ACN 009 468 099
Corporate Directory
Directors
Mr D M Murcia B.Juris, LL.B
Non-Executive Chairman
Mr D P Gordon B.Bus, CA, FFin, ACIS, MAICD
Managing Director
Mr P E Freund FAusIMM(CP), F.AIM
Executive Director
Mr K G McKay BSc (Hons), FAusIMM, MAICD
Non-Executive Director
Mr G T Clifford B.Bus, FCPA, FCIS
Non-Executive Director
Mr R G Hill B.Juris, LLB., B.Sc. (Hons), FFin
Non-Executive Director
Secretary
Mr G A James B.Bus, CA, ACIS
Share Register
Advanced Share Registry Limited
150 Stirling Highway
Nedlands WA 6009
(08) 9389 8033
Auditors
KPMG
Chartered Accountants
235 St Georges Terrace
Perth WA 6000
Bankers
National Australia Bank
1232 Hay Street
West Perth WA 6005
Stock Exchange Listing
Centaurus Metals Limited shares are
listed on the Australian Securities Exchange
Ordinary fully paid shares (ASX code: CTM)
Principal Registered Office in Australia
Level 1, 16 Ord Street
West Perth WA 6005
(PO Box 975, West Perth WA 6872)
Telephone
Facsimile
Email
Website
(08) 9420 4000
(08) 9420 4040
info@centaurus.com.au
www.centaurus.com.au
Contents
IFC
Corporate Directory
2
4
18
43
44
45
46
48
49
93
94
96
98
Chairman’s Letter
Operations Review
Directors’ Report
Auditor’s Independence Declaration
Statement of Comprehensive Income
Statement of Financial Position
Statement of Changes in Equity
Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Shareholder Information
Tenement Information
Statistics
$839 billion
Amount of the Brazilian
government stimulus package.
$24 billion
Amount of money steel producers
have publicly committed to their
Brazilian expansion packages.
380 million tonnes
Brazil’s annual iron ore
production.
Brazil
CHAIRMAN’S LETTER
Dear shareholder,
I am pleased to present Centaurus
Metals’ 2010 Annual Report and
to report on what has been a year
of exciting change and activity,
highlighted by the successful merger
of Glengarry Resources Limited and
Centaurus Resources Limited in
January 2010.
Following that transaction, we have further strength-
ened our successful teams in both Brazil and in
Australia, building on our strong track record of in-
tegrity and excellence established in both countries.
Our tenement position in south-eastern Brazil’s “Iron
Quadrangle” region has also been enhanced, with
a number of projects now reaching the final stages
of resource development in readiness for feasibility
studies and, ultimately, production.
Brazil – which is home to the world’s largest iron
ore miner, Vale – is renowned as having some of the
highest quality iron products in the global market
place. Perhaps not as well known is the fact that
Brazil also hosts a large and growing domestic
steel industry, particularly in the “Iron Quadrangle”
in the State of Minas Gerais – where our portfolio
of emerging iron ore projects is located. As Brazil
continues to implement a massive US$800 billion
infrastructure program over the coming decade,
and hosts large one-off events such as the FIFA
Soccer World Cup in 2014 and the Olympics in 2016,
domestic demand for steel is predicted to continue
to grow significantly.
Centaurus has implemented a dual development
strategy, initially to establish a substantial domestic
iron ore business supplying Brazil’s growing steel-
making industry followed in the longer term by the
establishment of a long-term international iron
ore export business to capitalise on the high level
of international demand for high-quality Brazilian
ores. The first part of this development strategy is
to achieve annualised production within Brazil of at
least 3 million tonnes per annum (mtpa) of iron ore
grading +63% Fe by the end of 2013. The significant
progress achieved over the past 12 months means
that we are well on track to achieve this goal.
Following an aggressive exploration program over
our lead projects at Jambreiro, Passabem and
Itambé, each of these projects is now well placed to
be able to contribute strongly towards our domestic
production goals and generate strong cash flows for
Centaurus.
Internationally, the rapidly declining availability and
quality of high grade ‘Direct Shipping Ore’ lump has
driven steel producers to far greater dependence on
prepared feeds, especially sinter. This, together with
the worldwide push to reduce carbon footprints, is
driving steel producers to demand higher quality
raw materials. There is little doubt that the highest
grade and lowest silica sinter feed will come from
Brazil, which hosts what are probably the largest
known resources in the world.
The second component of the Company’s business
plan is to develop a resource base capable of pro-
ducing 12-15mtpa of 64-69% Fe product for a mini-
mum project life of 10 years, and work is underway
to identify such a project.
To assist with the achievement of our strategic
objectives, we announced a number of important
corporate developments subsequent to the end of
the financial year. In September 2010, we announced
the appointment of experienced Australian iron ore
executive, Mr George Jones, as strategic consultant
to the Company, and I would like to welcome him
to the Centaurus team. George is one of Australia’s
most accomplished mining executives, with more
than 35 years experience in the mining, banking and
finance industries. His knowledge and experience is
certain to be of value as we move towards production
from our extensive iron ore portfolio in Brazil.
Most recently, we completed a significant capital
raising through a share placement that received
strong institutional support, and a Share Purchase
Plan, which was made available to all shareholders.
The $18.2 million raised has placed us in a strong
financial position to achieve our stated objectives
going forward.
The 12 months ahead promises to be a very exciting
time for Centaurus. We are well funded following the
recent capital raising, and several of our projects
are about to be upgraded with new JORC resources
ahead of the commencement of feasibility studies.
We are firmly on track to achieve our objective of
becoming a significant iron ore producer in Brazil’s
“Iron Quadrangle”.
2
In conclusion, I would like to thank my fellow Directors,
the senior management team and all staff and
employees of Centaurus – all of whom have worked
tirelessly over the past 12 months to achieve our goals.
A lot of hard work lies ahead, but with a portfolio of
advanced projects moving rapidly towards production,
strong cash reserves and an experienced and dedicated
team of professionals, I look forward to the coming
year with great enthusiasm and confidence.
Didier Murcia
Chairman B.Juris, LLB
Highlights
Building on our strong
track record of integrity
and excellence.
3
OPERATIONS REVIEW
Review
The 2009/10 financial year has certainly been one of
two very different halves. During the first half, the
Company – then still named Glengarry Resources –
devoted its activities towards finding an asset that
would allow it to progress to a production scenario
within an 18-24 month period. Consistent with this
objective, in November 2009 Glengarry announced
a proposed merger, by way of an off-market takeo-
ver, with ASX-listed iron ore company Centaurus
Resources Limited to create a well-funded interna-
tional resource company.
The merger of Glengarry and Centaurus allowed
shareholders of both companies to benefit from the
combination of Glengarry’s strong cash position and
Board with Centaurus’ emerging portfolio of near-
term production iron ore assets located in the world-
class Iron Quadrangle region of south-eastern Brazil
– one of the world’s major iron ore provinces.
By early 2010 over 95% of Centaurus Resources
shareholders had accepted the takeover offer from
Glengarry, and the name of the Company was
subsequently changed to Centaurus Metals Limited
to reflect its new direction and focus.
Following completion of the merger and with a
strengthened Board and management team with
extensive iron ore experience, Centaurus Metals has
quickly gone about developing and implementing its
Brazilian Iron Ore strategy. Since the merger was
completed, the Company has undertaken drilling
campaigns at several of its Iron Ore Projects,
announced a significant resource upgrade at the
Passabem Iron Ore Project, exercised its option
over the Jambreiro Iron Ore Project, and recently
completed a major capital raising.
Developing a Brazilian
Iron Ore Business
Centaurus Metals has a dual development strategy
in Brazil to build a substantial new international iron
ore production company, making it one of the few
ASX-listed companies offering direct exposure to the
rapid development and growth of Brazil.
With a population of approximately 200 million,
Brazil is becoming the key manufacturing centre for
all South American countries. This manufacturing
base, together with the growth in construction ahead
of the 2014 FIFA Soccer World Cup and 2016 Olympic
Games, supports the International Monetary Fund’s
recent forecast that Brazil’s economy is anticipated
to grow at 7.5% in 2010 and 4.1% in 2011.
As recently as late March 2010, the Brazilian Gov-
ernment announced a US$830 billion infrastructure
investment plan that should be carried out by the
President Lula’s chosen successor, Cabinet Chief
Dilma Rousseff, should she win the country’s Octo-
ber presidential election.
Domestic Iron and
Steel Business
The first limb of the Company’s business in Brazil
is the Domestic Iron & Steel Business (“Domestic
Business”), which is based on achieving targeted
annualised production of at least 3mtpa of iron ore
grading +63% Fe by the end of 2013 which will be sold
into the substantial domestic steel industry in Brazil.
The Iron Quadrangle’s proximity to the Domestic
Steel Industry in Brazil is analogous to having
a “Pilbara” on the Korean Peninsula or in the
Japanese archipelago. Being located in the midst
of a growing 40mtpa Brazilian steel customer base
allows Centaurus Metals to differentiate itself from
many other Australian-listed iron ore companies,
which face the significant barriers to market entry of
extensive and costly infrastructure.
Some of the biggest global steel producers, and po-
tential customers, are located within 100 kilometres
of the Company’s Brazilian projects and extensive
tenement portfolio.
The State of Minas Gerais, in which Centaurus Metals’
projects are located, accounts for over 60%, or 170Mtpa
of Brazil’s iron ore production. Significant investment
has already been committed to the region with three
of the country’s largest steelmakers – Gerdau, Arcelor
Mittal and Usiminas – recently commencing multi-
billion dollar expansions of their capacity in the
immediate vicinity of the Iron Quadrangle.
Centaurus Metals’ projects are strategically located
close to the heart of this world-class industry, ena-
bling the Company to sell its suite of proposed prod-
ucts at the mine gate, without incurring large capital
costs on infrastructure such as rail, port, power and
4
water. The Company’s objective is to initially produce
iron ore for the domestic market at an operating
margin of at least US$40/tonne.
Centaurus Metals anticipates moving quickly and
efficiently towards production to generate strong
cash flows which will underpin its growth in the
short-to-medium term.
Export Market Business
Another important factor differentiating Brazil, and
hence Centaurus Metals, is the very high quality of
iron ore products produced in the country, which
supports the Company’s medium term intention to
develop an Export Market Business.
The rapidly declining availability and quality of high-
grade Direct Shipping Ore (DSO) lump worldwide
has driven steel producers to a far greater level of
dependence on prepared feeds, especially sinter.
This, together with the worldwide push to reduce
carbon footprints, is driving steel producers to
demand higher quality raw materials. The highest
grade, lowest silica sinter feed will come out of Brazil.
As part of the planned development of its Export
Market Business – which will leverage off the cash
flow to be generated by Centaurus Metals’ Domestic
Business – the Company aims to acquire or develop
from its existing asset base a project capable of
producing 12-15mtpa of 64-69% Fe product for a
minimum project life of 10 years.
The Merger has
created a well funded
international resource
company.
5
Large City
Centaurus Project (Fe)
Centaurus Project (Mn)
Cenibra Project
Major Iron Ore Mine
Smelter
OPERATIONS REVIEW
Project
Map
Large City
Town
Highway
Road
Airport
Centaurus Project (Fe)
Centaurus Project (Mn)
Major Iron Ore Mine
Smelter
Monjolos
Ponte de Pedra Mn
Diamantina
Serra do Bicho Fe
Curvelo
Guanhães
Minas Rio
Conceição do
Mato Dentro
Ferros Fe
Sete Lagoas
Itambé Fe
Passabem Fe
Passabem
Itabira
Head Office
BELO
HORIZONTE
Arcelor Mittal
Brucutu
João Monlevade
Gerdau - Barão dos Cocais
Fazendão
Mutuca
Alegria
Germano
Pico
Timbopeba
Fabrica
Gerdau Açominas
Guanhães Project Fe
Jambreiro Project Fe
Candonga Project Fe
Usiminas
Ipatinga
Cel. Fabriciano
Steel Valley
50kms
The Jambreiro Iron Ore Project
In early February 2010, the Company reached agree-
ment with a leading public Brazilian forestry compa-
ny, Celulose Nipo-Brasileira S.A. “Cenibra”, to take
an option over an extensive portfolio of iron ore ex-
ploration tenements in south-east Brazil. The port-
folio comprised 63 prospective iron ore tenements,
covering an area of 1,014 square kilometres in the
State of Minas Gerais, around Brazil’s “Iron Quad-
rangle” where many of the country’s world-class
iron ore mines are located.
The Cenibra tenements are logistically well placed
within the State of Minas Gerais and most of the
known iron ore occurrences lie on tenements with
road access to the city of Ipatinga, which is located in
the heart of the “Steel Valley” where one of the larg-
est steel-makers in Brazil, Usiminas, has plans to
expand its production capacity to 12mtpa.
6
Under the agreement with Cenibra, Centaurus Met-
als has:
• conducted an initial evaluation over three key re-
gional tenement groups; and
• exercised its option over two of the regional tene-
ment groups by making a payment of US$30,000.
All Exploration Licences are now due to be trans-
ferred to Centaurus (100%).
Should Centaurus wish to progress any of the tene-
ments to a Mining Lease from the current stage of
exploration, a payment of US$50,000 per regional
group is to be made upon approval by the Depart-
ment of Mines (DNPM) of the initial documentation
required for the Mining Lease (up to a maximum
payment of US$100,000 should Centaurus Metals
decide to apply for a Mining Lease in both remaining
tenement groups).
Future resource-based payments are then to be
made on the in-situ Measured and Indicated Mineral
Resources as defined in the Plan of Economic Ex-
ploitation (PAE), which is equivalent to a feasibility
study and is required to be completed and lodged
with the DNPM prior to the grant of a mining lease.
Importantly, with Cenibra owning all of the surface
rights for its plantations, future development is not
expected to encounter any landowner issues and
should also enjoy significantly reduced environ-
mental approvals. The fast and simple licensing re-
quirements will make the Cenibra tenements an at-
tractive development proposition, should sufficient
resources be defined.
In June 2010, Centaurus exercised its option to ac-
quire a 100% interest in the Jambreiro Iron Ore Pro-
ject, which represents a potential cornerstone for
Centaurus’ domestic iron ore business in Brazil.
An Exploration Target1 for the Jambreiro Iron Ore
Project of 40 to 60 million tonnes grading 30-40%
Fe was estimated based on the dimensions of the
mapped iron formation, the size and strength of the
ground magnetic signature, logging of the previ-
ous drilling and assay results from recent rock chip
sampling.
A seven-hole diamond drilling program previously
completed by Cenibra at Jambreiro had intersect-
ed friable iron ore mineralisation from surface to a
depth of 90 metres vertically below surface.
The Company has received assay results from re-
sampling of these seven historical vertical diamond
drill holes with significant intersections of miner-
alisation encountered in most of the holes, including
85.8 metres of iron mineralisation in Hole JAM003.
Significant intersections included:
Hole JAM001
Hole JAM002
Hole JAM003
Hole JAM006
Hole JAM007
18.4 metres @ 33.1% Fe, 3.66% Al2O3 and 0.03% P from surface
33.1 metres @ 35.8% Fe, 2.99% Al2O3 and 0.05% P from 20.4 metres
25.5 metres @ 34.2% Fe, 1.06% Al2O3 and 0.01% P from surface
85.8 metres @ 32.0% Fe, 4.20% Al2O3 and 0.03% P from surface
21.6 metres @ 30.3% Fe, 1.24% Al2O3 and 0.02% P from 2.4 metres
37.3 metres @ 27.5% Fe, 2.74% Al2O3 and 0.04% P from 51.3 metres
The mineral encountered in the drilling was pre-
dominantly coarse-grained friable itabirite. Itabirite
is a term used to describe metamorphosed iron for-
mation composed of iron oxides. The ore at Jambrei-
ro and other Centaurus Metals projects compraise
principally of hematite.
The Company has also recently completed a 3,500
metre resource definition drill program at Jambreiro
comprising both reverse circulation (RC) and dia-
mond drilling.
The drilling has confirmed the presence of later-
ally extensive and thick zones of itabirite-hosted iron
mineralisation over several prospect areas which will
form the basis of the maiden JORC Resource estimate
targeted for completion by the end of October 2010.
1 Note: It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The
information above relating to the exploration target should not be misunderstood or misconstrued as an estimate of Mineral
Resources or Ore Reserves. Hence the terms Resources have not been used in this context. The potential quantity and grade
range is conceptual in nature, since there has been insufficient exploration to define a Mineral Resource. It is uncertain if further
exploration will result in the determination of a Mineral Resource.
7
OPERATIONS REVIEW
Significant drilling intercepts received to date include:
Tigre Prospect
98.2 metres @ 29.8% Fe, 3.9% Al2O3 and 0.05% P from 28 metres in Hole JBR-DD-002
93.8 metres @ 31.5% Fe, 5.5% Al2O3 and 0.04% P from 9 metres in Hole JBR-DD-003
70.0 metres @ 31.8% Fe, 3.3% Al2O3 and 0.03% P from 41 metres in Hole JBR-DD-001
62.5 metres @ 32.2% Fe, 2.0% Al2O3 and 0.03% P from 0.5 metres in Hole JBR-DD-011
53.0 metres @ 31.2% Fe, 3.5% Al2O3 and 0.03% P from 38 metres in Hole JBR-RC-020
Cruzeiro Prospect
31.0 metres @ 34.4% Fe, 1.4% Al2O3 and 0.02% P from surface in Hole JBR-RC-024
27.8 metres @ 30.4% Fe, 1.3% Al2O3 and 0.03% P from 10.9 metres in Hole JBR-DD-007
Galo Prospect
14.0 metres @ 35.1% Fe, 2.0% Al2O3 and 0.02% P from 56 metres in Hole JBR-RC-011
13.0 metres @ 31.2% Fe, 2.9% Al2O3 and 0.03% P from 12.3 metres in Hole JBR-DD-005
Importantly, many of the intersections encountered form part of thicker mineralised zones.
The Tigre Prospect
The Galo Prospect
Exploratory drilling completed at the Galo Prospect,
located to the north of the Tigre Prospect, has also
returned encouraging intersections of itabirite min-
eralisation. The recent drilling and previous map-
ping of the Galo Prospect indicates the extensive
nature of the friable itabirite over a strike length of
some 1.5 kilometres.
All three Prospect areas will form an integral part of
the resource estimation and potential future devel-
opment of the Jambreiro Iron Ore Project.
Some of the thickest and most significant intersec-
tions encountered in the drilling program were at
the Tigre Prospect, which is located in the central
zone of the Jambreiro Project. The drilling combined
with detailed geological mapping has identified a
laterally continuous zone of itabirite mineralisation
over a strike length of some 1.1 kilometres and with
a true width of 70 to 80 metres (see Figure 1).
The coarse-grained friable itabirite mineralisation
identified at surface generally continues to a depth
of approximately 50 metres before the material be-
comes more compact.
The Cruzeiro Prospect
At the Cruzeiro Prospect, the itabirite mineralisation
has been mapped over a strike length of some 500
metres and drilling has confirmed that the friable
nature of the mineralisation and grade tenor is con-
sistent with the other Prospects at Jambreiro.
8
Figure 1 – Jambreiro Iron Ore Project Showing Drill Hole Locations and Prospects
over Initial Ground Magnetic Survey
9
OPERATIONS REVIEW
The positive results from the initial beneficiation test
work – which show that a +63% Fe coarse sinter he-
matite product can be produced from Jambreiro min-
eralisation – and the excellent widths evident from
re-sampling of historical drill core, together with the
recent drilling, will pave the way for the maiden JORC
resource estimate for the Jambreiro Project which is
expected to be completed in October 2010.
Centaurus’ recent initial beneficiation test work, us-
ing a simple gravity separation process, has been
performed on a 200kg sample of the friable itabirite
at Jambreiro.
The average iron grade of the sample collected was
32.6% Fe, from which the low cost gravity upgrade
process (spirals) produced a 63% Fe final sinter
product with very low levels of phosphorus and alu-
mina (See Table 1). In addition, a better than 93% Fe
metal recovery to concentrate was achieved, high-
lighting the purity of the hematite in the Jambreiro
mineralisation.
Table 1 – Initial Gravity Separation Results - Jambreiro
Head Grade
Beneficiated Sample
Fe %
32.6
63.0
SiO2 %
51.1
8.2
Al2O3%
1.67
0.68
P%
0.02
0.01
10
Tenements in Guanhães Region
In addition to the three tenements that make up the
Jambreiro Project, Centaurus has exercised its option
to acquire a further 15 prospective iron ore tenements
under the innovative arrangement with Cenibra.
The new tenements – most of which are located
immediately west of the recently acquired Jam-
breiro Project in the Guanhães Group of tenements
– further enhance Centaurus’ project portfolio in the
State of Minas Gerais, around the “Iron Quadrangle”
region of south-eastern Brazil.
Two of the tenements were selected from the Ipat-
inga Group, located near the major Brazilian steel-
maker Usiminas.
11
OPERATIONS REVIEW
The Passabem Iron Ore Project
over a 500 metre zone within a much larger 5.2 kilo-
metre long mapped itabirite iron formation.
The Passabem Iron Ore Project will form part of
the Company’s domestic iron ore business in Bra-
zil. The Project is located 25 kilometres from Vale’s
40Mtpa Itabira operations and is well located in rela-
tion to the existing steel-making regions of Ipatinga
and João Monlevade, where Brazilian steel makers
Usiminas and Arcelor Mittal are respectively located.
During the last quarter of the financial year, the Com-
pany completed a 13-hole diamond drilling program
at Passabem aimed at extending the initial JORC com-
pliant Inferred Resource of 2.6Mt, which was defined
The drill campaign intersected itabirite mineralisa-
tion over the entire 5 kilometre strike extent of the
mapped iron formation, enabling a substantially in-
creased mineral resource to be calculated.
The new Indicated and Inferred Resource of 39.0Mt
grading 31.0% Fe (Table 2) represents a fifteen-fold
increase on the previously reported Inferred Resource
of 2.6Mt grading 31.3% Fe. The drilling has also al-
lowed an upgrade of some of the deposit to Indicated
Resource status.
Table 2 – Passabem Resource Summary
Tonnes (Mt)
Indicated
Inferred
TOTAL
2.8
36.2
39.0
Fe%
33.0
30.9
31.0
SiO2%
48.8
54.0
53.6
Al2O3%
1.90
0.74
0.82
P%
0.03
0.07
0.07
Mn%
0.10
0.06
0.06
LOI%
0.64
0.09
0.13
Note: Estimate calculated using Inverse Distance Squared technique with a cut off of 27% Fe applied.
Previous beneficiation testwork completed on the
Passabem mineralisation in 2009 showed that a
28.5% Fe head grade sample could be upgraded to
a high-grade iron product (+66% Fe) using a simple,
low-intensity magnetic separation process. Further
beneficiation tests are currently being conducted
on the core collected from the recently completed
drilling program, with the results of this testwork
expected during the second quarter of 2010/11 fi-
nancial year.
The resource upgrade confirms that the Passabem
Project has the potential to form an important part of
Centaurus’ domestic iron ore production business in
Brazil together with its other assets in south-east-
ern Brazil’s “Iron Quadrangle”.
Following the resource upgrade, further in-fill drill-
ing will now be planned to upgrade the resource to
Measured and Indicated status. Additionally, further
bench-scale metallurgical work needs to be con-
ducted to facilitate the commencement of a Feasi-
bility Study.
Figure 2 – Diamond Drill Hole Locations at Passabem
with Magnetics and Mapped Iron Formation
12
39 million tonne
resource defined
at Passabem.
13
OPERATIONS REVIEW
The Itambé Iron Ore Project
In August 2009, Centaurus announced an initial JORC
Inferred Mineral Resource estimate of 15.5Mt grad-
ing 37.2% Fe (refer Table 3) for the Itambé-1 tene-
ment within the 100%-owned Itambé Iron Ore Pro-
ject, located near Belo Horizonte in Brazil’s Iron
Quadrangle.
Previous beneficiation testwork indicates that the
friable Itambé ore can be upgraded to a high grade
(68% Fe) iron product via a simple and low cost mag-
netic separation process.
The Inferred Resource for the Itambé-1 tenement
was estimated by Centaurus in conjunction with
Prominas, an independent Brazilian geological and
mining consultancy group. The resource model in-
corporates data collected from previously reported
diamond drilling, historical adit channel sampling
which tested the itabirite formations, surface rock
chip sampling and geological mapping.
The modelled mineralisation lies within a gently dip-
ping, highly friable weathered itabirite zone with in-
tervals up to 15 metres wide.
Since this resource estimate, additional work pro-
grams including a Scoping Study have been under-
taken to meet planned development and production
timeframes for the Itambé Project in line with the
development plan for Centaurus’ portfolio of iron ore
projects in the Iron Quadrangle.
Further infill drilling at Itambé commenced in Au-
gust 2010.
The approvals process at Itambé continued through-
out the year.
Table 3 – Itambé Mineral Resource Statement
Tonnes (Mt)
15.5
Fe%
37.2
SiO2%
39.9
Al2O3%
3.7
P%
0.055
Mn%
0.07
LOI%
2.04
Note: Estimate calculated using Inverse Distance Squared technique with no iron grade Lower Cut off applied.
14
Regional Export Projects
Centaurus Metals holds a number of highly prospec-
tive tenement packages with the potential to host
resources of sufficient size to allow the Company to
establish an iron ore export business from Brazil.
Since the merger most activity has focused on the
Domestic Iron and Steel Business with minimal work
undertaken on the Company’s regional projects.
The Company expects to complete significant work
programs on the regional export orientated projects
over the coming year.
Bahia
Salvador
Rio Pardo Fe
Ilhéus
Minas Gerais
Itamarandiba Fe
Guanhães Fe
Itambé Fe
Belo Horizonte
Passabem Fe
Head Office
Vitória
100km
Rio de
Janeiro
São Paulo
n
a
e
c
O
c
i
t
n
a
l
t
A
Project
Map
Major Ports
Proposed Rail
City
15
OPERATIONS REVIEW
Australian Gold Assets
Capital Raising
In October 2010, Centaurus completed a capital rais-
ing of A$18.2 million to fund the Company’s ongoing
iron ore work programs in Brazil.
The raising comprised a share placement of A$14.4
million and a Share Purchase Plan of $3.8 million,
both of which were completed at 7.5 cents per share.
The placement was undertaken to institutional and
sophisticated clients of Hartleys Ltd and Southern
Cross Equities Ltd in two tranches.
Appointment of Strategic
Consultant
Also in September 2010, Centaurus was able to se-
cure the services of Mr George Jones, one of Aus-
tralia’s leading iron ore executives, as a strategic
consultant to the Company.
Mr Jones will provide advice in respect to the de-
velopment of strategic relationships for Centaurus’
future export plans in Brazil, access to new capital
markets, current market conditions in the global
iron ore market and future off-take arrangements
and associated project development funding.
Centaurus has entered into an agreement to divest
some of its non-core gold and base metals assets in
Australia to Southern Crown Resources Ltd (‘South-
ern Crown’), which is planning an Initial Public Of-
fering (IPO) by 31 December 2010.
The agreement covers the Dish Gold Project in New
South Wales and Percyvale Gold Project in Queens-
land, both of which are to be sold to Southern Crown
for 1,562,500 shares in the IPO. This will represent
approximately 5% of the post-IPO issued capital of
that Company.
In addition, Centaurus will be issued with 2 million
performance options, of which 1 million will vest
upon the definition of a resource of 250,000 gold
equivalent ounces at the Dish and 1 million of which
will vest upon the definition of a resource of 250,000
gold equivalent ounces at Percyvale.
It is expected that Centaurus Metals shareholders
will receive a priority offer in the IPO.
At the Citadel Project, no active field work has been
undertaken, although the company has actively pur-
sued a divestment of this project to realise value for
shareholders.
South Brazil Copper/Gold Assets
In 2010, the Company agreed to farm out its copper/
gold assets in Southern Brazil to Mining Ventures
do Sul Pesquisa e Mineração Ltda. Under the joint
venture agreement, Mining Ventures will spend up
to US$4.25 million to earn up to a 90% interest in the
assets. Mining Ventures is a private company ma-
jority owned by Denham Capital, a US private equity
firm focused on energy and commodities with over
US$4.3 billion of assets under management.
Competent Person’s Statement
The information in this report that relates to Exploration Results and Mineral Resources is based on infor-
mation compiled by Mr Ian Cullen who is a Member of the AusIMM. Ian Cullen is a permanent employee of
Centaurus Metals Limited. Ian Cullen has sufficient experience which is relevant to the style of mineralisation
and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent
Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Ian Cullen consents to the inclusion in the report of the matters based on his
information in the form and context in which it appears.
16
Centaurus Metals Limited
ABN 40 009 468 099
(formerly known as Glengarry Resources Limited)
And its controlled entities
Financial Report
30 June 2010
Directors’ Report
For the year ended 30 June 2010
The directors present their report together with the consolidated financial statements of Centaurus Metals
Limited (“Company”), being the Company and its subsidiaries, for the financial year ended 30 June 2010 and
the auditor’s report thereon.
1.
Directors
The directors of the Company at any time during or since the end of the financial year are:
Mr Didier M Murcia
Non-Executive Chairman
Mr Darren P Gordon
Managing Director
Mr Keith G McKay
Non-Executive Director
Mr Peter E Freund
Executive Director (appointed 28 January 2010)
Mr Geoffrey T Clifford
Non-Executive Director
Mr Richard G Hill
Non-Executive Director (appointed 28 January 2010)
Unless otherwise disclosed, all directors held their office from 1 July 2009 until the date of this report.
2.
Directors and Officers
Mr Didier M Murcia, B.Juris, LL.B
Non-Executive Chairman Age 47
Experience and expertise
Independent non-executive director appointed 16 April 2009 and appointed Chairman 28 January 2010. Lawyer
with over 25 years legal and corporate experience in the mining industry. He is currently Honorary Australian
Consul for the United Republic of Tanzania and a director of London listed Aminex plc. He is Chairman and
founding director of Perth-based legal group Murcia Pestell Hillard.
Other directorships
During the last three years Mr Murcia held directorships in the following ASX listed companies:
• Gindalbie Metals Limited (appointed 2 February 1998, resigned 31 January 2010)
• Gryphon Minerals Limited (appointed 28 July 2006)
• Target Energy Limited (appointed 1 September 2006, resigned 31 December 2009)
Special responsibilities
• Chairman of the Board
• Chairman of the Remuneration Committee
• Member of the Audit Committee
18
Directors’ Report
For the year ended 30 June 2010
2.
Directors and Officers (continued)
Mr Darren P Gordon, B.Bus, CA, FFin, ACIS, MAICD
Managing Director Age 38
Experience and expertise
Managing Director appointed 4 May 2009. Chartered Accountant with over 15 years experience in the mining
industry as a senior finance and resources executive. Former Chief Financial Officer and Company Secretary
for Gindalbie Metals Limited.
Other directorships
During the last three years Mr Gordon held directorships in the following ASX listed companies:
• Centaurus Resources Limited (appointed 13 June 2008, resigned 6 November 2009). Centaurus Resources
Limited was acquired by Centaurus Metals Limited and was delisted from the ASX on 1 March 2010.
Special responsibilities
• Managing Director
Mr Peter E Freund, FAusIMM(CP), F.AIM
Executive Director Age 64
Experience and expertise
Operations director appointed 28 January 2010. Mechanical Engineer with 40 years operational and project
development experience in the mining industry with expertise in all aspects of iron ore mining, processing and
other steel-making minerals. Former General Manager of the Karara Joint Venture between Gindalbie Metals
Limited and Ansteel.
Other directorships
During the last three years Mr Freund held directorships in the following ASX listed companies:
• Centaurus Resources Limited (appointed 16 October 2009, resigned 28 January 2010). Centaurus Resources
Limited was acquired by Centaurus Metals Limited and was delisted from the ASX on 1 March 2010.
Special responsibilities
• Operations Director
19
Directors’ Report
For the year ended 30 June 2010
2.
Directors and Officers (continued)
Mr Keith G McKay, BSc (Hons), FAusIMM, MAICD
Non-Executive Director Age 64
Experience and expertise
Independent non-executive director appointed 26 August 2004. Geologist with 40 years technical and corporate
experience in the mining industry as a senior executive, director and chairman. Former Chairman of Glengarry
Resources Limited and Gindalbie Metals Limited and former Managing Director of Gallery Gold Limited and
Battle Mountain (Aust.) Inc.
Other directorships
• Mr McKay held no other directorships of ASX listed companies during the last three years.
Special responsibilities
• Member of the Remuneration Committee
• Member of the Audit Committee
Mr Geoffrey T Clifford, B.Bus, FCPA, FCIS
Non-Executive Director Age 60
Experience and expertise
Independent non-executive director appointed 22 August 2008. Accountant with over 30 years experience in
senior accounting, finance, administration and company secretarial roles in the mining, retail and wholesale
industries. He is currently a Member of the West Australian State Council of Chartered Secretaries Australia.
Former non-executive director of Aztec Resources Limited and former Chairman of Sino Gas and Energy
Limited. Former General Manager Administration and Company Secretary of Portman Limited.
Other directorships
During the last three years Mr Clifford held directorships in the following ASX listed companies:
• Atlas Iron Limited (appointed 20 August 2007)
• Fox Resources Limited (appointed 17 April 2007)
• RMA Energy Limited (appointed 15 February 2007, resigned 15 April 2010)
Special responsibilities
• Member of the Remuneration Committee
• Chairman of the Audit Committee
20
Directors’ Report
For the year ended 30 June 2010
2.
Directors and Officers (continued)
Mr Richard G Hill, B.Juris, LLB., B.Sc. (Hons), FFin
Non-Executive Director Age 42
Experience and expertise
Independent non-executive director appointed 28 January 2010. Geologist and Solicitor with nearly 20 years
experience in the mining industry. Founder of two ASX-listed mining companies.
Other directorships
During the last three years Mr Hill held directorships in the following ASX listed companies:
• Centaurus Resources Limited (appointed 11 October 2006). Centaurus Resources Limited was acquired
by Centaurus Metals Limited and was delisted from the ASX on 1 March 2010.
• YTC Resources Limited (appointed 28 April 2006)
Special responsibilities
• Member of the Audit Committee
Mr Geoffrey A James, B.Bus, CA, ACIS
Company Secretary Age 44
Experience and expertise
Mr James was appointed as Company Secretary on 19 March 2007. Mr James is a Chartered Accountant and
a member of Chartered Secretaries Australia. He has over 20 years experience and was previously the Group
Financial Accountant with Clough Limited.
Special responsibilities
• Company Secretary
• Chief Financial Officer
21
Directors’ Report
For the year ended 30 June 2010
3.
Directors’ Meetings
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the
year ended 30 June 2010 and the number of meetings attended by each director were:
Meetings of Directors
Meetings of Committees
Held
Attended
Held
Attended
Held
Attended
Audit
Remuneration
14
14
14
4
14
4
14
13#
14
4
14
4
1
n/a
2
n/a
2
1
1
n/a
2
n/a
2
1
1
n/a
1
n/a
1
n/a
1
n/a
1
n/a
-
n/a
Mr D M Murcia
Mr D P Gordon
Mr K G McKay
Mr P Freund
Mr G T Clifford
Mr R G Hill
Held – denotes the number of meetings held during the time the director held office or was a member of the committee during the year.
# Mr D P Gordon did not attend due to a conflict of interest regarding the takeover of Centaurus Resources Limited.
The Company does not have a formal Nomination Committee. This function is performed by the full Board.
4.
Corporate Governance Statement
This statement outlines the main corporate governance practices in place throughout the financial year, which
comply with the ASX Corporate Governance Council recommendations, unless otherwise stated. Disclosure is
made at the end of this statement of areas of non-compliance with the Recommendations.
Further details of the various charters, policies, codes and procedures that document the Company’s corporate
governance practices are set out in the Company’s website at www.centaurus.com.au.
4.1 Board of Directors
The relationship between the Board and senior management is critical to the Group’s long term success. The
directors are responsible to the shareholders for the performance of the Group in both the short and the longer
term and seek to balance sometimes competing objectives in the best interests of the Group as a whole. Their
focus is to enhance the interests of shareholders and to ensure the Group is properly managed.
Day to day management of the Company’s affairs and the implementation of the corporate strategy and
policy initiatives are formally delegated by the Board to the Managing Director and senior executives.
These delegations are reviewed on an annual basis.
The Board operates in accordance with the broad principles set out in its Charter which is available from
the corporate governance information section of the Company’s website at www.centaurus.com.au.
The Charter details the Board’s composition and responsibilities.
Board Members
Details of the members of the Board, their skills, experience, expertise, qualifications, term of office and
independence status are set out in the Directors’ Report under the heading “Directors and Officers”
(section 2). There are four independent non-executive directors and two executive directors at the date of
signing the Directors’ Report.
22
Directors’ Report
For the year ended 30 June 2010
4.
Corporate Governance Statement (continued)
4.1 Board of Directors (continued)
Directors’ Independence
The Board has adopted specific principles in relation to directors’ independence and these are set out in its
Charter. The names of the directors considered to be independent are set out in the Directors’ Report.
The principles adopted by the Board employ the concept of materiality. Materiality for these purposes is
determined on both quantitative and qualitative bases. An amount of over 5% of annual turnover of the Group
or 5% of the individual director’s net worth is considered material for these purposes. In addition, a transaction
of any amount or a relationship is deemed material if knowledge of it impacts the shareholders’ understanding
of the director’s performance.
Term of Office
The Company’s Constitution specifies that all non-executive directors must retire from office no later than the
third annual general meeting following their last election. Where eligible, a director may stand for re-election.
Responsibilities of Management
The Board Charter sets out the responsibilities of management and details are available on the Company’s website.
Independent Professional Advice
Directors and Board Committees have the right, in connection with their duties and responsibilities, to seek
independent professional advice at the Company’s expense. Prior written approval of the Chairman is required,
but this will not be unreasonably withheld. A copy of the advice received by the director is made available to all
other members of the Board.
Director and Executive Education
The Group has a process to educate new directors about the nature of the business, current issues, the
corporate strategy and the expectations of the Group concerning performance of directors. Directors also have
the opportunity to visit Group facilities and meet with management to gain a better understanding of business
operations. Directors are given access to continuing education opportunities to update and enhance their skills
and knowledge.
The Group also has a process to educate new senior executives upon taking such positions. The induction
program includes reviewing the Group’s structure, strategy, operations, financial position and risk management
policies. It also familiarises the individual with the respective rights, duties, responsibilities and roles of the
individual and the Board.
Performance Assessment
The Board charter sets out the process to undertake an annual self assessment of the Board’s collective
performance, the performance of the Chairman and of its committees. The self assessment involves a
questionnaire process to review performance attributes.
The performance of senior executives is assessed by the Managing Director. The assessment involves an
annual review of performance and development and the results of the review are formally documented.
Nomination Committee
The Nomination Committee consists of the full Board and it operates in accordance with its Charter which is
available on the Company’s website. The responsibilities of the Committee include the annual review of the
membership and performance of the Board, reviewing candidates for vacancies and succession planning.
23
Directors’ Report
For the year ended 30 June 2010
4.
Corporate Governance Statement (continued)
4.2 Remuneration Committee
The Remuneration Committee operates in accordance with its Charter which is available on the Company’s website.
The Committee shall consist of at least three non-executive directors with relevant expertise and experience in the
industries in which the Group operates. The Committee advises the Board on remuneration and incentive policies
and practices generally, and makes specific recommendations on remuneration packages and other terms of
employment for executive directors, other senior executives and non-executive directors.
Each member of the senior executive team signs an employment contract at the time of their appointment
covering a range of matters, including their duties, rights, responsibilities and any entitlements on termination.
The standard contract refers to a specific formal job description. This job description is reviewed by the
Remuneration Committee on an annual basis and, where necessary, is revised in consultation with the relevant
employee.
Further information on directors’ and executives’ remuneration is set out in the Remuneration Report.
Executive remuneration and other terms of employment is reviewed annually by the Committee having regard to
personal and corporate performance, contribution to long term growth, relevant comparative information and
independent expert advice. As well as a base salary and compulsory superannuation, remuneration packages
may include retirement and termination entitlements, performance-related bonuses and fringe benefits. Non-
executive directors and executives are eligible to participate in the Employee Share Option Plan which provides
for the issue of options in the Company.
Details of the qualifications of directors of the Remuneration Committee and their attendance at Committee
meetings are set out in the Directors’ Report.
4.3 Remuneration Report – audited
4.3.1 Principles of Remuneration – audited
The primary objective of the Group’s executive reward framework is to ensure reward for performance is
competitive and appropriate for the results delivered. The framework aligns executive reward with achievement
of strategic objectives and the creation of value for shareholders, and conforms with market best practice for
delivery of reward. The Board ensures that executive reward satisfies the following key criteria for good reward
governance practices:
•
competitiveness and reasonableness;
• acceptability to shareholders;
• performance linked executive compensation;
•
•
transparency; and
capital management.
In consultation with external remuneration consultants, the Group has structured an executive remuneration
framework that is market competitive and complimentary to the reward strategy of the organisation to ensure:
(i) Alignment to shareholders’ interests:
•
focuses on the creation of shareholder value and returns; and
• attracts and retains high calibre executives.
24
Directors’ Report
For the year ended 30 June 2010
4.3 Remuneration Report – audited (continued)
4.3.1 Principles of Remuneration – audited (continued)
(ii) Alignment to program participants’ interests:
•
•
rewards capability and experience;
reflects competitive reward for contribution to growth in shareholder wealth;
• provides a clear structure for earning rewards; and
• provides recognition for contribution.
The remuneration framework currently consists of fixed salaries and long-term incentives through participation
in the Employee Share Option Plan.
The overall level of executive reward takes into account the performance of the Group over a number of years,
with greater emphasis given to the current and prior year. Over the past 5 years, the Group was involved
in mineral exploration and therefore growth in earnings is not considered relevant. No dividends have been
paid. Shareholder wealth is dependent upon exploration success and has fluctuated accordingly. During the
same period, average executive remuneration has been maintained in accordance with industry standards. The
performance of the Group in respect of the current financial year and the previous four financial years is set
out below:
2010
$
2009
$
2008
$
2007
$
2006
$
Net profit/(loss)
(3,918,654)
(1,265,869)
(3,505,630)
3,553,405
(1,927,436)
Change in share price
$0.01
$0.00
($0.06)
$0.07
$0.02
Market capitalisation
$42.3 million
$17.2 million
$17.2 million
$29.9 million
$10.4 million
During the years stated above, there were no other returns of capital made by the company to shareholders.
The executive pay and reward framework has three components:
• base pay and benefits;
•
long-term incentives through participation in the Employee Share Option Plan; and
• other remuneration such as superannuation.
The combination of these comprises the executive’s total remuneration.
• Base pay
Structured as a total employment cost package which may be delivered as a combination of cash and
prescribed non-financial benefits at the executive’s discretion. Executives are offered a competitive base
pay that comprises the fixed component of pay and rewards. External remuneration consultants provide
analysis and advice to ensure base pay is set to reflect the market for a comparable role. Base pay for
senior executives is reviewed annually to ensure the executive’s pay is competitive with the market. An
executive’s pay is also reviewed on promotion. There are no guaranteed base pay increases included in any
senior executive contracts.
• Cash Bonuses
The Board at its discretion may approve the payment of cash bonuses to executives for meeting or exceeding
performance targets.
25
Directors’ Report
For the year ended 30 June 2010
4.3 Remuneration Report – audited (continued)
4.3.1 Principles of Remuneration – audited (continued)
• Expatriate benefits
Executives located in Brazil receive expatriate benefits including housing and relocation costs.
• Retirement benefits
Directors and employees are permitted to nominate a superannuation fund of their choice to receive
superannuation contributions.
• Long term incentives
Long term incentives are comprised of share options, which are granted from time to time to encourage
exceptional performance in the realisation of strategic outcomes and growth in shareholder wealth.
Options are granted for no consideration and do not carry voting or dividend entitlements. Information on
the Employee Share Option Plan is set out in section 4.3.2.
Employment Agreements
Remuneration and other terms of employment for executives are formalised in employment agreements. The
agreements provide for the provision of other benefits and participation, when eligible, in the Employee Share
Option Plan.
Other major provisions of the agreements relating to remuneration are set out below:
D P Gordon - Managing Director
• Term of agreement – commenced on 4 May 2009 for a term of 2 years. Mr Gordon may terminate the
agreement by giving 2 months notice. The Company may terminate the agreement by giving 2 months
notice and in addition, pay on termination, an amount equal to 6 months of salary.
• Base salary is $350,000, reviewed annually. Provision of four weeks annual leave.
P E Freund - Operations Director
• Term of agreement – commenced on 1 February 2010 with no set term. Mr Freund or the Company may
terminate the agreement by giving 2 months notice.
• Base salary, inclusive of superannuation is $300,000, reviewed annually. Provision of four weeks annual leave.
M Papendieck – General Manager, Commercial
• Term of agreement – commenced on 1 February 2010 with no set term. Mr Papendieck or the Company may
terminate the agreement by giving 2 months notice.
• Base salary, inclusive of superannuation is $250,000, reviewed annually. Provision of four weeks annual leave.
G A James - Chief Financial Officer/Company Secretary
• Term of agreement – commenced on 19 March 2007 with no set term. Mr James or the Company may terminate
the agreement by giving 2 months notice.
• Base salary, inclusive of superannuation is $196,200, reviewed annually. Provision of four weeks annual leave.
26
Directors’ Report
For the year ended 30 June 2010
4.3 Remuneration Report – audited (continued)
4.3.1 Principles of Remuneration – audited (continued)
I Cullen – General Manager, Exploration and Evaluation
• Term of agreement – commenced on 1 February 2010 with no set term. Mr Cullen or the Company may terminate
the agreement by giving 2 months notice.
• Base salary, inclusive of superannuation is $190,000, reviewed annually. Provision of four weeks annual leave.
• Expatriate benefits including accommodation and relocation expenses are provided for living in Brazil.
K Petersen – Country Manager, Brazil
• Term of agreement – commenced on 1 February 2010 with no set term. Mr Petersen or the Company may
terminate the agreement by giving 2 months notice.
• Base salary, inclusive of superannuation is $180,000, reviewed annually. Provision of four weeks annual leave.
• Expatriate benefits including accommodation, relocation expenses and education fees are provided for
living in Brazil.
Non-Executive Directors
Fees and payments to non-executive directors reflect the demands which are made on, and the responsibilities
of, the directors. Non-executive directors’ fees and payments are reviewed annually by the Board. The Board also
has obtained the advice of independent remuneration consultants to ensure non-executive directors’ fees and
payments are appropriate and in line with the market. The Chairman’s fees are determined independently to the
fees of non-executive directors based on comparative roles in the external market.
Non-executive directors’ remuneration consists of set fee amounts and statutory superannuation. The current
base remuneration was last reviewed with effect from 15 February 2010. The level of fees for non-executive
directors is set at $50,000 per annum and $75,000 per annum for the non-executive Chairman. Directors do not
receive additional committee fees. Non-executive directors’ fees are determined within an aggregate directors’
fee pool limit, which is periodically recommended for approval by shareholders. The total maximum currently
stands at $300,000. There is no provision for retirement allowances for non-executive directors.
Non-executive directors are eligible to be granted with options to provide a material additional incentive for
their ongoing commitment and dedication to the continued growth of the Group. The Board considers the issue
of options to be reasonable in the circumstances, to assist the Company in attracting and retaining the highest
calibre of non-executive directors to the Company, whilst maintaining the Group’s cash reserves.
27
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Directors’ Report
For the year ended 30 June 2010
4.3 Remuneration Report – audited (continued)
4.3.3 Equity Instruments
Options are granted under the Employee Share Option Plan (Plan) which was approved by shareholders at the
2007 annual general meeting. Employees are eligible to participate in the Plan (including executive and non-
executive directors) unless the Board in its absolute discretion determine otherwise. Options are granted from
time to time under the Plan for no consideration and are granted for a period of up to 5 years. The vesting and
exercise conditions of options granted are determined by the Board in its absolute discretion. Options may also
be granted by the Company outside of the Plan, but under similar terms and conditions.
The Group has a policy that prohibits directors and employees who are granted share options as part of their
remuneration from entering into arrangements that limit their exposure to losses that would result from share
price decreases.
Options and rights over equity instruments granted as compensation
Details on options over ordinary shares in the Company that were granted as remuneration to each key
management person during the reporting period and details on options that vested during the reporting period
are as follows:
29
Directors’ Report
For the year ended 30 June 2010
4.3 Remuneration Report – audited (continued)
4.3.3 Equity Instruments (continued)
Directors
Mr D M Murcia
Mr D P Gordon
Mr K G McKay
Number of
options granted
during 2010
500,000
500,000
500,000
1,000,000
1,000,000
2,000,000
2,000,000
500,000
500,000
Grant Date
17/07/2009
17/07/2009
17/07/2009
17/07/2009
17/07/2009
17/07/2009
31/03/2010
17/07/2009
17/07/2009
Mr P E Freund
16,000,000(1)
19/01/2010
Mr G T Clifford
Mr R G Hill
Executives
500,000
500,000
500,000
500,000
17/07/2009
31/03/2010
31/03/2010
31/03/2010
Mr M Papendieck
4,000,000
15/02/2010
Mr G A James
250,000
250,000
500,000
750,000
17/07/2009
17/07/2009
17/07/2009
15/02/2010
Mr I Cullen
4,000,000(1)
19/01/2010
Mr K Petersen
2,400,000(1)
1,000,000
19/01/2010
15/02/2010
0.0467
0.0439
0.0420
0.0503
0.0467
0.0439
0.0670
0.0467
0.0439
0.0493
0.0467
0.0673
0.0645
0.0621
0.0359
0.0467
0.0439
0.0420
0.0359
0.0481
0.0446
0.0359
Fair value
per option at
grant date
($)
Exercise
price per
option
($)
Number
of options
vested during
2010
500,000
-
-
1,000,000
1,000,000
-
-
500,000
-
Expiry date
17/07/2014
17/07/2014
17/07/2014
17/07/2014
17/07/2014
17/07/2014
31/03/2015
17/07/2014
17/07/2014
31/10/2014
4,000,000
17/07/2014
31/03/2015
31/03/2015
31/03/2015
500,000
500,000
-
-
0.075
0.100
0.120
0.050
0.075
0.100
0.080
0.075
0.100
0.070
0.075
0.080
0.100
0.120
0.080
15/02/2015
1,000,000
0.075
0.100
0.120
0.080
0.070
0.080
0.080
17/07/2014
17/07/2014
17/07/2014
15/02/2015
250,000
-
-
-
30/06/2014
2,000,000
31/12/2013
15/02/2015
600,000
-
No options have been granted since the end of the financial year. The options were provided at no cost
to the recipients.
(1) These options were issued as replacement awards pursuant to the takeover of Centaurus Resources Limited.
30
Directors’ Report
For the year ended 30 June 2010
4.3 Remuneration Report – audited (continued)
4.3.3 Equity Instruments (continued)
Analysis of options and rights over equity instruments granted as compensation - audited
Details of vesting profiles of the options granted as remuneration to each key management person of the Group
and each of the five named Company executives and Group executives are detailed below:
Option granted
Number
Date
% vested in year
% forfeited
in year
Financial
years in which
grant vests
Directors
Mr D M Murcia
Mr D P Gordon
Mr K G McKay
Mr P E Freund
Mr G T Clifford
Mr R G Hill
Executives
Mr M Papendieck
Mr G A James
Mr I Cullen
Mr K Petersen
500,000
500,000
500,000
2,000,000
2,000,000
1,000,000
1,000,000
500,000
500,000
4,000,000
4,000,000
8,000,000
500,000
500,000
500,000
500,000
1,000,000
1,500,000
1,500,000
250,000
250,000
500,000
350,000
400,000
2,000,000
2,000,000
600,000
600,000
1,200,000
500,000
500,000
17/07/2009
17/07/2009
17/07/2009
17/07/2010
17/07/2010
31/03/2010
31/03/2010
17/07/2009
17/07/2009
19/01/2010
19/01/2010
19/01/2010
17/07/2009
31/03/2010
31/03/2010
31/03/2010
15/02/2010
15/02/2010
15/02/2010
17/07/2009
17/07/2009
17/07/2009
15/02/2010
15/02/2010
19/01/2010
19/01/2010
19/01/2010
19/01/2010
19/01/2010
15/02/2010
15/02/2010
100
-
-
100
-
-
-
100
-
100
-
-
100
100
-
-
100
-
-
100
-
-
-
-
100
-
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2010(1)
2011(1)
2012(1)
2010(1)
2011(1)
2012(2)
2013(3)
2010(1)
2011(1)
2010(4)
2011(4)
2012(4)
2010(1)
2010(1)
2011(1)
2012(1)
2010(1)
2012(2)
2013(3)
2010(1)
2011(1)
2012(1)
2012(2)
2013(3)
2010(4)
2011(4)
2010(4)
2011(4)
2012(4)
2012(2)
2013(3)
(1)Options vest on completion of service period.
(2)Options vest on commencement of iron ore production on a Mining Lease from the Company’s iron ore projects in Brazil.
(Estimated 30/6/2012).
(3)Options vest on achievement of iron ore production from the Company’s iron ore projects at an average rate of 250,000 tonnes per
month over a consecutive 3 month period. (Estimated 30/6/2013).
(4)These options were issued as replacement awards pursuant to the takeover of Centaurus Resources Limited and vest on completion of
service period.
31
Directors’ Report
For the year ended 30 June 2010
4.3 Remuneration Report – audited (continued)
4.3.3 Equity Instruments (continued)
Modification of terms of equity-settled share-based payment transactions– audited
No terms of equity-settled share-based payment transactions (including options and rights granted as
compensation to a key management person) have been altered or modified by the issuing entity during the
reporting period or the prior period.
Exercise of options granted as compensation – audited
During the reporting period, no shares were issued on the exercise of options previously granted as remuneration.
There are no amounts unpaid on the shares issued as a result of the exercise of the options in the 2010
financial year.
Analysis of movements in options – audited
The movement during the reporting period, by value, of options over ordinary shares in the Company held by
each key management person and each of the five named Company executives and relevant Group executives
is detailed below.
Replacement Awards Options
Employee
options
$
Consideration
for takeover
$
Remuneration
$
Total value granted
in the year
$(A)
Value of options
exercised in year
$(B)
Lapsed
in year
$(C)
Directors
Mr D M Murcia
Mr D P Gordon
Mr K G McKay
Mr P E Freund
Mr G T Clifford
Mr R G Hill
Executives
Mr M Papendieck
143,600
Mr G A James
Mr I Cullen
70,575
-
Mr K Petersen
35,900
66,300
318,800
45,300
-
-
-
-
-
-
-
216,543
571,916
23,350
96,950
-
-
-
-
-
-
-
-
101,243
47,438
91,059
59,610
66,300
318,800
45,300
788,459
23,350
96,950
143,600
70,575
192,302
142,948
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(A) The value of options granted in the year is the fair value of the options calculated at grant date using the Black Scholes option-pricing
model. The total value of the options granted is included in the table above. This amount is allocated to remuneration over the vesting
period (i.e. in years 1 July 2009 to 30 June 2015).
(B)The value of options exercised during the year is calculated as the market price of shares of the Company as at close of trading on the
date the options were exercised after deducting the price paid to exercise the option.
(C)The value of the options that lapsed during the year represents the benefit forgone and is calculated at the date the option lapsed using
the Black Scholes option-pricing model assuming the performance criteria had been achieved.
32
Directors’ Report
For the year ended 30 June 2010
4.4 Audit Committee
The Audit Committee operates in accordance with its Charter which is available on the Company’s website.
The Committee shall consist of at least three non-executive directors with appropriate financial expertise and
working knowledge of the industries in which the Group operates.
The responsibilities of the Committee include the review, assessment and approval of the annual report,
the half-year financial report and all other financial information published by the Group or released to the
market. The Committee assists the Board in reviewing the effectiveness of the organisation’s internal control
environment covering the effectiveness and efficiency of operations, reliability of financial reporting and
compliance with applicable laws and regulations. The Committee oversees the effective operation of the risk
management framework.
In fulfilling its responsibilities, the Audit Committee receives regular reports from management and the
external auditors. It also meets with the external auditors at least twice a year.
The Managing Director and Chief Financial Officer have made the following certifications to the Board:
•
•
that the financial records of the Group for the financial year have been properly maintained, the Group’s
financial reports for the financial year comply with accounting standards and present a true and fair view
of the Group’s financial position and operational results; and
the above statement is founded on a sound system of risk management and internal control and that the
system is operating effectively in all material respects in relation to financial reporting risks.
The Group’s policy is to appoint external auditors who clearly demonstrate quality and independence. The
performance of the external auditor is reviewed annually and applications for tender of external audit services
are requested as deemed appropriate, taking into consideration assessment of performance, existing value
and tender costs. The Corporations Act 2001 requires the rotation of the audit engagement partner at least
every five years.
An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is
provided in the Directors’ Report and in Note 32 to the financial statements. The external auditors are required
to provide an annual declaration of their independence to the Audit Committee. The external auditor is required
to attend the annual general meeting and be available to answer shareholder questions about the conduct of
the audit and the preparation and content of the audit report.
Details of the qualifications of directors of the Audit Committee and their attendance at Committee meetings
are set out in the Directors’ Report.
4.5 Risk Management
The Board is responsible for ensuring there are adequate policies in relation to risk management, compliance
and internal control systems. These policies are available on the Company’s website. In summary, the Group’s
policies are designed to ensure strategic, operational, legal, reputation and financial risks are identified,
assessed, addressed and monitored to enable achievement of the Group’s business objectives.
Considerable importance is placed on maintaining a strong control environment. There is a framework with
clearly drawn lines of accountability and delegation of authority. Adherence to the Group’s Code of Conduct is
required at all times and the Board actively promotes a culture of quality and integrity.
33
Directors’ Report
For the year ended 30 June 2010
4.5 Risk Management (continued)
The Group’s risk management policy is managed by the full Board. The Audit Committee, via its Charter,
oversees the effective operation of the risk management framework. The Board conducts an annual corporate
strategy workshop which reviews the Group’s strategic direction in detail and includes specific focus on the
identification of the key material business and financial risks which could prevent the Group from achieving its
objectives. The Board is required to ensure that appropriate controls are in place to effectively manage those
risks.
Detailed control procedures cover management accounting, financial reporting, project appraisal, environment,
health and safety, information technology security, compliance and other risk management issues. The Board
requires that each major proposal submitted to the Board for decision be accompanied by a comprehensive
risk assessment and, where required, management’s proposed mitigation strategies. The Group has in place
an insurance program which is reviewed periodically by the Board. The Board receives regular reports on
budgeting and financial performance. A system of delegated authority levels has been approved by the Board
to ensure business transactions are properly authorised and executed.
Senior management is responsible for designing, implementing and reporting on the adequacy of the Group’s
risk management and internal control system. A detailed questionnaire process is completed by senior
management on a six monthly basis to facilitate the reporting of risk management to the Board. The Managing
Director and Chief Financial Officer have certified to the Board that the risk management and internal control
systems to manage the Group’s material business risks have been assessed and found to be operating
effectively.
Environment, Health and Safety Management
The Group recognises the importance of environmental and occupational health and safety (OH&S) issues
and is committed to the highest levels of performance. To help meet this objective the Board facilitates the
systematic identification of environmental and OH&S issues and ensures they are managed in a structured
manner. This system allows the Group to:
• monitor its compliance with all relevant legislation;
•
continually assess and improve the impact of its operations on the environment;
• encourage employees to actively participate in the management of environmental and OH&S issues;
• work with trade associations representing the entity’s business to raise standards;
• use energy and other resources efficiently; and
• encourage the adoption of similar standards by the entity’s principal suppliers, contractors and distributors.
To manage OH&S issues, the Board has approved a number of procedure documents including a Safety
Management Plan, Radiation Safety Manual, Environmental Procedures Manual and an Emergency Procedures
and Response Plan. It is a condition of employment for all employees to follow these procedures. Reporting on
OH&S issues is a standard agenda item at regular Board Meetings.
Information on compliance with significant environmental regulations is set out in the Directors’ Report.
34
Directors’ Report
For the year ended 30 June 2010
4.6 Ethical Standards
The Group has developed a statement of values and a Code of Conduct (the Code) which has been fully
endorsed by the Board and applies to all directors and employees. The Code is regularly reviewed and updated
as necessary to ensure it reflects the highest standards of behaviour and professionalism and the practices
necessary to maintain confidence in the Group’s integrity. In summary, the Code requires that at all times, all
Group personnel act with the utmost integrity, objectivity and in compliance with the letter and the spirit of the
law and Group policies.
The purchase and sale of the Company’s securities by directors and employees is not permitted within two
business days after the release to the market of market sensitive information, or when otherwise privy to
information not yet released. The Chairman must be advised prior to any proposed transaction in the
Company’s securities by directors. Directors, officers and employees must not partake in short-term trading
of the Company’s securities which is defined as less than a 30 day period.
The Group has a policy that prohibits directors and employees who are granted share options as part of their
remuneration from entering into arrangements that limit their exposure to losses that would result from share
price decreases. The Group requires all directors and key management personnel to sign annual declarations
of compliance with this policy.
This Code and the Group’s trading policy are discussed with each new employee as part of their induction training.
The Code requires employees who are aware of unethical practices within the Group or breaches of the Group’s
trading policy to report these to the Group. This can be done anonymously. The directors are satisfied that the
Group has complied with the principles of proper ethical standards, including trading in securities.
A copy of the Code and the Share Trading Policy are available on the Company’s website.
4.7 Continuous Disclosure and Shareholder Communication
The Group has written policies and procedures on information disclosure that focus on continuous disclosure
of any information concerning the Company and its controlled entities that a reasonable person would expect to
have a material effect on the price of the Company’s securities. These policies and procedures also include the
arrangements the Group has in place to promote communication with shareholders and encourage effective
participation at general meetings. A summary of these policies and procedures is available on the Company’s
website.
The Company Secretary has been nominated as the person responsible for communications with the Australian
Securities Exchange (ASX). This role includes responsibility for ensuring compliance with the continuous
disclosure requirements in the ASX Listing Rules and overseeing, in conjunction with the Managing Director and
Chairman, information disclosure to the ASX, analysts, brokers, shareholders, the media and the public.
All information disclosed to the ASX is posted on the Company’s website on the same day it is released to the
ASX. When analysts are briefed on aspects of the Group’s operations, the material used in the presentation is
released to the ASX and posted on the Company’s website prior to the presentation made. Procedures have
also been established for reviewing whether any price sensitive information has been inadvertently disclosed,
and if so, this information is also immediately released to the market.
The Group seeks to provide opportunities for shareholders to participate through electronic means. All
Company announcements, media briefings, details of Company meetings, press releases, and financial reports
are available on the Company’s website.
35
Directors’ Report
For the year ended 30 June 2010
4.8 Non-Compliance Statement
The Company has not followed all of the Recommendations set out in Australian Securities Exchange Limited
Listing Rule 4.10.3. The Recommendations that have not been followed and the explanation of any departures
are as follows:
• A formal Board performance assessment was not undertaken during the year, however, a review was
undertaken of the composition of the Board due to changes in the Group’s strategy. The review assessed
the skills, qualifications and performance of the individual Board members which resulted in significant
changes to the composition of the Board.
• Non-executive directors should not receive options. Non-executive directors are eligible to participate in
the Employee Share Option Plan to provide a material additional incentive for their ongoing commitment
and dedication to the continued growth of the Group. The Board considers the issue of options to be
reasonable in the circumstances, to assist the Company in attracting and retaining the highest calibre of
non-executive directors to the Company, whilst maintaining the Group’s cash reserves and delivering on
the Group’s agreed strategy of securing a new advanced exploration or development asset.
• A separate Nomination Committee has not been formed. The role of the Nomination Committee is
carried out by the full Board. The Board considers that given its size, no efficiencies or other benefits are
gained by establishing a separate Nomination Committee.
5.
Principal Activities
During the year the principal activities of the Group consisted of project generation and exploration for iron ore
mineral resources. There were no other significant changes in the nature of the activities of the Group during
the year.
6.
Operating and Financial Review
A summary of consolidated results is set out below:
Interest income
Other income
Loss before income tax expense
Income tax expense
2010
$
381,689
-
381,689
2009
$
545,314
3,345,278
3,890,592
(3,918,654)
(1,265,869)
-
-
Loss attributable to members of Centaurus Metals Limited
(3,918,654)
(1,265,869)
Financial Position
At the end of the financial year the Group had net cash balances of $4,920,035 (2009: $9,673,582) and net
assets of $30,843,241 (2009: $9,525,664). Total liabilities amounted to $5,268,224 (2009: $272,495) and were
limited to trade and other creditors, employee benefits and deferred tax liabilities.
36
Directors’ Report
For the year ended 30 June 2010
Operating and Financial Review (continued)
6.
Exploration
Following a change in strategy in the previous financial year, the Group concentrated its activities on reviewing
new project opportunities during the first half of the year. A number of projects were reviewed in detail.
Following the takeover of Centaurus Resources Limited in January 2010, the Group focussed its exploration
activities on the Brazilian iron ore projects acquired. At the Itambe Iron Ore Project, the Group commenced a
resource upgrade drilling program. The aim of the program is to upgrade the established Inferred Resource to a
Measured and Indicated status in advance of completion of a feasibility study. At the Passabem Iron Ore Project,
the Group completed a resource definition drilling program. Centaurus completed an extensive review of the
Cenibra tenement package. Following this review, the Group exercised its option over a number of tenements in
the package and then commenced a resource drilling program on the Jambreiro Iron Ore Project.
In respect of the Group’s wholly owned Australian Citadel, Percyvale and Dish gold and base metal exploration
projects, no active field activities were undertaken during the year. The Group is actively marketing these
Projects to realise value for the Company.
Exploration work was carried out at several of the Group’s joint venture projects in Australia. In the Mt Isa
region in Queensland, activities were completed by both Ivanhoe Australia Limited on the Snake Creek Project
and MM Mining Plc on the Mt Guide Project.
Corporate
On 11 November 2009, the Company and Centaurus Resources Limited (CUR) announced that they had reached
agreement to merge to create a well funded Brazilian focussed iron ore group. Under the terms of the takeover
offer, CUR shareholders were offered eight (8) shares for every one (1) CUR share they held. A separate offer
was made to CUR optionholders, with the consideration being equivalent options on terms consistent with the
Share Offer. Both the Share and Option Offer were conditional upon a number of conditions, including a 90%
minimum acceptance level.
The Company announced on 19 January 2010 that all of the conditions for the takeover offer had either been
met or waived and the Share and Option Offers were declared unconditional. The takeover offer closed on 29
January 2010 and the compulsory acquisition process to acquire the remaining shares and options for which
acceptances had not been received was completed on 19 March 2010.
Significant changes in the state of affairs
In the opinion of directors, other than as outlined in this report, there were no significant changes in the state
of affairs of the Group that occurred during the financial year under review.
7.
Dividends
No dividend was declared or paid by the Company during the current or previous year.
8.
Events Subsequent to Reporting Date
On 6 August 2010 the Group entered into a Farm Out agreement with a Brazilian-based mining company covering
its two non-core Brazilian Copper-Gold Projects. Under the terms of the agreement, Mining Ventures Do Sul
Pesquisa e Mineração Ltda will spend up to US$4.25 million on the Project areas to earn up to a 90% interest.
37
Directors’ Report
For the year ended 30 June 2010
8.
Events Subsequent to Reporting Date (continued)
On 16 August 2010 the Group announced it had been awarded damages totalling A$2 million against its former joint
venture partner in the Liberdade Iron Ore Project in Brazil. The Group is in the process of enforcing the judgement.
On 8 September 2010 the Company announced a capital raising to raise up to $18 million through a share
placement and a Share Purchase Plan (“Plan”). On 20 September 2010 the Company completed Tranche
1 of the placement raising $6.63 million. Tranche 2 of the share placement will be completed on obtaining
shareholder approval at a meeting of shareholders to take place on 20 October 2010. The Plan closed on 28
September 2010 with the amount of shares to be allotted not yet determined as at the date of this report.
Other than the matters discussed above, there has not arisen in the interval between the end of the financial
year and the date of this report any item, transaction or event of a material and unusual nature likely, in the
opinion of the directors of the Company, to affect significantly the operations of the Group, the results of those
operations, or the state of affairs of the Group, in future financial years.
9.
Likely Developments
Other than likely developments contained in the “Operating and Financial Review”, further information on likely
developments in the operations of the Group and the expected results of operations have not been included
in this report because the directors believe it would be likely to result in unreasonable prejudice to the Group.
10. Environmental Regulation
The Group is subject to environmental laws and regulations under both Australian and Brazilian (State and
Federal) legislation depending on the activities undertaken. Compliance with these laws and regulations is
regarded as a minimum standard for the Group to achieve. There were no known significant breaches of these
regulations during the year.
11. Directors’ Interests
The relevant interest of each director in the shares and options over such shares issued by the companies
within the Group and other related bodies corporate, as notified by the directors to the ASX in accordance with
S205G(1) of the Corporations Act 2001, at the date of this report is as follows:
Directors
Mr D M Murcia
Mr D P Gordon
Mr P E Freund
Mr K G McKay
Mr G T Clifford
Mr R G Hill
Ordinary shares
Employee
options
Bid options issued on
takeover of Centaurus
Resources Limited
Total number
of options over
ordinary shares
9,373,902
52,358,328
200,000
2,419,000
1,000,000
8,555,440
1,500,000
6,000,000
16,000,000(1)
2,000,000
1,500,000
1,500,000
-
1,600,000
-
-
-
8,177,720
1,500,000
7,600,000
16,000,000
2,000,000
1,500,000
9,677,720
(1)These options were issued as replacement awards pursuant to the takeover of Centaurus Resources Limited.
38
Directors’ Report
For the year ended 30 June 2010
12. Share Options
Options granted to directors and executives of the Company
During or since the end of the financial year, the Company granted options for no consideration over unissued
ordinary shares in the Company to the following directors and to the following of the five most highly remunerated
officers of the Company as part of their remuneration:
Number of options granted
Exercise price
Expiry date
Directors
Mr D M Murcia
Mr D P Gordon
Mr K G McKay
500,000
500,000
500,000
1,000,000
1,000,000
2,000,000
2,000,000
500,000
500,000
Mr P E Freund
16,000,000(1)
Mr G T Clifford
Mr R G Hill
Executives
Mr M Papendieck
Mr G A James
Mr I Cullen
Mr K Petersen
500,000
500,000
500,000
500,000
4,000,000
250,000
250,000
500,000
750,000
4,000,000(1)
2,400,000(1)
500,000
500,000
0.075
0.100
0.120
0.050
0.075
0.100
0.080
0.075
0.100
0.070
0.075
0.080
0.100
0.120
0.080
0.075
0.100
0.120
0.080
0.070
0.080
0.080
0.080
17/07/2014
17/07/2014
17/07/2014
17/07/2014
17/07/2014
17/07/2014
31/03/2015
17/07/2014
17/07/2014
31/10/2014
17/07/2014
31/03/2015
31/03/2015
31/03/2015
15/02/2015
17/07/2014
17/07/2014
17/07/2014
15/02/2015
30/06/2014
31/12/2013
15/02/2015
15/02/2015
All options were granted during the financial year. No options have been granted since the end of the financial year.
(1) These options were issued as replacement awards pursuant to the takeover of Centaurus Resources Limited.
39
Directors’ Report
For the year ended 30 June 2010
12. Share Options (continued)
Unissued shares under options
At the date of this report unissued ordinary shares of the Company under option are:
Employee Options
(including replacement options)
Bid Options
Expiry date
Exercise price
31/12/2010
27/11/2011
6/01/2012
19/03/2012
19/03/2012
$0.220
$0.125
$0.125
$0.115
$0.135
4/08/2012
$0.03125
20/11/2012
20/11/2012
20/11/2012
14/02/2013
29/08/2013
29/08/2013
29/08/2013
15/12/2013
15/12/2013
15/12/2013
31/12/2013
31/12/2013
30/06/2014
17/07/2014
17/07/2014
17/07/2014
17/07/2014
31/10/2014
15/02/2015
31/03/2015
31/03/2015
31/03/2015
19/02/2015
Total
$0.205
$0.245
$0.285
$0.100
$0.125
$0.150
$0.175
$0.100
$0.120
$0.140
$0.080
$0.150
$0.070
$0.050
$0.075
$0.100
$0.120
$0.070
$0.080
$0.080
$0.100
$0.120
$0.095
Vested
1,200,000
-
-
250,000
500,000
-
500,000
500,000
500,000
-
50,000
50,000
100,000
250,000
250,000
-
1,200,000
1,400,000
2,000,000
1,000,000
2,825,000
3,325,000
-
4,000,000
1,150,000
500,000
-
-
-
Unvested
Vested
Total number
of shares
under option
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
500,000
1,200,000
1,200,000
2,000,000
-
-
-
1,150,000
12,000,000
5,350,000
2,000,000
500,000
500,000
700,000
-
1,200,000
12,000,000
12,000,000
3,519,392
3,519,392
-
-
250,000
500,000
30,000,000
30,000,000
-
-
-
500,000
500,000
500,000
16,000,000
16,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
50,000
100,000
250,000
250,000
500,000
2,400,000
2,600,000
4,000,000
1,000,000
2,825,000
3,325,000
1,150,000
16,000,000
6,500,000
2,500,000
500,000
500,000
700,000
21,550,000
27,100,000
61,519,392
110,169,392
These options do not entitle the holder to participate in any share issue of the Company.
40
Directors’ Report
For the year ended 30 June 2010
12. Share Options (continued)
Shares issued on exercise of options
During or since the end of the financial year, the Company has not issued any ordinary shares as a result of
the exercise of options.
13.
Indemnification and Insurance of Officers and Auditors
During the financial year, Centaurus Metals Limited paid insurance premiums to insure the directors, executive
officers and secretary of the Group. The amount of premiums paid has not been disclosed due to confidentiality
requirements under the contract of insurance.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may
be brought against the officers in their capacity as officers of entities in the Consolidated Entity, and any other
payments arising from liabilities incurred by the officers in connection with such proceedings, other than
where such liabilities arise out of conduct involving a wilful breach of duty by the officers or the improper use
by the officers of their position or of information to gain advantage for themselves or someone else or to cause
detriment to the Group.
14. Non-audit Services
During the year KPMG, the Company’s auditor, has performed certain other services in addition to their
statutory duties.
The Board has considered the non-audit services provided during the year by the auditor and in accordance with
written advice provided by resolution of the Audit Committee, is satisfied that the provision of those non-audit
services during the year by the auditor is compatible with, and did not compromise, the auditor independence
requirements of the Corporations Act 2001 for the following reasons:
• all non-audit services were subject to the corporate governance procedures adopted by the Company and
have been reviewed by the Audit Committee to ensure they do not impact the integrity and objectivity of
the auditor; and
•
the non-audit services provided do not undermine the general principles relating to auditor independence
as set out in APES 110 Code of Ethics for Professional Accountants, as they did not involve reviewing or
auditing the auditor’s own work, acting in a management or decision making capacity for the Company,
acting as an advocate for the Company or jointly sharing risks and rewards.
Details of the amounts paid to the auditor of the Company, KPMG, and its related practices for audit and
non-audit services provided during the year are set out below.
Audit services:
Auditors of the Company
Audit and review of financial reports (KPMG Australia)
Services other than statutory audit:
Other services
Taxation compliance services (KPMG Australia)
2010
$
2009
$
25,500
27,500
50,595
13,987
41
Directors’ Report
For the year ended 30 June 2010
15. Lead Auditor’s Independence Declaration
The Lead auditor’s independence declaration is set out on page 43 and forms part of the directors’ report
for the financial year ended 30 June 2010.
This report is signed in accordance with a resolution of the directors.
D P Gordon
Managing Director, Perth, Western Australia
30 September 2010
42
Lead Auditor’s Independence Declaration
43 43
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2010
Other income
Personnel expenses
Depreciation and amortisation
Exploration and evaluation expenses
Project generation expenses
Merger and acquisition expenses
Impairment loss
Other expenses
Results from operating activities
Finance income
Finance expenses
Net finance income
Loss before income tax
Income tax expense
Loss for the period
Other comprehensive income
Net change in fair value of available-for-sale financial assets
Net change in fair value of available-for-sale financial assets
transferred to profit or loss
Foreign currency translation difference for foreign operation
Income tax on other comprehensive income
Other comprehensive income for the period, net of income tax
Notes
8
9
15
10
11
2010
$
2009
$
38,549
3,188,728
(1,781,918)
(1,183,564)
(57,901)
(455,309)
(492,526)
(842,206)
(23,551)
(382,079)
-
-
-
(2,432,410)
(688,484)
(476,405)
(4,279,795)
(1,309,281)
381,689
(20,548)
361,141
701,864
(658,452)
43,412
(3,918,654)
(1,265,869)
-
-
(3,918,654)
(1,265,869)
(100,000)
-
606,706
-
506,706
(658,452)
658,452
-
-
-
Total comprehensive income for the period
(3,411,948)
(1,265,869)
Earnings per share
Basic loss per share
Diluted loss per share
22
22
Cents
(0.92)
(0.92)
Cents
(0.44)
(0.44)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
44
Consolidated Statement of Financial Position
For the year ended 30 June 2010
Current assets
Cash and cash equivalents
Other receivables and prepayments
Total current assets
Non-current assets
Other investments, including derivatives
Property, plant and equipment
Exploration and evaluation assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
Notes
12(a)
13
14
15
16
17
18
19
2010
$
4,920,035
595,973
5,516,008
495,417
624,146
29,475,894
30,595,457
36,111,465
783,839
99,407
883,246
4,384,978
4,384,978
5,268,224
30,843,241
2009
$
9,673,582
86,229
9,759,811
-
38,348
-
38,348
9,798,159
257,697
14,798
272,495
-
-
272,495
9,525,664
36,553,428
4,425,149
(10,135,336)
30,843,241
15,544,255
351,380
(6,369,971)
9,525,664
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
45
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47
Consolidated Statement of Cash Flows
For the year ended 30 June 2010
Cash flows from operating activities
Cash paid to suppliers and employees
Interest received
Net cash used in operating activities
Cash flows from investing activities
Payments for plant and equipment
Refunds/(payments) for security deposits
Exploration and evaluation expenditure
Proceeds from sale of plant and equipment
Proceeds from sale of available-for-sale financial assets
Proceeds from sale of mineral tenements
Payments for merger and acquisition costs
Acquisition of subsidiary, net of cash acquired
Net cash from/(used in) investing activities
Notes
2010
$
2009
$
(1,895,165)
(1,572,423)
382,401
537,907
12(b)
(1,512,764)
(1,034,516)
(381,700)
(140,621)
(8,342)
25,000
(2,468,394)
(1,520,334)
22,319
-
17,146
560,716
35,000
6,500,000
7
(821,408)
504,722
-
-
(3,250,082)
5,574,186
Net increase/(decrease) in cash and cash equivalents
(4,762,846)
4,539,670
Cash and cash equivalents at 1 July
Effect of exchange rate fluctuations on cash held
9,673,582
5,133,912
9,299
-
Cash and cash equivalents at 30 June
12(a)
4,920,035
9,673,582
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
48
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
NOTE CONTENTS
PAGE
1
2
3
4
5
6
7
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9
10
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15
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33
Reporting Entity
Basis of Preparation
Significant Accounting Policies
Determination of Fair Values
Financial Risk Management
Operating Segments
Business Combination
Other Income
Personnel Expenses
Finance Income and Expenses
Income Tax
Cash and Cash Equivalents
Other Receivables and Prepayments
Other Investments
Property, Plant and Equipment
Exploration and Evaluation Assets
Trade and Other Payables
Employee Benefits
Deferred Tax Liabilities
Capital and Reserves
Dividends
Earnings/(Loss) Per Share
Related Parties
Financial Instruments
Contingent Liabilities
Capital Commitments
Operating Leases
Share-Based Payments
Farm-Out and Joint Venture Exploration Agreements
Group Entities
Subsequent Events
Remuneration of Auditors
Parent Entity Information
50
50
51
64
64
67
68
69
69
69
70
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72
72
73
75
76
76
76
76
77
77
78
81
84
85
86
86
89
89
90
90
91
49
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
For the year ended 30 June 2010
1.
Reporting Entity
Centaurus Metals Limited (“the Company”) is a company domiciled in Australia. The Company was formerly
known as Glengarry Resources Limited (ASX code: GGY) and the change of name was effective from 14 April
2010 upon the completion of the merger with Centaurus Resources Limited. The address of the Company’s
registered address is Level 1, 16 Ord Street, West Perth WA 6005. The consolidated financial statements of
the Company as at and for the year ended 30 June 2010 comprise the Company and its subsidiaries (together
referred to as the “Group” and individually as “Group entities”). The Group primarily is involved in exploration
for iron ore resources.
2.
Basis of Preparation
(a) Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by
the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial
statements of the Group comply with International Financial Reporting Standards (IFRSs) and interpretations
adopted by the International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by the Board of Directors on 30 September 2010.
(b) Basis of measurement
The consolidated financial statements have been prepared under the historical cost convention, except for the
following material items in the statement of financial position:
• Derivative financial instruments are measured at fair value;
• Financial instruments at fair value through profit or loss are measured at fair value; and
• Available-for-sale financial assets are measured at fair value.
(c) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional
currency.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with AASB’s requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which the estimates are revised and in any future periods affected.
Determining the recoverability of exploration and evaluation expenditure capitalised in accordance with
the Group’s accounting policy (refer note 3(e)), requires estimates and assumptions as to future events and
circumstances, in particular, whether successful development and commercial exploitation, or alternatively
sale, of the respective areas of interest will be achieved. Critical to this assessment is estimates and
assumptions as to ore reserves, the timing of expected cash flows, exchange rates, commodity prices and
future capital requirements. Changes in these estimates and assumptions as new information about the
presence of recoverability of an ore reserves becomes available, may impact the assessment of the recoverable
amount of exploration and evaluation assets. If, after having capitalised the expenditure under accounting
policy 3(e), a judgement is made that recovery of the expenditure is unlikely, an impairment loss is recorded
in the income statement in accordance with accounting policy 3(g). The carrying amounts of exploration and
evaluation assets are set out in note 16.
50
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
2.
Basis of Preparation (continued)
(d). Use of estimates and judgements (continued)
Information about critical judgements in applying accounting policies that have the most significant effect on
the amounts recognised in the financial statements is included in the following notes:
• Note 4
- determining the fair values
• Note 24
- financial instruments
• Note 28
- measurement of share-based payments
(e) Change of accounting policy
Starting 1 July 2009, the Group has changed its accounting policies in the following areas:
• Determination and presentation of operating segments
• Presentation of financial statements
3.
Significant Accounting Policies
The accounting policies set out below have been applied consistently to all periods presented in these
consolidated financial statements, and have been applied consistently by the Group entities, except as explained
in notes 2(e) and 3(a)(i), which address changes in accounting policies.
(a) Basis of consolidation
(i) Business combinations
The Group has applied the acquisition method for the business combination disclosed in note 7.
For every business combination, the Group identifies the acquirer, which is the combining entity that obtains
control of the other combining entities or businesses. Control is the power to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. In assessing control, the Group takes into
consideration potential voting rights that currently are exercisable. The acquisition date is the date on which
control is transferred to the acquirer. Judgement is applied in determining the acquisition date and determining
whether control is transferred from one party to another.
Measuring goodwill
The Group measures goodwill as the fair value of the consideration transferred including the recognised
amount of any non-controlling interest in the acquiree, less the net recognised amount (general fair value) of
the identifiable assets acquired and liabilities assumed, all measured as at the acquisition date.
Consideration transferred includes the fair value of the assets transferred, liabilities incurred by the Group to
the previous owners of the acquiree, and equity interests issued by the Group. Consideration transferred also
includes the fair value of any share-based payment awards of the acquiree that are replaced mandatorily in the
business combination to the extent they relate to pre-combination services.
Share-based payment awards
When share-based payment awards exchanged (replacement awards) for awards held by the acquiree’s
employees (acquiree’s awards) relate to past services, then a part of the market-based measure of the awards
replaced is included in the consideration transferred.
Transaction costs
Transaction costs that the Group incurs in connection with a business combination, such as legal fees, due
diligence fees and other professional and consulting fees, are expensed as incurred.
51
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(a) Basis of consolidation (continued)
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed when necessary to align them with policies adopted
by the Group.
(iii) Transactions eliminated on consolidation
Inter-group balances and transactions, and any unrealised income and expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from
transactions with equity accounted investees are eliminated against the investment to the extent of the Group’s
interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to the
extent that there is no evidence of impairment.
Gain and losses are recognised when the contributed assets are consumed or sold by the equity accounted
investees or, if not consumed or sold by the equity accounted investee, when the Group’s interest in such
entities is disposed of.
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities
at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional currency at the foreign exchange rate at
that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in
the functional currency at the beginning of the period, adjusted for effective interest and payments during the
period, and the amortised cost in foreign currency translated at the exchange rate at the end of the period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are
retranslated to the functional currency at the exchange rate at the date that the fair value was determined.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences
arising on the retranslation of available-for-sale equity instruments, a financial liability designated as a hedge
of the net investment in a foreign operation, or qualifying cash flow hedges, which are recognised in other
comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency
are translated using the exchange rate at the date of the transaction.
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on
acquisition, are translated to Australian dollars at exchange rates at reporting date. The income and expenses of
foreign operations are translated to Australian dollars at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income. Since 1 July 2004, the Group’s
date of transition to AASBs, such differences have been recognised in the foreign currency translation reserve
(translation reserve, or FCTR). When a foreign operation is disposed of, in part or in full, the relevant amount
in the FCTR is transferred to profit or loss as part of the profit or loss on disposal.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned
nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are
considered to form part of a net investment in a foreign operation and are recognised in other comprehensive
income, and are presented within equity in the FCTR.
52
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(c) Financial instruments
(i) Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other
financial assets (including assets designated at fair value through profit and loss) are recognised initially on the
trade date at which the Group becomes a party to the contractual provisions of the instruments.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially
all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial
assets that is created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position
when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net
basis or to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial assets: receivables, cash and cash equivalents and
available-for-sale financial assets.
Receivables
Receivables are financial assets with fixed or determinable payments that are not quoted in an active market.
Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition receivables are measured at amortised cost using the effective interest method, less any
impairment losses.
Receivables comprise trade and other receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or
less. Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management
are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-
sale. The Group’s investments in equity securities and certain debt securities are classified as available-for-
sale financial assets. Subsequent to initial recognition, they are measured at fair value and changes therein,
other than impairment losses (refer note 3(g)) and foreign currency differences on available-for-sale equity
instruments (see note 3(b)(i)), are recognised in other comprehensive income and presented within equity in
the fair value reserve. When an investment is derecognised, the cumulative gain or loss in equity is transferred
to profit and loss.
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are
originated. All other financial liabilities (including liabilities designated at fair value through profit or loss) are
recognised initially on the trade date at which the Group becomes a party to the contractual provisions of the
instrument. The Group derecognises a financial liability when its contractual obligations are discharged or
cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement
of financial position when, and only when, the Group has a legal right to offset the amounts and intends either
to settle on a net basis or to realise the asset and settle the liability simultaneously.
53
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(c) Financial instruments (continued)
(ii) Non-derivative financial liabilities (continued)
The Group has the following non-derivative financial liabilities: trade and other payables. Such financial liabilities
are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition these financial liabilities are measured at amortised cost using effective interest rate method.
(iii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares
or share options are recognised as a deduction from equity, net of any tax effect.
(iv) Derivatives financial instruments
Derivatives are recognised initially at fair value; attributable transactions costs are recognised in profit and
loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value and changes therein
are recognised immediately in profit or loss.
Other non-trading derivatives
When a derivative financial instrument is not held for trading, and is not designated in a qualifying hedge
relationship, all changes in its value are recognised immediately in profit or loss.
(d) Property, plant and equipment
(i) Recognition and measurement
Items of plant and equipment are measured at cost less accumulated depreciation and accumulated impairment
losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-
constructed assets includes the cost of materials and direct labour, any other costs directly attributable to
bringing the assets to a working condition for their intended use, the costs of dismantling and removing the
items and restoring the site on which they are located, and capitalised borrowing costs. Cost also may include
transfers from comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency
purchases of property, plant and equipment. Purchase software that is integral to the functionality of the
related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net
within other income in profit or loss. When revalued assets are sold, the amounts included in the revaluation
reserve are transferred to retained earnings.
(ii) Subsequent costs
The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of
an item if it is probable that the future economic benefits embodied within the part will flow to the Group, and
its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of the
day-to-day servicing the property, plant and equipment are recognised in profit and loss as incurred.
54
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(d) Property, plant and equipment (continued)
(iii) Depreciation
Depreciation is calculated over the depreciable amount, which is the cost of an asset, or other amount
substituted for cost, less its residual value.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption
of the future economic benefits embodied in the asset. Leased assets are depreciated over shorter of the lease
term and their useful lives unless it is reasonably certain that the Group will obtain ownership by the end of the
lease term. Land is not depreciated.
The estimated useful lives for the current and comparative periods are as follows:
• Machinery
• Vehicles
10-15 years
3-5 years
• Furniture, fittings and equipment
3-8 years
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted
if appropriate.
(e) Exploration and evaluation expenditure
Exploration for and evaluation of mineral resources is the search for mineral resources after the entity has obtained
legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability
of extracting the mineral resource. Accordingly, exploration and evaluation expenditures are those expenditures
incurred by the Group in connection with the exploration for and evaluation of mineral resources before the technical
feasibility and commercial viability of extracting mineral resources are demonstrable.
Accounting for exploration and evaluation expenditure is assessed separately for each ‘area of interest’.
An ‘area of interest’ is an individual geological area which is considered to constitute a favourable environment
for the presence of a mineral deposit or has been proved to contain such a deposit.
Expenditure incurred on activities that precede exploration and evaluation of mineral resources, including all
expenditure incurred prior to securing legal rights to explore an area, is expensed as incurred. For each area
of interest the expenditure is recognised as an exploration and evaluation asset where the following conditions
are satisfied:
1) The rights to tenure of the area of interest are current; and
2) At least one of the following conditions is also met:
(i) The expenditure is expected to be recouped through the successful development and commercial
exploitation of an area of interest, or alternatively by its sale; and
(ii) Exploration and evaluation activities in the area of interest have not, at reporting date, reached a stage
which permits a reasonable assessment of the existence or otherwise of ‘economically recoverable
reserves’ and active and significant operations in, or in relation to, the area of interest are continuing.
Economically recoverable reserves are the estimated quantity of product in an area of interest that can
be expected to be profitably extracted, processed and sold under current and foreseeable conditions.
55
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(e) Exploration and evaluation expenditure (continued)
Exploration and evaluation assets include:
• Acquisition of rights to explore;
• Topographical, geographical, geochemical and geophysical studies;
• Exploratory drilling, trenching and sampling; and
• Activities in relation to evaluating the technical feasibility and commercial viability of extracting the
mineral resource.
General and administrative costs are allocated to, and included in, the cost of exploration and evaluation assets
only to the extent that those costs can be related directly to the operational activities in the area of interest to
which the exploration and evaluation assets relate. In all other instances, these costs are expensed as incurred.
Exploration and evaluation assets are classified as tangible or intangible according to the nature of the assets.
As the assets are not yet ready for use they are not depreciated.
Assets that are classified as intangible assets include:
• Drilling rights;
• Acquired rights to explore;
• Exploratory drilling costs; and
• Trenching and sampling costs.
Exploration and evaluation assets are transferred to Development Assets once technical feasibility and
commercial viability of an area of interest is demonstrable. Exploration and evaluation assets are assessed for
impairment and any impairment loss is recognised prior to being reclassified.
The carrying amount of the exploration and evaluation assets is dependent on successful development and
commercial exploitation, or alternatively, sale of the respective area of interest.
Impairment testing of exploration and evaluation assets
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical
feasibility and commercial viability or facts and circumstances suggest that the carrying amount exceeds the
recoverable amount.
56
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(e) Exploration and evaluation expenditure (continued)
Exploration and evaluation assets are tested for impairment when any of the following facts and circumstances
exist:
• The term of exploration license in the specific area of interest has expired during the reporting period or
will expire in the near future and is not expected to be renewed;
• Substantive expenditures on further exploration for and evaluation of mineral resources in the specific
area are not budgeted nor planned;
• Exploration for and evaluation of mineral resources in the specific area has not led to the discovery of com-
mercially viable quantities of mineral resources and the decision was made to discontinue such activities
in the specified area; or
• Sufficient data exists to indicate that although a development in the specific area is likely to proceed, the
carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful
development or by sale.
Where a potential impairment is indicated, an assessment is performed for each cash-generating unit which
is no larger than the area of interest. The Group performs impairment testing in accordance with accounting
policy 3(g)(ii).
Farm-out arrangements
Arrangements whereby an external party earns an ownership interest in an exploration or development
property via the sole-funding of a specified exploration, evaluation or development programme or by injection
of funds to be utilised for such a programme will be accounted so that the Group recognises its share of assets,
liabilities and equity associated with the property. Any gain or loss upon initial recognition of these items will
be recognised in the income statement.
(f) Leased assets
Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified
as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its
fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is
accounted for in accordance with the accounting policy applicable to that asset.
Other leases are operating leases and the leased assets are not recognised in the Group’s statement of financial
position.
(g)
Impairment
(i) Financial assets (including receivables)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine
whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence
indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a
negative effect on the estimated future cash flows of that asset that can be estimated reliably.
Objective evidence that financial assets (including equity securities) are impaired can include default or
delinquency by a debtor, restructuring of an amount due to the Group on terms that the Group would not
consider otherwise, indications that a debtor or issuer will enter bankruptcy, the disappearance of an active
market for a security. In addition, for an investment in an equity security, a significant or prolonged decline in
its fair value below its cost is objective evidence of impairment.
57
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(g) Impairment (continued)
The Group considers evidence of impairment for receivables at both a specific asset and collective level. All
individually significant receivables are assessed for specific impairment. All individually significant receivables
found not to be specifically impaired are then collectively assessed for any impairment that has been incurred
but not yet identified. Receivables that are not individually significant are collectively assessed for impairment
by grouping together receivables with similar risk characteristics.
In assessing collective impairment the Group uses historical trends of the probability of default, timing of
recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or less than suggested
by historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the
asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance
account against receivables. Interest on the impaired asset continues to be recognised through the unwinding
of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in
impairment loss is reversed through profit or loss.
Impairment losses on available-for-sale investment securities are recognised by transferring the cumulative
loss that has been recognised in other comprehensive income, and presented in the fair value reserve in equity,
to profit or loss. The cumulative loss that is removed from other comprehensive income and recognised in profit
or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and
the current fair value, less any impairment loss previously recognised in profit or loss. Changes in impairment
provisions attributable to time value are reflected as a component of interest income.
If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the
increase can be related objectively to an event occurring after the impairment loss was recognised in profit or
loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However,
any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in
other comprehensive income.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of impairment. If any such indication exists, then the
asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or
that are not yet available for use, the recoverable amount is estimated each year at the same time.
The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair
value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested
individually are grouped together into the smallest group of assets that generates cash inflows from continuing
use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating
unit”). Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to
which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the
lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business
combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination.
58
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(g) Impairment (continued)
The Group’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset
may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable
amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs
are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the
carrying amounts of the other assets in the unit (group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine
the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount
does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if
no impairment loss had been recognised.
(h) Non-current assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, that are expected to be recovered
primarily through sale rather than through continuing use, are classified as held for sale. Immediately before
classification as held for sale, the assets, or components of a disposal group, are remeasured in accordance
with the Group’s accounting policies. Thereafter generally the assets, or disposal group, are measured at the
lower of their carrying amount and fair value less cost to sell. Any impairment loss on a disposal group first
is allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no loss is
allocated to inventories, financial assets, deferred tax assets, employee benefit assets, investment property
and biological assets, which continue to be measured in accordance with the Group’s accounting policies.
Impairment losses on initial classification as held for sale and subsequent gains or losses on remeasurement
are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.
(i) Employee benefits
(i) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss
in the periods during which services are rendered by employees. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in future payments is available.
(ii) Other long-term employee benefits
The Group’s net obligation in respect of long-term employee benefits other than defined benefit plans is the
amount of future benefit that employees have earned in return for their service in the current and prior periods
plus related on-costs; that benefit is discounted to determine its present value, and the fair value of any related
assets is deducted. The discount rate is the yield at the reporting date on AA credit-rated or government bonds
that have maturity dates approximating the terms of the Group’s obligations. The calculation is performed
using the projected unit credit method. Any actuarial gains or losses are recognised in profit or loss in the
period in which they arise.
59
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(i) Employee benefits (continued)
(iii) Termination benefits
Termination benefits are recognised as an expense when the Group is demonstrably committed, without
realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal
retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary
redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Group
has made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of
acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting period,
then they are discounted to their present value.
(iv) Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the
related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
(v) Share-based payment transactions
The grant date fair value of share-based payment awards granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the period that the employees unconditionally become
entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for
which the related service and non-market vesting conditions are expected to be met, such that the amount
ultimately recognised as an expense is based on the number of awards that do not meet the related service and
non-market performance conditions at the vesting date. For share-based payment awards with non-vesting
conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and
there is no true-up for differences between expected and actual outcomes.
The fair value of the amount payable to employees in respect of share appreciation rights, which are settled in
cash, is recognised as an expense, with a corresponding increase in liabilities, over the period that the employees
unconditionally become entitled to payment. The liability is remeasured at each reporting date and at settlement
date. Any changes in the fair value of the liability are recognised as personnel expense in profit or loss.
Share-based payment arrangements in which the Group receives goods or services as consideration for its
own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of
how the equity instruments are obtained by the Group.
When the Company grants options over its shares to employees of subsidiaries, the fair value at grant date is
recognised as an increase in the investments in subsidiaries, with a corresponding increase in equity over the
vesting period of the grant.
(j) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation
that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognised as finance cost.
60
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(k) Revenue
Revenue is measured at the fair value of the consideration received or receivable, net of returns, trade
allowances and duties and taxes paid. Interest revenue is recognised using the effective interest method.
Revenue is recognised when persuasive evidence exists, usually in the form of an executed sales agreement,
that the significant risks and rewards of ownership have been transferred to the buyer, recovery of the
consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is
no continuing management involvement with the goods, and the amount of revenue can be measured reliably.
If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is
recognised as a reduction of revenue as the sales are recognised.
(l) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term
of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the
term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance expense and the
reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so
as to produce a constant periodic rate of interest on the remaining balance of the liability.
Contingent lease payments are accounted for by revising the minimum lease payments over the remaining
term of the lease when the lease adjustment is confirmed.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is or contains a lease. A
specific asset is the subject of a lease if fulfilment of the arrangement is dependent on the use of that specified
asset. An arrangement conveys the right to use the asset if the arrangement conveys to the Group the right
to control the use of the underlying asset. At inception or upon reassessment of the arrangement, the Group
separates payments and other consideration required by such an arrangement into those for the lease and
those for other elements on the basis of their relative fair values. If the Group concludes for a finance lease
that it is impracticable to separate the payments reliably, an asset and a liability are recognised at an amount
equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and
an imputed finance charge on the liability is recognised using the Group’s incremental borrowing rate.
(m) Finance income and finance costs
Finance income comprises interest income on funds invested (including available-for-sale financial assets),
dividend income, gains on the disposal of available-for-sale financial assets, changes in the fair value of financial
assets at fair value through profit or loss, and gains on hedging instruments that are recognised in profit or
loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Dividend
income is recognised in profit or loss on the date that the Group’s right to receive payment is established, which
in the case of quoted securities is the ex-dividend date.
Finance costs comprise interest expense on borrowings, changes in the fair value of financial assets at
fair value through profit or loss, impairment losses recognised on financial assets, and losses on hedging
instruments that are recognised in profit or loss. Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective
interest method.
Foreign currency gains and losses are reported on a net basis.
61
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(n)
Income tax
Income tax expense comprises current and deferred tax. Current and deferred tax are recognised in profit or
loss except to the extent that it relates to a business combination, or items recognised directly in equity or in
other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous
years.
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not
recognised for the following temporary differences: the initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences
relating to investments in subsidiaries and associates and jointly controlled entities to the extent that it is
probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognised for
taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the
tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset
if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes
levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences,
to the extent that it is probable that future taxable profits will be available against which they can be utilised.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer
probable that the related tax benefit will be realised.
(o) Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where
the amount of GST incurred is not recoverable from the taxation authority. In these circumstances, the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable
from, or payable to, the ATO is included as a current asset or liability in the balance sheet.
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows
arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified
as operating cash flows.
(p) Earnings per share
The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is
calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted
average number of ordinary shares outstanding during the period, adjusted for shares held by the Company’s
sponsored employee share plan trust. Diluted EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for shares
held by the Company’s sponsored employee share plan trust, for the effects of all dilutive potential ordinary
shares, which comprise convertible notes and share options granted to employees.
62
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(q) Segment reporting
Determination and presentation of operating segments
As of 1 July 2009 the Group determines and presents operating segments based on the information that
internally is provided to the Managing Director, who is the Group’s chief operating decision maker. This change
in accounting policy is due to the adoption of AASB 8 Operating Segments. Previously operating segments were
determined and presented in accordance with AASB 114 Segment Reporting. The new accounting policy in
respect of segment operating disclosures is presented as follows.
Comparative segment information has been re-presented in conformity with the transitional requirements of
such standard. Since the change in accounting policy only impacts presentation and disclosure aspects, there
is no impact on earnings per share.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the
Group’s other components. All operating segments’ operating results are regularly reviewed by the Group’s
MD to make decisions about resources to be allocated to the segment and assess its performance, and for
which discrete financial information is available.
Segment results that are reported to the MD include items directly attributable to a segment as well as those
that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily
the Group’s headquarters), head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and
equipment, and intangible assets other than goodwill.
(r) Presentation of financial statements
The Group applies revised AASB 101 Presentation of Financial Statements (2007), which became effective as of
1 January 2009. As a result, the Group presents in the consolidated statement of changes in equity all owner
changes in equity, whereas all non-owner changes in equity are presented in the consolidated statement of
comprehensive income.
Comparative information has been re-presented so that it also is in conformity with the revised standard. Since
the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share.
(s) New standards and interpretations not yet adopted
The following standards, amendments to standards and interpretations have been identified as those which
may impact the entity in the period of initial application. They are available for early adoption at 30 June 2010,
but have not been applied in preparing this financial report.
• AASB 9 Financial Instruments includes requirements for the classification and measurement of financial
assets resulting from the first part of Phase 1 of the project to replace AASB 139 Financial Instruments:
Recognition and Measurement.
AASB 9 will become mandatory for the Group’s 30 June 2014 financial statements. Retrospective application
is generally required, although there are exceptions, particularly if the entity adopts the standard for the
year ended 30 June 2012 or earlier. The Group has not yet determined the potential effect of the standard.
• AASB 124 Related Party Disclosures (revised December 2009) simplifies and clarifies the intended meaning
of the definition of a related party and provides a partial exemption from the disclosure requirements for
government-related entities. The amendments, which will become mandatory for Group’s 30 June 2012
financial statements, are not expected to have any impact on the financial statements.
63
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
3.
Significant Accounting Policies (continued)
(s) New standards and interpretations not yet adopted (continued)
• AASB 2009-5 Further amendments to Australian Accounting Standards arising from the Annual Improvements
Process affect various AASBs resulting in minor changes for presentation, disclosure, recognition and
measurement purposes. The amendments, which become mandatory for the Group’s 30 June 2011
financial statements, are not expected to have a significant impact on the financial statements.
• AASB 2009-8 Amendments to Australian Accounting Standards - Group Cash-settled Share-based Payment
Transactions resolves diversity in practice regarding the attribution of cash-settled share-based payments
between different entities within a group. As a result of the amendments AI 8 Scope of AASB 2 and AI 11 AASB
2 - Group and Treasury Share Transactions will be withdrawn from the application date. The amendments,
which become mandatory for the Group’s 30 June 2011 financial statements, are not expected to have a
significant impact on the financial statements.
4.
Determination of Fair Values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities. Fair values have been determined for measurement and
/ or disclosure purposes based on the following methods. When applicable, further information about the
assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
(i) Investments in equity securities
The fair value of available-for-sale financial assets is determined by reference to their quoted closing bid price
at the reporting date.
(ii) Trade and other receivables
The fair value of trade and other receivables is estimated as the present value of future cash flows, discounted at
the market rate of interest at the reporting date. This fair value is determined for disclosure purposes.
(iii) Share-based payment transactions
The fair value of the employee share options and the share appreciation rights is measured using the Black-
Scholes formula. Measurement inputs include share price on measurement date, exercise price of the
instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected
due to publicly available information), weighted average expected life of the instruments (based on historical
experience and general option holder behaviour), expected dividends, and the risk-free interest rate (based on
government bonds). Service conditions attached to the transactions are not taken into account in determining
fair value.
5.
Financial Risk Management
Overview
The Group has exposure to the following risks arising from the use of financial instruments:
• Credit Risk
• Liquidity Risk
• Market Risk
This note presents information about the Groups’ exposure to each of the above risks, their objectives, policies
and processes for measuring and managing risk, and their management of capital. Further quantitative
disclosures are included throughout these consolidated financial statements.
64
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
5.
Financial Risk Management (continued)
Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the risk
management framework. The Audit Committee, via its Charter, oversees the effective operation of the risk
management framework.
Risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate
risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group’s activities. The Group, through
its training and management standards and procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their role and obligations.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails
to meet its contractual obligations, and arises principally from the Group’s receivables from customers and
investment securities. No impairment of receivables in the Group is required for recognition.
Other receivables and prepayments
The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each counterparty.
However, management also considers the default risk of the industry and country in which counterparties
operate, as these factors may have an influence on credit risk.
The Other receivables and prepayments consist of mainly refundable deposits and prepaid expenditure. No
allowance for impairment is required as at 30 June 2010.
Investments
The Group limits its exposure to credit risk by investing predominantly in liquid securities listed on the
Australian Securities Exchange (Refer to Note 14).
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with the
financial liabilities that are settled by delivering cash or another financial asset.
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring
unacceptable losses or risking damage to the Group’s reputation.
As at 30 June 2010, the Group has current trade and other payables of $783,839 (2009: $257,697). The Group
believes it will have sufficient cash resources to meet its financial liabilities when due.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and
equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective
of market risk management is to manage and control market risks exposures within acceptable parameters,
while optimising the return.
65
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
5.
Financial Risk Management (continued)
Currency risk
The Group is exposed to currency risk on purchases that are denominated in currency other than the functional
currency of the Group in the Australian dollar (AUD). The currencies in which these transactions primarily are
denominated are AUD and Brazilian Real (BRL).
The Group investment in its Brazilian subsidiary is not hedged as those currency positions are considered to
be long term in nature.
Commodity risk
The Group is exposed to commodity price risk. The risk arises from its activities directed at exploration and
development of mineral commodities, primarily iron ore. If commodity prices fall, the market for companies
exploring for these commodities is affected.
Other market price risk
Equity price risk arises from available-for-sale equity securities held. The financial assets were acquired
through the business combination with Centaurus Resources Limited, which had acquired them from the
purchase consideration received from the sale of tenements in New South Wales in March 2009. The financial
assets were held mainly to fund the operating expenditure requirements of the Group if needed.
Capital management
The objectives for managing capital are to safeguard the Group’s ability to continue as a going concern and
to maintain an optimal capital structure to reduce the cost of capital. Centaurus Metals Limited is a junior
exploration company and it is dependent from time to time on its ability to raise capital from the issue of new
shares and its ability to realise value from its exploration and evaluation assets. The Board is responsible for
capital management. This involves the use of cash flow forecasts to determine future capital management
requirements. Capital management is undertaken to ensure a secure, cost-effective and flexible supply of
funds is available to meet the Group’s operating and capital expenditure requirements.
There were no changes in the Group’s approach to capital management during the year.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
66
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
6.
Operating Segments
The Group has one reportable segment, being iron ore exploration and evaluation in Brazil. Comparative segment
information has been represented in conformity with the requirements of AASB 8 Operating Segments.
Reportable Segment Information – Iron Ore Exploration
For the year ended 30 June
Segment loss before income tax
Segment loss before income tax
Unallocated corporate expenses
Net finance costs
Interest income
Segment interest income
Unallocated interest income
Depreciation
Segment depreciation expense
Unallocated depreciation expense
Reportable segment assets
Segment assets
Unallocated other assets
Total assets
Total
2010
$
2009
$ (1)
(455,572)
(3,824,223)
361,141
(3,918,654)
21,188
360,501
381,689
21,312
36,589
57,901
27,857,534
8,253,931
36,111,465
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) During 2009 the Group operated predominantly in Australia and its principal activities were focussed on reviewing new project
opportunities. Following the acquisition of Centaurus Resources Limited in January 2010, the Group changed its focus to developing
the Brazilian iron ore projects acquired.
2010
Revenue
$
2010
Non-current assets
$
2009
Revenue
$
2009
Non-current assets
$
Geographical Segment Information
Brazil
Australia
Total
-
-
-
29,389,411
1,206,046
30,595,457
-
-
-
-
38,348
38,348
67
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
7.
Business Combination
Business Combination - Acquisition of Centaurus Resources Limited
On 11 November 2009, Glengarry Resources Limited (“GGY”) and Centaurus Resources Limited (“CUR”)
announced that they had reached an agreement to merge to create a Brazilian focussed iron ore group. Under
the terms of the takeover offer, CUR shareholders were offered eight (8) GGY shares for every one (1) CUR
share they held (“Share Offer”). A separate offer was made to CUR optionholders, with the consideration being
equivalent GGY options on terms consistent with the Share Offer (“Bid Options”). Both the Share and Option
Offer were conditional upon a number of conditions, including a 90% minimum acceptance level. In addition
Replacement Options were issued to CUR executive and employee share based payment option holders on
terms similar to the bid offer. On 19 January 2010, all of the conditions for the takeover offer had either been
met or waived and the Share and Option Offer were declared unconditional.
For the purposes of AASB 3 Business Combinations, GGY is the acquirer. Post combination the majority of the
Board, Managing Director and Chief Financial Officer roles were filled by GGY officers and GGY was the key
influencer in the transaction’s initiation and completion.
The following summarises the major classes of consideration transferred, and the recognised amounts of
assets acquired and liabilities assumed at the acquisition date:
Consideration paid for the business combination
Ordinary shares in GGY (316,805,640 ordinary shares)
Share options over ordinary shares in GGY (61,519,392 Bid Options)
Share options over ordinary shares in GGY (28,120,000 Replacement Options)
Total equity consideration
$
20,909,173
2,468,402
498,195
23,875,770
The fair value of the ordinary shares issued was based on the listed share price of Glengarry Resources
Limited at 19 January 2010 of $0.066 per share. The fair value of the options has been valued using a
Black-Scholes option pricing model taking into accounts the terms and conditions upon which the instruments
were granted.
Provisional values
recognised on acquisition
2010
$
504,722
274,466
566,666
48,750
260,581
27,174,780
(508,712)
(60,505)
(4,384,978)
23,875,770
Identifiable assets acquired and liabilities assumed
Cash and cash equivalents
Other receivables and prepayments
Available-for-sale financial investments
Derivatives
Property, plant and equipment
Exploration and evaluation assets
Trade and other payables
Employee benefits
Deferred tax liability
Total net identifiable assets
68
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
7.
Business Combination (continued)
Transaction separate from the acquisition
The Company incurred acquisition-related costs of $842,206 relating to advisory fees, external legal fees and due
diligence costs. These costs have been expensed in the consolidated statement of comprehensive income.
Provisional accounting
At the date of this report, the acquisition accounting balances are provisional due to ongoing work which may
impact acquisition accounting entries.
8.
Other Income
Net gain on disposal of mineral tenements
Net gain on disposal of plant and equipment
9.
Personnel Expenses
2010
$
35,000
3,549
38,549
2009
$
3,183,232
5,496
3,188,728
Salaries, fees and other benefits
1,232,436
1,321,214
Superannuation
Share-based payments
Capitalised to exploration
10. Finance Income and Expense
Finance income
Interest income on bank deposits
Net gain on sale of available-for-sale financial assets
Finance expense
157,611
753,755
(361,884)
1,781,918
213,497
54,785
(405,932)
1,183,564
381,689
-
381,689
545,314
156,550
701,864
Impairment losses on available-for-sale financial assets
-
(658,452)
Change in fair value of derivatives
Interest expense
Net finance income recognised in profit or loss
(20,000)
(548)
(20,548)
361,141
-
-
(658,452)
43,412
69
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
11.
Income Tax
(a) Numerical reconciliation of income tax expense to prima facie tax payable
Loss from continuing operations before income tax expense
Tax at the Australian tax rate of 30%
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income:
Overseas project generation and review costs
Share-based payments
Sundry items
Effect of tax rates in foreign jurisdictions
Utilisation of previously unrecognised tax losses
Over provision of prior year tax
Change in temporary differences (Note 11(d))
Current year capital losses not recognised
Current year tax losses not recognised
Other
Income tax expense
(b) Tax losses
Unused tax losses for which no deferred tax asset has been recognised:
Tax losses
Capital losses
Potential tax benefit @ 30%
2010
$
2009
$
(3,918,654)
(1,265,869)
(1,175,596)
(379,761)
33,245
226,126
8,571
73,970
16,436
273
(907,654)
(289,082)
(11,164)
-
-
(1,240,326)
(31,248)
12,763
-
875,726
61,577
-
-
796,757
732,651
-
-
23,594,649
17,233,058
2,473,264
2,473,264
26,067,913
19,706,322
7,820,374
5,911,897
The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in
respect of these items because it is not probable that future taxable profit will be available against which the
Group can utilise the benefit.
70
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
11.
Income Tax (continued)
(c) Deferred tax assets not recognised relate to the following:
Deferred tax assets
Tax losses
Taxable temporary differences
Deductible temporary differences
Net deferred tax assets
2010
$
2009
$
7,820,374
5,911,897
(207,724)
236,025
(8,416)
55,162
7,848,675
5,958,643
(d) Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
2010
$
2009
$
Receivables
Available-for-sale financial assets
Exploration
-
-
-
-
-
-
Accrued expenses/provisions
(29,822)
(35,647)
Transaction costs relating to
issue of capital
(206,203)
(19,515)
Tax losses
Set off of tax
Net tax (assets)/liabilities
28,301
207,724
-
46,746
2010
$
9,779
-
197,945
-
-
-
2009
$
8,416
-
-
-
-
-
2010
$
9,779
-
197,945
2009
$
8,416
-
-
(29,822)
(35,647)
(206,203)
(19,515)
28,301
46,746
8,416
(207,724)
(8,416)
-
-
-
-
-
-
-
(e) Income tax recognised directly in equity
Recovery of net tax assets is not considered probable. Accordingly, net deferred tax credited directly to other
comprehensive income for changes in the fair value of available-for-sale financial assets is nil: (2009: $nil).
12.
(a) Cash and Cash Equivalents
Cash at bank and on hand
Deposits - at call
Deposits - short term
Deposits
2010
$
920,035
-
4,000,000
4,920,035
2009
$
2,667
170,915
9,500,000
9,673,582
The deposits are bearing floating and fixed interest rates between 4.50% and 5.50% (2009: between 3.00% and 4.35%)
71
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
12.
(b) Reconciliation of Cash Flows from Operating Activities
Loss for the period
Adjustments for:
Depreciation
Foreign exchange loss
Exploration and evaluation expenses
Project generation expenses
Merger and acquisition expenses
Non-cash employee benefits expense – share based payments
2010
$
2009
$
(3,918,654)
(1,265,869)
57,901
23,551
-
455,309
492,526
842,206
753,755
6,618
382,079
-
-
54,785
(Profit) on sale of mineral tenements
(35,000)
(3,183,232)
(Profit)/loss on sale of available-for-sale financial assets
Impairment losses
Exploration and evaluation assets
Available-for-sale financial assets
Change in fair value of held for trading derivative instruments
(Profit)/loss on sale of plant and equipment
-
-
-
20,000
(3,549)
(156,550)
2,432,410
658,452
-
(5,496)
Operating loss before changes in working capital and provisions
(1,335,506)
(1,053,252)
Change in other receivables
Change in trade creditors and provisions
Net cash used in operating activities
13. Other Receivables and Prepayments
Other receivables
Security deposits
Prepayments
14. Other Investments
Available-for-sale financial assets (1)
Derivative instruments (2)
(28,039)
(149,219)
(7,616)
26,352
(1,512,764)
(1,034,516)
411,000
107,809
77,164
595,973
466,667
28,750
495,417
28,054
43,900
14,275
86,229
-
-
-
(1) Shares in ASX listed entity consists of 3,333,333 listed ordinary shares in Clancy Exploration Limited (ASX: CLY). The available-for-sale
financial assets have been revalued to the market price at 30 June 2010, the resulting decrease being debited to the fair value reserve.
Further movement in share prices after 30 June 2010 has not been taken into account.
(2) Unlisted options in ASX listed entity consists of 1,250,000 unlisted options in Clancy Exploration Limited (ASX: CLYO). The fair value of the
options is determined using a Black-Scholes formula taking into account the terms and conditions upon the instruments were granted.
72
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74
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
For the year ended 30 June 2010
16. Exploration and Evaluation Assets
Cost
Balance at 1 July 2008
Additions
Disposals
Balance at 30 June 2009
Balance at 1 July 2009
Acquisition through business combinations
Additions
Effect of movements in exchange rate
Balance at 30 June 2010
Impairment losses
Balance at 1 July 2008
Impairment loss
Balance at 30 June 2009
Balance at 1 July 2009
Impairment loss
Balance at 30 June 2010
Carrying amounts
Balance at 1 July 2008
Balance at 30 June 2009
Carrying amounts
Balance at 1 July 2009
Balance at 30 June 2010
$
1,907,128
1,143,953
(34,754)
3,016,327
3,016,327
27,174,780
1,851,441
449,673
32,492,221
583,917
2,432,410
3,016,327
3,016,327
-
3,016,327
1,323,211
-
-
29,475,894
The ultimate recoupment of exploration and evaluation expenditure carried forward is dependent on successful
development and commercial exploitation or, alternatively, sale of the respective project areas.
7575
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
17. Trade and Other Payables
Trade and other creditors
Accrued expenses
18. Employee Benefits
2010
$
391,524
392,315
783,839
2009
$
72,535
185,162
257,697
Liability for annual leave
99,407
14,798
19. Deferred Tax Liabilities
Deferred tax liability attributable to exploration and evaluation assets
4,384,978
-
The deferred tax liability arose from the acquisition of Centaurus Resources Limited, refer note 7. The amount
recognised is a provisional estimate.
20. Capital and Reserves
On issue at 1 July
Issue of ordinary shares related to business combination
Issue of ordinary shares for services
On issue at 30 June – Fully paid
Issue of ordinary shares
2010
Number of
Shares
2009
Number of
Shares
286,003,678
286,003,678
316,805,640
1,589,321
-
-
604,398,639
286,003,678
The Company issued a total 316,805,640 ordinary fully paid shares for the Off-Market Takeover Bid for Centaurus
Resources Limited. The fair value of the shares issued has been assessed as $0.066 per share based on the closing
market price for Glengarry Resources Limited shares on the date they were issued.
Centaurus issued 1,589,321 ordinary shares at $0.0629 cents per share to Gresham Advisory Partners Limited as
part settlement of the corporate advisory fee in relation to the merger and has been expensed.
Option Reserve
The Company issued 89,639,392 share options in exchange of the Centaurus existing Bid and Replacement Options.
The fair value of the options has been valued using a Black-Scholes formula taking into account the terms and
conditions upon which the instruments were granted. Included with option reserve is an allocation of fair value or
replacement options attributable to business combination consideration (refer to note 7).
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary
shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled
to one vote.
76
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
20. Capital and Reserves (continued)
Employee share options
Information relating to the Employee Share Option Plan, including details of options issued, exercised and lapsed
during the financial year and options outstanding at the end of the financial year are set out in Note 28.
Share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options issued but not exercised.
Available-for-sale investments revaluation reserve
Changes in the fair value of investments, such as equities, classified as available-for-sale financial assets, are
taken to the available-for-sale investments revaluation reserve as described above. Amounts are recognised
in profit and loss when the associated assets are sold or impaired.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial
statements of foreign operations, as well as from the translation of liabilities that hedge the Group’s net
investment in a foreign subsidiary.
21. Dividends
There were no dividends paid or declared during the year (2009: nil)
22. Earnings/(Loss) Per Share
Basic (loss) per share
The calculation of basic and diluted earnings per share at 30 June 2010 was based on the loss attributable to ordinary
shareholders of $3,918,654 (2009: $1,265,869) and a weighted average number of ordinary shares outstanding of
428,056,033 (2009: 286,003,678), calculated as follows:
Loss attributable to ordinary shareholders
Loss for the period
Loss attributable to the shareholders
Weighted average number of ordinary shares
Issued ordinary shares at 1 July
Effect of shares issued related to business combination
Effect of shares issued in February 2010
2010
$
2009
$
(3,918,654)
(1,265,869)
(3,918,654)
(1,265,869)
2010
Number
2009
Number
286,003,678
286,003,678
141,477,587
574,768
-
-
Weighted average number of ordinary shares 30 June
428,056,033
286,003,678
Diluted earnings per share
Potential ordinary shares were not considered to be dilutive as the consolidated entity made a loss for the year
ended 30 June 2010 and the exercise of potential ordinary shares would not increase that loss.
77
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
23. Related Parties
Key management personnel compensation
Short term employee benefits
Post-employment benefits
Termination benefits
Share-based payments
2010
$
1,012,377
116,512
-
723,927
2009
$
656,179
198,810
450,168
49,961
1,852,816
1,355,118
Individual directors and executives compensation disclosures
Information regarding individual directors’ and executives’ compensation and some equity instruments disclosures as
required by Corporations Regulations 2M.3.03 is provided in the remuneration report section of the directors’ report.
Apart from the details disclosed in this note, no director has entered into a material contract with the Company or the
Group since the end of the previous financial year and there were no material contracts involving directors’ interests
existing at year-end.
Options and rights over equity instruments
The movement during the reporting period in the number of options over ordinary shares in Centaurus Metals Limited held,
directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at 1
July 2009
Granted as
compensation
Directors
Mr D M Murcia
Mr D P Gordon
-
-
Mr K G McKay
1,000,000
1,500,000
6,000,000
1,000,000
Mr P E Freund
-
16,000,000(2)
Mr G T Clifford
1,000,000
500,000
Bid options
issued on
takeover of
Centaurus
Resources
Limited
-
1,600,000
-
-
-
Mr R G Hill
Executives
Mr M Papendieck
Mr K M Seymour(1)
Mr G A James
Mr I Cullen
Mr K Petersen
-
-
750,000
750,000
-
-
1,500,000
8,177,720
4,000,000
6,000,000
-
1,750,000
4,000,000(2)
-
-
-
3,400,000(3)
8,000,000
Other
changes
Held at 30
June 2010
Vested
during
the year
Vested and
exercisable
at 30 June
2010
-
-
-
-
-
-
-
1,500,000
500,000
500,000
7,600,000
3,600,000
3,600,000
2,000,000
1,000,000
1,500,000
16,000,000
4,000,000
4,000,000
1,500,000
250,000
500,000
9,677,720
8,677,720
8,677,720
10,000,000
7,000,000
7,000,000
750,000
-
-
-
-
-
-
2,500,000
250,000
1,250,000
4,000,000
2,000,000
2,000,000
11,400,000
8,600,000
8,600,000
(1) Resigned on 1 July 2009
(2) These options were issued as replacement awards pursuant to the takeover of Centaurus Resources Limited.
(3) Includes 2,400,000 options issued as replacement awards pursuant to the takeover of Centaurus Resources Limited.
No options were exercised during the year.
78
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
23. Related Parties (continued)
Options and rights over equity instruments (continued)
Held at 1
July 2008
Granted as
compensation Exercised
Other
changes*
Held at 30
June 2009
Vested
during
the year
Vested and
exercisable at
30 June 2009
Directors
Mr D M Murcia
Mr D P Gordon
-
-
Mr K G McKay
1,000,000
Mr D R Richards
2,000,000
-
-
-
-
Mr G T Clifford
-
1,000,000
Mr W F Manning
1,000,000
Executives
Mr K M Seymour
Mr G A James
750,000
750,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
500,000
500,000
(2,000,000)
-
-
-
-
1,000,000
250,000
250,000
(1,000,000)
-
-
-
-
-
750,000
750,000
750,000
750,000
750,000
750,000
* Other changes represent options that expired or were forfeited during the year.
Movement in shares
The movement during the reporting period in the number of ordinary shares in Centaurus Metals Limited held,
directly, indirectly or beneficially, by each key management person, including their related parties, is as follows:
Held at 1
July 2009
Purchases
Issue on acquisition of
Centaurus Resources Limited
Received on the
exercise of options Sales
Held at 30
June 2010
Directors
Mr D M Murcia
7,000,000
1,040,566
Mr D P Gordon
44,000,000
Mr K G McKay
2,419,000
-
-
Mr P E Freund
-
200,000
Mr G T Clifford
1,000,000
Mr R G Hill
Executives
Mr M Papendieck
-
-
-
-
-
Mr G A James
100,000
93,985
Mr I Cullen
Mr K Petersen
-
-
-
-
1,333,336
8,358,328
-
-
-
8,555,440
9,196,000
266,667
-
5,280,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,373,902
52,358,328
2,419,000
200,000
1,000,000
8,555,440
9,196,000
460,652
-
5,280,000
79
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
23. Related Parties (continued)
Movement in shares (continued)
Held at 1 July 2008
Purchases
Received on the
exercise of options
Sales
Held at
30 June 2009
Name
Directors
Mr D M Murcia
Mr D P Gordon
-
-
7,000,000
44,000,000
1,000,000
-
Mr K G McKay
1,419,000
Mr D R Richards
1,112,600
Mr G T Clifford
-
1,000,000
Mr W F Manning
250,000
Executives
Mr K M Seymour
Mr G A James
619,000
100,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,000,000
44,000,000
2,419,000
(1,112,600)
-
-
1,000,000
(250,000)
(619,000)
-
-
-
100,000
Loans to key management personnel and their related parties
There are no loans made to directors or other key management personnel of Centaurus Metals Limited or the Group.
Key management personnel and director transactions
A number of key management personnel, or their related parties, hold positions in other entities that result in
them having control or significant influence over the financial or operating policies of these entities.
A number of these entities transacted with the Group in the reporting period. The terms and conditions of
the transactions with key management personnel and their related parties were no more favourable than
those available, or which might reasonably be expected to be available, on similar transactions to non-key
management personnel related entities on an arm’s length basis.
The aggregate value of transactions and outstanding balances relating to key management personnel and
entities over which they have control or significant influence were as follows:
Transaction value
year ended 30 June
2010
$
2009
$
Balance outstanding
as at 30 June
2010
$
2009
$
Transaction
Consolidated
Key management person
Mr K G McKay
Consulting fees
Mr D M Murcia (1)
Legal fees
60,302
19,309
37,666
8,987
Total and current liabilities
-
16,135
16,135
-
-
-
(1)Payable to Murcia Pestell Hillard Pty Ltd, a firm in which Mr D M Murcia is a partner.
80
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
24. Financial Instruments
Credit risk
Exposure to credit risk
The carrying amount of the Group’s financial assets represents the maximum credit exposure. The Group’s
maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Other receivables and prepayments
Other investments, including derivatives
2010
$
2009
$
4,920,035
9,673,582
595,973
495,417
86,229
-
6,011,425
9,759,811
The Group’s maximum exposure to credit risk for other receivables at the reporting date by geographic region was:
Australia
Brazil
Impairment losses
Carrying amount
2010
$
154,062
441,911
595,973
2009
$
86,229
-
86,229
None of the Company’s other receivables are past due (2009: nil). The Group believes that no impairment
allowance is necessary in respect of the other receivables not past due.
Liquidity risk
The following are the contractual maturities of financial liabilities, excluding the impact of netting agreements:
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12
mths
1-2
years
2-5 years
More than
5 years
30 June 2010
Trade and other payables
782,839
(782,839)
(782,839)
782,839
(782,839)
(782,839)
30 June 2009
Trade and other payables
257,697
(257,697)
(257,697)
257,697
(257,697)
(257,697)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at
significantly different amounts.
81
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
24. Financial Instruments (continued)
Currency risk
Exposure to currency risk
The Group’s exposure to foreign currency risk at balance date was as follows, based on notional amounts:
AUD Equivalent
Cash
Other receivables and prepayments
Trade and other payables
Net exposure
30 June 2010
30 June 2009
BRL
$
449,048
441,911
(430,020)
460,939
USD
$
569
-
-
569
The Group had no exposure to BRL in 2009. There was no exposure to USD in 2010.
Sensitivity analysis
A strengthening of the AUD, as indicated below, against the BRL at 30 June would have increased (decreased)
equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate
variances that the Group considered to be reasonably possible at the end of the reporting period. This analysis
assumes that all other variables, in particular interest rates, remain constant.
30 June 2010
BRL (10 percent strengthening)
30 June 2009
USD (10 percent strengthening)
Equity
$
Profit or loss
$
-
-
(46,094)
(57)
A weakening of the AUD against the above currencies at 30 June would have had the equal but opposite effect
on the above currencies to the amounts shown above, on the basis that all other variables remain constant.
Interest rate risk
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
2010
$
2009
$
4,920,035
9,685,763
-
-
4,920,035
9,685,763
Variable rate instruments
Financial assets
Financial liabilities
82
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
24. Financial Instruments (continued)
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and
profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular foreign
currency rates, remain constant. The analysis is performed on the same basis for 2009.
Profit or loss
Equity
100bp
Increase
$
100bp
Decrease
$
100bp
Increase
$
100bp
Decrease
$
49,200
49,200
96,858
96,858
(49,200)
(49,200)
(96,858)
(96,858)
-
-
-
-
-
-
-
-
30 June 2010
Variable rate instruments
Cash flow sensitivity (net)
30 June 2009
Variable rate instruments
Cash flow sensitivity (net)
Fair values
Fair values versus carrying amounts
The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement
of financial position are as follows:
Assets carried at fair value
Other receivables and prepayments
Available-for-sale financial assets
Held for trading derivatives instruments
Liabilities carried at fair value
Trade and other payables
30 June 2010
30 June 2009
Carrying
amount
$
Fair value
$
Carrying
amount
$
Fair value
$
154,062
466,667
28,750
649,479
353,819
353,819
154,062
466,667
28,750
649,479
353,819
353,819
-
-
-
-
-
-
-
-
-
-
-
-
83
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
24. Financial Instruments (continued)
Fair values (continued)
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels
have been defined as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)
• Level 3: inputs for the asset or liability that are not based on observable market data
(unobservable inputs).
30 June 2010
Available-for-sale financial assets
Derivative instruments (i)
30 June 2009
Available-for-sale financial assets
Derivative instruments
Level 1
$
466,667
-
466,667
-
-
-
Level 2
$
-
-
-
-
-
-
Level 3
$
-
28,750
28,750
-
-
-
Total
$
466,667
28,750
495,417
-
-
-
There have been no transfers of assets from Levels during the year ended 30 June 2010 (2009: no transfers in either direction).
(i) Derivatives were acquired as a result of the business combination. Decline in fair value of derivative instruments of $20,000 has been
charged to finance expense (refer notes 7 and 14).
25. Contingent liabilities
The Company and the Group had contingent liabilities at 30 June 2010 in respect of:
(a) Royalties payable under the Ponte de Pedra tenement acquisition agreement:
(i) At the date of this report there is no defined JORC Indicated Resource for the Ponte Pedra tenements. In
the event of defining a JORC Indicated Resource, a First Advanced Royalty will be calculated and paid based
on the definition of JORC Indicated Resources identified at the following three rates. Any identified JORC
Indicated Resources not falling into the categories outlined above will not require a payment.
The First Advanced Royalty is payable in three consecutive six month periods commencing in June 2009 based
on the JORC Indicated Resources defined during each of these six month periods but capped at USD$5,000,000
for each period. The payments are therefore capped at USD$15,000,000 over the first 20 months of the Project
but may be adjusted by the Second Advanced Royalty, details of which are set out below.
Manganese
(Mn)
38.0%
38.0%
From 34.0% to < 38.0%
Silica
(SiO2)
5.0%
5.0%
5.0%
Phosphorous
(P)
First Royalty Rate
per Indicated Resource ton
0.15%
0.30%
0.30%
US$1.00 per ton
US$0.75 per ton
US$0.50 per ton
Rate 1
Rate 2
Rate 3
84
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
25. Contingent liabilities (continued)
(ii) The Second Advanced Royalty Payment is an adjustment payment that will be determined at the time of
completing a feasibility study on the Project and identifying economically recoverable resources. Any resources
that are identified in a feasibility study as being economically recoverable but for which no First Advanced Royalty
has been paid, will be paid for as per the specifications in the table above plus a 10% premium.
(b) Royalties payable under the Itambé tenement acquisition agreements:
(i) At the date of this report there is no defined JORC Indicated Resources greater than 35 million tonnes of Iron
Ore for the Itambé 1 tenement. Under the Itambé 1 tenement acquisition agreement, in the event of defining
an economic feasible mineral reserve greater than 35 million tonnes of iron ore with more than 35% of Iron on
the Itambé 1 tenement, a royalty of USD $0.20 per tonne of economically feasible iron ore is payable.
(ii) At the date of this report there is no defined JORC Indicated Resources greater than 35% Fe on any of the
other 7 Itambé acquisition tenements which includes the Passabem tenement. Under the Itambé tenement
acquisition agreement for the 7 tenements, in the event of defining an economic feasible mineral reserve,
on any of the 7 tenements, greater than 35% Fe, a royalty of USD $0.20 per tonnes of economically feasible
iron ore is payable.
(c) Royalties payable under the Cenibra tenement acquisition agreement:
Future resource-based payments are made according to a confidential schedule of rates and the grade
of the in situ Measured and Indicated Resource and is paid in 3 instalments over a 4 year period.
There are no other contingent liabilities that require disclosure.
Guarantees
Guarantees given in respect of bank security bonds amounting to $107,809 (2009: $13,475), secured by cash deposits
lodged as security with the bank.
No material losses are anticipated in respect of any of the above contingent liabilities.
26. Capital Commitments
Exploration expenditure commitments
In order to maintain current rights of tenure to exploration tenements, the Group is required to perform minimum
exploration work to meet the minimum expenditure requirements specified by various government bodies.
Contracted for but not provided and payable:
Less than one year
Between one and five years
More than five years
2010
$
2009
$
707,572
1,748,716
-
694,918
2,708,172
-
2,456,288
3,403,090
The above commitments may be reduced by tenement withdrawals, concessions, exemptions, reductions and joint
venture arrangements with third parties.
85
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
27. Operating Leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
2010
$
381,824
495,217
-
2009
$
48,726
-
-
877,041
48,726
The Group leases a number of offices and apartments under operating lease. The leases run for a period of one
to three years, with an option to renew the leases after that date.
During the year ended 30 June 2010 $149,776 was recognised as an expense in profit or loss in respect of
operating leases (2009: $95,168).
The office leases were combined leases of land and buildings. Since the land title does not pass, the rent
paid to the landlord of the building is increased to market rent at regular intervals, and the Group does not
participate in the residual value of the building, it was determined that substantially all the risks and rewards
of the building are with the landlord. As such, the Group determined that the leases are operating leases.
28. Share-Based Payments
Description of the share-based payment arrangements
Employee Share Option Plan
The Employee Share Option Plan (“ESOP”) was approved by shareholders at the 2007 annual general meeting.
All employees (including directors) are eligible to participate in the Plan. Options granted carry no dividend
or voting right. When exercisable, each option is converted into one ordinary share of the Company with full
dividend and voting rights.
Replacement Award Options were issued pursuant to the takeover of Centaurus Resources Limited.
86
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
28. Share-Based Payments (continued)
The terms and conditions relating to the grant of options are as follows:
Grant Date
Number of Options
Vesting Conditions
Option Term
Employee Options
17/07/2009
17/07/2009
17/07/2009
17/07/2009
17/07/2009
15/02/2010
15/02/2010
15/02/2010
31/03/2010
31/03/2010
31/03/2010
31/03/2010
31/03/2010
Sub total
Replacement
Award Options
19/01/2010
19/01/2010
19/01/2010
19/01/2010
19/01/2010
19/01/2010
19/01/2010
19/01/2010
19/01/2010
19/01/2010
19/01/2010
Sub total
Total
2,825,000
1,000,000
1,325,000
2,000,000
1,150,000
1,150,000
2,650,000
2,700,000
500,000
500,000
500,000
1,000,000
1,000,000
18,300,000
1,200,000
2,960,000
600,000
1,200,000
2,160,000
1,000,000
1,000,000
2,000,000
4,000,000
4,000,000
8,000,000
28,120,000
46,420,000
Vested immediately
Vested on 04/05/2010
Vest on 17/07/2010
Vest on 04/05/2011
Vest on 17/07/2011
Vested immediately
See note 1
See note 2
Vested immediately
Vest on 31/03/2011
Vest on 31/03/2012
See note 1
See note 2
Vested immediately
Vested immediately
Vest on 31/08/2010
Vest on 31/08/2011
Vest on 31/12/2010
Vested immediately
Vested on 30/06/2010
Vest on 30/06/2011
Vested on 31/01/2010
Vest on 31/10/2010
Vest on 31/10/2011
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
1 year
4 years
4 years
4 years
4 years
4 ½ years
4 ½ years
4 ½ years
5 years
5 years
5 years
Note 1: Options vest on commencement of iron ore production on a Mining Lease from the Company’s iron ore projects in Brazil.
Note 2: Options vest on achievement of iron ore production from the Company’s iron ore projects at an average rate of 250,000 tonnes
per month over a consecutive 3 month period.
87
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
28. Share-Based Payments (continued)
The number and weighted average exercise prices of share options are as follows:
Weighted average
exercise price
2010
Number of options
2010
Weighted average
exercise price
2009
Outstanding at 1 July
Forfeited during the period
Exercised during the period
Granted during the period
Outstanding at 30 June
Exercisable at 30 June
$0.160
$0.136
-
$0.088
$0.095
$0.105
6,300,000
(2,850,000)
-
46,420,000
49,870,000
17,885,000
$0.178
$0.246
-
$0.133
$0.160
$0.151
Number
of options
2009
5,600,000
(700,000)
-
1,400,000
6,300,000
4,900,000
The options outstanding at 30 June 2010 have an exercise price in the range of $0.050 to $0.285 (2009: $0.10 to
$0.285) and the weighted average remaining contractual life is 4.0 years. (2009: 2.8 years).
Inputs for measurement of grant date fair values
The weighted average fair value at grant date of options granted during the year end 30 June 2010 was $0.035
(2009: $0.023). The fair value at grant date is determined using a Black-Scholes option pricing model that takes
into account the exercise price, the term of the option, 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 model inputs for 2010 include:
Exercise
price
Life of
option
Share price
at grant
date
Expected
share price
volatility
Dividend
yield
Risk-free
interest
rate
Fair value
at grant
date
Grant date
Expiry date
Employee
Options
17/07/2009
17/07/2014
$0.050
17/07/2009
17/07/2014
$0.075
17/07/2009
17/07/2014
$0.100
17/07/2009
17/07/2014
$0.120
15/02/2010
15/02/2015
$0.080
31/03/2010
31/03/2015
$0.080
31/03/2010
31/03/2015
$0.100
31/03/2010
31/03/2015
$0.120
5 years
5 years
5 years
5 years
5 years
5 years
5 years
5 years
Replacement
Award Options
19/01/2010
31/12/2010
$0.220
0.95 years
19/01/2010
31/12/2013
$0.080
3.95 years
19/01/2010
31/12/2013
$0.150
3.95 years
19/01/2010
30/06/2014
$0.070
4.45 years
19/01/2010
30/10/2014
$0.070
4.78 years
$0.065
$0.065
$0.065
$0.065
$0.053
$0.089
$0.089
$0.089
$0.066
$0.066
$0.066
$0.066
$0.066
93%
93%
93%
93%
93%
93%
93%
93%
94%
99%
99%
99%
99%
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
5.10%
5.10%
5.10%
5.10%
5.16%
5.50%
5.50%
5.50%
4.32%
5.03%
5.03%
5.20%
5.20%
$0.0503
$0.0467
$0.0439
$0.0420
$0.0359
$0.0673
$0.0645
$0.0621
$0.0034
$0.0446
$0.0375
$0.0481
$0.0493
88
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
28. Share-Based Payments (continued)
Employee expenses
Share options granted in 2007
Share options granted in 2008
Share options granted in 2009
Share options granted in 2010
Total expense recognised as employee costs
2010
$
-
10,186
9,206
734,363
753,755
2009
$
6,819
31,538
16,428
-
54,785
29. Farm-Out and Joint Venture Exploration Agreements
The Group has entered into a farm-out and joint venture exploration agreement with Summit Resources (Aust)
Pty Ltd for the Mt Guide Project. Summit has earned a 90% interest in the Project. MM Mining Plc is earning
80% of Summit’s interest in the Project. The Group has a free carried 10% interest in the Project until the
completion of a bankable feasibility study.
At the end of the financial year Ivanhoe Australia Ltd informed the Company of its withdrawal from the farm-
out and joint venture exploration agreement for the Snake Creek Project. Subsequent to 30 June 2010 the
Group commenced the process to relinquish the Project tenement. The carrying amount of this Project at 30
June 2010 is nil.
Refer to note 31 for details of the farm-out exploration agreement announced for its two non-core Brazilian
Copper-Gold Projects.
30. Group Entities
Parent entity
Centaurus Metals Limited
Subsidiaries
Centaurus Resources Pty Ltd
San Greal Resources Pty Ltd
Centaurus Brasil Mineracao Ltda
CSLI Limited
Glengarry Sabah Pty Ltd
Semporna Mining Sdn Bhd
Country of
incorporation
Ownership interest
2010
2009
Australia
Australia
Brazil
Channel Islands
Australia
Malaysia
100%
100%
100%
100%
100%
100%
-
-
-
-
100%
100%
89
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
31. Subsequent Events
On 6 August 2010 the Group entered into a Farm Out agreement with a Brazilian-based mining company cover-
ing its two non-core Brazilian Copper-Gold Projects. Under the terms of the agreement, Mining Ventures Do Sul
Pesquisa e Mineração Ltda will spend up to US$4.25 million on the Project areas to earn up to a 90% interest.
On 16 August 2010 the Group announced it had been awarded damages totalling A$2 million against its former
joint venture partner in the Liberdade Iron Ore Project in Brazil. The Company is in the process of enforcing
the judgement.
On 8 September 2010 the Group announced a capital raising to raise up to $18 million through a share place-
ment and a Share Purchase Plan (“Plan”). On 20 September 2010 the Company completed Tranche 1 of the
placement raising $6.63 million. Tranche 2 of the share placement will be completed on obtaining shareholder
approval at a meeting of shareholders to take place on 20 October 2010. The Plan closed on 28 September 2010
with the amount of shares to be allotted not yet determined as at the date of this report.
32. Remuneration of Auditors
Audit services
Auditors of the Company
KPMG Australia: Audit and review of financial reports
Other services
Auditor of the Company
KPMG Australia: Taxation services
2010
$
2009
$
25,500
27,500
50,595
13,987
90
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
33. Parent Entity Information
As at and throughout the financial year ending 30 June 2010 the parent company of the Group was Centaurus
Metals Limited.
Result of the parent entity
Loss for the period
Other comprehensive income
Net change in fair value of available-for-sale financial assets
Net change in fair value of available-for-sale financial assets
transferred to profit and loss
Other comprehensive income for the period, net of income tax
Company
2010
$
2009
$
(3,537,015)
(1,265,869)
-
-
-
(658,452)
658,452
(1,265,869)
Total comprehensive loss for the year
(3,537,015)
(1,265,869)
Financial position of the parent entity at the year end
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Share capital
Reserves
Accumulated losses
Total equity
4,575,293
9,759,811
26,554,456
31,129,749
38,348
9,798,159
411,577
411,577
272,495
272,495
30,718,172
9,525,664
39,520,025
15,544,255
951,846
351,380
(9,753,699)
(6,369,971)
30,718,172
9,525,664
91 91
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
For the year ended 30 June 2010
For the year ended 30 June 2010
33. Parent Entity Information (continued)
Parent entity contingencies
The parent entity had no contingent liabilities as at 30 June 2010 (2009: nil).
Parent entity capital commitments
The parent entity capital commitments are consistent with those disclosed in Note 26.
Parent entity lease commitments
The parent entity has the following lease commitments:
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than five years
2010
$
139,060
333,744
-
2009
$
48,726
-
-
472,804
48,726
92
Directors declaration
1. In the opinion of the directors of Centaurus Metals Limited (the “Company”):
(a) The consolidated financial statements and notes, and the Remuneration Report in the Directors’
Report are in accordance with the Corporations Act 2001, including:
(i) Giving a true and fair view of the Group’s financial position as at 30 June 2010 and of their
performance, for the financial year ended on that date; and
(ii) Complying with Australian Accounting Standards
Interpretations) and the Corporations Regulations 2001;
(including the Australian Accounting
(b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable; and
2. The directors have been given the declarations required by section 295A of the Corporations Act 2001 from the
Managing Director and the Chief Financial Officer for the financial year ended 30 June 2010.
3. The financial report also complies with International Financial Reporting Standards as disclosed in note 2(a).
Signed in accordance with a resolution of the directors.
D P Gordon
Managing Director
Perth
30 September 2010
93 93
Independent Auditor’s Report
94
95
Shareholder Information
The shareholder information set out below was applicable as at 7 October 2010.
A. Substantial Shareholders
The names of substantial shareholders who have notified the Company in accordance with section 671B of the
Corporations Act 2001 are:
Mr Darren Gordon – 52,558,328 shares.
B. Class of Shares and Voting Rights
(a) At 7 October 2010 there were 3,658 holders of ordinary shares in the Company.
(b) The voting rights attaching to the ordinary shares, set out in Clause 41 of the Company’s Constitution, are:
On a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a
shareholder has one vote; and
On a poll, every person present who is a shareholder or a proxy, attorney or representative of a
shareholder shall, in respect of each fully paid share held by him, or in respect of which he is appointed a
proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares, shall
have a fraction of a vote for each partly paid share. The fraction shall be equivalent to the proportion
which the amount paid is of the total amounts paid and payable, excluding amounts credited, provided
that the amounts paid in advance of a call are ignored when calculating a true portion.
(c) At 7 October 2010, there were 71 holders of options over 110,169,392 unissued ordinary shares. There
are no voting rights attached to the unissued ordinary shares. Voting rights will be attached to the
unissued ordinary shares when the options have been exercised.
C. Distribution of Equity Securities
(a) Analysis of numbers of equity security holders by size of holding:
1
1,001
5,001
10,001
100,001
-
-
-
-
1,000
5,000
10,000
100,000
and over
Class of Equity Security
Ordinary Shares
Shares
Options
58
277
519
1,865
939
3,658
-
-
-
7
64
71
(b) There were 415 holders of less than a marketable parcel of ordinary shares.
96
Shareholder Information
D. Equity Security Holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of each class of quoted equity security are listed below:
Name
Mr Darren Gordon
Bridgelane Pty Ltd
Lujeta Pty Ltd
UBS Nominees Pty Ltd
UBS Wealth Management Aust Nominees Pty Ltd
Mr Bradley George Bolin
HSBC Custody Nominees (Aust) Limited
Mr Mark Papendieck
Citicorp Nominees Pty Ltd
Mr Richard Hill
Bond Street Custodians Limited
National Nominees Limited
MPH Resources Pty Ltd
Mr Steve Woodham
Matzo Consulting Pty Ltd
Australian Global Capital Pty Ltd
Mr Matthew Sikirich
Egg Au Pty Ltd
Mr Grant Pestell
JP Morgan Nominees Aust Limited
Total Top 20 Shareholders
Other Shareholders
Total Number of Issued Shares
E. Restricted Securities
The Company currently has no restricted securities.
F. On-market Buy Back
There is no current on-market buy back.
Ordinary Shares
Number Held
Percentage of Issued
Shares
52,558,328
24,975,860
17,143,650
13,467,231
11,328,520
11,049,600
10,246,288
9,196,000
8,635,121
8,555,440
8,187,092
8,113,388
7,000,000
6,963,200
6,546,844
6,400,000
6,108,000
6,069,200
5,851,880
5,661,428
234,057,070
509,266,567
743,323,637
7.07
3.36
2.31
1.81
1.52
1.49
1.38
1.24
1.16
1.15
1.10
1.09
0.94
0.94
0.88
0.86
0.82
0.82
0.79
0.76
31.49
68.51
100.00
97
Tenement Information
Australian Tenements
Tenement
EL6910
EPM16117
EPM14233
E45/2874
E45/2876
E45/2877
E45/2901
Project Name
Location
Interest
The Dish
Percyvale
Mt Guide
Citadel
Citadel
Citadel
Citadel
New South Wales
Queensland
Queensland
Western Australia
Western Australia
Western Australia
Western Australia
100%
100%
(1)
100%
100%
100%
100%
(1) Subject to a Farm-Out and Joint Venture Exploration Agreement with Summit Resources (Aust) Pty Ltd. Summit has earned a 90%
interest in the Project. MM Mining Plc is earning 80% of Summit’s interest in the Project.
Brazilian Tenements
Project Name
Itambe
Itambe
Itambe
Itambe
Itambe
Itambe
Itambe
Itambe
Passabem
Passabem
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Guanhaes
Guanhaes
Guanhaes
Location
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Tenement
832.316/2005
831.409/2008
831.410/2008
831.411/2008
831.412/2008
831.413/2008
831.414/2008
832.335/2008
831.645/2006
830.588/2008
830.986/2006
831.056/2007
832.303/2008
832.304/2008
832.305/2008
832.476/2008
832.589/2008
832.590/2008
832.591/2008
832.592/2008
832.593/2008
832.601/2008
831.212/2009
831.213/2009
833.998/2008
833.999/2008
834.000/2008
98
Tenement Information
Brazilian Tenements (Continued)
Tenement
834.001/2008
834.002/2008
834.003/2008
834.004/2008
834.378/2008
834.379/2008
834.380/2008
834.381/2008
834.382/2008
834.383/2008
834.384/2008
834.435/2008
834.436/2008
834.437/2008
834.438/2008
834.439/2008
834.440/2008
834.794/2007
834.795/2007
834.796/2007
832.523/2009
832.465/2008
832.468/2008
832.469/2008
832.470/2008
832.472/2008
832.473/2008
832.474/2008
831.174/2005
831.649/2004
831.629/2004
831.636/2004
831.637/2004
831.638/2004
831.639/2004
831.642/2004
832.249/2006
832.250/2006
833.409/2007
Project Name
Guanhaes
Guanhaes
Guanhaes
Guanhaes
Itamarandiba
Itamarandiba
Itamarandiba
Itamarandiba
Itamarandiba
Itamarandiba
Itamarandiba
Itamarandiba
Itamarandiba
Itamarandiba
Itamarandiba
Itamarandiba
Itamarandiba
Rio Pardo
Rio Pardo
Rio Pardo
Rio Pardo
Serra do Bicho
Serra do Bicho
Serra do Bicho
Serra do Bicho
Serra do Bicho
Serra do Bicho
Serra do Bicho
Cenibra
Cenibra
Cenibra
Cenibra
Cenibra
Cenibra
Cenibra
Cenibra
Cenibra
Cenibra
Cenibra
Location
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Interest
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
(2)
99
Tenement Information
Brazilian Tenements (Continued)
Tenement
833.410/2007
834.347/2007
834.352/2007
830.721/2007
833.895/2007
810.411/2007
810.412/2007
810.413/2007
810.414/2007
810.522/2007
810.523/2007
810.525/2007
815.907/2007
815.908/2007
815.909/2007
Project Name
Cenibra
Cenibra
Cenibra
Cenibra
Cenibra
Cacapava do Sul
Cacapava do Sul
Cacapava do Sul
Cacapava do Sul
Cacapava do Sul
Cacapava do Sul
Cacapava do Sul
Brusque
Brusque
Brusque
Location
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Rio Grande do Sul
Rio Grande do Sul
Rio Grande do Sul
Rio Grande do Sul
Rio Grande do Sul
Rio Grande do Sul
Rio Grande do Sul
Santa Catarina
Santa Catarina
Santa Catarina
Interest
(2)
(2)
(2)
(2)
(2)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
(2) The Group has an agreement with Celulose Nipo-Brasileira S.A. to acquire 100% of the tenement.
100
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