
0.3
Copper oxide mineralisation hosted in strongly altered and
quartz vein stockworked porphyry
TOR-DD-005
Minor copper mineralisation in weakly altered porphyry
TOR-DD-006
0.0
156.9
156.9
Including
130.0
156.9
26.9
0.2
0.5
Copper-zinc mineralised skarn
TOR-DD-007
Minor copper mineralisation in weakly altered porphyry
Results of this drilling are encouraging, and the Joint Venture partners evaluated the geology, geophysical and geochemical
results to vector in to higher grade areas of the porphyry system. Follow-up work comprising mapping and IP surveys
identified enhanced prospectivity further to the west and this is the area where the next stage of diamond drilling will be
carried out.
El Tecolote (Gold, Copper & Zinc)
Azure’s 100% owned El Tecolote project, covering approximately 138km², was acquired for its historical mine production,
its excellent porphyry copper and skarn copper-zinc potential, and due to its strategic location between and adjacent to the
San Eduardo and La Tortuga properties. No significant exploration has been undertaken on the property since the 1980’s.
The project area contains the historical El Tecolote Copper-Zinc-Silver Mine. This significant mining and processing venture
operated during the periods 1939-1944 and 1978-1984, with total production recorded as approximately 1.4 million tonnes @
1.9% copper, 7.0% zinc and 47g/t silver. Operations ceased due to low metals prices at the time, with unmined copper and
zinc mineralisation remaining around the old mine workings. Potential also exists for additional deposits along strike and at
depth, with exploration by Grupo Mexico in the 1980’s identifying mineralisation separate from the El Tecolote deposit.
Elsewhere within the property there is potential for porphyry copper mineralisation, with Azure personnel discovering the
altered and mineralised Tecolote Porphyry. Reconnaissance exploration identified strongly altered porphyry containing
quartz vein stockwork, oxidised sulphides and copper oxide mineralisation. This confirms the project's potential to host
porphyry copper mineralisation.
First stage geochemical sampling returned encouraging results from rock chip and stream sediment sampling. Numerous
significant copper values were returned, including 2.4% Cu, 0.98% Cu and 0.44% Cu, hosted within strong phyllic altered
zones which increase in intensity towards the north and northeast of the outcropping portion of the porphyry. Anomalous
values of zinc and molybdenum are coincident with the elevated copper values, indicating the potential for this mineralized
porphyry outcrop to be part of a major porphyry copper system.
Recently, encouraging results have been received from reconnaissance exploration over the northern part of the property. A
gold mineralised shear zone at least 500m long and averaging 50m in width hosting numerous historical mine workings with
shafts as deep as 30m has been identified. This area has been named Monarca.
7
Azure Minerals Limited – 2010 Annual Report
Review of Operations
Sampling returned grades up to 7.7g/t gold from quartz veins near the old mine workings, and grades up to 1.3g/t gold from
the surrounding host rocks. Extensive alluvial gold workings nearby indicate that significant gold has been shed by this
mineralised system, providing further encouragement to explore this prospect. A detailed mapping and sampling program
over the Monarca prospect has been completed, and Azure expects to drill test the mineralised system before the end of 2010.
Pozo de Nacho (molybdenum)
Pozo de Nacho, 100%-owned by Azure, contains a substantial body of molybdenum mineralisation within an intrusive
porphyry system and the surrounding sediments. During 2006/07 Azure drilled mineralisation over an area of 800 by 250
metres, from surface to depths in excess of 300 metres, and it remains open-ended in most directions. Follow-up work has
been delayed by funding restrictions, however the recent capital raising will enable the next stage of work to commence. An
IP survey, planned for late in 2010, is designed to identify the extent of the mineralised system and assist in the targeting of
the next phase of deep diamond drilling, which is planned for early 2011.
ESTACION LLANO (gold)
This 24km2 property, 100% owned by Azure, covers the interpreted western extension of the mineralised system hosting the
+1.3 million ounce San Francisco Gold Mine (currently producing at a rate of 100,000oz gold per year), where recent drilling
by Canadian owner Timmins Gold Corp confirms the mineralised system extends west towards Azure’s property.
The entire Estacion Llano property is coved with a veneer of alluvial sand, and no drilling has been carried out within
Azure’s project area. Azure has commenced exploration with a program of geochemical surface sampling. Drilling to test
the extensions of the San Francisco mineralised system is expected to commence in late 2010 once the geochemical results
have been evaluated.
8
Azure Minerals Limited - Financial Statements
Directors' Report
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 2010.
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 twelve 100% owned projects, two of which have been joint ventured. 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 2010 was $2,058,068 (2009: $3,355,760). Included in this
loss figure is $1,536,522 (2009: $3,241,555) 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)
2010
(0.9)
(0.9)
2009
(1.9)
(1.9)
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,
$5,791,730 (after capital raising costs) was raised through the issue of 126,005,177 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.
9
Azure Minerals Limited - Financial Statements
Directors' Report
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 $5,791,130 (from $ 29,459,548 to $35,250,678) as a result of:
Issue of 100,005,177 fully paid ordinary shares at $0.05 each
Issue of 26,000,000 fully paid ordinary shares at $0.04 each
Less expenses associated with the above issue of shares
Total
2010
$
5,000,258
1,040,000
6,040,258
(249,128)
5,791,130
Net cash received from the increase in contributed equity amounting to $5,791,730 was raised principally to continue the company’s
exploration programme in Mexico.
(c) The Company reached agreement with joint venture partner Kiska Metals Corp (formerly Geoinformatics Exploration Inc) to rationalise
and dissolve its Mexican Joint Venture. Under the terms of the agreement, Azure has gained 100% ownership of five of the former joint
venture projects. The remainder will revert to Kiska or be relinquished. Furthermore, as part consideration for the rationalisation, Kiska
has transferred full ownership of two of its 100%-owned Mexican properties to Azure:
El Tecolote – A 112km2 property containing the El Tecolote Copper-Zinc-Silver Mine, once a significant mining and processing
venture operated by Grupo Mexico, Mexico’s largest mining company. Historical production is recorded as approximately 1.4 million
tonnes @ 1.9% copper, 7.0% zinc and 47g/t silver. Production ceased in the early 1980’s due to low metals prices at the time, with
substantial unmined copper and zinc mineralisation remaining around the old mine workings. Potential also exists for additional
deposits within the property.
San Juan – Peripheral to the high grade Cumobabi porphyry-hosted molybdenum-copper mine, San Juan is prospective for epithermal
silver-gold mineralisation. Previous drilling intersected 22m @ 92g/t silver and potential exists for a typical silver-rich epithermal
precious metal deposit.
(d) Entering into a joint venture with Australian mining company OZ Minerals Ltd on Azure’s 100%-owned San Eduardo property, located
in Sonora Mexico.
To earn an initial 51% participating interest in San Eduardo, OZ Minerals Ltd will spend US$3,000,000 over the next 3 years, with a
minimum commitment of US$300,000 to be expended within the first year. OZ Minerals can earn an additional 19% participating interest
in the project by spending a further US$10,000,000, taking its total equity to 70%.
(e) The signing of an option to sell the company’s 100%-owned Tabisco project (“Option”) to TSX Venture Exchange listed StoneShield
Capital Corp (TSX-V: STS). To acquire the Option, which will be open for six months, StoneShield will issue Azure with 100,000
StoneShield shares, subject to receiving TSX-V approval for the transaction. To exercise the option, and acquire 100% of the project,
StoneShield must pay Azure US$100,000 and issue a further 300,000 StoneShield shares to Azure. The option period may be extended to
a maximum of two years by Stoneshield making a series of additional share issues to Azure at six monthly intervals. Should Stoneshield
extend the option period to the maximum period of two years and then exercise the option to purchase Azure would have been paid
US$100,000 and issued with 1,300,000 Stoneshield shares. As at the date of this report the option has not been exercised.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
Since year end TSX-V approval was received for the Tabisco option agreement referred to in (d) above and Azure has been issued with
100,000 shares in Stoneshield Capital Corp.
No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly affect the
operations of the group, the results of those operations, or the state of affairs of the group in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The group expects to maintain the present status and level of operations.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The company is subject to significant environmental regulation in respect to its exploration activities.
The company aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in
compliance with all environmental legislation. The directors of the company are not aware of any breach of environmental legislation for
the year under review. 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. The directors have assessed that the Company has no current
reporting requirements, but may be required to report in the future.
10
Azure Minerals Limited - Financial Statements
Directors' Report
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
3,200,000 ordinary shares in Azure Minerals Limited
6,500,000 options over ordinary shares in Azure Minerals Limited
Dr Wolf Martinick, PhD, BSc (agric) (Appointed 1 September 2007)
Experience and Expertise
Dr Martinick is an environmental scientist with over 40 years experience in mineral exploration and mining projects around the world,
attending to environmental, water, land access and indigenous people issues. He has conducted due diligence on mining projects around
the world on behalf of international financial institutions and resource companies for a variety of transactions including listings on
international stock exchanges, mergers and debt financing. He is a Fellow of the Australian Institute of Mining and Metallurgy.
He is a founding director and chairman of Weatherly International plc, an AIM listed company with copper mines in Namibia. He was
also a founding director of Basin Minerals Limited, an ASX listed mineral exploration company that discovered a world-class mineral
project in Victoria, Australia, that was acquired by Iluka Resources Limited in 2003.
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
Former Directorships in the last 3 years
Windimurra Vanadium Limited – resigned 2 October 2009
Carbine Resources Limited – resigned 4 November 2008
Special Responsibilities
Chairman Remuneration Committee
Member of Audit Committee
Interests in Shares and Options
1,540,000 ordinary shares in Azure Minerals Limited
2,800,000 options over ordinary shares in Azure Minerals Limited
11
Azure Minerals Limited - Financial Statements
Directors' Report
INFORMATION ON DIRECTORS (cont’d)
Names, qualifications, experience and special responsibilities (cont’d)
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 Resource Equipment 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
Resource Equipment 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
2,669,600 ordinary shares in Azure Minerals Limited
2,000,000 options over ordinary shares in Azure Minerals Limited
Company Secretary
Brett Dickson, BBus, CPA (Appointed 21 November 2006)
Mr Dickson is a Certified Practising Accountant with a Bachelors degree in Economics and Finance from Curtin University and has over
20 years experience in the financial management of companies, principally companies in early stage development of its resource or
product, and offers broad financial management skills. He has been Chief Financial Officer for a number of successful resource
companies listed on the ASX. In addition he has had close involvement with the financing and development of a number of greenfield
resources projects.
DIRECTORS' MEETINGS
The number of directors' meetings held (including meetings of committees of directors) and number of meetings attended
by each of the directors of the company during the financial year are:
Directors'
Meetings
A
9
9
8
B
9
9
9
Meetings of Committees
Audit
A
*
2
2
B
*
2
2
Remuneration
B
A
*
-
-
*
-
-
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.
12
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.
13
Azure Minerals Limited - Financial Statements
Directors' Report
Key management personnel of the Group
Short-Term
Cash, salary
& fees
Cash
Bonus
Non monetary
benefits
Post Employment
Super-
annuation
Retirement
benefits
Name
Share-based
Payments
Options
Total
Percentage
Consisting of
Options
%
Directors
Anthony Paul Rovira – Executive Chairman
2010
2009
258,500
264,935
John Walter Saleeba – Non executive
2010
2009
32,500
32,500
-
-
-
-
-
-
-
-
Wolf Gerhard Martinick –Non Executive (Appointed 1 September 2007)
2010
2009
Executives
Brett Dickson – Company Secretary
24,375
-
2010
2009
132,000
132,000
-
-
- -
- -
-
-
Patrick Manouge – Exploration Manager(resigned 30 March 2009)
2010
2009
Total
2010
2009
152,152
447,375
581,587
-
-
-
-
-
-
-
-
23,265
60,177
2,925
2,925
11,050
35,425
-
-
-
13,694
37,240
112,221
-
-
-
-
-
-
-
-
-
-
-
-
144,500
-
426,264
325,112
57,800
-
57,800
-
93,225
35,425
93,225
35,425
101,150
-
233,150
132,000
-
-
361,250
-
-
165,846
845,865
693,808
33.9
-
62.0
-
62.0
-
43.4
-
-
-
42.7
-
Compensation options
No options were granted during the 2009 year. During the 2010 the following options were issued.
2010
Number
Date
Granted
Fair
Value
Per
option
Fair
value
$
Exercise
Price
$
Terms and conditions for each grant
First
Expiry
exercise
date
date
Last
exercise
date
Vested
Number
%
Directors
A P Rovira
5,000,000
9 Dec 09
.0289
144,500
0.088
30 Nov 12
9 Dec 09
30 Nov 12
5,000,000
J W Saleeba
2,000,000
9 Dec 09
.0289
57,800
0.088
30 Nov 12
9 Dec 09
30 Nov 12
2,000,000
W Martinick
2,000,000
9 Dec 09
.0289
57,800
0.088
30 Nov 12
9 Dec 09
30 Nov 12
2,000,000
Executives
B Dickson
3,500,000
9 Dec 09
.0289
101,150
0.088
30 Nov 12
9 Dec 09
30 Nov 12
3,500,000
Total
12,500,000
.0289
361,250
12,500,000
Value of Options granted as part of remuneration was calculated in accordance with AASB 2: Share Based Payments.
2010
Fair Value per
options granted
during the year
Value of options
granted during
the year
Value of options
exercised during
the year
Value of options
lapsed during the
year
Remuneration
consisting of options
for the year
100
100
100
100
100
Directors
A P Rovira
J W Saleeba
W G Martinick
Executives
B Dickson
$
0.029
0.029
0.029
0.029
$
144,500
57,800
57,800
101,150
$
-
-
-
-
14
$
-
-
(16,400)
(182,760)
%
33.9
62.0
62.0
43.4
Azure Minerals Limited - Financial Statements
Directors' Report
There were no alterations to the terms and conditions of options granted as remuneration since their grant date. There were no forfeitures
nor shares issued on exercise of Compensation Options during 2010 or 2009.
The Company’s remuneration policy prohibits directors and executives from entering into transactions or arrangements which limit the
economic risk of participating in unvested entitlements.
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 (2009: 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.
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. 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.
During the year 12,500,000 exercisable at $0.088 before 30 November 2012 options were issued to Directors and Executives (2009: Nil)
No options were exercised during the financial year and no options have been exercised since the end of the financial year. During the
year 7,250,000 (2009: 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 2010/11 financial year.
End of Audited Remuneration Report
15
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 14,800,000 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
Exercisable at 8.8 cents, on or before 30 November 2012 12,500,000
Exercisable at 25 cents, on or before 30 November 2009 (2,800,000)
Exercisable at 25 cents, on or before 30 November 2010 (2,800,000)
Exercisable at 25 cents, on or before 31 January 2010 (200,000)
Exercisable at 15 cents, on or before 30 November 2009 (2,450,000)
Total options issued and lapsed in the year to 30 June 2010
Total number of options outstanding as at 30 June 2010 and at the date of this report
The balance is comprised of the following
Date granted
6 Dec 2006
6 Dec 2006
6 Dec 2006
24 Dec 2007
24 Dec 2007
9 Dec 2012
Expiry date
31 Jan 2011
31 Jan 2012
31 Jan 2013
30 Jan 2011
30 Jan 2012
30 Nov 2012
Exercise price (cents)
17.5
25.0
35.0
25.0
25.0
8.8
Total number of options outstanding at the date of this report
Total Number of
options
10,550,000
12,500,000
(2,800,000)
(2,800,000)
(200,000)
(2,450,000)
4,250,000
14,800,000
Number of options
500,000
500,000
500,000
400,000
400,000
12,500,000
14,800,000
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of
any other body corporate.
No options were exercised during the financial year and since the end of the financial year no options have been exercised.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
During the financial year, Azure Minerals Limited paid a premium of $19,092 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.
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.
16
Azure Minerals Limited - Financial Statements
Directors' Report
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 Audit (WA) Pty Ltd) 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 Audit (WA) Pty Ltd
Audit and review of financial reports
2. Non audit Services
Audit-related services
BDO Audit (WA) Pty Ltd
Attendance at Annual General Meeting
Taxation Services
BDO Audit (WA) Pty Ltd
Tax compliance services
Total remuneration for non-audit services
Consolidated
2010
$
2009
$
37,018
36,657
542
-
11,110
10,916
11,652
10,916
AUDITOR INDEPENDENCE
A copy of the auditors independence declaration as required under section 307c of the Corporations Act 2001 is set out on page 58.
AUDITOR
BDO Audit (WA) Pty Ltd 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, 29 September 2010
17
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
ASX P & R1
If not, why
not2
ASX P & R1
If not, why
not2
(cid:51)
(cid:51)
n/a
(cid:51)
(cid:51)
n/a
(cid:51)
(cid:51)
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
Recommendation 7.4³
Recommendation 8.1
Recommendation 8.2
Recommendation 8.3³
n/a
(cid:51)
(cid:51)
(cid:51)
n/a
n/a
(cid:51)
(cid:51)
n/a
(cid:51)
n/a
(cid:51)
n/a
(cid:51)
(cid:51)
(cid:51)
n/a
(cid:51)
(cid:51)
n/a
n/a
n/a
n/a
n/a
n/a
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
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
Recommendation(s)
1.3
4.4
2.6
8.3
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) and Compliance Procedures (summary)
Procedure for Selection, Appointment and Rotation of External Auditor
Shareholder Communication Strategy
Risk Management Policy (summary)
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
18
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
2009/2010 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 Executive Chair and assisting the Executive Chair 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
Executive Chair or, if the matter concerns the Executive Chair, 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 Executive Chair is responsible for evaluating the performance of senior executives. The evaluations are performed by conducting
interviews with the senior executives, as required.
Recommendation 1.3:
Companies should provide the information indicated in the Guide to reporting on Principle 1.
Disclosure:
During the Reporting Period an evaluation of senior executives took place in accordance with the process disclosed at Recommendation
1.2.
Please refer to the section above marked Website Disclosures.
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 Dr Wolf Martinick and Mr John Saleeba. The non-independent director of the Board is Mr
Anthony Rovira.
Recommendation 2.2:
The Chair should be an independent director.
Notification of Departure:
The Chair is not an independent director.
Explanation for Departure:
Mr Rovira is not independent by virtue of his executive role. The Board considers that Mr Rovira is the most appropriate person for the
position of Chair given his industry experience, 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.
19
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
Recommendation 2.3:
The roles of the Chair and Chief Executive Officer 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 three 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 (or equivalent) is responsible for evaluating the Executive Chair.
The Chair evaluates the Board and, when deemed appropriate, Board committees and individual directors by utilising
questionaries which are completed by each director. The Chair, in consultation with the Company Secretary, then reviews the
questionnaires and holds round table discussions with the Board to discuss the questionnaires. The Chair holds discussions with
individual directors, if required.
The Nomination Committee evaluates the performance of the Chair each year by personal interview. In reviewing the Chair the
performance of the company against predetermined budgets and evaluation criteria (if any) is assessed.
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 Dr Wolf Martinick and Mr 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.
20
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
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.
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 Chair, 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 nomination-related discussions occurred from time to time during the year as required. To assist the
Board to fulfil its function as the Nomination Committee, it has adopted a Nomination Committee Charter (which is available on the
Company's website).
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 an evaluation of the Board and its committees took place in accordance with the process disclosed at
Recommendation 2.5. However, there were no performance evaluations held in the Reporting Period for individual directors.
Selection and (Re)Appointment of Directors
In determining candidates for the Board, the Nomination Committee (or equivalent) follows a prescribed procedure whereby it evaluates
the range of skills, experience and expertise of the existing Board, considers the balance of independent directors on the Board as well
identifying the particular skills that will best increase the Board's effectiveness. A potential candidate is considered with reference to their
skills and expertise in relation to other Board members. If relevant, the Nomination Committee recommends an appropriate candidate for
appointment to the Board. Any appointment made by the Board is subject to ratification by shareholders at the next annual general meeting.
The Company's Policy and Procedure for Selection and (Re)Appointment of Directors is available on the Company's website.
The Board recognises that Board renewal is critical to performance and the impact of Board tenure on succession planning. Each director
other than the Managing Director, must not hold office (without re-election) past the third annual general meeting of the Company
following the Director's appointment or three years following that director's last election or appointment (whichever is the longer).
However, a Director appointed to fill a casual vacancy or as an addition to the Board must not hold office (without re-election) past the next
annual general meeting of the Company. At each annual general meeting a minimum of one director or a third of the total number of
directors must resign. A director who retires at an annual general meeting is eligible for re-election at that meeting. 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.
21
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
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.
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:
•
•
•
•
Notification of Departure:
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; and
has at least three members.
The Audit Committee has two members, Wolf Martinick and John Saleeba, both of whom are independent non-executive directors. The
Audit Committee is chaired by John Saleeba, who is not chair of the Board.
Explanation for Departure:
Given the size and structure of the Board, the Company is unable to structure the Audit Committee in accordance with Recommendation
4.2. However, the Audit Committee has been structured so that it is in accordance with Recommendation 4.2, except that it only has two
members.
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
Dr Wolf Martinick
Mr John Saleeba
No. of meetings attended
2
2
Details of each of the director's qualifications are set out in the Directors' Report.
22
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
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 the necessary financial
expertise to the Audit Committee.
The Company has established procedures for the selection, appointment and rotation of its external auditor, which is available of the
Company's website. 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.
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 Executive Chair, who is responsible for identifying, assessing,
monitoring and managing risks. The Executive Chair 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 Executive Chair 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.
23
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
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
During the Reporting Period, the Company managed its material business risks as outlined above. In addition, the Board received a report
from management each month which enabled an assessment by the Board of activities that may impact on the risk profile of the Company.
Specific areas of risk that were identified in the report included operational activities, asset management (including title to exploration and
mining leases) and staff. Any matter identified from the monthly report was then discussed at the following Board meeting.
In June 2010, the Company undertook a review of its risk management policy and procedures, and formalised and documented its system
to manage its material business risks. The Board adopted a revised Risk Management Policy and Risk Management Procedures.
Under the revised Risk Management Policy, the Board will oversee the processes by which risks are managed. This will include defining
the Company's risk appetite, monitoring of risk performance and those risks that may have a material impact to the business. Management
is responsible for the implementation of the risk management and internal control system to manage the Company's risks and to report to
the Board whether those risks are being effectively managed.
The Company's system to manage its material business risks includes the preparation of a risk register by management to identify the
Company's material business risks, analyse those risks, evaluate those risks (including assigning a risk owner to each risk) and treat those
risks. Risks and their management are to be monitored and reviewed at least half yearly by senior management. The risk register is to be
updated and a report submitted to the Executive Chair. The Executive Chair is to provide a risk report at least half yearly to the Board and
an annual review of the risk profile is to be undertaken to ensure relevancy.
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.
The Board has established a separate Audit Committee to monitor and review the integrity of financial reporting and the
Disclosure:
The Executive Chair 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 Executive Chair and the Chief Financial Officer (or equivalent) under Recommendation 7.3.
24
Azure Minerals Limited - Financial Statements
Corporate Governance Statement
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. Fees for
non executive directors are not linked to the performance of the Company. From time to time the Company may grant options to non-
executive directors. The grant of options is designed to attract and retain appropriately qualified non-executive directors to the Board.
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.
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 one meeting during the Reporting Period. The following table identifies those directors who are
members of the Remuneration Committee and shows their attendance at Committee meeting:
Name
Dr Wolf Martnick
Mr John Saleeba
No. of meetings attended
1
1
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, 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. However, it does apply to John Saleeba.
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.
25
Azure Minerals Limited - Financial Statements
Statements of Comprehensive Income
YEAR ENDED 30 JUNE 2010
Notes
Consolidated
Parent Entity
Revenue from continuing activities
Expenditure
Depreciation
Salaries and employee benefits expense
Directors fees
Exploration expenses
Exploration expenses reimbursed
Travel expenses
Promotion expenses
Administration expenses
Consulting expenses
Insurance expenses
Impairment on loan to subsidiary
Share based payment expense
Loss from equipment sales
Preparation for TSX Listing
Other expenses
5
6
6
6
27
2010
$
2009
$
2010
$
2009
$
39,650
64,881
39,650
54,549
(39,806)
(473,619)
(65,000)
(1,536,522)
871,672
(115,341)
(26,358)
(97,953)
(14,533)
(44,654)
-
(361,250)
(1,873)
-
(192,481)
(46,655)
(493,583)
(65,000)
(3,241,555)
957,042
(83,183)
(35,361)
(135,156)
(5,000)
(46,857)
-
-
-
(3,075)
(222,258)
(17,334)
(473,619)
(65,000)
(156,085)
871,672
(115,341)
(26,358)
(97,953)
(14,533)
(24,329)
-
(361,250)
(1,270)
-
(192,479)
(16,710)
(493,583)
(65,000)
(11,094)
957,042
(83,183)
(35,361)
(135,156)
(5,000)
(29,294)
(4,636,848)
-
-
(3,075)
(200,778)
Loss from continuing operations before income tax
(2,058,068)
(3,355,760)
(634,229)
(4,703,491)
Income tax benefit/(expense)
7
-
-
-
-
Loss from continuing operations after income tax
(2,058,068)
(3,355,760)
(634,229)
(4,703,491)
Other comprehensive income
Exchange differences on translation of foreign operations
Other comprehensive income for the year net of tax
(14,808)
(184,942)
(14,808)
(184,942)
-
-
-
-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
(2,072,876)
(3,540,702)
(634,229)
(4,703,491)
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
22
(0.9)
(0.9)
(1.9)
(1.9)
The above Statements of Comprehensive Income are to be read in conjunction with the Notes to the Financial Statements.
26
Azure Minerals Limited - Financial Statements
Statements of Financial Position
AT 30 JUNE 2010
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
Non-Current Liabilities
Provisions
Total Non-Current Liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
Notes
Consolidated
Parent Entity
2010
$
2009
$
2010
$
2009
$
18
8
9
10
11
13
14
14
5,242,755
153,391
5,396,146
1,345,997
130,407
1,476,404
5,063,872
6,214,634
11,278,506
1,272,504
4,244,210
5,516,714
100,894
1,109,034
22,308
1,232,236
143,398
709,602
22,308
875,308
40,500
-
22,535
63,035
57,561
-
22,535
80,096
6,628,382
2,351,712
11,341,541
5,596,810
319,523
35,758
355,281
136,819
23,692
160,511
250,035
35,758
285,793
37,917
23,692
61,609
105,176
105,176
102,780
102,780
105,176
105,176
102,780
102,780
460,457
263,291
390,969
164,389
6,167,925
2,088,421
10,950,572
5,432,421
15
16(a)
16(b)
35,250,678
1,038,408
(30,121,161)
6,167,925
29,459,548
691,966
(28,063,093)
2,088,421
35,250,678
1,264,942
(25,565,048)
10,950,572
29,459,548
903,692
(24,930,819)
5,432,421
The above Statements of Financial Position are to be read in conjunction with the Notes to the Financial Statements
27
Azure Minerals Limited - Financial Statements
Statements of Changes in Equity
CONSOLIDATED
30 JUNE 2010
Issued
Share Capital
Share Option
Reserve
$
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
Total
$
$
Balance at 1 July 2009
29,459,548
903,692
(211,726)
(28,063,093)
2,088,421
Loss for period
Other comprehensive income
Exchange differences on
operations
translation of
foreign
Total other comprehensive loss
Total comprehensive loss for the period
-
-
-
-
Transactions with owners in their capacity as owners:
Issue of share capital net of transaction costs
5,791,130
-
-
-
-
-
-
(2,058,068)
(2,058,068)
(14,808)
(14,808)
-
-
(14,808)
(14,808)
(14,808)
(2,058,068)
(2,072,876)
-
-
-
-
-
-
5,791,130
361,250
6,152,380
-
5,791,130
361,250
361,250
35,250,678
1,264,942
(226,534)
(30,121,161)
6,167,925
Share based payments
Total transactions with owners
Balance as at 30 June 2010
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
Loss for period
Other comprehensive income
Exchange differences on
operations
translation of
foreign
Total other comprehensive loss
Total comprehensive loss for the period
Transactions with owners in their capacity as owners:
Issue of share capital, net of transaction costs
Total transaction with owners
Balance at 30 June 2009
-
-
-
-
4,329,766
4,329,766
-
-
-
-
-
-
-
(3,355,760)
(3,355,760)
(184,942)
(184,942)
-
-
(184,942)
(184,942)
(184,942)
(3,355,760)
(3,540,702)
-
-
-
-
4,329,766
4,329,766
29,459,548
903,692
(211,726)
(28,063,093)
2,088,421
The above consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes.
28
Azure Minerals Limited - Financial Statements
Statements of Changes in Equity
PARENT ENTITY
30 JUNE 2010
Issued
Share Capital
Share Option
Reserve
$
$
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
Total
$
$
Balance at 1 July 2009
29,459,548
903,692
-
(24,930,819)
5,432,421
Loss for period
Other comprehensive income
Exchange differences on
operations
translation of
foreign
Total other comprehensive loss
Total comprehensive loss for the period
-
-
-
-
Transactions with owners in their capacity as owners:
Issue of share capital net of transaction costs
5,791,130
-
-
-
-
-
Share based payments
Total transactions with owners
Balance as at 30 June 2010
-
361,250
5,791,130
361,250
35,250,678
1,264,942
-
-
-
-
-
-
-
-
(634,229)
(634,229)
-
-
-
-
(634,229)
(634,229)
-
-
-
5,791,130
361,250
6,152,380
(25,565,048)
10,950,572
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
-
(20,227,328)
5,806,146
Loss for period
Other comprehensive income
Exchange differences on
operations
translation of
foreign
Total other comprehensive loss
Total comprehensive loss for the period
Transactions with owners in their capacity as owners:
Issue of share capital, net of transaction costs
Total transaction with owners
Balance at 30 June 2009
-
-
-
-
4,329,766
4,329,766
-
-
-
-
-
-
29,459,548
903,692
-
-
-
-
-
-
-
(4,703,491)
(4,703,491)
-
-
-
-
(4,703,791)
(4,703,491)
-
-
4,329,766
4,329,766
(24,930,819)
5,432,421
The above company Statements of Changes in Equity should be read in conjunction with the accompanying notes.
29
Azure Minerals Limited - Financial Statements
Statements of Cash Flows
YEAR ENDED 30 JUNE 2010
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
2010
$
2009
$
2010
$
2009
$
(1,000,807)
28,875
(584,634)
(1,163,739)
47,587
(2,492,575)
(980,482)
28,875
824,109
(1,146,176)
47,587
952,810
18(b)
(1,556,566)
(3,608,727)
(127,498)
(145,779)
(2,807)
-
(422,945)
-
(16,791)
11,432
(530,131)
-
(1,544)
-
-
(1,947,053)
-
1,100
-
(4,180,786)
(425,752)
(535,490)
(1,948,597)
(4,179,686)
6,040,259
(172,796)
-
4,458,909
(129,143)
(103,075)
6,040,259
(172,796)
-
4,458,909
(129,143)
(103,075)
5,867,463
4,226,691
5,867,463
4,226,691
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
3,885,145
82,474
3,791,368
(98,774)
1,345,997
1,420,067
1,272,504
1,371,278
18(a)
11,613
5,242,755
(156,544)
1,345,997
-
5,063,872
-
1,272,504
The above Statements of Cash Flows are to be read in conjunction with the Notes to the Financial Statements.
30
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.
Compliance with AIFRSs
The consolidated financial statements of Azure Minerals Limited and the separate financial statements of Azure Minerals Limited also
comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
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.
Financial Statement Presentation
The Group has applied revised AASB 101 Presentation of Finacial Statements which became effective on 1 January 2009. The revised
standard requires the separate presentation of a statement of comprehensive income and a statement of changes in equity. All non-owner
changes in equity must now be presented in the statement of comprehensive income. As a consequence, the groupo had to change the
presentation of its financial statements. Comparative information has been re-presented so that it is also in conformity with the revised
standard.
(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 acquisition 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.
Changes in accounting policy
The group has changed its accounting policy for transactions with non-controlling interests and the accounting loss of control, joint control
or significant influence from 1 July 2009 when a revised AASB127 Consolidated and Separate Financial Statements became operative. The
revisions to AASB 127 contained consequential amendments to AASB 128 Investments in Associates and AASB 131 Interests in Joint
Ventures.
The group has applied the new policy prospectively to transactions occurring after 1 July 2009. As a consequence no adjustments were
necessary to any of the amounts previously recognised in the financial statements.
(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.
31
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Depreciation
Depreciation of plant and equipment is calculated on a reducing balance basis so as to write off the net costs of each asset over the expected
useful life. The rates vary between 20% and 40% per annum.
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount is greater than its estimated
recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.
When revalued assets are sold, it is group policy to transfer the amounts included in other reserves in respect of those assets to retained
earnings.
(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.
(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 statement of financial position 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.
32
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(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 profit or loss, 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 profit or loss 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.
(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.
33
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(l) Contributed Equity
Ordinary shares are classified as equity.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds
received.
(m) Earnings per share (EPS)
Basic earnings per share
Basic EPS is calculated as the profit attributable to equity holders of the company, excluding any costs of servicing equity other than
ordinary shares, divided by the weighted average number of ordinary shares outstanding during the financial year, adjusted for any bonus
elements in ordinary shares issued during the year.
Diluted earnings per share
Diluted EPS adjusts the figures used in the determination of basic EPS to take into account the after income tax effect of interest and
other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential ordinary shares.
(n) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on
the balance sheet.
(o) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current
financial year.
(p) Interests in joint ventures
The Groups share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the
consolidated income statement and balance sheet.
(q) Segment reporting
Operating segments are reported in a meaner consistent with the internal reporting to the chief operating decision maker. The chief
operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been
identified as the Executive Chairman.
Changes in accounting policy
The group has adopted AASB 8 Operating Segments from 1 July 2009. AASB 8 replaces AASB 114 Segment Reporting. The new
standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal
reporting purposes. This has resulted in a decrease in the number of segments reported. There has been no other impact on the
measurement of the company’s assets and liabilities.
(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 profit or loss. Debts which are known to be uncollectible are written off by reducing the carrying
amount directly.
34
Azure Minerals Limited - Financial Statements
Notes continued
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(s) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivative, and trading and available-for-sale
securities) is based on quoted market prices at the balance sheet date. The quoted market price used for financial assets held by the Group
is the current bid price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined
using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at
each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other
techniques, such as estimated discounted cash flow, are used to determined fair value for the remaining financial instruments. The fair
value of interest rate swaps is calculated as the present value of the estimated future cash flows. The fair value of forward exchange
contracts is determined using forward exchange market rates at the balance sheet date.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their
short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash
flows at the current market interest rate that is available to the Group for similar financial instruments.
(t) Provisions
Provisions for legal claims, service warranties and make good obligations are recognised when the Group has a present legal or
constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the
amount has been reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering
the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in
the same class of obligations may be small.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at
the balance sheet date. The discount rate used to determine the present value reflects current market assessments of the time value of
money and the risks specific to the liability. The increase in the provision due to the passage of time is recognised as interest expense.
(u) 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 2010. These are outlined below.
Application
date for
Group*
1 July 2010
Application
date of
standard*
1 January
2010
Impact on Group
financial report
The amendments
are expected to
only affect the
presentation of the
Group’s financial
report and will not
have a direct
impact on the
measurement and
recognition of
amounts under the
current AASB
2009-5
Reference Title
Summary
AASB
2009-5
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 except for the following:
The amendment to AASB 101 stipulates that the terms of a
liability that could result, at anytime, in its settlement by
the issuance of equity instruments at the option of the
counterparty do not affect its classification.
The amendment to AASB 107 explicitly states that only
expenditure that results in a recognised asset can be
classified as a cash flow from investing activities.
The amendment to AASB 136 clarifies that the largest unit
permitted for allocating goodwill acquired in a business
combination is the operating segment, as defined in IFRS 8
before aggregation for reporting purposes.
The main change to AASB 139 clarifies that a prepayment
option is considered closely related to the host contract
when the exercise price of a prepayment option reimburses
the lender up to the approximate present value of lost
interest for the remaining term of the host contract.
The other changes clarify the scope exemption for business
combination contracts and provide clarification in relation
to accounting for cash flow hedges.
35
Azure Minerals Limited - Financial Statements
Notes continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Reference Title
Summary
AASB
2009-8
Amendments
to Australian
Accounting
Standards –
Group Cash-
settled Share-
based
Payment
Transactions
[AASB 2]
This Standard makes amendments to Australian
Accounting Standard AASB 2 Share-based Payment and
supersedes Interpretation 8 Scope of AASB 2 and
Interpretation 11 AASB 2 – Group and Treasury Share
Transactions.
The amendments clarify the accounting for group cash-
settled share-based payment transactions in the separate or
individual financial statements of the entity receiving the
goods or services when the entity has no obligation to settle
the share-based payment transaction.
The amendments clarify the scope of AASB 2 by requiring
an entity that receives goods or services in a share-based
payment arrangement to 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.
Application
date of
standard*
1 January
2010
Impact on Group
financial report
There is expected
to be no affect on
the Group’s
financial
statements.
Application
date for
Group*
1 July 2010
The amendments address the retrospective application of
IFRSs to particular situations and are aimed at ensuring that
entities applying IFRSs will not face undue cost or effort in
the transition process.
1 January
2010
1 July 2010
There is expected
to be no affect on
the Group’s
financial
statements
Amendments
to IFRS 1
First-time
Adoption of
International
Financial
Reporting
Standards.
Amendments
to Australian
Accounting
Standards –
Classification
of Rights
Issues [AASB
132]
AASB
2009-9
AASB
2009-10
AASB 9
(issued
December
2009)
Specifically, the amendments:
• exempt entities with existing leasing contracts from
reassessing the classification of those contracts in
accordance with IFRIC 4 Determining whether an
Arrangement contains a Lease when the application of
their national accounting requirements produced the
same result.
The amendment provides relief to entities that issue rights
in a currency other than their functional currency, from
treating the rights as derivatives with fair value changes
recorded in profit or loss. Such rights will now be
classified as equity instruments when certain conditions are
met.
Financial
Instruments
Amends the requirements for classification and
measurement of financial assets
36
1 February
2010
There is expected
to be no affect on
the Group’s
financial
statements
1 July 2010
1 July 2013
Periods
beginning
on or after 1
January
2013
Due to the recent
release of these
amendments and
that adoption is
only mandatory
for the 30 June
2014 year end, the
entity has not yet
made an
assessment of the
impact of these
amendments.
Azure Minerals Limited - Financial Statements
Notes continued
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Reference
Title
Summary
AASB
Interpretation
19 (issued
December
2009)
Extinguishing
Financial
Liabilities
with Equity
Instruments
Equity instruments issued to a creditor to
extinguish all or part of a financial liability are
‘consideration paid’ to be recognised at the fair
value of the equity instruments issued, unless
their fair value cannot be measured reliably, in
which case they are measured at the fair value of
the debt extinguished. Any difference between
the carrying amount of the financial liability
extinguished and the ‘consideration paid’ is
recognised in profit or loss.
Application
date of
standard*
Periods
beginning on
or after 1 July
2010
Impact on Group
financial report
There will be no
impact as the entity
has not undertaken
any debt for equity
swaps.
Application
date for
Group*
1 July 2010
AASB 2010-3
(issued June
2010)
AASB 3 -
Business
Combinations
Confirms that any balances of contingent
consideration that relate to acquisitions under the
superseded AASB 3 must be accounted for under
the superseded standard, i.e. not via profit or loss.
Periods
commencing
on or after 1
July 2010
AASB 2010-4
(issued June
2010)
AASB 7 -
Financial
Instruments:
Disclosures
Deletes various disclosures relating to credit risk,
renegotiated loans and receivables and the fair
value of collateral held.
Periods
commencing
on or after 1
January 2011
ASB 2010-4
(issued June
2010)
AASB 101 -
Presentation
of Financial
Statements
A detailed reconciliation of each item of other
comprehensive income may be included in the
statement of changes in equity or in the notes to
the financial statements.
Periods
commencing
on or after 1
January 2011
1 July 2010
1 July 2011
1 July 2011
There will be no
impact on initial
adoption as
adjustments to
contingent
consideration on
acquisitions prior to 1
July 2009 have been
accounted for in
accordance with the
superseded AASB 3.
There will be no
impact on initial
adoption to amounts
recognised in the
financial statement as
the amendments result
in fewer disclosures
only.
There will be no
impact on initial
adoption of this
amendment as a
detailed reconciliation
of each item of other
comprehensive
income has always
been included in the
statement of changes
in equity.
37
Azure Minerals Limited - Financial Statements
Notes continued
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 cash and cash equivalents. For the Company it arises
from receivables due from subsidiaries.
Cash and Cash Equivalents
The Group manages its credit risk on cash and cash equivalents by only dealing with banks licensed to operate in Australia.
Trade and other receivables
As the Group operates in the mining exploration sector, it does not have trade receivables and therefore is not exposed to credit risk in
relation to trade receivables.
Presently, the Group undertakes exploration and evaluation activities exclusively in Mexico. At the balance sheet date there were no
significant concentrations of credit risk.
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s maximum exposure to credit risk
at the reporting date was:
Trade and other receivables
Cash and cash equivalents
Security deposits
Trade and other receivables
Receivable from controlled entity
Allowance for impairment from controlled entity
Cash and cash equivalents
Security deposit
Impairment losses
Note
8
18
11
Consolidated
Carrying amount
2010
2009
136,752
5,242,755
22,308
Parent Entity
Carrying amount
114,125
1,345,997
22,308
Note
2010
2009
8
25
25
18
11
34,964
10,797,797
(4,630,744)
5,063,872
22,308
10,815
8,850,744
(4,630,744)
1,272,504
22,308
None of the Company’s other receivables are past due (2009: 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 2010 the Group does not have any collective
impairments on its other receivables (2009: nil).
38
Azure Minerals Limited - Financial Statements
Notes continued
2 .
FINANCIAL RISK MANAGEMENT (Cont’d)
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 no need to raise additional capital in the next 12 months to meet forecasted operational activities. The decision on
how the Company will raise future capital will depend on market conditions existing at that time.
Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 180 days, including
the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such
as natural disasters
The following are the contractual maturities of financial liabilities at amortised cost:
Consolidated
30 June 2010
Trade and other payables
30 June 2009
Trade and other payables
Company
30 June 2010
Trade and other payables
30 June 2009
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
319,523
136,819
-
-
319,523
136,819
-
-
-
-
-
-
-
-
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12 mths
1-2 years
2-5 years
More than
5 years
250,035
37,917
-
-
250,035
37,917
-
-
-
-
-
-
-
-
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
Gross balance sheet exposure
Forward exchange contracts
Net exposure
30 June 2010
USD
50,894
34,744
85,638
-
85,638
30 June 2009
USD
51,655
49,452
101,107
-
101,107
39
Azure Minerals Limited - Financial Statements
Notes continued
2 .
FINANCIAL RISK MANAGEMENT (Cont’d)
Exposure to currency risk
The Group’s exposure to foreign currency risk at balance date was as follows, based on notional amounts:
Trade receivables
Trade payables
Gross balance sheet exposure
Forward exchange contracts
Net exposure
30 June 2010
USD
50,894
34,744
85,638
-
85,638
30 June 2009
USD
51,655
49,452
101,107
-
101,107
The Company’s exposure to foreign currency risk at 30 June 2010 was nil (2009:Nil).
The following significant exchange rates applied during the year:
AUD
USD
Sensitivity analysis
Average rate
Reporting date spot rate
2010
0.8822
2009
0.74803
2010
0.8567
2009
0.8048
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 equity and decrease 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
2009.
30 June 2010
USD
30 June 2009
USD
Consolidated
Company
Equity
Profit or loss
Equity
Profit or loss
8,564
8,564
10,111
10,111
-
-
-
-
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.
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
2010
2009
2010
2009
5,265,064
1,368,606
5,086,180
1,295,112
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 2010 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 $52,651 higher /lower (2009 – change of 100 basis points: $13,686 higher/lower).
Parent Sensitivity
At 30 June 2010 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 $50,862 higher /lower (2009 – change of 100 basis points: $12,951 higher/lower).
40
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 2010
30 June 2009
Carrying
amount
153,391
5,242,755
22,308
Fair value
153,391
5,242,755
22,308
Carrying
amount
130,047
1,345,997
22,308
Fair value
130,047
1,345,997
22,308
(319,523)
(319,523)
(136,819)
(136,819)
30 June 2010
30 June 2009
Carrying
amount
6,214,634
5,063,872
22,535
Fair value
6,214,634
5,063,872
22,535
Carrying
amount
4,244,210
1,272,504
22,535
Fair value
4,244,210
1,272,504
22,535
(250,035)
(250,035)
(37,917)
(37,917)
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.
41
Azure Minerals Limited - Financial Statements
Notes continued
SEGMENT INFORMATION
4.
The Company currently does not have production and is only involved in exploration. As a consequence, activities in the operating segments
are identified by management based on the manner in which resources are allocated, the nature of the resources provided and the identity of
service line manager and country of expenditure. Discrete financial information about each of these areas is reported to the executive
management team on a monthly basis.
Based on this criteria, management has determined that the company has one operating segment being mineral exploration in Mexico. As the
company is focused on mineral exploration, the Board monitors the company based on actual versus budgeted exploration expenditure incurred
by area of interest. These areas of interest meet aggregating criteria and are aggregated into one reporting sector. This internal reporting
framework is the most relevant to assist the Board with making decisions regarding the company and its ongoing exploration activities, while
also taking into consideration the results of exploration work that has been performed to date.
Revenue from external sources
Reportable segment loss
Reportable segment assets
Reportable segment liabilities
Reconciliation of reportable segment loss
Reportable segment loss
Other profit
Unallocated:
- Salaries and wages
- Travel and accommodation
- Office costs
- Other corporate expenses
- Share based payments
- loss on asset sales
- Depreciation
Loss before tax
Reconciliation of reportable segment assets
Reportable segment assets
Unallocated:
- Cash
- Trade and other receivables
- Security deposits
- Office plant and equipment
Total segment asset
Reconciliation of reportable segment liabilities
Reportable segment liabilities
Unallocated:
- Trade and other payables
- Provisions
Total segmentliabilities
42
30 June 2010
$
-
(664,850)
1,170,329
(69,488)
(664,850)
39,650
(473,619)
(115,341)
(97,953)
(343,026)
(361,250)
(1,873)
(39,806)
30 June 2009
$
-
(2,284,513)
796,989
(2,284,513)
53,449
(493,583)
(118,544)
(135,156)
(330,758)
-
-
(46,655)
(2,058,068)
(3,355,760)
1,170,329
796,989
5,242,755
153,391
22,308
39,599
1,345,998
130,406
22,308
56,011
6,628,382
2,351,712
(69,488)
(98,903)
(250,035)
(140,934)
(460,457)
(37,916)
(126,472)
(263,291)
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
2010
$
2009
$
2010
$
2009
$
39,650
-
39,650
53,449
11,432
64,881
39,650
-
39,650
53,449
1,100
54,549
39,806
46,655
17,334
16,710
1,536,522
(871,672)
46,357
29,299
3,241,555
(957,042)
98,739
49,955
156,085
(871,672)
46,357
29,299
98,739
(957,042)
11,094
49,955
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(b) Numerical reconciliation of income tax expense to prima
facie tax payable
Loss from continuing operations before income tax expense
(2,058,068)
(3,355,760)
(634,229)
(4,703,491)
Tax at the Australian tax rate of 30% (2008: 30%)
(617,420)
(1,006,728)
(190,269)
(1,411,047)
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Share-based payments
Foreign Exploration
Preparation for TSX listing
Sundry items
108,375
-
-
29,802
-
-
923
21,824
108,375
(261,502)
-
29,802
-
-
923
21,824
(479,243)
(983,981)
(313,594)
(1,388,300)
Movement in unrecognised temporary differences
(97,756)
(108,901)
(97,756)
1,282,154
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
152,630
(3,053)
986,736
(19,534)
-
-
-
-
427,422
125,680
411,350
106,146
-
-
-
-
43
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
Deferred Tax Liabilities (at 30%)
Consolidated
Parent Entity
2010
$
2009
$
2010
$
2009
$
108,758
(3,785)
(18,713)
49,780
3,606,891
1,719,959
850,600
6,313,490
86,728
(4,019)
21,413
34,942
2,919,242
1,570,382
915,933
5,544,621
-
108,758
(3,785)
(18,713)
49,780
3,606,891
-
850,600
4,593,531
86,728
(4,019)
21,413
34,942
2,919,242
-
915,933
3,974,239
-
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-
16,639
136,752
-
16,282
114,125
-
12,617
34,964
10,079,797
13,395
10,815
8,850,744
(a)
recovery
(4,630,744)
4,244,210
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.
(4,630,441)
6,214,634
-
153,391
-
130,407
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
Consolidated
At 1 July 2008
Cost
Accumulated Depreciation
Net Book Amount
Year ended 30 June 2009
Opening net book value
Additions
Disposals
Depreciation on disposals
Depreciation Charge
Foreign exchange translation adjustment
Closing net book amount
Furniture, fittings
and equipment
$
326,237
(219,857)
106,380
106,380
1,580
(8,438)
1,462
(21,551)
(961)
78,472
Motor
Vehicles
$
88,321
(22,982)
65,339
Exploration
Equipment
$
52,368
(27,195)
25,173
65,339
5,731
(19,753)
7,819
(20,910)
(692)
37,534
25,173
9,480
(13,536)
11,516
(4,194)
(1,047)
27,392
Total
466,926
(270,034)
196,892
196,892
16,791
(41,727)
20,797
(46,655)
(2,700)
143,398
44
Azure Minerals Limited - Financial Statements
Notes continued
9.
PLANT AND EQUIPMENT (cont’d)
At 30 June 2009
Cost
Accumulated Depreciation
Net Book Amount
Year ended 30 June 2010
Opening net book value
Additions
Disposals
Depreciation on disposals
Depreciation Charge
Foreign exchange translation adjustment
Closing net book amount
At 30 June 2010
Cost
Accumulated Depreciation
Net Book Amount
Parent Entity
At 1 July 2008
Cost
Accumulated Depreciation
Net Book Amount
Year ended 30 June 2009
Opening net book value
Additions
Disposals
Depreciation on disposals
Depreciation Charge
Foreign exchange translation adjustment
Closing net book amount
At 30 June 2009
Cost
Accumulated Depreciation
Net Book Amount
Year ended 30 June 2009
Opening net book value
Additions
Disposals
Depreciation on disposals
Depreciation Charge
Foreign exchange translation adjustment
Closing net book amount
At 30 June 2010
Cost
Accumulated Depreciation
Net Book Amount
317,094
(238,622)
78,472
78,472
2,943
(1,616)
239
(21,511)
(922)
57,605
317,210
(259,605)
57,605
70,382
(32,848)
37,534
37,534
-
-
-
(15,028)
(1,756)
20,750
68,050
(47,300)
20,750
46,929
(19,537)
27,392
434,405
(291,007)
143,398
27,392
-
(7,701)
6,431
(3,268)
(315)
22,539
143,398
2,943
(9,317)
6,670
(39,807)
(2,993)
100,894
38,908
(16,369)
22,539
424,168
(323,274)
100,894
Exploration
Equipment
$
33,000
(26,109)
6,891
6,891
-
(13,536)
11,516
(2,051)
-
2,820
19,464
(16,644)
2,820
2,820
-
(7,701)
6,431
(649)
-
901
Total
312,920
(236,629)
76,291
76,291
-
(13,536)
11,516
(16,710)
-
57,561
299,384
(241,823)
57,561
57,561
1,544
(7,701)
6,431
(17,335)
-
40,500
11,763
(10,862)
901
293,226
(252,726)
40,500
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Furniture, fittings
and equipment
$
Motor
Vehicles
$
279,920
(210,520)
69,400
69,400
-
-
-
(14,659)
-
54,741
279,920
(225,179)
54,741
54,741
1,544
-
-
(16,686)
-
39,599
281,463
(241,864)
39,599
45
Azure Minerals Limited - Financial Statements
Notes continued
Consolidated
Parent Entity
2010
$
2009
$
2010
$
2009
$
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
1,109,034
709,602
Opening net book amount
Additions
Disposals
Closing net book amount
709,602
399,432
-
1,109,034
193,270
516,332
-
709,602
-
-
-
-
-
-
-
-
-
-
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
22,535
-
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
2010
%
100
100
2009
%
100
100
46
Azure Minerals Limited - Financial Statements
Notes continued
13. TRADE AND OTHER PAYABLES (CURRENT)
Trade payables
Consolidated
Parent Entity
2010
$
2009
$
2010
$
2009
$
319,52
136,819
250,035
37,917
Information about the Groups financial risk management policies is disclosed in note 2.
14. PROVISIONS
CURRENT
Employee benefits
NON-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 $0.125 per share
Issue at $0.04 per share
Share issue expenses
30 June closing balance
35,758
23,692
35,758
23,692
28,165
77,011
105,176
25,769
77,011
102,780
28,165
77,011
105,176
25,769
77,011
102,780
Consolidated and Parent Entity
2010
Number of shares
343,217,666
343,217,666
$
35,250,678
35,250,678
2009
Number of shares
217,212,489
217,212,489
$
29,459,548
29,459,548
2010
2009
Number of
shares
217,212,489
100,005,177
-
26,000,000
-
343,217,666
$
29,459,548
5,000,258
-
1,040,000
(249,128)
35,250,678
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
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 8.8 cents, on or before 30 Nov 2012
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 35 cents, on or before 31 Jan 2013
30 June closing balance
Further information on options issued is set out in note 27.
47
Number of options
2010
2009
10,550,000
14,850,000
12,500,000
-
(2,450,000)
(500,000)
-
(1,500,000)
(2,800,000)
(200,000)
-
-
(2,800,000)
(200,000)
(200,000)
(300,000)
(800,000)
-
-
(800,000)
14,800,000
10,550,000
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
2010
$
2009
$
2010
$
2009
$
1,264,942
(226,534)
1,038,408
903,692
(211,726)
691,966
1,264,942
-
1,264,942
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
418,760
4,823,995
5,242,755
146,011
1,199,986
1,345,997
239,877
4,823,995
5,063,872
72,518
1,199,986
1,272,504
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.
48
Azure Minerals Limited - Financial Statements
Notes continued
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
Notes
Consolidated
Parent Entity
2010
$
2009
$
2010
$
2009
$
(2,058,066)
(3,355,760)
(634,229)
(4,703,491)
37,659
361,250
1,873
3,111
46,656
-
12,069
(26,005)
17,334
361,250
1,270
16,710
-
920
-
-
103,075
-
103,075
(26,051)
(452)
109,648
14,462
(115,460)
4,194
(325,147)
47,651
(24,149)
778
135,786
14,462
(9,891)
2,218
(239,819)
4,684,499
Net cash outflow from operating activities
(1,556,566)
(3,608,727)
(127,498)
(145,779)
(c) Non-cash financing and investing activities
There have been no non-cash financing and investing activities during the 2010 year (2009: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
82,176
-
-
(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
373,696
3,713,604
-
-
-
-
(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
4,087,300
4,746,521
-
-
122,837
184,255
44,509
-
122,837
184,255
44,509
-
307,092
44,509
307,092
44,509
The property lease is a non-cancellable lease with a three-year term ending 31 December 2012, with rent payable monthly in advance.
The lease allows for subletting of all leased areas and excess off space has been sub-let the related third parties as disclosed in Note
24(d).
(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
413,765
-
413,765
390,500
390,500
781,000
413,765
-
413,765
-
-
-
49
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
Prior to year end Azure entered into an option agreement to sell the company’s 100%-owned Tabisco project (“Option”) to TSX Venture
Exchange listed StoneShield Capital Corp (TSX-V: STS). To acquire the Option, which will be open for six months, StoneShield was to
issue Azure with 100,000 StoneShield shares, subject to receiving TSX-V approval for the transaction. Since year end TSX-V approval was
received and Azure has been issued with 100,000 shares in Stoneshield Capital Corp.
No other matter or circumstance has arisen since the end of the financial year which significantly affected or may significantly affect the
operations of the group, the results of those operations, or the state of affairs of the group in future financial years
22. LOSS PER SHARE
(a) Reconciliation of earnings to profit or loss
Net loss
Loss used in calculating basic loss per share
(b) Weighted average number of ordinary shares
outstanding during the year used in calculating
basic loss per share
Weighted average number of ordinary shares used in
calculating basic loss per share
2010
$
2009
$
(2,058,066)
(2,058,066)
(3,355,760)
(3,355,760)
CONSOLIDATED
Number of
shares
2010
Number of
shares
2009
238,152,785 175,080,909
(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
Audit (WA) Pty Ltd or associated entities for:
Tax compliance services
Other
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
2010
$
2009
$
2010
$
2009
$
11,110
592
37,018
48,670
12,008
-
37,200
49,208
11,110
592
37,018
48,670
12,008
-
37,200
49,208
Consolidated
Parent Entity
2010
$
447,375
37,240
361,250
845,865
2009
$
581,587
112,221
-
693,808
2010
$
447,755
37,240
361,250
845,865
2009
$
581,587
112,221
-
693,808
(b) Shares issued on exercise of compensation options
There were no shares issued on exercise of compensation options during the year.
50
Azure Minerals Limited – Financial Statements
Notes continued
24. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont’d)
(c) Option holdings of key management personnel
2010
Balance at
beginning of
year
1 July 2009
Granted as
Remuneration
Options
Exercised
Options
Lapsed
Balance at end
of year
30 June 2010
Vested at 30 June 2010
Vested &
Exercisable
Unvested
Directors
Wolf Gerhard Martinick
Anthony Paul Rovira
John Walter Saleeba
Executives
Brett Dickson
Total
2009
1,000,000
5,500,000
800,000
2,000,000
5,000,000
2,000,000
2,400,000
3,500,000
9,700,000
12,500,000
-
-
-
-
-
(200,000)
(4,000,000)
(800,000)
2,800,000
6,500,000
2,000,000
2,800,000
6,500,000
2,000,000
(2,400,000)
3,500,000
3,500,000
7,400,000
14,800,000
14,800,000
-
-
-
-
-
Balance at
beginning of
year
1 July 2008
Granted as
Remuneration
Options
Exercised
Options
Lapsed
Balance at end
of year
30 June 2009
Vested at 30 June 2009
Unvested
Vested &
Exercisable
Directors
Wolf Gerhard Martinick
Anthony Paul Rovira
John Walter Saleeba
Executives
Brett Dickson
Patrick Manouge
- Resigned 31 March 2009
Total
1,000,000
6,500,000
1,000,000
2,400,000
1,700,000
12,600,000
-
-
-
-
-
-
(d) Shareholdings of key management personnel
-
-
-
-
-
-
-
(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
-
-
-
-
-
-
Balance
1 July
Ord
Granted
Ord
On Exercise
of Options
Ord
Net Change
Other
Ord
Balance
30 June
Balance
Indirectly Held
Ord
Ord
2010
Directors
Wolf G Martinick
Anthony Paul Rovira
John Walter Saleeba
Executives
Brett Dickson
Total
1,100,000
2,982,000
1,050,000
274,000
5,406,000
-
-
-
-
-
-
-
-
-
-
440,000
218,000
1,619,600
(162,000)
2,115,600
1,540,000
3,200,000
2,669,600
112,000
7,521,600
-
1,880,000
2,669,600
40,000
4,589,600
51
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
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
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
2010
$
-
-
-
-
-
2009
$
-
-
-
-
-
2010
$
8,850,744
1,953,157
-
(4,636,848)
6,167,053
2009
$
4,676,062
4,180,786
-
(4,636,848)
4,220,000
It is the intention of each subsidiary to repay outstanding loans through the successful exploitation or sale of its mineral assets. During
2009 market conditions deteriorated 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.
(d) Other Related Transactions
The Company has entered into a sub-lease agreement on normal commercial terms with Ezenet Limited, a company of which Wolf
Martinick is a director and Brett Dickson is Company Secretary. During the year Ezenet Limited paid sub-lease fees totalling $4,800
(2009: Nil).
The Company has also entered into a sub-lease agreement on normal commercial terms with Rox Resources Limited, a company of
which Brett Dickson is Company Secretary. During the year Rox Resources Limited paid sub-lease fees totalling $59,010 (2009: Nil).
52
Azure Minerals Limited - Financial Statements
Notes continued
26.
INTERESTS IN JOINT VENTURES
The company has interests in the following joint ventures:
Joint Venture
(a)
JOGMEC
Activities
Copper
Interest
100%
Carrying Value $
NIL
Under the joint venture agreement JOGMEC may earn a 51% interest in the La Tortuga and Los Nidos projects by spending US$3
million by 31 March 2012. At 30 June 2010 JOGMEC had spend approximately US$1,266,982 (2009: US$656,938).
(b) OZ Minerals
Copper
100%
NIL
The Group has entered into a joint venture with OZ Minerals Limited (OZ Minerals) covering the San Eduardo projects Pursuant to
the agreement OZ Minerals may earn a 51% interest in the projects by spending US$3 million. OZ Minerals may earn a further 19%
interest by spending a further US$10 million. At 30 June 2010 OZ Minerals had spend approximately US$83,253 (2009: Nil)
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 – 2010
31 Jan ‘11
6 Dec ‘06
31 Jan ‘12
6 Dec ‘06
31 Jan ‘13
6 Dec ‘06
30 Nov ‘09
6 Dec ‘06
30 Nov ‘09
3 Aug ‘07
17.5
25.0
35.0
15.0
15.0
Weighted average exercise price
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
3.74
3.64
3.45
0.93
14.3
-
-
-
6.81
6.60
6.47
3.74
3.64
3.45
3.03
2.82
0.93
14.3
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Lapsed
during the
year
Number
-
-
-
1,200,000
1,250,000
2,450,000
$0.150
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
-
-
1,500,000
$0.258
-
-
-
-
-
-
500,000
500,000
500,000
-
-
1,200,000
1,250,000
3,950,000
$0.191
500,000
500,000
500,000
-
-
1,500,000
$0.258
-
-
-
-
-
-
500,000
500,000
500,000
-
-
1,200,000
1,250,000
3,950,000
$0.191
53
Azure Minerals Limited - Financial Statements
Notes continued
27. SHARE-BASED PAYMENTS (cont’d)
No options were exercised during the periods covered by the above tables. During the 2010 financial year 50,000 options were forfeited due to
employees leaving the Group and not exercising their options with 90 days of their resignation date and 2,400,000 lapsed (2009: 2,900,000 and
Nil).
The weighted average remaining contractual life of share options outstanding at the end of the period was 1.59 years (2008: 2.58 years).
Fair value of options granted.
Options are granted for no consideration. No options were granted pursuant to the Plan during the 2010 or 2009 financial years.
(b) Directors and executive options
Set out below are summaries of Directors options granted.
Grant Date
Expiry Date
Exercise
Price
(cents)
Value per
option at
grant date
(cents)
Balance at
the start of
the year
Number
Granted
during
the year
Number
Exercised
during the
year
Number
Lapsed
during the
year
Number
Balance at
end of the year
Number
Vested and
exercisable at
end of the year
Number
Consolidated and parent entity – 2010
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
30 Nov ‘12
9 Dec ‘09
25.0
25.0
25.0
25.0
25.0
8.8
Weighted average exercise price
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
-
-
8.2
10.2
11.7
2.9
-
-
-
8.2
10.2
11.7
2,800,000
2,800,000
200,000
400,000
400,000
-
6,600,000
$0.25
-
-
-
-
-
12,500,000
12,500,000
$0.088
-
-
-
-
-
-
-
-
2,800,000
2,800,000
200,000
-
-
-
-
$0.25
-
-
-
400,000
400,000
12,500,000
13,300,000
$0.098
-
-
-
400,000
400,000
12,500,000
13,300,000
$0.098
1,400,000
2,800,000
2,800,000
200,000
400,000
400,000
8,000,000
$0.25
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$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
-
2,800,000
2,800,000
200,000
400,000
400,000
6,600,000
$0.25
The weighted average remaining contractual life of share options outstanding at the end of the period was 2.3 years (2009: 1.5 years).
Fair value of director options granted.
Options are granted for no consideration. No options were granted during the 2009 financial year. During the 2010 financial year the weighted
average fair value of the options granted was 2.9 cents. The price was calculated by using the Binominal Option valuation methodology applying
the following inputs:
Weighted average exercise price
Weighted average life of the option
Weighted average underlying share price
Expected share price volatility
Risk free interest rate
2010
8.8 cents
3 years
5.0 cents
110%
4.83%
2009
-
-
-
-
-
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 and executives
Consolidated
Parent Entity
2010
$
361,250
2009
$
-
2010
$
361,250
2009
$
-
54
Azure Minerals Limited - Financial Statements
Directors' Declaration
The directors of the company declare that:
(1)
(a)
(b)
(2)
(3)
(4)
(5)
The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:
complying with Accounting Standards and the Corporations Regulations 2001; and
giving a true and fair view of the consolidated entity’s as at 30 June 2010 and of its performance for the year ended on that date.
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 13 to 15 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 of the Corporations Act 2001.
The Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with
International Financial Reporting Standards.
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, 29 September 2010
55
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF AZURE MINERALS LIMITED
Report on the Financial Report
We have audited the accompanying financial report of Azure Minerals Limited, which comprises the
statement of financial position as at 30 June 2010, and the statement of comprehensive income,
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 company and the entities it controlled at the year’s end
or from time to time during the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the
financial report in accordance with Australian Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing
and maintaining internal controls relevant to the preparation and fair presentation of the financial
report that is free from material misstatement, whether due to fraud or error; selecting and
applying appropriate accounting policies; and making accounting estimates that are reasonable in
the circumstances. In Note 1, the directors also state, in accordance with Accounting Standard AASB
101 Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. 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.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
56
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
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.
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
(ii)
(b)
2010 and of their performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 14 of the directors’ report for the year
ended 30 June 2010. 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 2010, complies
with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Glyn O’Brien
Director
Perth, Western Australia
Dated this 29th day of September 2010
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
57
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
29 September 2010
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 2010, 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 Audit (WA) Pty Ltd
Perth, Western Australia
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
58
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 9 September 2010.
(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
Tempo Capital Pty Ltd
Yandal Investments Pty Ltd
Welas Pty Ltd
Investec Bank (Australia) Ltd
ANZ Nominees Limited
Poluru Pty Ltd
Mr Peter Murray Nicholas
Mr Kim Robinson
Dr Lyndsay George McDonald Gordon
Novacarta Pty Ltd
Fleurbow Pty Ltd
Stadjoy Pty Ltd
Mr David Alistair Cadwallader
Alchemy Securities Pty Ltd
Mr Robert Hastings Smythe
Mr David Alistair Cadwallader
Mr Richard Eric James + Mrs Margaret Anne James
Mr Kevin Chan
Vanwhile Pty Ltd
Dr Wolf Gerhard Martinick
Ordinary shares
Number of holders Number of shares
88
216
676
1,670
532
3,182
1048
10,004
792,926
6,041,857
69,085,465
267,287,414
343,217,666
7,596,920
Listed ordinary shares
Number of shares
36,643,428
29,152,200
6,530,000
5,600,000
5,186,237
2,900,000
2,500,000
2,500,000
2,232,833
2,103,000
2,067,140
2,038,400
2,011,200
2,000,000
2,000,000
1,750,000
1,730,000
1,636,625
1,568,000
1,540,000
113,689,063
Percentage of
ordinary shares
10.68
8.49
1.90
1.63
1.51
0.84
0.73
0.73
0.65
0.61
0.60
0.59
0.59
0.58
0.58
0.51
0.50
0.48
0.46
0.45
33.12
(c) Substantial shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations Act 2001
are:
Tempo Capital Pty Ltd
Yandal Investments Pty Ltd
(d) Voting rights
All ordinary shares (whether fully paid or not) carry one vote per share without restriction.
59
Number of Shares
36,643,428
29,152,200
(e) Schedule of interests in mining tenements
Common Name
El Llano del Nogal
Tabisco
Pozo de Nacho
San Nicolas
Estacion Llano
Los Chinos
La Tortuga
Los Nidos
El Tecolote
San Juan
El Carnero
Las Viboras
San Eduardo
Promontorio
Llano del Nogal - Fraccion 1 All Minerals
Llano del Nogal - Fraccion 2 All Minerals
Llano del Nogal - Fraccion 3 All Minerals
All Minerals
Llano del Nogal 2
All Minerals
Llano del Nogal 3
All Minerals
Tabisco - Fraccion 2
All Minerals
Tabisco 2 - Fraccion 1
All Minerals
Tabisco 2 - Fraccion 2
All Minerals
Pozo de Nacho
All Minerals
Pozo de Nacho 2 - Fracc. 1
All Minerals
Pozo de Nacho 2 - Fracc. 2
All Minerals
Pozo de Nacho 3
All Minerals
San Nicolas
All Minerals
Estacion Llano
All Minerals
Los Chinos
All Minerals
La Tortuga
All Minerals
La Tortuga II
All Minerals
Los Nidos
All Minerals
Los Nidos II
All Minerals
El Tecolote
All Minerals
El Tecolte III
All Minerals
San Juan
All Minerals
San Juan II
All Minerals
Carnero
All Minerals
Viboras
All Minerals
San Eduardo
All Minerals
Hidalgo
All Minerals
Promontorio
All Minerals
El Magistral
All Minerals
Promontorio Regional
Tenement
224717
224718
224719
230186
232390
220663
229008
229009
222873
225057
225058
228563
225315
227017
229035
230422
233462
231051
234294
230771
234586
222952
230422
231326
232429
232387
14966
28521
218881
234447
Percentage held / earning
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%*
100%*
100%*
100%
60