Catalyst Metals Limited
Annual Report 2008

Plain-text annual report

ABN 54 118 912 495 ANNUAL REPORT AND FINANCIAL STATEMENTS YEAR ENDED 30 JUNE 2008 CONTENTS PAGE CORPORATE DIRECTORY CHAIRMAN’S REPORT DIRECTORS’ REPORT AUDITOR’S INDEPENDENCE DECLARATION BALANCE SHEET INCOME STATEMENT STATEMENT OF CHANGES IN EQUITY CASH FLOW STATEMENT NOTES TO THE FINANCIAL STATEMENTS DIRECTORS’ DECLARATION INDEPENDENT AUDIT REPORT CORPORATE GOVERANCE STATEMENT ASX ADDITIONAL INFORMATION 2 3 4 13 14 15 16 17 18 38 39 41 47 Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 1 CORPORATE DIRECTORY DIRECTORS AUDITORS Nathan McMahon (Non Executive Chairman) Bryan Dixon (Non Executive Director) Mark Thompson (Non Executive Director) RSM Bird Cameron Partners 8 St Georges Terrace Perth WA 6000 COMPANY SECRETARY Lisa Wynne REGISTERED OFFICE & PRINCIPAL PLACE OF BUSINESS 22 Oxford Close West Leederville, Western Australia 6007 Phone: +618 9381 4360 Facsimile: +618 9380 5911 Email: info@catalystmetals.com Website: www.catalystmetals.com SHARE REGISTRY Security Transfer Registrars 770 Canning Hwy Applecross WA 6153 Telephone: +618 9315 2333 Facsimile: +618 9315 2233 STOCK EXCHANGE LISTING The Company is listed on Australian Stock Exchange Limited Home Exchange – Perth ASX Codes: CYL CYLO Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 2 CHAIRMAN’S REPORT Dear Shareholders During the year Catalyst Metals Limited (ASX:CYL) completed exploration programs at the company’s Minnie Creek Project in Western Australia, acquired the highly prospective Everton Molybdenum Project in Victoria whilst also being successful in being admitted to the pre-qualifying short list for a potentially significant copper-molybdenum project in South America. Catalysts’ projects now contain both significant historic production and new discoveries of molybdenum, at a time when the steel-market metal is in growing demand and fetching high prices. Fieldwork continued at Minnie Creek Project including programs of diamond drilling, ground radiometric surveys and soil geochemistry analysis. Metallurgical test work is currently being undertaken and this will form the basis of future work. The initial focus for the forthcoming year will be the Everton Molybdenum Project located in the Lachlan fold belt of Victoria, approximately 25 kilometres east of Wangaratta. The programs included preliminary geological reconnaissance of the 127 km2 project, research and field visits to the historic mine workings, and preliminary assessment of the modern quarry. The extensive nature of the mineralisation is encouraging that a significant and large scale body of molybdenum may be present at Everton. Work to gain all statutory approvals for access has been completed, to allow drill testing as soon as possible. The Company has taken a firm view that the molybdenum market will remain strong and we believe that we will be positioned to capitalise on the current and predicted strong prices. During a difficult year in the equity markets we would like to express of thanks for the strong support of the Company by all staff, contractors and shareholders. Yours sincerely, Nathan McMahon Chairman 23 September 2008 Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 3 DIRECTORS’ REPORT The Directors present their report on Catalyst Metals Limited for the year ended 30 June 2008. DIRECTORS The names of directors in office at any time during or since the end of the year are: Nathan McMahon (Appointed 27 July 2007) Mark Thompson Bryan Dixon (Appointed 27 July 2007) Howard Dawson (Removed 27 July 2007) James Malone (Removed 27 July 2007) Malcolm Carson (Resigned 3 August 2007) Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. COMPANY SECRETARY Lisa Wynne was appointed as Company Secretary 1 August 2007 following the resignation of Michael Higginson. CORPORATE STRUCTURE Catalyst Metals Ltd is a company limited by shares that is incorporated and domiciled in Australia. Catalyst Metals Ltd had no controlled entities during the financial year. NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES The principal activity of the Company during the year was exploration of its Minnie Creek Project north east of Carnarvon in Western Australia. RESULTS OF OPERATIONS The operating loss after income tax of the Company for the year ended 30 June 2008 was $130,431 (2007: $168,832). The Company’s basic loss per share for the year was 0.6 cents (2007: 0.8 cents). DIVIDENDS No dividend has been paid during or is recommended for the financial year ended 30 June 2008. EMPLOYEES The Company employed 3 employees as at 30 June 2008 (2007: 4). REVIEW OF OPERATIONS During the December quarter, the Company received encouraging rock and soil geochemical results from Minnie Creek project. Four new prospect areas were tested by soil geochemical surveys in the Minnie Creek project area, along with further rock sampling and prospecting. Detailed multiple- channel ground radiometric surveys and rock sampling of the prospective uranium targets within Catalyst’ 1200km2 tenements was completed during the December quarter. During the June quarter, Company completed a 6 diamond core hole drill programme for 968m to confirm the grade and structural orientation of the Molybdenum mineralisation. Drilling intersected a broad contiguous zone of molybdenum mineralization up to 75 metres wide extending over 700 metres in length. Molybdenum mineralization remains open along strike to the southeast and at depth. Catalyst has commenced first stage metallurgical test work to determine the expected recoveries of molybdenum at Minnie Springs. In February 2008 the Company announced the acquisition of the Everton Molybdenum Project in Victoria. The project area of 127km2 includes the Everton Molybdenite Mine, one of the most significant historic producers in Australia. Catalyst has the right to farm in to up to 90% of the project by spending Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 4 DIRECTORS’ REPORT REVIEW OF OPERATIONS $250,000 on exploration over 2 years, including a minimum of 750m drilling to acquire a 51% interest in the Project. Catalyst can earn a further 39% of the Project by spending and additional $500,000 for the following 2 years. Catalyst has pre-qualified for the right to bid on a government-owned molybdenum-copper project in South America. The successful bidder at auction will acquire the right to treat an ongoing stream of metallurgical waste (slag) from Chilean mining smelters including the right to reprocess accumulated historic dups. Field visits, composite grab samples and preliminary petrography undertaken during June 2008. SIGNIFICANT CHANGES IN STATE OF AFFAIRS On 22 February 2008, the Company issued 210,637 as part consideration for the right to farm in to up to 90% of the Everton Project in Victoria. There were no other significant changes in the state of affairs of the Company during the financial year. FUTURE DEVELOPMENTS Likely future developments in the operations of the Company are referred to in the Chairman’s Report. Other than as referred to in this report, further information as to likely developments in the operations of the Company and expected results of those operations would, in the opinion of the Directors, be speculative and prejudicial to the interests of the Company and its shareholders. SUBSEQUENT EVENTS There has not been any matter or circumstance that has arisen since 30 June 2008, which has significantly affected, or may significantly affect the operations of the Company, the result of those operations, or the state of affairs of the Company in subsequent financial years. FINANCIAL POSITION The Company’s working capital, being current assets less current liabilities was $1,990,052 at 30 June 2008 (2007: $2,592,498). 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. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 5 DIRECTORS’ REPORT INFORMATION ON DIRECTORS Nathan McMahon (Non Executive Chairman – Appointed 27 July 2007) Mr. McMahon has provided corporate and management advice to the mining industry for approximately 14 years to in excess of 20 public listed mining companies. Mr. McMahon has specialised in native title negotiations, joint venture negotiations and project acquisition due diligence. He is a director of several unlisted mining and exploration companies with interests in platinum group elements, base metals, industrial minerals and diamond exploration. Qualifications: Bachelor of Commerce Directorships: Cazaly Resources Limited Bannerman Resources Limited Universal Coal PLC (formerly South China Resources PLC) Hodges Resources Limited Former Directorships: Graynic Metals Limited (From 2005 to 2006) Northern Mining Limited (From 2005 to 2006) Special Responsibilities: On-going corporate and management advice, capital raisings, investor relations, risk identification, corporate governance. Member of the Audit Committee. Interests in shares and options: 900,000 ordinary shares Mark Thompson (Executive Director) Mr Thompson has worked extensively throughout Africa, USA, South America and Australia on mineral exploration, resource development and palaeontologic projects since 1989. Mr Thompson has worked for companies including Western Mining Corp, Equatorial Mining Ltd, Panorama Resources Ltd and Centenary International Mining Ltd. He has successfully vendored the lead properties for other companies such as Image Resources NL and Meteoric Resources Ltd. Prior to returning to full time exploration in 2005, Mr Thompson was based in America to help explore and develop palaeontology resources in Montana and Wyoming. Mr Thompson is a member of the Society of Vertebrate Palaeontology, the National Speakers Association of Australia and an Editorial Board member/author of the Encyclopaedia of Anthropology. He brings to Catalyst a strong technical as well as practical experience in the exploration for mineral deposits. Memberships: Member of the Australian Institute of Geoscientists Member of the Society of Economic Geology Special Responsibilities: Mr Thompson’s role encompasses the management of all mineral exploration, growth identification and operational functions of the company. His responsibilities also include health, safety and environment management. Directorships: None Interests in shares and options: 1,265,250 ordinary shares 1,000,000 Class A incentive shares 1,000,000 Class B incentive shares 545,000 options over ordinary shares 1,050,000 unlisted options over ordinary shares Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 6 DIRECTORS’ REPORT Bryan Dixon (Non-Executive Director - Appointed 27 July 2007) (Company Secretary – Resigned 1 February 2007) Mr Dixon has substantial experience in the mining sector and in the management of public and listed companies. Previously, Mr Dixon has been employed by KPMG, Resolute Samantha Limited, Société Générale and Archipelago Resources Plc. Mr Dixon is a Chartered Accountant and brings additional project development, project acquisition, financing and corporate skills to the Company. Qualifications: Bachelor of Commerce Chartered Accountant Associate Member of the Chartered Secretaries Of Australia Special Responsibilities: Ongoing business development, capital raisings, investor relations, risk identification, corporate governance and financial management of the Company. Mr Dixon is Chairman of the Audit Committee. Directorships: Hodges Resources Ltd – Non Executive Director Blackham Resources Ltd – Managing Director Interests in shares and options: Nil Lisa Wynne (Company Secretary) Ms Wynne has a Bachelor of Commerce and is a Chartered Accountant with 7 years experience working with listed entities in senior financial roles responsible for management and financial reporting, taxation, and ensuring continuous disclosure and compliance. Lisa presently works with a number of emerging ASX and TSX listed resource companies and specialises in financial and company secretarial transaction and corporate work. DIRECTORS’ MEETINGS The number of meetings attended by each of the Directors of the Company during the financial year was: Board Meetings Audit Committee Meetings Number held and entitled to attend Number Attended Number held and entitled to attend Number Attended Mark Thompson Bryan Dixon Nathan McMahon Malcolm Carson Jim Malone Howard Dawson 10 7 7 4 3 3 8 7 4 3 3 3 - 2 2 - - - - 2 2 - - - Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 7 DIRECTORS’ REPORT ENVIRONMENTAL ISSUES The Company’s operations are subject to State and Federal laws and regulation concerning the environment. Details of the Company performance in relation to environmental regulation are as follows: The Company’s exploration activities are subject to the Western Australian and Victorian Mining Acts. The Company has a policy of complying with or exceeding its environmental performance obligations. The Board believes that the Company has adequate systems in place for the management of its environmental requirements. 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 financial year under review. PROCEEDINGS ON BEHALF OF THE COMPANY No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. SHARE OPTIONS As at the date of this report, there were 12,202,500 unissued ordinary shares under option. No person entitled to exercise any option referred to above have or had, by virtue of the option, a right to participate in any share issue of any other body corporate. REMUNERATION REPORT This report details the type and amount of remuneration for each director of Catalyst Metals Limited, and for the executives receiving the highest remuneration. The information provided in this report includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures. These disclosures have been transferred from the financial report and have been audited. Remuneration Policy It is the company’s objective to provide maximum stakeholder benefit from the retention of a high quality board by remunerating directors fairly and appropriately with reference to relevant employment market conditions. To assist in achieving the objective the Board links the nature and amount of executive directors’ emoluments to the company’s financial and operational performance. The expected outcomes of this remuneration structure are: • • Retention and Motivation of Directors Performance rewards to allow Directors to share the rewards of the success of Catalyst Metals Limited The remuneration of an executive director will be decided by the Board. In determining competitive remuneration rates the Committee reviews local and international trends among comparative companies and the industry generally. It also examines terms and conditions for the employee share option plan. The maximum remuneration of non-executive Directors is the subject of Shareholder resolution in accordance with the Company’s Constitution, and the Corporations Act 2001 as applicable. The appointment of non-executive Director remuneration within that maximum will be made by the Board having regard to the inputs and value of the Company of the respective contributions by each non- executive Director. The Board may award additional remuneration to non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company. There is no scheme to provide retirement benefits, other than statutory superannuation, to non- executive directors. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 8 DIRECTORS’ REPORT REMUNERATION REPORT All equity based remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are valued using the Black-Scholes methodology. Performance Based Remuneration The issue of options to directors in accordance with the Company’s employee share option plan to encourage the alignment of personal and shareholder returns. The intention of this program is to align the objectives of directors/executives with that of the business and shareholders. In addition all directors and executives are encouraged to hold shares in the Company. The Company has not paid bonuses to directors or executives to date. Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration The remuneration policy has been tailored to maximise the commonality of goals between shareholders and directors and executives. The method applied in achieving this aim to date being the issue of options to directors to encourage the alignment of personal and shareholder interests. The company believes this policy will be the most effective in increasing shareholder wealth. Details of Remuneration for Year Ended 30 June 2008 Details of the remuneration for each director and the key management personnel (as defined in AASB 124 Related Party Disclosures) of the Company during the year are set out in the following tables: The key management personnel of the Company includes the directors as per page 4 above and the following executive officer who’s remuneration must be disclosed under the Corporations Act 2001 as they are one of the 5 highest remunerated executives: • 2008 Name Lisa Wynne – Company Secretary (Appointed 1 August 2007) Short-term employment benefits Cash salary and fees Other Post- employment benefits Superannuation Share-based payments Options Total Non-executive directors B Dixon (i) N McMahon J Malone M Carson (from 26 May 2006 to 3 Aug 2007) H Dawson (i) Executive directors M Thompson Total key management personnel compensation Other company officers L Wynne 30,694 16,175 2,750 - 6,875 3,058 14,437 (ii) 55,000 73,276 (iii) 114,552 87,713 - 14,474 (iv) - - - - - 275 - 275 - - - - - - - - - - 30,694 16,175 2,750 - 6,875 17,770 128,276 202,540 14,474 (i) Mr Dixon’s directors fees were paid to Warrior Strategic Pty Ltd, a company in which Mr Dixon has a relevant interest. (ii) HG & L Dawson Discretionary Trust, a trust in which Mr Dawson has a relevant interest, was paid $14,437 for the provision of geological consulting services. (iii) Red Dog Prospecting Pty Ltd was paid $73,276 for the provision of Mineral Exploration services. (iv) Mr Thomspon is a director of Red Dog Prospecting Pty Ltd. Sila Consulting Pty Ltd was paid $14,474 for the provision of accounting, compliance and company secretarial services. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 9 DIRECTORS’ REPORT REMUNERATION REORT 2007 Name Non-executive directors J Malone M Carson (from 26 May 2006 to 3 Aug 2007) H Dawson Executive directors M Thompson Total key management personnel compensation Other company officers B Dixon (resigned 1 Feb 2007) L Wynne (Appointed 11 October 2006, resigned 6 June 2007) Short-term employment benefits Cash salary and fees Post- employment benefits Superannuation Options Share-based payments Total 31,950 - 36,696 119,761 188,407 36,528 4,592 1,638 - 3,302 5,367 10,307 - - - - - 82,609 82,609 - - 33,588 - 39,998 207,737 281,323 36,528 4,592 Employment Contracts of Directors and Senior Executives There were no formal contracts finalised as at the completion of the June 2008 financial year for Non- executive Directors. Directors are paid under the terms agreed to by a directors resolution at rates detailed below: Mr McMahon to receive director’s fees of $40,000 per annum inclusive of superannuation requirements. Mr Thompson to receive director’s fees of $30,000 per annum inclusive of superannuation requirements plus a daily rate for services on top of his director’s duties. Mr Dixon to receive director’s fees of $30,000 per annum inclusive of superannuation requirements. The Company Secretary has a monthly agreement on ordinary commercial terms. SHARE-BASED COMPENSATION Options over shares in the Company are granted under the Catalyst Metals Limited Employee Incentive Scheme (Scheme). The purpose of the Scheme is to give employees, directors, executive officers and consultants of the Company an opportunity, in the form of options, to subscribe for ordinary shares in the Company. The Directors consider the Scheme will enable the Company to retain and attract skilled and experienced employees, board members and executive officers and provide them with the motivation to make the Company more successful. The terms and conditions of each grant of options affecting remuneration in the previous, this or future reporting years are as follows: Grant date 16 July 2006 16 July 2006 16 July 2006 Date vested and exercisable 16 July 2006 16 July 2006 16 July 2006 Expiry date Exercise price 16 July 2009 16 July 2009 16 July 2009 $0.25 $0.30 $0.35 Value per option at grant date $0.088 $0.078 $0.070 Details of options over ordinary shares in the Company provided as remuneration to each director and each of the key management personnel of the Company are set out below. When exercisable, each option is convertible into one ordinary share of Catalyst Metals Limited. Further information on the options is set out in note 12 to the financial statements. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 10 DIRECTORS’ REPORT REMUNERATION REORT Number of options granted during the year Number of options vested during the year Name Mark Thompson 2008 - 2007 1,050,000 2008 - 2007 1,050,000 The assessed fair value at grant date of options granted is allocated equally over the period from grant date to vesting date, and the amount is included in the remuneration tables above. Fair values at grant date are determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the options. The model inputs for options granted during the year ended 30 June 2007 included: a) options are granted for no consideration and vest immediately b) exercise price $0.25, $0.30 and $0.35 c) grant date: 16 July 2007 d) expiry date: 16 July 2009 e) share price at grant date: $0.20 f) risk-free interest rate: 5.5% No options were issued during the 2008 financial period. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Directors and Officers have indemnities in place and in July 2008 the Company put in place insurance policies for Directors and Officers insurance. NON-AUDIT SERVICES The board of directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons: • all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board. • There were no fees for non-audit services were paid/payable to the external auditors during the year ended 30 June 2008: AUDITOR’S INDEPENDENCE DECLARATION The lead auditor’s independence declaration for the year ended 30 June 2008 has been received and immediately follows the Directors’ Report. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 11 BALANCE SHEET As at 30 June 2008 Current Assets Cash and cash equivalents Trade and other receivables Other financial assets Total Current Assets Non-Current Assets Property, plant and equipment Exploration and evaluation expenditure Total Non-Current Assets Note 6 7 8 2008 $ 2007 $ 2,028,119 2,647,576 14,179 13,973 3,160 - 2,045,458 2,661,549 9 10 15,933 13,102 1,086,761 523,077 1,102,694 536,179 TOTAL ASSETS 3,148,152 3,197,728 Current Liabilities Trade and other payables TOTAL LIABILITIES NET ASSETS Equity Contributed equity Share-based payments reserve Accumulated losses 11 55,406 69,051 55,406 69,051 3,092,746 3,128,677 12 13 13 3,356,710 3,262,210 82,609 82,609 (346,573) (216,142) TOTAL EQUITY 3,092,746 3,128,677 The above balance sheet should be read in conjunction with the accompanying notes. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 14 INCOME STATEMENT For the Year Ended 30 June 2008 Revenue 2 163,589 171,684 Note 2008 $ 2007 $ Occupancy costs Professional fees Administration costs Exploration costs Personnel Corporate Other Loss before income tax expense Income tax expense Net loss attributable to members of Company Basic loss per share (cents per share) Diluted loss per share (cents per share) (27,096) (94,815) (99,784) (8,853) (31,271) (67,777) (74,414) (11,781) (43,616) (153,706) (18,846) (1,010) - (1,567) 3 5 4 4 (130,431) (168,832) - - (130,431) (168,832) (0.6 cents) (0.8 cents) (0.6 cents) (0.8 cents) The above income statement should be read in conjunction with the accompanying notes. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 15 STATEMENT OF CHANGES IN EQUITY For the Year Ended 30 June 2008 Issued Capital Accumulated $ losses $ Share-based payments reserve $ Total $ Balance at 30 June 2006 173,000 (47,310) Loss for the year Share-based payments Issue of shares Issue of options Share issue costs Balance at 30 June 2007 Loss for the year Issue of shares Options exercised during the year Balance at 30 June 2008 - - 3,200,000 115,000 (225,790) 3,262,210 - 25,000 69,500 (168,832) - - - - - - 82,609 - - - (216,142) 82,609 (130,431) - - - - - 125,690 (168,832) 82,609 3,200,000 115,000 (225,790) 3,128,677 (130,431) 25,000 69,500 3,356,710 (346,573) 82,609 3,092,746 The above statement of changes in equity should be read in conjunction with the accompanying notes. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 16 CASH FLOW STATEMENT For the Year Ended 30 June 2008 Cash Flows from Operating Activities Payments for exploration and evaluation Payments to suppliers, contractors and employees Interest received Note 2008 $ 2007 $ (510,798) (421,617) (296,240) (202,498) 167,149 165,684 Net cash flows used in operating activities 14 (639,889) (458,431) Cash Flows from Investing Activities Payments for property, plant and equipment Payments for exploration property Payments for financial assets Proceeds from disposal of property, plant and equipment (9,128) (15,625) (60,900) (100,000) (4,040) - - 1,090 Net cash flows used in investing activities (74,068) (114,535) Cash Flows from Financing Activities Proceeds from issue of shares and other equity securities 94,500 3,315,000 Share issue expenses - (190,796) Net cash flows from financing activities 94,500 3,124,204 Net increase cash and cash equivalents (619,457) 2,551,238 Cash and cash equivalents at the beginning of the financial year 2,647,576 96,338 Cash and cash equivalents at the end of the financial year 6 2,028,119 2,647,576 The above cash flow statement should be read in conjunction with the accompanying notes. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 17 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (a) Statement of Compliance The financial report is a general purpose financial report that has been prepared in accordance with Accounting Standards, including Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’). Compliance with the A-IFRS ensures that the financial statements and notes of the Company comply with International Financial Reporting Standards (‘IFRS’). The financial report of Catalyst Metals Limited was authorised for issue in accordance with a resolution of the Director’s on 23 September 2008. (b) Basis of preparation The financial report covers Catalyst Metals Limited, which is a listed public company, incorporated and domiciled in Australia. The financial report has been prepared on an accruals basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based on the fair values of the consideration given in exchange for assets. The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated. (c) Revenue Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. (d) Impairment At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset's fair value less costs to sell and value in use, is compared to the asset's carrying value. Any excess of the asset's carrying value over its recoverable amount is expensed to the income statement. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. (e) Cash and cash equivalents For the purpose of the cash flow statement, cash includes cash on hand and at call deposits with banks or financial institutions and investments in money market instruments with less than 30 days to maturity. (f) Trade and other receivables Trade receivables, loans, and other receivables are recorded at amortised cost less impairment. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 18 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (g) Financial instruments Recognition and Initial Measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Trade date accounting is adopted for financial assets that are delivered within timeframes established by marketplace convention. Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below. Derecognition Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity is no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expire. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss. Classification and Subsequent Measurement (i) Financial assets at fair value through profit or loss Financial assets classified as held for trading are included in the category ‘financial assets at fair value through profit or loss’. Financial assets are classified as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are recognised in profit or loss. (ii) Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified as held-to-maturity when the Company has the positive intention and ability to hold to maturity. Investments intended to be held for an undefined period are not included in this classification. Investments that are intended to be held-to-maturity, such as bonds, are subsequently measured at amortised cost. This cost is computed as the amount initially recognised minus principal repayments, plus or minus the cumulative amortisation using the effective interest method of any difference between the initially recognised amount and the maturity amount. This calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums and discounts. For investments carried at amortised cost, gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process. (iii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 19 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (g) Financial instruments (cont.) (iv) Available-for-sale investments Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any of the three preceding categories. After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss. Fair value Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models. Impairment At each reporting date, the group assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement. (h) Exploration and Evaluation Expenditure Exploration and evaluation expenditure is accumulated separately for each area of interest. Such expenditure comprises net direct costs and an appropriate portion of related overhead expenditure. Each area of interest is limited to a size related to a known or probable mineral resource capable of supporting a mining operation. incurred by or on behalf of the Company Exploration expenditure for each area of interest is written off as incurred, except that it may be carried forward provided that one of the following conditions is met: • such costs are expected to be recouped through successful development and exploitation of the area of interest or, alternatively, by its sale; or • exploration activities in an area of interest have not, at balance date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. The Company performs impairment testing when facts and circumstances suggest the carrying amount has been impaired. If it was determined that the asset was impaired it would be immediately written off to the income statement. Expenditure is not carried forward in respect of any area of interest unless the Company’s right of tenure to that area of interest is current. Expenditures incurred before the Company has obtained legal rights to explore a specific area is expensed as incurred. Amortisation is not charged on areas under development, pending commencement of production. (i) Trade and other payables These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. (j) Provisions 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. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 20 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (k) Employee entitlements 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 liabilities, are used. Employee benefit expenses and revenues arising in respect of the following categories: • wages and salaries, non-monetary benefits, annual leave, long service leave and other leave benefits, and • other types of employee benefits are recognised against profits on a net basis in their respective categories. (l) Income tax Current tax Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the year. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior years is recognised as a liability (or asset) to the extent that it is unpaid (or refundable). Deferred tax Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items. In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable amounts will be available against which deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business combination) which affects neither taxable income nor accounting profit. Furthermore, a deferred tax liability is not recognised in relation to taxable temporary differences arising from goodwill. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year(s) when the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the company intends to settle its current tax assets and liabilities on a net basis. Current and deferred tax for the year Current and deferred tax is recognised as an expense or income in the income statement, except when it relates to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity, or where it arises from the initial accounting for a business combination, in which case it is taken into account in the determination of goodwill or excess. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 21 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (m) Intangibles Research and development Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably. Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project. (n) Equity based payments The Company determines the fair value of options issued to employees as remuneration and recognises the expense in the income statement. This policy is not limited to options and also extends to other forms of equity based remuneration. Fair value is measured using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period. (o) Earnings per share Basic earnings per share is determined by dividing the profit from ordinary activities after related income tax expense by the weighted average number of ordinary shares outstanding during the financial year. (p) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST except: • where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables are stated with the amount of GST included. • The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing and financial activities, which are recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 22 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (cont’d) (q) Critical accounting estimates and judgments The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company. Significant judgments, estimates and assumptions made by management in the preparation of these financial statements are outlined below:. Exploration and evaluation The Company's accounting policy for exploration and evaluation is set out in note 1(h). The application of this policy necessarily requires management to make certain estimates and assumptions as to future events and circumstances, in particular the assessment of whether economic quantities of reserves may be found. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised expenditure under the Group’s policy, management concludes that the Company is unlikely to recover the expenditure by future exploitation or sale, then the relevant capitalised amount will be written off to the income statement. Impairment of assets In determining the recoverable amount of assets, in the absence of quoted market prices, estimations are made regarding the present value of future cash flows using asset-specific discount rates. For intangible assets, expected future cash flow estimation is based on, future production profiles, commodity prices and costs. (r) New Accounting Standards and Interpretations Issued But Not Yet Effective Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2008 reporting periods. The economic entity’s assessment of the impact of these new standards and interpretations is set out below. The following Australian Accounting Standards and Interpretations that have recently been issued but are not yet effective have not been adopted by the Company for the annual reporting period ending 30 June 2008. Those that are relevant to the company are set out below: (i) AASB 8 Operating Segments and AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 AASB 8 and AASB 2007-3 are effective for annual reporting periods commencing on or after 1 January 2009. AASB 8 will result in a significant change in the approach to segment reporting, as it requires adoption of a ‘management approach’ to reporting on financial performance. The information being reported will be based on what the key decision makers use internally for evaluating segment performance and deciding how to allocate resources to operating segments. The economic entity has not yet decided when to adopt AASB 8. Application of AASB 8 may result in different segments, segment results and different types of information being reported in the segment note of the financial report. However, at this stage, it is not expected to affect any of the amounts recognised in the financial statements . (ii) Revised AASB 101 Presentation of Financial Statements and AASB 2007-8 Amendments to Australian Accounting Standards arising from AASB 101 A revised AASB 101 was issued in September 2007 and is applicable for annual reporting periods beginning on or after 1 January 2009. It requires the presentation of a statement of comprehensive income and makes changes to the statement of changes in equity, but will not affect any of the amounts recognised in the financial statements. If an entity has made a prior period adjustment or has reclassified items in the financial statements, it will need to disclose a third balance sheet (statement of financial position), this one being as at the beginning of the comparative period. The economic entity intends to apply the revised standard from 1 July 2009. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 23 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 2. Revenue Interest received 3. Expenses Loss before income tax includes the following specific expenses: Directors fees Audit fees Exploration written off (refer note 1(h)) Depreciation Share-based payments Project costs Net loss on disposal of property, plant & equipment (Gain)/loss on fair value of other financial assets 4. Earnings per Share 2008 $ 2007 $ 163,589 171,684 71,357 12,750 8,853 6,297 - 68,679 - 880 28,199 16,750 11,781 1,214 82,609 - 218 - 2008 No. of Shares 2007 No. of Shares Weighted average number of ordinary shares for basic and diluted earnings per share 23,406,711 22,210,989 (i) (ii) Diluted earnings per share are calculated after classifying all options on issue remaining unconverted at 30 June 2008 as potential ordinary shares. As at 30 June 2008, the Company has on issue 12,202,500 options over unissued capital and has incurred a net loss. As the notional exercise prices of these options is greater than the current market price of the shares, they have not been included in the calculations of the diluted earnings per share as they are anti-dilutive for all periods presented. There have been no transactions involving ordinary shares or potential ordinary shares that would significantly change the number of ordinary shares or potential ordinary shares outstanding between the reporting date and the date of completion of these financial statements. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 24 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 5. Income tax Loss before tax Prima facie tax on operating loss before income tax at 30% Tax effect of: - non deductible expenses - share based payments - deductible capital raising expenditure - deductible temporary differences Deferred tax asset not brought to account at balance date as realisation of the benefit is not probable Income tax attributable to operating loss Unrecognised deferred tax balances The directors estimate that the potential deferred tax benefits arising from tax losses not brought to account at balance date is approximately: Tax losses Timing differences 2008 $ 2007 $ (130,431) (168,832) (39,129) (50,650) 124 - - (13,547) 869 24,783 (13,547) (155,123) 52,552 193,669 - - 355,700 1,008,324 1,364,024 180,526 512,347 692,873 Net unrecognised deferred tax asset at 30% 409,602 207,862 The potential deferred tax asset, arising from tax losses and temporary differences (as disclosed above), has not been recognised as an asset because recovery of tax losses and temporary differences is not considered probable. The potential deferred tax asset will only be obtained if: - - - the relevant Company derives future assessable income of a nature and an amount sufficient to enable the benefit to be realised; the relevant Company continues to comply with the conditions for deductibility imposed by tax legislation; and no changes in tax legislation adversely affect the relevant Company in realising the benefit from the deduction for the losses. 6. Cash and cash equivalents Cash at bank 7. Trade and other receivables 2008 $ 2007 $ 2,028,119 2,647,576 Sundry debtors 14,179 13,973 Fair value and credit risk Due to the short term nature of the receivables, their carrying value is assumed to approximate their fair value. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 25 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 2008 $ 2007 $ 8. Financial assets at fair value through profit or loss Current Shares - in listed corporation - at fair value 3,160 - Listed shares at fair value The fair value of listed investments has been determined directly by reference to published price quotations in an active market. Changes in fair values of financial assets at fair value through profit or loss are recorded in other income or other expense in the income statement. 9. Property, plant and equipment Year ended 30 June 2008 Opening net book amount 1 July 2007 Additions Disposals Depreciation charge Closing net book amount 30 June 2008 At 30 June 2008 Cost or fair value Accumulated depreciation Net book amount Computer equipment Furniture, fittings and equipment 3,072 3,710 - (1,642) 5,140 7,302 (2,162) 5,140 10,030 5,418 - (4,655) 10,793 15,997 (5,204) 10,793 Total $ 13,102 9,128 - (6,297) 15,933 23,299 (7,366) 15,933 10. Exploration and evaluation expenditure Opening balance Additions Exploration written off (refer note 1(h)) 2008 $ 523,077 572,537 (8,853) 2007 $ - 534,858 (11,781) Closing balance 1,086,761 523,077 Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 26 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 11. Trade and other payables Current Payables Trade creditors Accruals 2008 $ 2007 $ 16,512 38,894 55,406 18,809 50,242 69,051 Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value. Trade and other payables are non-interest bearing and normally settled on 30-day terms. 12. Contributed Equity (a) Share capital Ordinary shares Fully paid Incentive shares Class A Class B (b) Other equity securities Options – Listed Options - Unlisted 2008 Number 2008 $ 2007 Number 2007 $ (c) 23,558,141 3,249,407 23,000,003 3,151,432 4,000,000 4,000,000 4,000 4,000 4,000,000 4,000,000 4,000 4,000 31,558,141 3,257,407 31,000,003 3,159,432 (d) 11,152,500 1,050,000 99,303 11,500,000 102,778 - 1,050,000 - Total contributed equity 43,760,637 3,356,710 43,550,003 3,262,210 (c) Movements in Ordinary Shares Details Balance at beginning of year Issue of shares Exercise of options Transfer from option reserve Less: Transaction costs Balance at end of year (d) Movements in other equity securities Details Listed Options Issue price $’000 Number of Shares 23,000,003 210,637 347,500 $0.1187 $0.20 - - 3,151,432 25,000 69,500 3,475 - 23,558,141 3,249,407 Number of Shares Issue price $’000 Balance at beginning of 11,500,500 102,778 year Exercise of options Less: Transaction costs Balance at end of year (347,500) 0.01 (3,475) - 11,152,500 - 99,303 Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 27 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 12. Contributed Equity (cont’d) Details Unlisted Options Number of Shares Issue price $’000 Balance at beginning of 1,050,000 year Issued - - Balance at end of year 1,050,000 (e) Ordinary shares - - - On a show of hands, every member present in person or by proxy shall have one vote and, upon a poll, each share shall have one vote. (f) Incentive Shares Class A Incentive Shares • • • • The Class A Incentive shares are a separate class of shares that will be convertible into ordinary shares. They do no carry any voting rights in the company or rights to participate in new issues (whether bonus or rights) in the Company. Each incentive share will convert into one ordinary share upon the earlier of: (i) (ii) (iii) the volume weighted average price for 30 days of Catalyst Metals Limited ordinary shares exceeds $0.50 or; the Company directly or indirectly secures an asset with JORC measured, indicated and inferred resources exceeding 150,000 gold equivalent ounces; a takeover bid becoming unconditional; entering into and the Court approving a solvent scheme of arrangement or reconstruction which as the effect of changing the control of the Company. If the above do not occur, within 3 years from the date the Company’s ordinary shares are admitted to quotation of ASX, each 100,000 incentive shares will convert into one ordinary share (with any fractional entitlement being rounded up to the nearest whole full paid share. The incentive shares are unlisted and non transferable. Class B Incentive Shares • • • • The Class B Incentive shares are a separate class of shares that will be convertible into ordinary shares. They do no carry any voting rights in the company or rights to participate in new issues (whether bonus or rights) in the Company. Each incentive share will convert into one ordinary share upon the earlier of: (i) (ii) (iii) the volume weighted average price for 30 days of Catalyst Metals Limited ordinary shares exceeds $0.75 or; the Company directly or indirectly secures an asset with JORC measured, indicated and inferred resources exceeding 225,000 gold equivalent ounces; a takeover bid becoming unconditional; entering into and the Court approving a solvent scheme of arrangement or reconstruction which as the effect of changing the control of the Company; and conditional on the Minnie Creek Project being the main focus of the Company at the time of the (i), (ii) and (iii) above. If the above do not occur, within 3 years from the date the Company’s ordinary shares are admitted to quotation of ASX, each 100,000 incentive shares will convert into one ordinary share (with any fractional entitlement being rounded up to the nearest whole full paid share. The incentive shares are unlisted and non transferable. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 28 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 12. Contributed Equity (cont’d) (g) Options Listed Options The options entitle the holders to subscribe for fully paid ordinary shares in the Company and the Option may be exercised at any time until 31 December 2008 at an exercise price of twenty cents (20c) per Option exercised. The Options will lapse at 5.00pm WST on 31 December 2008. Unlisted Executive Options The options entitle the holders to subscribe for fully paid ordinary shares in the Company and the Option may be exercised at any time until 31 December 2008. The options were issued as three different series, with strike price of $0.25, $0.30 and $0.35 respectively. The Options will lapse at 5.00pm WST on 16 July 2009. (h) Capital risk management When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity. In order to maintain or adjust the capital structure, the entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, enter into joint ventures or sell assets. The entity does not have a defined share buy-back plan. No dividends were paid in 2008 and no dividends are expected to be paid in 2009. There is no current intention to incur debt funding on behalf of the Company as on-going exploration expenditure will be funded via cash reserves, equity or joint ventures with other companies. The Company is not subject to any externally imposed capital requirements. 2008 $ 2007 $ 13. Reserves & Retained Profits a) Reserves Share-based payments reserve Balance at the beginning of the year Share balance payments expense Balance at the end of the year 82,609 - 82,609 - 82,609 82,609 The share-based payments reserve records the value of share options issued by the Company. b) Retained losses Balance at the beginning of the year Loss for the year Balance at the end of the year Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 216,142 130,431 346,573 47,310 168,832 216,142 29 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 14. Notes to the Cash Flow Statement (a) Reconciliation of net cash used in operating activities to operating loss after income tax Operating loss after tax (130,431) (168,832) 2008 $ 2007 $ Add non cash items: Depreciation Net loss on disposal of non-current assets Share-based payments expense (Gain)/loss on fair value of other financial assets Exploration written off Changes in net assets and liabilities Increase in receivables Increase/(decrease) in payables Increase in exploration 6,297 - - 880 8,853 1,214 218 82,609 - - (206) (13,644) (511,638) (7,492) 56,929 (423,077) Net cash outflow from operating activities (639,889) (458,431) (b) Non-cash financing and investing activities The Company did not have any non-cash financing or investing activities during the year (2007: Nil) 15. Key Management Personnel Compensation (a) Directors and Specified Executives The names and positions held by key management personnel in office at any time during the year are: Directors N McMahon M Thompson B Dixon M Carson H Dawson J Malone Executives & Officers L Wynne M Higginson Non-Executive Chairman (Appointed 27 July 2007) Executive Director Non-Executive Director (Appointed 27 July 2007) Non-Executive Director (From 29 May 2007 to 3 August 2007) Non-Executive Chairman (From 21 March 2006 to 27 July 2007) Non-Executive Director (From 21 March 2006 to 27 July 2007) Company Secretary (Appointed 1 August 2007) Company Secretary (From 6 June 2007 to 1 August 2007) All of the above persons were also key management persons during the year ended 30 June 2008 except M Higginson. (b) Key management personnel remunerations Short-term employee benefits Post-employment benefits Share based payments Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 2008 216,739 275 - 217,014 2007 229,167 10,307 82,609 322,443 30 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 15. Key Management Personnel Compensation (cont’d) The company has applied the provisions of AASB 2008-4 Amendments to Australian Accounting Standard – Key Management Personnel Disclosures by Disclosing Entities, and has transferred the detailed remuneration disclosures to the directors’ report. The relevant information can be found in the remuneration report on pages 8 to 11. (c) Equity instrument disclosures relating to key management personnel Options provided as remuneration and shares issued on exercise of such options Details of options provided as remuneration and share issued on the exercise of such options, together with terms and conditions of the options, can be found in the remuneration report on pages 8 to 11 of the Directors’ Report. Option holdings The numbers of options over ordinary shares in the company held during the year by each director of the Company and other key management personnel, including their personally related parties, are set out below: Granted as compensation Exercised Other changes Balance at end of year Vested and exercisable - - - - - - - (220,000) - - 1,595,000 1,595,000 - - - - (457,500) (i) (395,000) (i) (10,000) (ii) - - - - - 9,375 - - - - - Other key management personnel On 27 July 2007, the shareholders voted to remove Messers Dawson and Malone from the board of the Company. On 3 August 2007, Mr Carson resigned from the board. (i) (ii) 2008 Directors M Thompson Bryan Dixon Nathan McMahon J Malone H Dawson M Carson Lisa Wynne (i) (ii) 2007 Directors M Thompson J Malone H Dawson M Carson Balance at beginning of year 1,595,000 220,000 457,500 395,000 10,000 9,375 Balance at beginning of year - - - - Other key management personnel Bryan Dixon (i) - Granted as compensation Exercised Other changes Balance at end of year Vested and exercisable 1,050,000 - - - - - - - - - - 545,000 457,500 395,000 10,000 - 1,595,000 1,595,000 457,500 395,000 10,000 457,500 395,000 10,000 220,000 220,000 220,000 (i) Mr Dixon resigned as Company Secretary of the Company on 1 February 2007. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 31 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 15. Key Management Personnel Compensation (cont’d) (iii) Shareholdings Ordinary Shares The numbers of ordinary shares in the company held during the financial year by each director and other key management personnel of the Company, including their personally related parties, are set out below. There were no shares granted during the year as compensation. 2008 Directors M Thompson Bryan Dixon Nathan McMahon M Carson H Dawson J Malone Balance at beginning of year 1,090,000 415,000 665,455 20,000 1,040,000 965,000 Other key management personnel Lisa Wynne - Purchased Other changes Balance at end of year 175,250 145,000 - (560,000) (iii) 1,001,098 (766,553) (iii) 1,265,250 - 900,000 - - - - (20,000) (ii) (1,040,000) (i) (965,000) (i) - - - - - (i) (ii) (iii) On 27 July 2007, the shareholders voted to remove Messers Dawson and Malone from the board of the Company. On 3 August 2007, Mr Carson resigned from the board. As disclosed in an ASX release on 29 April 2008, an involuntary sale of 1,326,553 ordinary shares in April 2008 pursuant to the (purported) exercise of rights by a creditor of Opes Prime Group Ltd. No consideration has been received by the Mr McMahon or Mr Dixon at this time. Mr McMahon and Mr Dixon are pursuing actions against the major financier of the Opes Prime Group Ltd. 2007 Directors H Dawson J Malone M Thompson M Carson Other key management personnel Bryan Dixon # Balance at beginning of year Received during the year on exercise of options Other changes Balance at end of year 1,040,000 915,000 1,000,000 - 415,000 - - - - - - 50,000 90,000 20,000 1,040,000 965,000 1,090,000 20,000 - 415,000 Incentive shares The numbers of incentive shares in the company held during the financial year by each personally related parties, are set out below: Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 32 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 15. Key Management Personnel Compensation (cont’d) (d) Equity instrument disclosures relating to key management personnel 2008 Directors M Thompson B Dixon N McMahon M Carson H Dawson J Malone Balance at beginning of year 1,000,000 - - - Class A Incentive Shares Class B Incentive Shares Other changes Balance at end of year Balance at beginning of year Other changes Balance at end of year - - - - 1,000,000 1,000,000 - - - - - - - - - - - - 1,000,000 - - - - - 600,000 (600,000) (i) 900,000 (900,000) (i) 600,000 (600,000) (i) 900,000 (900,000) (i) On 27 July 2007, the shareholders voted to remove Messers Dawson and Malone from the board of the Company. (i) 2007 Directors H Dawson J Malone M Thompson M Carson Class A Incentive Shares Class B Incentive Shares Balance at beginning of year Other changes Balance at end of year Balance at beginning of year Other changes Balance at end of year 600,000 900,000 1,000,000 - - - - - 600,000 900,000 600,000 900,000 1,000,000 1,000,000 - - - - - - 600,000 900,000 1,000,000 - (e) Loans to key management personnel Amounts payable to Directors and Director related entities at the end of the financial year, included in current liabilities 2008 $ 2007 $ - 2,063 (f) Other transactions with key management personnel Mr McMahon is a director and shareholder of Cazaly Resources Limited. Catalyst Metals Limited had an agreement based on normal commercial terms and conditions to reimburse for office rental and administration and overheads. Messers Dawson and Malone are directors and shareholders of Discovery Capital Limited. Catalyst Metals Limited had an agreement based on normal commercial terms and conditions to reimburse for office rental and exploration consulting services Messers Dawson and Malone are directors of Latin Gold Limited . Catalyst Metals Limited had an agreement based on normal commercial terms and conditions to reimburse for office and administrative expenses. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 33 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 15. Key Management Personnel Compensation (cont’d) Mr Thompson, is a related party of Red Dog Prospecting Pty Ltd. Catalyst Metals Limited has agreed to engage Red Dog Prospecting Pty Ltd based on normal commercial terms and conditions for the provision of exploration and development services and vehicle hire. Aggregate amounts of each of the above types of other transactions with key management personnel of Catalyst Metals Limited: Purchases Rent of office building Administrative and office overheads Exploration services and vehicle hire Sales Reimbursements for secretarial services 16. Related Party Disclosures Key Management Personnel 2008 $ 29,806 3,804 83,589 2007 $ 43,227 21,282 39,996 605 12,254 Red Dog Option and Joint Venture Agreement (Red Dog Agreement) Red Dog Prospecting Pty Ltd, a company which Mr Thompson is both a director and shareholder, entered into an Option and Joint Venture Agreement with Catalyst on 25 May 2006. Red Dog granted Catalyst an option to purchase a 90% interest in Tenements E09/1187, E09/1174 and E09/1291 for a purchase price of $100,000 (Option). Catalyst exercised the Option in July 2006. On the exercise of the Option by Catalyst, a joint venture was established between the parties (with Catalyst having a participating share of 90% and Red Dog having a participating share of 10%) for the purposes of prospecting, exploring and, if so decided by the parties, mining of marketable minerals and other commodities. Catalyst will be required to sole fund all exploration costs up to completion of a feasibility study. Catalyst will be Manager of the joint venture and, whilst it is solely funding exploration costs, it will have conduct of the joint venture operations as it sees fit. 17. Equity-based payments The Company has entered into an Employee Share Option Plan that allows for share options to be granted to eligible employees and officers of the Company. The number of share options that can be issued under the plan cannot exceed 5% of the total number of shares on issue. The terms and conditions of the share option issued under the plan are at the discretion of the Board however, the maximum term of the share option is five years. No options were granted during the year. 18. Auditors’ Remuneration Amounts received or due and receivable by the auditors for: Auditing accounts Other services 2008 $ 2007 $ 12,750 16,750 - - 12,750 16,750 Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 34 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 19. Commitments There were no outstanding commitments, which are not disclosed in the financial statements as at 30 June 2008 other than: (a) Tenement commitments No later than 1 year Later than 1 year but not later than 5 years 2008 $ 2007 $ 310,000 312,586 - 310,000 310,000 - 312,586 312,586 20. Financial Instruments Notes Floating Interest Rate $ 1 year or less Over 1-5 years $ $ Non interest bearing $ Total $ 2008 Financial assets Cash and cash equivalents Trade and other receivables Other financial assets Total financial assets Financial liabilities Trade and other payables Total financial liabilities 6 7 11 7.30% 2,033,629 - - - - 2,033,629 - - Net financial assets/(liabilities) 2,033,629 2007 Financial assets Cash and cash equivalents Trade and other receivables Total financial assets Financial liabilities Trade and other payables Total financial liabilities 6.21% 2,600,000 - - 2,600,000 6 7 11 - - Net financial /(liabilities) 2,600,000 - - - - - - - - - - - - - (5,510) 2,028,119 14,179 14,179 3,160 3,160 11,829 2,045,458 55,406 55,406 55,406 55,406 (43,577) 1,990,052 47,576 2,647,576 13,973 13,973 61,549 2,661,549 69,051 69,051 69,051 69,051 (7,502) 2,592,498 Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 35 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 20. Financial Instruments (cont’d) Reconciliation of net financial assets to net assets Net Financial Assets Property, plant & equipment Exploration expenditure Net Assets 2008 $ 2007 $ 1,990,052 2,592,498 15,933 1,086,761 13,102 523,077 3,092,746 3,128,677 The Company’s principal financial instruments comprise cash, short-term deposits and financial assets at fair value through profit or loss. The main purpose of these financial instruments is to finance the company’s operations. The company has various other financial assets and liabilities such as sundry receivables, and trade payables, which arise directly from its operations. The main risks arising from the company’s financial instruments are cash flow interest rate risk and equity price risk. Other minor risks are either summarised below and Note 13 with respect to capital risk management. The Board reviews and agrees policies for managing each of these risks. Interest rate risks The company’s exposure to the risks of changes in market interest rates relates primarily to the company’s short-term deposits with a floating interest rate. These financial assets with variable rates expose the company to cash flow interest rate risk. All other financial assets and liabilities in the form of receivables and payables are non-interest bearing. The company does not engage in any hedging or derivative transactions to manage interest rate risk. Interest rate sensitivity At 30 June 2008, if interest rates had changed by 100 basis points during the entire year with all other variables held constant, profit for the year and equity would have been $16,359 lower/higher, mainly as a result of lower/higher interest income from cash and cash equivalents. A sensitivity of 100 basis points has been selected as this is considered reasonably possible in the current economic environment. Based on the sensitivity analysis only interest revenue from variable rate deposits and cash balances are impacted resulting in a decrease or increase in overall income. Credit risk The maximum exposure to credit risk at balance date is the carrying amount (net of provision of doubtful debts) of those assets as disclosed in the balance sheet and notes to the financial statements. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The Company’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded are spread amongst approved counterparties. Liquidity risk The responsibility for liquidity risk management rests with the Board of Directors. The Company manages liquidity risk by maintaining sufficient cash or credit facilities to meet the operating requirements of the business and investing excess funds in highly liquid short term investments. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 36 NOTES TO THE FINANCIAL STATEMENTS For The Year Ended 30 June 2008 21. Segment Information The Company operates predominantly in one business segment and in one geographical location. The operations of the Company consist of mineral exploration, within Australia. 22. Subsequent Events There has not been any matter or circumstance that has arisen since 30 June 2008, which has significantly affected, or may significantly affect the operations of the Company, the result of those financial years. operations, or state of affairs of the Company subsequent the in 23. Contingent Liabilities and Contingent Assets The Company does not have any contingent liabilities or contingent assets at 30 June 2008. Catalyst Metals Limited ABN 54 118 912 495 Annual Report 2008 37 CORPORATE GOVERNANCE The Board of Directors of Catalyst Metals Limited is responsible for corporate governance of the Company. The Board guides and monitors the business and affairs of Catalyst Metals Limited on behalf of the shareholders by whom they are elected and to whom they are accountable. For further information on corporate governance policies adopted by Catalyst Metals Limited, refer to our website: www.catalystmetals.com/corporate_governance. The Corporate Governance practices of Catalyst were in place throughout the reporting period and have complied with each of the 10 Essential ASX Corporate Governance Principles and the corresponding Best Practice Recommendations. Board Objectives The Board will develop strategies for the Company, review strategic objectives, and monitor the performance against those objectives. The overall goals of the corporate governance process are to: • • • drive shareholders value; assure a prudential and ethical base to the Company’s conduct and activities; and ensure compliance with the Company’s legal and regulatory obligations. Principle 1: Lay solid foundations for management and oversight The board has adopted a Charter that sets out the roles and responsibilities of the board. This may be viewed at www.catalystmetals.com.au. The Charter includes, amongst other things that the Board will: • • • • • • developing initiatives for profit and assets growth; reviewing the corporate, commercial and financial performance of the Company on a regular basis; acting on behalf of, and being accountable to, the Shareholders; identifying business risks and implementing actions to manage those risks; and developing and effecting management and corporate systems to assure quality reviewing the Company’s systems of risk management and internal compliance and control, codes of conduct and legal compliance • ensuring the Company and its officers act legally, ethically and responsibly in all matters ensuring that policies and procedures are in place consistent with the Company’s objectives, and The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in Board discussions on a fully informed basis. Principle 2: Structure the board to add value Composition The board currently consists of three non-executive directors, including the chairman. Details of their experience, qualifications and committee memberships are set out below. All directors were in office at the date of this report: Nathan McMahon – Chairman Independent non-executive Chairman since July 2007 Term in office – 14 months Mr. McMahon has provided corporate and management advise to the mining industry for approximately 14 years to in excess of 20 public listed mining companies. Mr. McMahon has specialised in native title negotiations, joint venture negotiations and project acquisition due diligence. He is a director of several unlisted mining and exploration companies with interests in platinum group elements, base metals, industrial minerals and diamond exploration. 41 CORPORATE GOVERNANCE Mark Thompson (Non Executive Director) Non-executive director since May 2006 Term in office – 28 months Mr Thompson has worked extensively throughout Africa, USA, South America and Australia on mineral exploration, resource development and palaeontologic projects since 1989. Mr Thompson has worked for companies including Western Mining Corp, Equatorial Mining Ltd, Panorama Resources Ltd and Centenary International Mining Ltd. He has successfully vendored the lead properties for other companies such as Image Resources NL and Meteoric Resources Ltd. Prior to returning to full time exploration in 2005, Mr Thompson was based in America to help explore and develop palaeontology resources in Montana and Wyoming. Mr Thompson is a member of the Society of Vertebrate Palaeontology, the National Speakers Association of Australia and an Editorial Board member/author of the Encyclopaedia of Anthropology. He brings to Catalyst a strong technical as well as practical experience in the exploration for mineral deposits. Bryan Dixon Independent Non-executive director since July 2007 Term in office – 14 months Mr Dixon has substantial experience in the mining sector and in the management of public and listed companies. Previously, Mr Dixon has been employed by KPMG, Resolute Samantha Limited, Société Générale and Archipelago Resources Plc. Mr Dixon is a Chartered Accountant and brings additional project development, project acquisition, financing and corporate skills to the Company. Bryan is a member of Company Secretaries Australia and has been Company Secretary with a number of resources companies. Appointment Election of Board members is substantially the province of the Shareholders in general meeting. However, the Company commits to the following principles: • • the Board to comprise of Directors with a blend of skills, experience and attributes appropriate for the Company and its business; the principal criterion for the appointment of new Directors being their ability to add value to the Company and its business. Board Independence The Board has accepted the ASX Corporate Governance Councils definition of an Independent Director contained in their report titled “The Principles of Good Corporate Governance and Best Practice Recommendations – March 2003”. Mr McMahon and Mr Dixon have been assessed as Independent Directors. In reaching that determination, the Board has taken into account: • • The specific disclosures made in accordance with the Corporations Act, but each such director in respect of any material contract or relationship • That no such director is, or is associated directly with, a substantial shareholder of the company • Where applicable, the related party dealings referable to each such Director, noting that those dealings are not material under accounting standar5ds. Full details of related party dealings are set out in the notes to the financial statements That no such non-executive Director has within the last three years been employed in an executive capacity by the company That no such non-executive Director is , or is associate with a supplier or customer of the company which is material under accounting standards That such non-executive Director’s are free from any interest and any business or other relationship which could, or could reasonable be perceived to, materially interfere with the director’s ability to act in the best interests of the Company. • • 42 CORPORATE GOVERNANCE Under the accounting standards, a matter is considered to be material if it is equal to or greater than 10% of the appropriate base amount. Mr Thompson does not meet the Company’s criteria for independence. Mr Thompson is an executive and has a material contractual relationship in the form of a 10% free-carry joint venture agreement. Mr Thompson’s experience and knowledge of the Company make his contribution to the Board such that it is appropriate for him to remain on the Board. Given the size of the company and the industry in which is operates, the current Board structure is considered to best serve the Company in meeting its objectives, given its small capitalisation, limited resources and existing operations. The composition of the Board is reviewed on an annual basis to ensure that the Board has the appropriate mix of expertise and experience. Independent professional advice There are procedures in place, as agreed by the board, to enable directors to seek independent professional advice on issues arising in the course of their duties at the company’s expense. Remuneration and Nomination Committee A Remuneration and Nomination Committee Charter has been established by the Board to assess and make recommendations regarding membership of the Board, including proposed new appointments. Given the size and scope of the operations of the Company, the full board has assumed those responsibilities that are ordinarily assigned to a remuneration and nomination committee. Where appropriate, independent consultants are engaged to identify possible new candidates for the Board. Nomination Arrangements Where a vacancy is considered to exist, the Committee will select an appropriate candidate through consultation with external parties and consideration of the needs of shareholders and the Company. Such appointments will be referred to shareholders for re-election at the next annual general meeting. All Directors, except the Managing Director, are subject to re-election by shareholders at least every three years. When a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the services of a new director with particular skills, the Board will determine the selection criteria for the position based on the skills deemed necessary for the Board to best carry out its responsibilities. The Board will then appoint the most suitable candidate (assuming one is available) who must stand for election at the next annual general meeting. Performance During the reporting year the Company did not have a formal process for evaluation of Directors and Executives due to their only being three in total. The Board undertakes an annual review of its own performance with external advice as appropriate. Principle 3: Promote ethical and responsible decision making Code of Conduct The Directors, officers and employees of the Company are required to conduct themselves in accordance with at www.catalystmetals.com.au/corporate_governance. Company’s Conduct viewed which Code can the be of Share Trading Policy The Company also has policies concerning trading in the Company’s securities by directors, officers and employees. This policy can be viewed at www.catalystmetals.com.au/corporate_governance. 43 CORPORATE GOVERNANCE Principle 4: Safeguard integrity of financial reporting Audit Committee The Board has established an audit committee in August 2007, which operates under a charter of the Board and can be viewed at www.catalystmetals.com.au/corporate_governance. Given the size and scope of the operations of the Company, the full board has assumed those responsibilities that are ordinarily assigned to a audit committee. It is the Board’s responsibility to ensure that an effective internal control framework exists within the Company. This includes both internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial and non information. The members of the audit committee at the end of the year and date of this report were: B Dixon (Chairman) N McMahon L Wynne (Secretary) For details on member qualifications and attendance at meetings of the Audit Committee held during the year refer to the Directors’ Report. Appointment of auditor The shareholders in a general meeting are responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors. Principle 5: Make timely and balanced disclosure The Board has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to the ASX as well as communicating with the ASX. The Company has a Continuous Disclosure at www.catalystmetals.com.au/corporate_governance. Company’s available website viewing Policy the for on Principle 6: Respect the rights of shareholders The Board of Catalyst is committed to open and effective communication, ensuring all shareholders is informed of all significant development concerning the Company. The Company has in place an effective Shareholder at Communications www.catalystmetals.com.au/corporate_governance. viewed Policy. policy can This be Principle 7: Recognise and manage risk Identification and Management of Risk The Board’s Charter clearly establishes that it is responsible for ensuring there is a good sound system for overseeing and managing risk. Due to the size and scale of operations, risk management issues are considered by the Board as a whole. The Board’s collective experience will enable accurate identification of the principal risks which may affect the Company’s business. Management of these risks will be discussed by the Board at periodic (at least annual) strategic planning meetings. In addition, key operational risks and their management, will be recurring items for deliberation at Board meetings. A copy of the Company’s risk management policy can be viewed at www.catalystmetals.com.au/corporate_governance. 44 CORPORATE GOVERNANCE The Board has received assurance from the Financial Controller and a Mr Thompson that the declarations made in accordance with section 295A of the Corporation Act 2001 are: 1. 2. founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board the Company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects. Principle 8: Encourage enhanced performance Performance During the reporting year the Company did not conduct a formal process for evaluation of Directors and Executives due to their only being three in total. The Board undertakes an annual review of its own performance with external advice as appropriate. Principle 9: Remunerate fairly and responsibly Remuneration Arrangements A Remuneration and Nomination Committee Charter has been established by the Board to assess and make recommendations regarding membership of the Board, including proposed new appointments. Given the size and scope of the operations of the Company, the full board has assumed those responsibilities that are ordinarily assigned to a remuneration and nomination committee. Given the size and scope of the operations of the Company, the full board has assumed those responsibilities that are ordinarily assigned to a remuneration and nomination committee. Where appropriate, independent consultants are engaged to appropriate levels of remuneration . It is the company’s objective to provide maximum stakeholder benefit from the retention of a high quality board by remunerating directors fairly and appropriately with reference to relevant employment market conditions. To assist in achieving the objective the Board links the nature and amount of executive directors’ emoluments to the company’s financial and operational performance. The expected outcomes of this remuneration structure are: • • Retention and motivation of Directors Performance rewards to allow Directors to share the rewards of the success of Catalyst Metals Limited The remuneration of an executive director will be decided by the Remuneration and Nomination Committee. In determining competitive remuneration rates the Committee reviews local and international trends among comparative companies and the industry generally. It also examines terms and conditions for the employee share option plan. The maximum remuneration of non-executive Directors is the subject of shareholder resolution in accordance with the Company’s Constitution, and the Corporations Act 2001 as applicable. The appointment of non- executive Director remuneration within that maximum will be made by the Board having regard to the inputs and value of the Company of the respective contributions by each non-executive Director. The Board may award additional remuneration to non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company. There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive directors. All remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are valued using the Black-Scholes methodology. 45 CORPORATE GOVERNANCE Principle 10: Recognise the legitimate interest of stakeholders Code of conduct The Board is committed to the establishment and maintenance of appropriate ethical standards to underpin the Company’s operations and corporate practices. The Directors, officers and employees of the Company are required to conduct themselves in accordance with the Company’s Code of Conduct which can be viewed at www.catalystmetals.com.au/corporate_governance. Corporate Governance Disclosures – Explanation of departure During the financial year Catalyst Metals has complied with each of the 10 Essential Corporate Governance Principles and the corresponding Best Practice Recommendations. Explanation of departure During the financial year Catalyst has complied with each of the 10 Essential ASX Corporate Governance Principles and the corresponding Best Practice Recommendations, other than in relation to the matters specified below: ASX Best Practice Recommendation Notification Departure of Explanation of Departure The 2.4 board should establish a nomination committee The Company not has a established formal nomination committee The Board continues to strive to meet the principles of Good Corporate Governance and Best Practice Recommendations published by the ASX or other such principles and guidance as the Board may consider appropriate form time to time, however the Board also recognises that complying the ASX Corporate Governance Council Recommendation 2.4.is impractical given the size of the company and the industry in which it operates. The Directors believe, it is sufficient for the full board to assume those responsibilities that are ordinarily assigned to a remuneration and nomination committee. The 9.2 board should establish a remuneration The Company not has established a formal remuneration committee The Board continues to strive to meet the principles of Good Corporate Governance and Best Practice Recommendations published by the ASX or other such principles and guidance as the Board may consider appropriate form time to time, however the Board also recognises that complying the ASX Corporate Governance Council Recommendation 9.2.is impractical given the size of the company and the industry in which it operates. The Directors believe, it is sufficient for the full board to assume those responsibilities that are ordinarily assigned to a committee. remuneration nomination and 46 ASX ADDITIONAL INFORMATION Additional information required by Australian Stock Exchange Limited and not shown elsewhere in this Annual Report is as follows. The information is made up to 19 September 2008. DISTRIBUTION OF SHAREHOLDERS Analysis of numbers of equity security holders by size of holding Class of Equity Security Holders Fully Paid Ordinary Shares Options 1-1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over Holding less than a marketable parcel 4 53 74 220 38 389 60 7 74 49 128 21 279 - TWENTY LARGEST SHAREHOLDERS The names of the twenty largest quoted equity security holders are: Ordinary Shares 1 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Equity West Ltd Robin Scrimgeour Lateral Minerals PL Howard G Dawson Jodie Marwick Kilkenny Enterprises Pty Ltd Widerange Corp Pty Ltd Sandy Louise Edwards Kingsreef Pty Ltd Chepalix Pty Ltd Kingsreef Pty Ltd Reads IT Pty Ltd 13. Michael Tilley 14. Mark James Thompson 15. 16. 17. 18. 19. 20. David John Sharp Skink Resources Pty Ltd Katie McMahon Bruce Myles Lagbail Pty Ltd Joenderbee Inv Pty Ltd Number Held 1,403,500 1,403,500 1,000,000 990,000 935,000 915,000 534,545 500,000 400,000 450,000 400,000 387,000 293,000 265,250 255,000 237,000 224,184 210,637 206,000 200,000 Options % Held Number Held % Held 5.96 5.96 4.24 4.20 3.97 3.88 2.27 2.12 2.12 1.91 1.70 1.64 1.24 1.13 1.08 1.01 0.95 0.89 0.87 0.85 M&K Korkidas Pty Ltd Lateral Minerals Pty Ltd Robert Colefax Asail Investmnets Pty ltd Marc Boudames Kilkenny Enterprises Pty Ltd Luke Charles Anderson Howard Dawson Reads IT Pty Ltd Kilkenny Enterprises Pty Ltd Sandy Louise Edwards Greyhound Investments Pty Ltd GV &WA Butcher Millan Mirkovic Luke Charles Anderson Jacqueline Mason David John Sharp Hung Piew Kueh Deshon Enterprises Pty Ltd Craig Aylmore 956,956 500,000 500,000 500,000 467,620 457,500 450,000 395,000 268,750 230,000 228,000 221,144 186,000 170,000 150,000 130,000 127,500 116,000 110,000 106,000 8.58 4.48 4.48 4.48 4.19 4.10 4.03 3.54 2.41 2.06 2.04 1.98 1.67 1.52 1.34 1.17 1.14 1.04 0.99 0.95 11,309,616 47.99 6,270,470 56.19 47 ASX ADDITIONAL INFORMATION (continued) UNQUOTED EQUITY SECURITIES Class A Incentive Shares Class B Incentive Shares Options exercisable at 25 cents on or before 16 July 2009 Options exercisable at 30 cents on or before 16 July 2009 Options exercisable at 35 cents on or before 16 July 2009 * All unquoted options above are held by Mr Mark Thompson SUBSTANTIAL SHAREHOLDERS Ordinary shareholders Number Percentage Fully Paid Robin Scrimgeour VOTING RIGHTS 2.655.500 11.27 Number on issue Number of holders 4,000,000 4,000,000 350,000 350,000 350,000 23 24 1* 1* 1* a) b) c) d) Ordinary Shares On a show of hands, every member present in person or by proxy shall have one vote and, upon a poll, each share shall have one vote. Class A Incentive Shares No voting rights Class B Incentive Shares No voting rights Options No voting rights TAX STATUS The Company is treated as a public company for taxation purposes. FRANKING CREDITS The Company has nil franking credits. TENEMENT SCHEDULE Project Eudamullah Minnie Creek Michelles Well Bluebush Well Koonana Hill Black Range Tenements E09/1174 E09/1187 E09/1291 E09/1303 E09/1438 E09/1501 Interest 90% 90% 90% 90% 90% Application Competent Persons Statement The information in the directors report on pages 4 and 5 of this report that relates to Exploration Results is based on information compiled by independent consultant Mr.Julian Bartlett, B.Sc (Hons) Geol. M.Sc. (Econ.Geol.), RP.Geo, who has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity to which he is undertaking, and consents to the inclusion in the public release of the matters based on their information in the form and context in which it appears. 48 

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