Annual Report 2012
ACN 009 468 099
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Centaurus Metals | Annual Report 2012 Powering
towards
Production
Centaurus Metals | Annual Report 2012
Centaurus Metals | Annual Report 2012 Corporate Directory
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
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Centaurus Metals | Annual Report 2012 Bankers
Australia
National Australia Bank
1232 Hay Street
West Perth WA 6005
Brazil
Banco Bradesco S.A.
Rua da Bahia, 951, 5º andar,
depto. corporate superintendência,
Centro
Belo Horizonte
Minas Gerais
CEP 30.160-011
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: (08) 9420 4000
Facsimile: (08) 9420 4040
Email: info@centaurus.com.au
Website: www.centaurus.com.au
Brazil Office
Centaurus Brasil Mineração Ltda
Rua Pernambuco, I1.077 - S - Funcionários
Belo Horizonte - MG
CEP: 30.130-151
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
y Directors
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Mr K G McKay
BSc (Hons), FAusIMM, MAICD
Non-Executive Director
Mr R G Hill
B.Juris, LL.B, BSc. (Hons), FFin
Non-Executive Director
Mr M D Hancock
B.Bus, CA, FFin
Non-Executive Director
Secretary
Mr G A James
B.Bus, CA, ACIS
Share Registry
Advanced Share Registry Limited
150 Stirling Highway
Nedlands WA 6009
Telephone: (08) 9389 8033
Auditors
KPMG
Chartered Accountants
235 St Georges Terrace
Perth WA 6000
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Centaurus Metals | Annual Report 2012
HIGHLIGHTS AND ACHIEVEMENTS
• Pre-Feasibility Study outlines robust domestic
project at Jambreiro
• Major resource upgrade achieved following
successful in-fill drilling
• $26M capital raising completed underpinned
by Atlas Iron and Boston based Liberty
Metals and Mining
• Bankable Feasibility Study and approvals for the
Jambreiro Project nearing completion
• Centaurus poised to join the ranks of iron ore
producers by end of 2013
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Centaurus Metals | Annual Report 2012 The past 12 months has been an active and successful period for
Centaurus, notwithstanding the challenging environment in global
financial markets and the headwinds experienced in the iron ore
market during the year.
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Powering
towards
Production
Dear Shareholders,
As I write this report, the Company is well advanced towards
achieving its objective of becoming a new iron ore producer in
south-eastern Brazil, with the Feasibility Study on our flagship
Jambreiro Project nearing completion and construction of our
first 2Mtpa operation, supplying domestic markets, on track to
begin next year.
That should pave the way for Centaurus to join the ranks of iron
ore producers by the end of 2013, putting us on a strong growth
trajectory with a relatively simple business model based on
mining, beneficiating and delivering iron ore from a portfolio of
low capital and operating cost mines in south-eastern Brazil.
In November 2011, we completed and delivered a Pre-Feasibility
Study for Jambreiro which confirmed an extremely robust
development opportunity with low capital and operating costs
and the ability to become a consistent and reliable supplier of
high-quality iron ore to domestic steel mills. Following this, an
extensive in-fill drilling program was completed which resulted
in a substantial increase in the Measured Resource with the
overall Jambreiro resource increasing to 125.2Mt @ 26.7% Fe.
The updated resource forms the backbone of the Jambreiro
Bankable Feasibility Study (BFS) which commenced during
the year.
We engaged a group of high-quality consultants in Brazil to
work alongside our in-house team to undertake the BFS, which
I am pleased to say, is progressing well and is on track to be
completed and delivered to the market during the fourth
Quarter of 2012.
One of the most important aspects of the Jambreiro Project will
be its ability to produce a premium grade product and sell iron
ore to nearby customers in south-east Brazil, which are most
likely to be the steel mills operating in the area around the major
regional centre of Belo Horizonte. There is a great opportunity
to become a niche supplier to these steel mills, delivering a
consistent and high quality product to their doorsteps.
Importantly, pilot plant beneficiation testwork completed during
the year confirmed the ability to produce a premium grade (66%
Fe) product from Jambreiro, demonstrating our ability to deliver
a high-grade sinter feed blend with low impurities. Discussions
around potential off-take arrangements have commenced and
we look forward to establishing strong off take arrangements
over the next 6 months.
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Centaurus Metals | Annual Report 2012
There has been extensive commentary about
the fall in iron ore prices seen this year and the
slow-down in Chinese iron ore and steel demand.
While domestic iron ore prices in Brazil are not
immune from these forces, the supply-demand
fundamentals for iron ore in Brazil remain sound.
In order to strengthen its balance sheet and
funding position while we finalise the BFS and
pursue financing discussions for the Jambreiro
Project, Centaurus completed a $26 million
equity raising at 44 cents per share during the
year to existing and new institutional investors.
There is a large domestic market for iron ore
consumption, which is expected to increase
by 30-40 per cent over the coming decade to
around 65 million tonnes a year as crude steel
production grows. While the Brazilian economy
has not performed as strongly as expected
over the last 18 months, it is widely expected to
rebound in the medium term as infrastructure
investment gathers momentum ahead of the
2014 Soccer World Cup and 2016 Olympics.
These milestone global events inevitably create
their own mini-vortex of economic activity and
development, and there is no reason to believe
that the experience in Brazil will be any different
from other host countries of these events in the
past. Evidence of this activity can already be seen
in cities across Brazil.
Another point worth emphasising is that
Jambreiro will have low cash operating costs,
somewhere in the region of A$20-25/a tonne at
the mine gate, and will not require a massive
up-front investment in infrastructure. The simple
business model of “mine, beneficiate and deliver”
should serve us well and provide us with a strong
buffer against fluctuations in the iron ore price.
Our project development team in Brazil has done
an excellent job during the year in progressing
the approvals process for the Jambreiro Project,
which was well advanced at the time of writing
with all three statutory reports required for
the grant of a Mining Lease lodged and the
Preliminary Licence (LP) for the Project expected
to be issued in October 2012.
The Environmental Impact Assessment (EIA/
RIMA) was lodged in March and a successful
Public Hearing was held in June, at which key
stakeholders, including the local community,
were very supportive of the Jambreiro Project
due to the significant economic benefits that will
flow to the region once it is operational.
We also continued to progress the next leg of our
growth strategy, our Export Strategy, during the
year with extensive drilling programs completed
at the Serra da Lontra Project. While our
priority remains the successful development of
Jambreiro, we will continue to progress projects
with the ability to underpin this next important
growth horizon for the Company.
This raising was strongly supported by our
existing major shareholder Atlas Iron, which
injected A$5.2 million to maintain its 19.6 per
cent shareholding, and Boston-based Liberty
Metals & Mining Holdings, LLC (LMM), which
subscribed for A$11 million worth of shares
to acquire a 12.8 per cent stake. LMM is a
subsidiary of Liberty Mutual Insurance, the third
largest diversified property and casualty insurer
in the US and the sixth largest P&C insurer
worldwide. LMM holds significant positions in a
number of junior resource projects with projects
located around the world. Centaurus represents
LMM’s first investment in an ASX-listed company,
and represents a strong vote of confidence in our
management team, assets and growth potential.
The additional funds from this placement will
ensure that we are in a strong position to weather
short-term volatility in global financial markets,
with the ability to complete the BFS on the
Jambreiro Project and prepare the Company to
make the transition to production. At the time
of writing this report, our cash reserves stood at
approximately $30 million.
In conclusion, on behalf of the Board I would
like to express my thanks to our Managing
Director, Darren Gordon, and his exceptionally
hard-working team, both here in Australia
and Brazil, for their efforts during the year. I
would also like to thank my fellow Directors
and express my sincere thanks to you, our
shareholders, for your continued support
during what has been a challenging year.
Centaurus has great assets, a first rate
management team and a clear growth path
ahead of it. With these attributes, we remain
confident about our future as an iron ore
producer, and I look forward to your continued
participation in our growth.
Didier Murcia
Non-executive Chairman. (B.Juris, LLB)
20 September 2012
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Centaurus Metals | Annual Report 2012
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During the 2012 financial year, Centaurus Metals made significant
progress towards achieving its strategic objective of becoming a
low-cost producer of iron ore, initially for the domestic Brazilian
steel industry and, ultimately, the global iron ore export market.
The Company progressed development of both a Domestic Hub and Export Hub in south-eastern
Brazil, putting in place the foundations for its first two growth horizons underpinned by a portfolio
of low capital and operating cost mines. The Company’s flagship Jambreiro Project forms the
centrepiece of the Domestic Hub (Figure 1).
DOMESTIC IRON
ORE BUSINESS
Centaurus’ key focus within its extensive project
portfolio in south-east Brazil during the year
has remained on its Domestic Iron & Steel
Business (“Domestic Business”), which is based
on commencing targeted annualised production
of 2Mtpa of iron ore from the Jambreiro Iron Ore
Project by the end of 2013. Production from this
operation is planned to be sold into the large
domestic steel industry in south-east Brazil,
which is based in and around the world-class
iron ore mining region of south-eastern Brazil
known as the “Iron Quadrangle”.
The Iron Quadrangle’s proximity to the domestic
steel industry in Brazil is analogous to having
Western Australia’s world-class Pilbara iron
ore province on the Korean Peninsula or in
the Japanese archipelago. Being located
in the midst of a growing 40Mtpa Brazilian
steel customer base enables Centaurus to
differentiate itself from many other Australian-
listed iron ore companies, which can face
significant barriers to market entry of having to
invest in extensive and costly infrastructure.
Some of the biggest global steel producers,
and potential customers, are located within 150
kilometres of the Company’s Brazilian projects
and extensive tenement portfolio. The State
of Minas Gerais – where Centaurus’ domestic
production projects are located – accounts for
over 60 per cent, or 170Mtpa, of Brazil’s iron ore
production. Significant investment has already
been committed to this region with three of the
country’s largest steelmakers – Gerdau,
Arcelor Mittal and Usiminas – well established
in the region.
Figure 1 – Centaurus Metals Domestic Project Hub
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Centaurus Metals | Annual Report 2012
Centaurus’ key projects are strategically
located close to the heart of this world-class
industry, enabling the Company to sell its suite
of proposed products at the mine gate without
incurring large capital costs on infrastructure
such as rail and port. Moreover, the Company’s
flagship Jambreiro Project is located just
outside the congested Iron Quadrangle region,
a location which confers important strategic
advantages in terms of the assessment and
environmental approvals process.
The Company’s core focus remains the
commencement of production from the
Jambreiro Project by the end of 2013, however
in the longer term Centaurus holds a portfolio
of iron ore assets which will be evaluated as
potential future production centres for the
Company’s domestic iron ore strategy. These
include the G100 tenements, the Itambé
Project and the Passabém Project.
Figure 2 - (Left to Right) Pilot plant testwork, Jambreiro drilling program
JAMBREIRO IRON ORE PROJECT
Figure 3 - Jambreiro Project location, north of the Iron Quadrangle
The Company made rapid progress at the Jambreiro Project during the 2012 financial year, with the completion of a major
resource drilling program, the delivery of two significant resource upgrades, the completion of a positive Pre-Feasibility
Study (PFS) and the commencement of a Bankable Feasibility Study (BFS) which is on track to be completed in the early
part of Q4 of 2012. This outstanding progress puts the Company well on track to deliver first iron ore production from
Jambreiro on schedule by the end of 2013.
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Centaurus Metals | Annual Report 2012 w
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Figure 4 - (Left to Right) Jambreiro Project tenements, showing nearby Candonga and G100 tenements, Jambreiro itabirite face
MINERAL RESOURCES & ORE RESERVES
Centaurus conducted extensive exploration and in-fill drilling programs at the Jambreiro Project
during the 2012 financial year, which underpinned substantial increases in the JORC-compliant
Mineral Resource and Ore Reserve inventories. Over 17,500 metres of drilling has been completed
since the Jambreiro Project was acquired in June 2010.
The first resource upgrade was announced on 6 October 2011 based on drill results received over
the June and September 2011 Quarters. The October 2011 Resource comprised 116.5 million tonnes
at an average grade of 26.8% Fe (Measured, Indicated and Inferred), representing a 65 per cent
increase in combined resources at Jambreiro over the previously reported figure (70.6Mt @ 28.0%
Fe). The October 2011 Mineral Resource is summarised in Table 1 below:
Table 1 - Jambreiro Iron Ore Project – October 2011 JORC Resource Estimate by Mineralisation Type
JORC Category
Friable
Measured
Indicated
Measured + Indicated
Inferred
TOTAL
Compact
Measured
Indicated
Measured + Indicated
Inferred
TOTAL
TOTAL
Fe %
SiO2%
AI203%
P%
Million
Tonnes
12.1
39.9
52.1
15.0
28.6
27.9
28.0
24.9
51.2
51.1
51.1
55.2
67.0
27.3
52.0
1.4
18.6
20.0
29.5
27.4
26.6
26.6
25.7
48.8
50.2
50.1
51.9
49.5
26.1
51.1
116.5
26.8
51.6
LOI
%
1.7
2.2
2.1
2.1
2.1
1.6
1.2
1.3
1.3
1.3
1.7
4.6
5.3
5.1
5.3
5.1
2.8
3.0
3.0
4.0
3.6
4.5
0.03
0.04
0.04
0.04
0.04
0.05
0.06
0.05
0.05
0.05
0.04
Based on the October 2011 resource estimate, Centaurus calculated a maiden Ore Reserve estimate
for Jambreiro as part of the November 2011 Pre-Feasibility Study for the Jambreiro development
(see below). In establishing the Ore Reserve, only the Measured and Indicated components of the
friable resource (52.1Mt at 28.0% Fe) were considered, as summarised in Table 2 on the right:
20% Fe Cut-Off
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Centaurus Metals | Annual Report 2012
Table 2 - Jambreiro Reserve Classifications – November 2011
Ore Reserve Classification
Mt
Fe%
SiO2%
AI203%
P%
LOI %
Proven
Probable
Total
12.0
37.0
49.0
28.5
28.1
28.2
51.2
51.0
51.1
4.5
5.2
5.0
0.03
0.04
0.04
1.7
2.2
2.1
The Proven and Probable Ore Reserve was estimated at 49.0Mt at an average grade of 28.2% Fe,
representing a 94 per cent conversion of the Measured and Indicated components of the friable resource.
Following successful completion of the Pre-Feasibility Study, Centaurus undertook a major in-fill drilling
program across the resource area at Jambreiro. Based on the results of this drilling, the Company
announced a further increase to the JORC Resource on 19 June 2012.
The June 2012 JORC resource estimate (combined Measured, Indicated and Inferred) increased to 125.2
million tonnes grading 26.7% Fe, with the key change being a significant 246 per cent increase in the
Measured component of the resource.
The June 2012 Resource estimate, which reinforced the consistency of the grade and volume of
mineralisation at Jambreiro, underpins the Bankable Feasibility Study (BFS) which is due for completion
in early Q4 2012, paving the way for financing and development of the project to proceed.
Total resources at the Jambreiro Project as at the end of the 2012 financial year are summarised in
Table 3 below:
Table 3 - Jambreiro Iron Ore Project – June 2012 JORC Resource Estimate by Mineralisation Type
Fe %
SiO2%
AI203%
P%
JORC Category
Friable
Measured
Indicated
Measured + Indicated
Inferred
TOTAL
Compact
Measured
Indicated
Measured + Indicated
Inferred
TOTAL
Total
Measured
Indicated
Measured + Indicated
Inferred
TOTAL
Million
Tonnes
37.6
16.1
53.7
12.1
28.8
27.3
28.4
25.0
50.7
50.2
50.6
54.2
65.7
27.7
51.2
9.1
19.5
28.6
30.8
25.9
25.8
25.8
25.5
52.2
49.5
50.4
47.6
59.4
25.6
49.0
46.7
35.5
82.3
42.9
28.3
26.5
27.5
25.3
51.0
49.9
50.5
49.5
125.2
26.7
50.2
LOI
%
1.7
2.4
1.9
2.0
1.9
1.1
1.2
1.2
1.0
1.1
1.6
1.7
1.7
1.3
1.5
4.4
5.4
4.7
5.1
4.8
3.5
3.4
3.4
4.3
3.9
4.2
4.3
4.3
4.5
4.4
0.04
0.04
0.04
0.04
0.04
0.06
0.06
0.06
0.06
0.06
0.04
0.05
0.05
0.06
0.05
20% Fe Cut-Off
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Centaurus Metals | Annual Report 2012
On 14 November 2011, Centaurus announced the results of the
Pre-Feasibility Study (“PFS”) on the Jambreiro Iron Ore Project which
outlined a proposed 2Mtpa project capable of generating revenues of
A$1.25 billion and EBITDA of A$858 million over its initial 8.5 year life
using a domestic iron ore price of US$73 per tonne.
PRE-FEASIBILITy STUDy
The strong economics of the project – including a A$289
million post-tax NPV and IRR of 53% for a 2Mtpa operation –
prompted the Centaurus Board to immediately approve the
commencement of a Bankable Feasibility Study (“BFS”).
PFS Background and Assumptions
Significant work was undertaken in the following areas to
facilitate the completion of the PFS, including:
• Estimating Measured and Indicated Resources;
• Pit designs and total material movements;
• Converting Resources into Proven and Probable
Ore Reserves;
• Consideration of mine fleet requirements and costs
over the initial life of the Project;
• Detailed beneficiation test work and process flow
sheet design;
•
Initial plant design with detailed capital equipment
lists and pricing;
• Financial assessment including detailed work on tax
regime in Brazil; and
• Direct market information for the sales price of iron
ore in the Brazilian domestic market.
The Study was prepared in conjunction with a number of
Brazilian consulting groups including CNEC Worley Parsons,
Contecmina Consultoria em Mineração (‘Contecmina’) and
BNA Consultoria e Sistemas Ltda (‘BNA’).
CNEC Worley Parsons and Contecmina focused on the
process flow sheet, the plant design and infrastructure for
the Project, including the associated capital and operating
costs while BNA focused on Mineral Resources and Ore
Reserves estimations, mining fleet requirements and capital
and operating cost estimates.
Centaurus managed the financial modelling and economic
assessment of the Project.
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Centaurus Metals | Annual Report 2012Powering towards Production
The key assumptions used in the PFS are set out in Table 4 below with key financial outcomes set
out in Table 5.
Table 4 – Key PFS Assumptions
Ore Reserves
Grade
Mass Recovery per dry tonne
Reserve – Final Product
Grade
Waste Movement
Total Material Movement
Waste to Ore Ratio (LOM)
Production Rate
BRL to AUD Exchange Rate
AUD to USD Exchange Rate
Sales Price – Mine Gate
Discount Rate
Table 5 – Key Financial Outcomes of PFS
Total Revenue
Cash Surplus – Pre Tax
Cash Surplus – Post Tax
EBITDA
Capital Costs
Annual Operating Cash Flow
Operating Cash Cost (per tonne Product - LoM)
NPV8% Pre- tax
NPV8% Post- tax
Pre Tax IRR
Post Tax IRR
49.0 Mt
28.2% Fe
37.6%
17.1 Mt
66% Fe
46.0 Mt
95.0 Mt
0.94 to 1
2Mtpa
1.65 to 1
1 to 1
US$73 per DMT
8%
A$1.25 billion
A$745 million
A$499 million
A$858 million
A$132 million
A$101 million
A$19.9 per tonne
A$450 million
A$289 million
75%
53%
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The larger components of the operating cash
costs relate to diesel fuel, labour and power. The
cost of power was estimated at BRL$155 (A$94)
per Megawatt hour, fuel was costed at BRL$1.75
(A$1.06) per litre and labour assumes a full
time workforce of 330 people, which is typical of
a project of Jambreiro’s size in Brazil, utilising
smaller, locally sourced plant and equipment
under a company-operated mining fleet.
In addition to the operating cash costs, a Federal
Government Royalty of 2% and Landowner
Royalty of 1.85% of the mine gate value of a
shipment of ore will be levied on all iron ore sales.
As product will most likely be sold at the Mine
Gate, transport costs were not directly considered
in the operating costs. However, transport costs
were studied during the PFS process.
Pricing Assumptions & Domestic
Sales Market
Centaurus undertook significant analysis of the
pricing regime in the domestic market in Brazil
using local consultants with extensive experience
in the procurement of raw materials for the iron
making business.
The iron ore pricing analysis at the time of the PFS
indicated that iron ore grading 62% to 64% would
attract a sales price in the domestic market of
circa US$75 per tonne at the Mine Gate.
The higher iron grade and lower impurities of
the final product to be produced at Jambreiro
is highly sought after by the domestic market.
The opportunity to purchase consistent quality
concentrate from long term, proven reserves will
also differentiate Jambreiro products from the
significant number of non-Vale suppliers to this
domestic market.
Centaurus used a price of US$73 per tonne for
its higher grade, lower impurity product in the
domestic market for the purpose of the PFS. This
pricing assumption is now being reviewed as part
of the Bankable Feasibility Study process.
Sensitivity Analysis
Sensitivity analysis undertaken at the time of
the PFS indicated that the Project was most
sensitive to iron ore prices followed by exchange
rates, discount rates, operating expenditure and
capital expenditure.
The degree of sensitivity is represented in the
Tornado chart in Figure 5 below and the values
used for each variable under each case and the
impact on post-tax NPV is summarised
Table 6 below.
Table 6 – Values used for Sensitivity Analysis of 2 Mtpa Concentrate Production Scenario
2 Mtpa
Variable
Base
Post Tax – NPV (A$M)
-20%
-10%
Case
+10%
+20%
-20%
-10%
Base
+10%
+20%
Price (Mine Gate) USD/dmt
58
66
73
80
88
185.6
237.1
288.7
340.2
391.7
Capital Expenditure ($M)
158
145
132
118
105
270.1
279.4
288.7
297.9
307.2
Operating Cash Costs ($M/dmt)
23.8
21.8
19.9
17.9
15.9
261.0
274.8
288.7
302.5
316.4
Foreign Exchange Rate R$/AUD
1.98
1.82
1.65
1.49
1.32
241.3
262.8
288.7
320.3
359.8
Discount Rate %
10
9
8
7
6
252.9
270.1
288.7
308.6
330.0
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Centaurus Metals | Annual Report 2012
Figure 5 - NPV Sensitivity Analysis (+/- 20%)
Project and Mine Life Upside
Centaurus used the October 2011 JORC Mineral
Resource base for completion of the PFS,
comprising 116.5Mt grading 26.8% Fe.
Pit optimisation work using the same technical
and economical parameters as the Ore Reserve
study, with adjustment for the compact ore,
indicated that the following JORC Resource lies
within a larger conceptual open pit.
Conceptual Open Pit Size 93.7Mt at 27.3% Fe
(80.4% of the total
October 2011
Resource base)
Strip Ratio
1.2:1
Potential Final Product
32.2Mt of 66% Fe
Potential Mine Life
16.1 years
The conceptual in-pit Resource includes the
current Ore Reserve of 49.0Mt that accounts for
94% of the friable October 2011 Measured and
Indicated Resources.
The remaining 44.7Mt1, which is almost
exclusively compact ore, represents a strong
opportunity to continue mining beyond the initial
friable project by at least a further 7 years.
Beneficiation testing to date has confirmed a
high grade, low impurity, saleable product can
be produced from the compact ore.
Subsequent to the completion of the Pre-
Feasibility Study, Centaurus announced an
upgraded Mineral Resource estimate for the
Jambreiro Project (see above), which will form
the basis of the Bankable Feasibility Study.
1 This Resource total includes 24.7Mt of inferred
resources, which by definition, is of insufficient
confidence to have economic considerations applied
that would enable them to be categorised as mineral
reserves. There is no guarantee that further drilling
will convert all Inferred Resources to Indicated
Resources.
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Centaurus Metals | Annual Report 2012Powering towards Production
Beneficiation testwork on resource grade mineralisation completed
during the year has so far demonstrated that both friable and
compact mineralisation types can be beneficiated to a high-quality
saleable product to suit various customers and markets, ranging
from the premium 67% Fe with less than 2% silica to the more
economical 63% Fe with less than 5% silica.
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METALLURGICAL TEST WORK
The beneficiated product from Jambreiro will have extremely low phosphorus grades between 0.01% and
0.02% P with low alumina grades ranging between 0.7% and 0.9% Al2O3.
The Company completed an extensive pilot plant testwork program as part of the BFS work program
on 30 tonnes of friable mineralisation, including both outcrop and samples extracted from drill holes, in
order to finalise the process flowsheet for costing purposes and to produce a representative product for
marketing purposes with the domestic steel mills.
The pilot plant run also tested additional circuit options which will potentially enhance the product quality
range at reduced operating costs.
The results of this pilot plant testwork were announced on 6 August 2012, confirming the ability to
produce a premium grade (66.0% Fe) product from the Project.
Figure 6 - (Left to Right) Jig Concentrate, WHIMS Cleaner Concentrate, Tails from WHIMS Cleaner Process
The extensive testwork program demonstrated the ability to deliver a high-grade sinter feed-blend
product with low impurities (4.1% silica, 0.8% Al2O3, 0.01% phosphorus) at an improved mass recovery of
39.4%.
The key batches of the testwork program generated approximately nine dry tonnes of finished product
which will be distributed to domestic steel producers in Brazil ahead of discussions around potential off-
take arrangements. Some of the product will also be used to undertake independent sinter testwork.
Importantly, the testwork has also revealed opportunities to reduce both capital and operating costs for
the Jambreiro Project by introducing slight changes to the design of the flowsheet in response to the
testwork results. These will be incorporated in the Bankable Feasibility Study.
A summary of the pilot plant testwork results is provided below:
Table 7 – Pilot Plant Testwork Result Summary
Metal
Recovery %
Mass
Recovery %
Fe % SiO2% AI203%
P%
LOI %
Ore Feed
30.4
52.3
2.7
0.02
Pilot Plant Concentrate
85.4
39.4
66.0
4.1
0.8
0.01
1.7
1.0
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Centaurus Metals | Annual Report 2012
Powering
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Production
15
Centaurus Metals | Annual Report 2012 STATUTORy APPROVALS
Environmental Approvals
During the year the Company lodged all three
statutory reports required for the grant of the
Mining Lease:
• Final Exploration Reports - Lodged with
DNPM on 27 January 2012
- Approved by DNPM on 25 May 2012
• Environmental Impact Assessment (EIA/RIMA)
Lodged with SUPRAM on26 March 2012
-
Approval expected for Q4 2012
• Mining Lease Application (PAE) - Lodged with
DNPM on 10 July 2012
-
Approval expected for Q1 2013
DNPM Approvals
During May 2012, Centaurus received Government
approval for the Final Exploration Reports covering
the Jambreiro Project’s three key tenements.
The approval – by the National Department of
Mineral Production (DNPM), the key national
regulatory body for Brazil’s mining industry – paved
the way for Centaurus to lodge a PAE (Economic
Exploitation Plan), which effectively represents the
start of the approval process to secure the grant of
a Mining Lease.
The PAE for the Jambreiro Project was lodged with
the DNPM on 10 July 2012, and was prepared on
the basis of the Pre-Feasibility Study completed in
November 2011.
Centaurus is targeting the grant of the Mining
Lease for Q1 2013.
The Jambreiro Project is located in an area of
eucalypt plantation owned by one of Brazil’s largest
pulp companies, Cenibra. As a result, Centaurus
predominantly deals with this one land-owner in an
area that has already been industrial-use land and
disturbed from an environmental perspective.
Centaurus has a 10-year land access and co-
operation agreement in place with Cenibra. Cenibra
has recently harvested the eucalypt trees from a
large portion of the Jambreiro Project site, providing
an excellent platform to commence development.
Centaurus lodged the key environmental approval
documentation, the Environmental Impact
Assessment (“EIA”) for the Jambreiro Project, with
the State environmental authority SUPRAM in the
State of Minas Gerais in March 2012. The application
was made for an operation that can deliver up to
3Mtpa of high grade iron ore, although the Project is
initially planned to commence production at a rate
of 2Mtpa.
Centaurus collected a large amount of data over a 12
month period, including data from two wet seasons,
in order to complete an extensive EIA. During the
course of this data collection, the Company did not
identify any issues which would be an impediment
to the grant of the Preliminary Licence or to
development of the Project.
Significant effort has also been made in working
with and informing the local community and key
project stakeholders on the scope of the Jambreiro
Project and the potential benefits it will bring to the
communities in the region. SUPRAM places a
heavy emphasis on the social and economic
benefits of any new Project during the
environmental approval process.
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Centaurus Metals | Annual Report 2012
Figure 7 - (Left to right) Public Hearing panel, Public Hearing audience
A very positive Public Hearing was held in June
2012 in the city of São João Evangelista to provide
the local community and stakeholders with a strong
understanding of the Project including its potential
environmental impacts, as well as its social and
economic benefits. It also provided the community
with a forum to voice any specific concerns about
the Project. The Public Hearing was attended by
over 400 people from all over the region, including
representatives of the State Environment Agency
(SUPRAM), the State’s Public Prosecution Office,
the local mayor and counsellors, as well as Non-
Government Organisations.
Matters discussed at the Public Hearing
included surface water depletion, employment
opportunities and the post-mining growth of the
local community.
Following completion of the Public Hearing,
SUPRAM formally requested some additional
information from the Company, with this
information having now been provided.
The Company is targeting approval of the EIA and
grant of a Preliminary Licence for the Project
during October 2012, in line with its development
timetable of producing first iron ore at Jambreiro
by the end of 2013.
On approval of this environmental application,
the Company will be granted a Preliminary
Licence or “LP”. Once the LP is granted, the
Company will apply for an Installation Licence
(“LI”) which will allow construction of the plant
and equipment to commence on site.
From the grant of the LP, the Company would
expect to have the Installation Licence in place
by April 2013 and be in a position to commence
site erection of the plant. Once construction
is completed in accordance with the LI, the
Company anticipates a fairly fast grant of the
final licence-to-operate instrument, being an
Operating Licence (‘LO’).
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BANKABLE FEASIBILITy STUDy
As a result of the robust economics of the Jambreiro Project demonstrated in the PFS, Centaurus’
Board approved the commencement of a Bankable Feasibility Study for the Project which commenced
in March 2012 and is expected to be completed early in the fourth Quarter of 2012.
BNA Micromine do Brasil Consultoria Ltda (who delivered the upgraded JORC resource in June 2012)
has been engaged to carry out the Resource, Reserve and Mining work for the BFS.
Contécmina Consultoria em Mineração has been engaged to undertake the beneficiation flowsheet
and equipment selection work of the BFS.
Contécmina completed the PFS for Jambreiro and is well placed to undertake the BFS engineering
work, and will coordinate the schedules of the various contractors to produce the overall BFS.
Figure 8 - Process Flowsheet
Figure 9 - (Left to Right) Bruno Scarpelli & Peter Freund, CTM geologist in core shed, Jambreiro high grade itabirite
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Centaurus Metals | Annual Report 2012
The Site Layout Map for the Jambreiro Project is shown diagramatically in Figures 10 & 11.
Figure 10 - Jambreiro Iron Ore Project Site Layout
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Centaurus Metals | Annual Report 2012Powering towards Production Figure11 - Jambreiro Project aerial view showing proposed site layout
FUTURE WORK PROGRAM
Centaurus’ immediate focus will be the delivery of the Bankable Feasibility Study for the Jambreiro
Project development, and the receipt of all remaining statutory approvals. The current timetable for
commencement of production at Jambreiro is shown in Figure 12 below.
Figure 12 - Timetable for commencement of production at the Jambreiro Iron Ore Project
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Centaurus Metals | Annual Report 2012 Powering
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21
Centaurus Metals | Annual Report 2012 EXPLORATION
Exploration completed over the 2012 financial year was focused on resource definition and in-fill
drilling, with results continuing to support the quality and consistency of mineralisation at the
Jambreiro Project.
A major resource drilling program was completed during the first half of the financial year, targeting
the main Tigre deposit as well as the Cruzeiro, Galo and Coelho satellite prospects, with the objective
of upgrading the resources for each prospect to the Measured and Indicated categories.
This drilling program was the basis of the October 2011 resource upgrade (see above).
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Figure 13 - (Left to Right) Serra da Lontra Drilling Program, Trench at the Jambreiro Iron Ore Project
A major RC in-fill drilling program was then commenced as part of the Bankable Feasibility Study,
which targeted the definition of Measured Resources to support the first 4-5 years of production from
the friable project.
The in-fill program confirmed the consistency of the iron grade and volume of mineralisation at the
Tigre and Cruzeiro Deposits, both along strike and down-dip.
Exploration drilling also confirmed the extension of the Cruzeiro Deposit to the south, which
approaches the Tigre Deposit. It is expected that this will result in the two pits eventually being joined
as demonstrated earlier in Figure 11.
The south-eastern portion of the Tigre Deposit and the Cruzeiro Deposit both host relatively high-grade
friable mineralisation that dips sub-parallel to the natural surface. These zones are ideal for a start-up
mining operation with a low strip ratio targeting high-grade ore as a source of early production in order
to maximise cash flow in the initial years to facilitate rapid payback of capital.
This in-fill drilling program delivered outstanding results, strengthening the Company’s confidence in
the resource inventory at Jambreiro and leading to the delivery of an upgraded JORC resource (mainly
in JORC classification) during June.
Figures 14 and 15 are typical cross-sections through the Jambreiro deposit areas.
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Centaurus Metals | Annual Report 2012Powering towards Production
Figure 14 - Tigre Deposit Cross Section Showing Material Type – Section 4.
Figure 15 - Cruzeiro Deposit Cross Section Showing Material Type – Section 45.
23
Centaurus Metals | Annual Report 2012 Exploration drilling is scheduled to commence in October 2012 at a new greenfields exploration target,
the G100 Project, located 15km north of our flagship Jambreiro Iron Ore Project in south-east Brazil.
The upcoming drilling will comprise of an initial 2,500 metres of Reverse Circulation (RC) drilling,
following a recent mapping program and completion of a detailed ground magnetic survey in August.
This survey confirmed the strength and scale of the large regional aeromagnetic signature at the G100
Project, which is a conceptual iron formation target in the form of a closed fold located in a similar
geological setting to Jambreiro (see Figure 16 below).
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Figure 16 - Regional Aeromagnetic map of G100 Project – CODEMIG, Analytical Signal
The regional aeromagnetic map clearly
demonstrates the relative size of the G100
Project compared with the footprint of the
Jambreiro Project. While the size and strength
of the magnetic anomaly is impressive, drilling
is now required to determine if sub surface iron
mineralisation is responsible for the strong
magnetic signature of the Project.
The results of the recent ground magnetic
survey are shown in Figure 16 below. The
survey included 70km of survey lines covering
an area of 30km2 in the southern part of the
tenement package. North-South survey lines
were spaced 200 metres perpendicular to the
strike of fold hinge identified in the regional
signature. Survey readings were taken
every 10 metres.
The resulting interpretation confirms the
geometry of the regional aeromagnetic survey
and provides the Company with high quality
information to target its drilling program.
The overall strike length of the anomaly at
the G100 Project is more than 30km with
Centaurus’ tenement package covering 98% of
the magnetic signature.
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Centaurus Metals | Annual Report 2012
Extensive geological mapping
over the G100 Project has
not so far identified any
significant outcrops of iron
formation, although there are
vast occurrences of soils with
hematite (possibly martite)
and magnetite occurrences
that have been identified with
the magnetic anomalies and
the topographical highs of
the project area. Because
of the absence of outcrop,
the exploration model for
the G100 Project, at this
stage, relies heavily on the
magnetic signature and geo-
morphological similarities to
the Jambreiro Iron Ore Project.
To put this in context, the
south-eastern limb of the
Tigre Deposit at Jambreiro
was originally covered by thick
vegetation and a 2-10 metre
thick layer of organic soils
overlaying the mineralisation,
which prior to clearing was
not identified in the mapping
as an area of near-surface
mineralisation.
Figure 17 - Ground Magnetic Image - G100 Project
It was only after clearing
and completion of a ground
magnetic survey that it
became evident that there
was mineralisation in this
part of the Jambreiro Project
area. Like the south-eastern
limb of the Tigre Deposit, the G100 Project is
predominantly covered by thick vegetation in
many areas, which may account for the absence
of iron mineralisation outcrop.
The geological setting of the G100 Project and the
friable itabirite mineralisation at the Jambreiro
Project are similar in that they are both located
in the biotite gneisses, quartz-mica schists,
amphibolites and meta-ultramafics of the Upper
Formation of the Guanhães Group (Archean).
Work on Landowner Agreements and
environmental licensing to access the G100
Project is progressing well. Agreements have
been formalised with the landowners over the
initial target areas and work continues with the
neighbouring properties.
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Centaurus Metals | Annual Report 2012 CANDONGA IRON ORE PROJECT
Centaurus’ Candonga Iron Ore Project is located 40km from its flagship Jambreiro Project in
Minas Gerais, south-east Brazil.
Figure 18 - Candonga Project Map Location
During the year the Company completed a
trenching program which confirmed the presence
of high-grade itabirite mineralisation at surface
in various locations over a strike length of
approximately 1.6km.
The results have enhanced the potential of the
Candonga Project as a future source of ore feed
for Centaurus’ planned iron ore operation at
Jambreiro.
This potential remains subject to further
metallurgical test work to be undertaken as part
of the ongoing beneficiation test work program
for Jambreiro, as the mineralogy of the Candonga
mineralisation appears to be different to that of
Jambreiro, being of considerably higher in-situ Fe
grade and mineral species.
The trenching work has significantly enhanced
the definition of drill targets for the next round of
exploration and drilling at Candonga. The friable
itabirite mineralisation at surface identified in the
trenches, which varies in width between 15 and 88
metres, contains hematite, magnetite and goethite.
The holes in the initial program intersected iron
enriched intervals of friable mineralisation at
surface before becoming more compact at depth.
At surface, medium to coarse grained hematite and
goethite are the primary iron minerals with both
being substituted by magnetite at depth.
Early observation and metallurgical
characterisation work indicates that this
mineralisation has properties which appear highly
complementary in a physical and mineral species
sense to the Jambreiro concentrate product,
providing further market flexibility and appeal to
Centaurus´ domestic product range.
Although undertaken on a relatively small
sample the characterisation test work is very
encouraging. Initiation of further flowsheet
testwork is planned, based on a larger sample
which will be generated as part of an upcoming
drill program.
This testwork will be focused on how to leverage
processing, logistics and infrastructure benefits
from the proposed Jambreiro Project development.
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Centaurus Metals | Annual Report 2012
ITAMBÉ IRON ORE PROJECT
The Itambé Iron Ore Project comprises flat-lying, near-surface zones of itabirite-hosted
mineralisation of varying thicknesses up to 25 metres.
Figure 19 - Itambé Project Map with Magnetic Image
The Project has a current resource estimate
of 10.0 million tonnes grading 36.6% Fe,
which encompasses both friable and compact
mineralisation as well as an enriched itabirite
scree material weathered from the in situ itabirite.
The outcropping itabirite mineralisation is
coarse grained and of a friable nature.
In keeping with the Company’s core focus on
Jambreiro, no detailed field work was undertaken
at the Itambé Project during the year.
Figure 20 - (Left to Right) Standing on medium grade Itambe itabirite, Itambe Itabirite insitu, Itambe Countryside.
Environmental & Mining Approvals
In line with the environmental work being undertaken on the Jambreiro Project, similar data collection took place for
Itambé. This data collection, in the areas of flora and fauna and water monitoring, will form the basis of the EIA/RIMA
document required to be completed to secure the necessary environmental approvals for the Project.
The PAE document required to commence the Mining Lease application process was lodged during the year.
27
Centaurus Metals | Annual Report 2012 PASSABÉM IRON ORE PROJECT
During the year, the final research (exploration) report for the Passabém Project was lodged
with the DNPM.
In July 2011, Centaurus completed its obligations to the original vendor of Passabém and paid the final
consideration owing to remove the advanced royalty that was payable for the Project.
The Project has a current resource estimate of 39.0 million tonnes grading 31.0% Fe.
In keeping with the Company’s core focus on Jambreiro, no detailed field work was undertaken at the
Passabém Project during the year.
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Figure 21 - (Above) Passabem exposed itabirite, (Below) Passabem friable ore, )Right) Peter Freund with Passabem farmer
EXPORT IRON
ORE BUSINESS
In addition to producing iron ore to sell into the
world-class Brazilian steel industry, Centaurus
also intends to sell iron ore into the global
steel market. One of the important factors
differentiating Brazil, and hence Centaurus
Metals, is the very high quality of iron ore products
produced in Brazil, which supports the Company’s
intention to implement an Export Market Strategy.
Rapidly declining availability and quality of high
grade DSO lump worldwide 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.
Centaurus plans to leverage off the cash flow that
will be generated by the Domestic iron ore business
to develop projects around existing infrastructure,
such as ports and roads, which are capable of
producing high-grade hematite products and of
supporting a minimum project life of 10 years.
28
Centaurus Metals | Annual Report 2012Powering towards Production
Figure 22 - (Left to Right) Jambreiro core shed, Jambreiro drilling.
SERRA DA LONTRA PROJECT
Located 140km via sealed road from the major regional export port of Ilhéus, in the State of Bahia,
Brazil, the Serra da Lontra Project comprises 12 tenements.
Figure 23 - Serra da Lontra Project Location
During the year the Company undertook a maiden RC and
diamond drilling program at Serra Da Lontra, designed
to underpin a maiden JORC resource estimate for the
Project. The drilling targeted two key prospects – the
Fittipaldi Prospect and the Senna Prospect.
The drilling at the Fittipaldi Prospect confirmed the
continuation of the siliceous itabirite mineralised body,
which ranges in width between 15-35 metres with average
iron grades of 30-40% Fe.
Drilling at the Senna Prospect commenced in June 2012.
While significant intersections of siliceous itabirite were
encountered at the Senna Prospect, drilling intersected
more amphibolitic itabirite than originally anticipated.
The siliceous itabirite outcrop of the Senna Prospect was
originally mapped over 1.2km of strike, coincident with a
significant ground magnetic anomaly. However, the drilling
targeting the outcrop has confirmed that siliceous itabirite
mineralisation continues sub-surface for approximately
400 metres of strike and to depths of up to 50 metres.
Below this, the dip of the mineralisation appears to
steepen and is predominantly amphibolitic itabirite
averaging 15-40 metres in width. Consequently, the
Company’s expectations for siliceous itabirite at this
prospect area have been reduced.
29
Centaurus Metals | Annual Report 2012 Figure 24 - (Left to Right) Serra da Lontra Outcrop, Drilling at Serra da Lontra
Figure 25 - Serra da Lontra Iron Ore Project Map with Recent Results
The Company has increased its efforts to understand the metallurgical response of the amphibolitic
itabirite mineralisation. Comprehensive testwork on both the siliceous and amphibolitic itabirite is
ongoing at the University of São Paulo with the objective of defining a suitable process route that will
allow product to be achieved for both mineralisation types.
30
Centaurus Metals | Annual Report 2012 CURRAL VELHO IRON ORE PROJECT
During the year, Centaurus acquired a new iron ore exploration project in the State of Paraiba, north-
eastern Brazil, through a tenement swap agreement. The acquisition was consistent with Centaurus’
strategy of acquiring prospective iron ore projects which are strategically located near open access
infrastructure, offering potentially low development costs.
Figure 26 - Curral Velho Project Location
The Curral Velho Iron Ore Project comprises six tenements
covering an area of 83 square kilometres. It is located
approximately 350km from the major Brazilian export port
of Suape in the neighbouring State of Pernambuco and only
60km from the new Transnordestina rail system, which is
currently under construction and due for completion in late
2014, connecting to the Suape port complex.
The Suape Port, recognised as one of the most
technologically advanced ports in Brazil, currently exports
approximately 11 million tonnes of product annually,
ranging from agricultural products and petrochemical
liquids to general cargo, is also capable of receiving
bulk commodities.
The Suape Port has a draft of -15.5 metres for the inner
harbour and -20 metres for the outer harbour.
The iron mineralisation at Curral Velho has initially been
observed over a strike length of some 6 kilometres, of a
total prospective strike length of some 20 kilometres, with
rock chip sampling by the project vendor, showing average
grades of itabirite iron mineralisation at surface between
30% and 40% Fe.
Detailed field mapping, regional aeromagnetics and ground
magnetic work still needs to be undertaken.
Based on the previous rock chip sampling work completed
and the recent initial field mapping by Centaurus, the
Company has established an Exploration Target for the
Curral Velho Project of 30 to 40 million tonnes grading 30
to 40% Fe.1
In consideration for acquiring the Curral Velho Iron Ore
Project, Centaurus transferred its interests in its non-core
Caçapava Copper/Gold Project in southern Brazil. The
acquisition enabled Centaurus to realise value from its
non-core copper/gold tenement package while further
strengthening its Brazilian iron ore portfolio.
Note1: 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.
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CORPORATE
Strategic alliance with Atlas Iron
Share Consolidation
On 22 September 2011, Shareholders approved
the consolidation of the Company’s capital
on a 1-for-8 basis. The consolidation took
effect from 5 October 2011. The consolidation
reduced the number of shares on issue from
1.068 billion to 133.5 million.
$26M Share Placement
Subsequent to the end of the 2012 financial
year, Centaurus completed a $26.2 million
equity raising which was underpinned by
new and existing institutional and strategic
investors. The equity raising was undertaken
through a two-tranche share placement at 44
cents per share, comprising:
• an A$11 million Share Placement
to Boston-based Liberty Metals &
Mining Holdings, LLC (“LMM”), under
a subscription agreement entered into
between LMM and the Company. LMM is
a subsidiary of Liberty Mutual Insurance,
the third largest diversified property and
casualty (“P&C”) insurer in the US and
the sixth largest P&C insurer worldwide;
and
• a A$15.2 million Share Placement to
Centaurus’ major shareholder, Atlas
Iron Limited (ASX: AGO), and institutional
and professional investor clients of Ord
Minnett as Lead Manager and Bell Potter
as Co-Manager to the equity raising (“the
Placement”).
On 27 July 2011, the Company announced it
had entered into a strategic alliance with Atlas
Iron Limited (“Atlas”) pursuant to which Atlas
agreed to take a strategic 19.9% stake in the
Company, and for Atlas to provide technical,
development and product marketing support
as the Company looks to develop its export
and domestic iron ore businesses in Brazil.
Centaurus and Atlas entered into a subscription
agreement with respect to the strategic
alliance (“Agreement”).
Under the Agreement, Atlas subscribed
for a share placement comprising 26.5
million shares at 70.4 cents per share (post-
consolidation basis), raising a total of $18.7
million. In addition, Atlas subscribed for 3.75
million options at an exercise price of $1.20
per share (post-consolidation basis), expiring
on 31 August 2014. The share and option
placement was approved by Shareholders on 22
September 2011.
As part of the strategic alliance, Atlas was
entitled to nominate a representative to
the Centaurus Board of Directors. On 23
September 2011, the Company appointed Atlas
Iron’s Chief Commercial Officer, Mr Mark
Hancock to the Board.
Pursuant to the strategic alliance, and subject
to meeting various conditions including Atlas
continuing to hold a 5% interest in the share
capital in the Company, ASX Limited have
granted Centaurus a waiver from the listing
rules to permit Atlas to have a right to maintain
its equity interest in the Company in the event
that further equity issues are undertaken for
future funding requirements or as a means of
securing further assets (other than by a takeover
bid or scheme of arrangement). Atlas will be
given the opportunity to participate in these
future equity issues of the Company on the same
terms as those being offered to third parties.
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Centaurus Metals | Annual Report 2012
The Company issued 19.14 million shares
under the first tranche, which did not require
shareholder approval, to raise A$8.4 million. The
second tranche, comprising 40.41 million shares
to raise a further A$17.8 million, was completed
on 6 September 2012 following receipt of
shareholder approval.
Following completion of the placement, LMM
holds a 12.77% interest in Centaurus, while Atlas
Iron has maintained its 19.58% interest.
LMM holds a number of significant positions in
junior resource companies with projects located
across the world. Centaurus represents LMM’s
first investment in an ASX Listed Company.
The funds raised under the Equity Raising will
be used to progress feasibility and development
activities at Jambreiro and to strengthen the
Company’s balance sheet as it progresses
discussions with potential lenders and debt
financiers for the Project.
In this regard, Centaurus appointed Perth-based
PCF Capital Group to act as debt advisor and to
work with the Company to secure an appropriate
debt funding package for Jambreiro by the end of
calendar 2012.
The additional funding available to the Company
will also give it the flexibility to maintain an
aggressive exploration and resource development
push at its other Brazilian iron ore projects.
COMPETENT PERSON’S
STATEMENT
The information in this report that relates to
Exploration Results and Mineral Resources
is based on information compiled by Roger
Fitzhardinge who is a Member of the Australasia
Institute of Mining and Metallurgy and Volodymyr
Myadzel who is a Member of Australian Institute
of Geoscientists. Roger Fitzhardinge is a
permanent employee of Centaurus Metals Limited
and Volodymyr Myadzel is the Senior Resource
Geologist of BNA Consultoria e Sistemas Limited,
independent resource consultants engaged by
Centaurus Metals Limited.
Roger Fitzhardinge and Volodymyr Myadzel have
sufficient experience which is relevant to the
style of mineralisation and type of deposit under
consideration and to the activity which they are
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 Reserve’. Roger
Fitzhardinge and Volodymyr Myadzel consent to
the inclusion in the report of the matters based
on their information in the form and context in
which it appears.
The information in this report that relates to
Ore Reserves is based on information compiled
by Beck Nader who is a professional Mining
Engineer and a Member of Australian Institute
of Geoscientists. Beck Nader is the Managing
Director of BNA Consultoria e Sistemas Ltda and
is a consultant to Centaurus Metals Limited.
Beck Nader 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 Reserve’.
Beck Nader consents to the inclusion in the report
of the matters based on their information in the
form and context in which it appears.
33
Centaurus Metals | Annual Report 2012 34 CENTAURUS METALS ANNUAL REPORT 2012
34
Centaurus Metals | Annual Report 2012 FINANCIAL
stAtemeNt 2012
CENTAURUS METALS ANNUAL REPORT 2012 35
35
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort
For the year ended 30 June 2012
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 2012 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
Mr Darren P Gordon
Mr Peter E Freund
Mr Keith G McKay
Mr Richard G Hill
Mr Mark D Hancock
Mr Geoffrey T Clifford
Independent Non-Executive Chairman
Managing Director
Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Non-Executive Director (Appointed 23 September 2011)
Independent Non-Executive Director (Resigned 12 August 2011)
Unless otherwise disclosed, all directors held their office from 1 July 2011 until the date of this report.
2. DIreCtors AND oFFICers
mr Didier m murcia, B.Juris, LL.B
Non-Executive Chairman Age 49
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. 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:
Alicanto Minerals Limited (appointed 30 May 2012)
Gryphon Minerals Limited (appointed 28 July 2006)
Rift Valley Resources Limited (appointed 22 November 2010)
Gindalbie Metals Limited (appointed 2 February 1998, resigned 31 January 2010)
Target Energy Limited (appointed 1 September 2006, resigned 31 December 2009)
Special responsibilities
Chairman of the Board
Chairman of the Remuneration Committee
mr Darren P Gordon, B.Bus, CA, FFin, ACIs, mAICD
Managing Director Age 40
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 for Gindalbie Metals Limited.
36 CENTAURUS METALS ANNUAL REPORT 2012
36
Centaurus Metals | Annual Report 2012
DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
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 66
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
mr Keith G mcKay, Bsc (Hons), FAusImm, mAICD
Non-Executive Director Age 66
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
During the last three years Mr McKay held directorships in the following ASX listed companies:
Rift Valley Resources Limited (appointed 18 February 2011)
Special responsibilities
Member of the Remuneration Committee
Member of the Audit Committee
CENTAURUS METALS ANNUAL REPORT 2012 37
37
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
2. DIreCtors AND oFFICers (continued)
mr richard G Hill, B.Juris, LL.B, Bsc (Hons), FFin
Non-Executive Director Age 44
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:
YTC Resources Limited (appointed 28 April 2006, resigned 11 July 2012)
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.
Special responsibilities
Member of the Remuneration Committee
Chairman of the Audit Committee
mr mark D Hancock, B.Bus, CA, FFin
Non-Executive Director Age 43
Experience and expertise
Non-executive director appointed 23 September 2011. Currently an Executive Director – Commercial and joint Group
Secretary at Atlas Iron Limited. Over 20 years experience in senior financial roles across a number of leading companies in
Australia and South East Asia, including Lend Lease Corporation Ltd, Woodside Petroleum Ltd and Premier Oil Plc.
Other directorships
During the last three years Mr Hancock held directorships in the following ASX listed companies:
Atlas Iron Limited (appointed 25 May 2012)
Warwick Resources Limited (appointed 25 June 2009). Warwick Resources Limited was acquired by Atlas Iron Limited and
was delisted from the ASX on 21 December 2009.
Aurox Resources Limited (appointed 13 August 2010). Aurox Resources Limited was acquired by Atlas Iron Limited and was
delisted from the ASX on 1 September 2010.
Giralia Resources NL (appointed 2 March 2011). Giralia Resources NL was acquired by Atlas Iron Limited and was delisted
from the ASX on 7 April 2011.
FerrAus Ltd (appointed 13 September 2011). FerrAus Ltd was acquired by Atlas Iron Limited and was delisted from the ASX
on 26 October 2011.
Special responsibilities
Member of the Audit Committee
38 CENTAURUS METALS ANNUAL REPORT 2012
38
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
mr Geoffrey A James, B.Bus, CA, ACIs
Company Secretary Age 46
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
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 2012 and the number of meetings attended by each director were:
Mr D M Murcia
Mr D P Gordon
Mr P E Freund
Mr K G McKay
Mr R G Hill
Mr G T Clifford
Mr M D Hancock
meetings of Directors
meetings of Committees
Held
Attended
Held
Attended
Held
Attended
Audit
Remuneration
7
7
7
7
7
1
5
7
7
6
6
7
-
5
1
n/a
n/a
2
2
n/a
1
1
n/a
n/a
2
2
n/a
1
2
n/a
n/a
2
2
n/a
n/a
2
n/a
n/a
2
2
n/a
n/a
Held – denotes the number of meetings held during the time the director held office or was a member of the committee during the year.
The Company does not have a formal Nomination Committee. This function is performed by the full Board.
CENTAURUS METALS ANNUAL REPORT 2012 39
39
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
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 three
independent non-executive directors, two executive directors and one non independent non-executive director at the date
of signing the Directors’ Report.
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.
40 CENTAURUS METALS ANNUAL REPORT 2012
40
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
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 Company does not have a formal Nomination Committee, the role of the Nomination Committee is performed by 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.
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 and Performance Share Plan which provide for the issue of options
and performance rights 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.
CENTAURUS METALS ANNUAL REPORT 2012 41
41
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
4. CorPorAte GoverNANCe stAtemeNt (continued)
4.3 remuneration report – audited
4.3.1 Principles of Remuneration
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:
•
•
•
•
•
The Group has structured an executive remuneration framework that is market competitive and complimentary to the
reward strategy of the organisation to ensure:
(i)
competitiveness and reasonableness;
acceptability to shareholders;
performance linked executive compensation;
transparency; and
capital management.
Alignment to shareholders’ interests:
•
•
focuses on the creation of shareholder value and returns; and
attracts and retains high calibre executives.
(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 base pay, cash incentive bonuses and long-term incentives through
participation in the Employee Share Option Plan and Performance Share 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. 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:
2012
$
2011
$
2010
$
2009
$
2008
$
Net loss
(20,783,843)
(12,204,218)
(5,635,542)*
(1,265,869)
(3,505,630)
Change in share price (1)
($0.201)
$0.064
$0.08
$0.00
($0.48)
Market capitalisation
at year end
$58.7 million
$68.0 million
$42.3 million
$17.2 million
$17.2 million
(1) In October 2011 the Group completed a 1-for-8 share consolidation, comparatives have been restated.
*The Group changed its accounting policy for exploration and evaluation expenditure effective from 1 July 2009. Exploration and evaluation expenditure is
expensed in the year incurred.
During the years stated above, there were no other returns of capital made by the Company to shareholders and no
dividends paid.
42 CENTAURUS METALS ANNUAL REPORT 2012
42
Centaurus Metals | Annual Report 2012
DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
base pay and benefits;
short term incentives in the form of cash bonuses based on achievement of milestones;
long term incentives through participation in the Employee Share Option Plan and Performance Share Plan; and
other remuneration such as superannuation.
The executive pay and reward framework has four components:
•
•
•
•
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. 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.
Incentives – Cash Bonuses
The Board may pay discretionary cash bonuses or offer performance based incentives, where employees are
paid pre-determined cash bonuses on achievement of milestones based on the Company’s strategic objectives.
Expatriate Benefits
Expatriate executives located in Brazil receive 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 – Options and Performance Rights
Long term incentives comprising of share options and performance rights are granted from time to time to
encourage exceptional performance in the realisation of strategic outcomes and growth in shareholder wealth.
Options and performance rights are granted for no consideration and do not carry voting or dividend entitlements.
Information on share options and performance rights granted during the year is set out in section 4.3.4.
•
•
•
•
Short Term Incentive Plan
The Group has implemented a Short Term Incentive Plan (“STI”) to motivate and reward employees for the achievement of
specific milestones. The milestones are linked to the Group’s strategic objectives of becoming a substantial producer of iron
ore for both the domestic Brazilian steel market and the global iron ore export market. Achievement of the milestone would
result in the payment of a pre-determined cash bonus.
The milestones used and the respective weightings of the milestones will vary by role and are designed to align performance
measures to the responsibilities of each role. The STI plan is comprised of 100% non-financial milestones, reflecting the
Group’s position as a developer of iron ore projects. The milestones are applicable for the period ending 31 December 2013.
Due to the commercially sensitive nature of the milestones, the precise metrics being used have not been disclosed.
A summary of the milestones in place as at the date of this report is as follows:
(A) Domestic Production Strategy (Jambreiro Project):
•
•
•
•
•
•
Obtaining government environmental approvals;
Achieving feasibility study results to exceed targeted levels of CAPEX and OPEX costs;
Entering into agreements for the sale of iron ore with Brazilian steel groups;
Securing debt and/or equity funding facilities to support the development of the Project;
Achieving commencement of on-site construction; and
Securing access to infrastructure facilities.
(B) Export Production Strategy:
•
•
Definition of a JORC Inferred Resource exceeding a target level; and
Securing access to port facilities.
(C) Project Acquisition:
•
•
Achieve a set production threshold for a new project acquisition; and
Securing access to new tenement packages adjacent to existing projects.
These milestones have been chosen to ensure the performance of executives is aligned with the Group’s
broader strategic objectives.
CENTAURUS METALS ANNUAL REPORT 2012 43
43
Centaurus Metals | Annual Report 2012
DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
4. CorPorAte GoverNANCe stAtemeNt (continued)
4.3 remuneration report – audited (continued)
4.3.1 Principles of Remuneration (continued)
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 and
Performance Share 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. Mr Gordon may terminate the agreement by giving 6 months notice.
The Company may terminate the agreement by giving 12 months notice.
Base salary, inclusive of superannuation is $425,000 effective from 1 July 2012, reviewed annually. Provision of four
weeks annual leave.
Short Term Incentive Cash Bonuses – a bonus of up to 90% of total fixed remuneration is payable on meeting various
key performance hurdles relating to offtake agreements, government project approvals, project funding approvals,
definition of JORC Resources and production targets.
Long Term Incentive Performance Rights – subject to shareholder approval, performance rights are issued under
the Company’s Performance Share Plan with vesting conditions based on performance hurdles relating to
production targets.
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. Entitled to 6 months salary if position is made redundant.
Base salary, inclusive of superannuation is $400,000 effective from 1 July 2012, reviewed annually. Provision of four
weeks annual leave.
Expatriate benefits including accommodation, relocation expenses and education fees are provided for living in Brazil.
Short Term Incentive Cash Bonuses – a bonus of up to 60% of total fixed remuneration is payable on meeting various
key performance hurdles relating to feasibility study results, offtake agreements, government project approvals and
project funding approvals.
Long Term Incentive Cash Bonuses – a bonus of up to 90% of total fixed remuneration is payable on meeting various
key performance hurdles relating to commencement of iron ore production, achievement of annualised iron ore
production rates and definition of JORC Inferred and Measured Resources exceeding a targeted level from the Group’s
existing projects or new projects that may be acquired.
Long Term Incentive Performance Rights – subject to shareholder approval, performance rights are issued under
the Company’s Performance Share Plan with vesting conditions based on performance hurdles relating to
production targets.
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. Entitled to 6 months salary if position is made redundant.
Base salary, inclusive of superannuation is $240,000 effective from 1 July 2012, reviewed annually. Provision of four
weeks annual leave.
Short Term Incentive Cash Bonuses – a bonus of up to 25% of total fixed remuneration is payable on meeting various
key performance hurdles relating to feasibility study results and project funding approvals.
Long Term Incentive Performance Rights – performance rights are issued under the Company’s Performance Share
Plan with vesting conditions based on performance hurdles relating to production targets.
•
•
•
•
•
•
•
•
•
•
•
44 CENTAURUS METALS ANNUAL REPORT 2012
44
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
K Petersen – Chief Geologist - New Projects
•
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. Entitled to 6 months salary if position is made redundant.
Base salary, inclusive of superannuation is $230,000 effective from 1 July 2012, reviewed annually. Provision of four
weeks annual leave.
Short Term Incentive Cash Bonuses – a bonus of up to 50% of total fixed remuneration is payable on meeting various
key performance hurdles relating to acquisition of new projects.
A Moura – General Manager – Operations
•
Term of agreement – commenced on 30 January 2012 with no set term. Mr Moura or the Company may terminate the
agreement by giving 2 months notice. Entitled to 6 months salary if position is made redundant.
Base salary, inclusive of superannuation is BRL 477,000 (AUD equivalent $226,000) effective from 1 July 2012, reviewed
annually. Provision of four weeks annual leave.
Short Term Incentive Cash Bonuses – a bonus of up to 25% of total fixed remuneration is payable on meeting various
key performance hurdles relating to feasibility study results and project construction timetables.
Long Term Incentive Performance Rights – performance rights are issued under the Company’s Performance Share
Plan with vesting conditions based on performance hurdles relating to production targets.
R Fitzhardinge – General Manager – Exploration and Evaluation
•
Term of agreement – commenced on 19 July 2010 with no set term. Mr Fitzhardinge or the Company may terminate
the agreement by giving 2 months notice. Entitled to 6 months salary if position is made redundant.
Base salary, inclusive of superannuation is $245,000 effective from 1 July 2012, reviewed annually. Provision of four
weeks annual leave.
Expatriate benefits including accommodation and relocation expenses are provided for living in Brazil.
Short Term Incentive Cash Bonuses – a bonus of up to 25% of total fixed remuneration is payable on meeting various
key performance hurdles relating to feasibility study results and project acquisitions.
Long Term Incentive Performance Rights – performance rights are issued under the Company’s Performance Share
Plan with vesting conditions based on performance hurdles relating to production targets.
B Scarpelli – General Manager – Environment and Occupational Health and Safety
•
Term of agreement – commenced on 4 December 2010 with no set term. Mr Scarpelli or the Company may terminate
the agreement by giving 2 months notice. Entitled to 6 months salary if position is made redundant.
Base salary, inclusive of superannuation is BRL 456,000 (AUD equivalent $216,000) effective from 1 July 2012, reviewed
annually. Provision of four weeks annual leave.
Short Term Incentive Cash Bonuses – a bonus of up to 25% of total fixed remuneration is payable on meeting various
key performance hurdles relating to government project approvals.
Long Term Incentive Performance Rights – performance rights are issued under the Company’s Performance Share
Plan with vesting conditions based on performance hurdles relating to production targets.
•
•
•
•
•
•
•
•
•
•
•
•
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 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 1 July 2012. The level of fees for non-executive directors is set at $60,000
per annum and $90,000 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.
CENTAURUS METALS ANNUAL REPORT 2012 45
45
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
4. CorPorAte GoverNANCe stAtemeNt (continued)
4.3 remuneration report – audited (continued)
4.3.1 Principles of Remuneration (continued)
Employment Agreements (continued)
Non-executive directors are eligible to be granted with options and performance rights 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 and performance rights 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.
4.3.2 Directors’ and Executive Officers’ Remuneration
Details of the nature and amount of each major element of remuneration of each director of the Company, each of
the named Company executives and relevant Group executives who receive the highest remuneration and other key
management personnel of the Group are:
Post-
employ-
ment
benefits
share-
based
pay-
ments
(2)
short term Benefits
2012
Non-Executive directors
Mr D M Murcia
Mr K G McKay
Mr R G Hill
Mr M D Hancock
(Appointed 23 Sept 2011)
Mr G T Clifford
(Resigned 12 Aug 2011)
Executive directors
Mr D P Gordon
Mr P E Freund
Executives (3)
Mr M Papendieck
(Resigned 5 Aug 2011) (4)
Mr G A James
Mr R Fitzhardinge
Mr K Petersen
Mr B Scarpelli
Mr A Moura
(Appointed 30 Jan 2012)
Salary &
fees
$
Cash
Bonus
$
Other
Benefits
(1)
$
Super-
annua-
tion
$
Options
& rights
$
Total
$
80,000
50,459
50,459
42,519
6,146
-
-
-
-
-
-
-
-
-
-
-
36,147
116,147
4,541
4,541
-
553
-
11,681
-
-
55,000
66,681
42,519
6,699
365,000
304,072
35,000
34,404
4,841
85,132
25,000
49,263
71,908
71,584
501,749
544,455
40,870
211,009
243,735
211,009
208,986
-
-
-
24,600
14,616
-
-
27,916
20,381
-
2,117
18,991
4,009
18,991
7,623
(36,276)
6,692
27,724
13,048
32,239
6,711
236,692
303,384
288,029
263,464
87,780
-
1,278
7,022
44,660
140,740
Total
1,902,044
108,620
139,548
142,651
279,407
2,572,270
S300A(1)(e)
(i) Propor-
tion of re-
muneration
perform-
ance related
%
S300A(1)(e)
(vi) Value of
options and
rights as
proportion
of remune-
ration
%
-
-
-
-
-
7.0%
6.3%
-
-
-
8.5%
5.5%
-
31.1%
-
17.5%
-
-
14.3%
13.1%
-
2.8%
9.1%
4.5%
12.2%
31.7%
46 CENTAURUS METALS ANNUAL REPORT 2012
46
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
(1) Other benefits include non-cash benefits and expatriate benefits for executives located in Brazil.
(2) The fair value of the options is calculated at the date of grant using the Black Scholes option-pricing model and allocated to each reporting period evenly
over the period from grant date to vesting date. The fair value of the rights is calculated using the 5 day volume weighted average share price prior to date
of grant. The value disclosed is the portion of the fair value of the options and rights recognised in this reporting period.
(3) There are no other personnel who meet the criteria of s300A executive disclosure.
(4) Mr M Papendieck’s current year remuneration includes a $36,276 reversal of expense recognised in prior years in relation to options that expired unvested
due to performance condition not being met.
Post-
employ-
ment
benefits
share-
based
pay-
ments
(3)
short term Benefits
Salary &
fees
$
Cash
Bonus
$
Other
Benefits
(2)
$
Super-
annua-
tion
$
Options
& rights
$
Total
$
112,163
54,772
93,338
-
12,465
4,438
33,413
1,022
39,588
25,463
2,416
56,166
78,750
41,285
49,312
28,287
-
-
-
-
343,750
70,000 (1)
-
-
-
-
-
291,284
229,358
186,054
96,553
178,997
209,346
117,626
-
-
-
-
-
-
-
6,250
68,428
78,607
26,215
275,623
488,428
671,729
-
-
20,642
16,746
19,763
15,929
269,763
218,729
26,056
2,957
-
125,566
32,594
92,913
5,956
15,819
43,096
37,727
260,643
355,805
-
9,338
39,654
166,618
S300A(1)(e)
(i) Propor-
tion of re-
muneration
perform-
ance related
%
S300A(1)(e)
(vi) Value of
options as
proportion
of remu-
neration
%
-
-
-
-
14.33%
-
-
-
-
-
-
-
29.8%
1.9%
42.4%
4.3%
14.0%
41.0%
7.3%
7.3%
-
16.5%
10.6%
23.8%
2011
Non-Executive directors
Mr D M Murcia
Mr K G McKay
Mr R G Hill
Mr G T Clifford (Resigned 12
August 2011)
Executive directors
Mr D P Gordon
Mr P E Freund
Executives (4)
Mr M Papendieck
Mr G A James
Mr I Cullen (Resigned
12 November 2010)
Mr R Fitzhardinge (Appointed 19
July 2010)
Mr K Petersen
Mr B Scarpelli (Appointed 4
December 2010)
Total
1,850,602
70,000
230,170
146,289
576,659
2,873,720
(1) A discretionary cash bonus was paid during the year, there were no bonuses forfeited during the year.
(2) Other benefits include non-cash benefits and expatriate benefits for executives located in Brazil.
(3) The fair value of the options is calculated at the date of grant using the Black Scholes option-pricing model and allocated to each reporting period evenly
over the period from grant date to vesting date. The value disclosed is the portion of the fair value of the options recognised in this reporting period.
(4) There are no other personnel who meet the criteria of s300A executive disclosure.
CENTAURUS METALS ANNUAL REPORT 2012 47
47
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
4. CorPorAte GoverNANCe stAtemeNt (continued)
4.3 remuneration report – audited (continued)
4.3.3 Analysis of Bonuses
Details of the vesting profile of incentive cash bonuses awarded as remuneration to each director of the Company and other
key management personnel are detailed below:
Gran
Included in
remune-
ration
$
Grant Date
% vested in
year
% Forfeited
in year (6), (7)
%
Unvested (7)
Executive directors
Mr D P Gordon - discretionary
35,000 (1)
25/08/2011
Mr D P Gordon - performance
- (2)
-
Mr P E Freund – performance
34,404 (3)
24/04/2012
- (1)
0.0%
6.7%
-
10.0%
26.7%
-
90.0%
66.6%
Executives
Mr K Petersen - performance
Mr B Scarpelli – discretionary
24,600 (4)
14/07/2011
14,616 (5)
25/08/2011
24.0%
- (5)
76.0%
-
-
-
Financial
years in
which
unvested
bonus
payable
-
2013
2013
& 2014
-
-
(1) A discretionary cash bonus was paid during the year.
(2) A cash bonus of up to 100% of total fixed remuneration is payable on meeting various key performance hurdles. During the year 10% of the bonus amount
was forfeited with 90% of the bonus unvested and will vest in the future provided performance hurdles are met.
(3) A cash bonus of up to 150% of total fixed remuneration is payable on meeting various key performance hurdles. During the year 6.7% of the bonus amount
was paid for meeting performance hurdles relating to definition of JORC Resources, 26.7% of the bonus amount was forfeited and the remaining 66.6% of
the bonus is unvested and will vest in future years provided performance hurdles are met.
(4) A cash bonus of up to 50% of total fixed remuneration is payable on meeting various key performance hurdles. During the year 24% of the available bonus
was paid for meeting performance hurdles relating to acquisition of new projects. The remaining 76% of the bonus was forfeited during the year.
(5) A discretionary cash bonus was paid during the year. No bonuses with performance hurdles were established during the year.
(6) The amounts forfeited are due to the performance criteria not being met in relation to the current financial year.
(7) No amounts have been accrued as remuneration in the 2012 year as the performance hurdles have not yet been met.
4.3.4 Equity Instruments
A Performance Share Plan (PSP) was adopted by the Board on 23 July 2012 and was approved by shareholders on 31 August
2012. Under the PSP, the Board may from time to time in its absolute discretion grant performance rights to eligible persons
including executives and employees, in the form and subject to terms and conditions as the Board determines. Performance
rights are, in effect, options to acquire unissued shares in the Company, the exercise of which is subject to certain
performance milestones and remaining in employment during the vesting period. Performance rights are granted under the
PSP for no consideration and are granted for a period not exceeding 5 years.
Subsequent to the end of the financial year on 31 August 2012, shareholders approved and the Company granted 700,000
performance rights to Mr D P Gordon and 300,000 performance rights to Mr P E Freund. The performance rights will only
vest into shares if the performance conditions relating to production targets are met. In addition the Company granted
performance rights to executives and employees, subject to performance conditions relating to production targets. With the
exception of performance rights to Mr D Gordon (refer 4.3.4) whereby the service period commenced prior to grant date, no
other performance rights were granted or issued during the 2012 financial year.
Options are granted under the Employee Share Option Plan (ESOP) which was approved by shareholders at the 2010 annual
general meeting. Employees are eligible to participate in the ESOP (including executive and non-executive directors) unless
the Board in its absolute discretion determine otherwise. Options are granted from time to time under the ESOP for no
consideration and are granted for a period of up to 5 years.
48 CENTAURUS METALS ANNUAL REPORT 2012
48
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
The vesting and exercise conditions of options granted are determined by the Board in its absolute discretion. Employees
must remain in employment during the vesting period. Options may also be granted by the Company outside of the ESOP,
but under similar terms and conditions.
The Group has a policy that prohibits directors and employees who are granted share options and performance rights 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 and rights over ordinary shares in the Company that were granted as remuneration to each key
management personnel during the reporting period and details on options and rights that vested during the reporting
period are as follows:
PerForm-
ANCe rIGHts
Executive directors
Mr D Gordon
Number of
performance
rights granted
Grant Date
Fair value per
performance
rights ($)
exercise price
per perfor-
mance right
($)
expiry date
Number of
performance
rights vested
during 2012
300,000
400,000
31/08/2012
31/08/2012
0.4288
0.4288
-
-
31/12/2013
30/06/2015
-
-
Performance rights were granted to Mr D Gordon following shareholder approval on 31 August 2012. As at 30 June 2012,
approximately 4 months has been recognised as remuneration in accordance with Australian Accounting Standards as the
service period had commenced in March 2012. The rights were provided at no cost to the recipient.
Number of
options
granted
Grant Date
Fair value per
option at grant
date ($)
exercise price
per option ($)
expiry date
Number of
options vested
during 2012
oPtIoNs
Executive directors
Mr A Moura
400,000
30/01/2012
0.3128
0.80
30/01/2017
100,000
No options have been granted since the end of the financial year. The options were provided at no cost to the recipient.
Analysis of rights over equity instruments granted as compensation
Details of vesting profiles of performance rights granted as remuneration to each key management personnel of the
Group during the reporting period are detailed below:
PerForm-
ANCe rIGHts
Executive directors
Mr D Gordon
Number of
performance
rights granted
Grant Date
% vested in
year
% forfeited in
year (A)
Financial
years in which
grant vests
300,000
400,000
31/08/2012
31/08/2012
-
-
-
-
2014(1)
2015(2)
(1) Performance rights vest on first sale of iron ore from the Jambreiro Iron Ore Project on or before 31 December 2013.
(2) Performance rights vest on first sale of iron ore into the export market from the Company’s current or future Brazilian Projects on or before 30 June 2015.
CENTAURUS METALS ANNUAL REPORT 2012 49
49
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
4. CorPorAte GoverNANCe stAtemeNt (continued)
4.3 remuneration report – audited (continued)
4.3.4 Equity Instruments (continued)
Analysis of options over equity instruments granted as compensation
Details of vesting profiles of the options granted as remuneration to each key management personnel of the Group are
detailed below:
oPtIoNs
directors
Mr D Murcia
Mr Richard Hill
Executive directors
Mr D Gordon
Mr P Freund
Executives
Mr M Papendieck
Mr G James
Mr R Fitzhardinge
Mr K Petersen
Mr B Scarpelli
Mr A Moura
Number
of options
granted
Grant Date
% vested in
year
% forfeited in
year (A)
Financial
years in which
grant vests
62,500
62,500
62,500
62,500
125,000
125,000
1,000,000
187,500
187,500
62,500
37,500
37,500
62,500
62,500
150,000
62,500
62,500
75,000
75,000
100,000
150,000
150,000
17/07/2009
30/11/2010
30/11/2010
31/03/2010
31/03/2010
31/08/2010
09/02/2010
15/02/2010
15/02/2010
17/07/2009
19/07/2010
19/07/2010
01/10/2010
01/10/2010
09/02/2010
15/02/2010
15/02/2010
04/02/2011
04/02/2011
30/01/2012
30/01/2012
30/01/2012
100%
100%
-
100%
-
-
100%
-
-
100%
-
-
-
-
100%
-
-
-
-
100%
-
-
-
-
-
-
-
-
-
100%
100%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2014
-
2014(1)
2015(2)
-
n/a
n/a
-
2014(1)
2015(2)
2013(3)
2014(4)
-
2014(1)
2015(2)
2014(1)
2015(2)
2012
2013(5)
2014(6)
(A) The % forfeited in the year represents options forfeited on resignation.
(1) Options vest on commencement of iron ore production on a Mining Lease from the Company’s iron ore projects in Brazil.
(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.
(3) Options vest on definition of a JORC Inferred Resource that delivers over 100Mt of +60% iron ore or concentrate from the Company’s iron ore projects
in Brazil.
(4) Options vest on definition of a JORC Inferred Resource that delivers over 250Mt, or a JORC Measured and Indicated Resource that delivers over 100Mt of
+60% iron ore or concentrate from the Company’s iron ore projects in Brazil.
(5) Options vest on achievement of iron ore production from the Company’s iron ore projects at an average rate of 150,000 tonnes per month over a consecutive
3 month period into the Domestic Steel Industry in Brazil.
(6) Options vest on achievement of first iron ore shipment from Brazil into the international iron ore export market.
50 CENTAURUS METALS ANNUAL REPORT 2012
50
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
Modification of terms of equity-settled share-based payment transactions
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.
There are no amounts unpaid on the shares issued as a result of the exercise of the options in the 2012 financial year.
Exercise of options granted as compensation
During the reporting period, the following shares were issued on the exercise of options previously granted as compensation
to key management personnel:
executives
Mr M Papendieck
Number of
shares
Amount paid $/
share
125,000
$0.64
Analysis of movements in options
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 Company executives and relevant Group executives is detailed below:
directors
Mr D M Murcia
Mr D P Gordon
Mr K G McKay
Mr P E Freund
Mr R G Hill
Mr M D Hancock
Mr G T Clifford (resigned 12 August 2011)
Executives
Mr M Papendieck
Mr G James
Mr K Petersen
Mr R Fitzhardinge
Mr B Scarpelli
Mr A Moura
value of
options granted
$(A)
value of perfor-
mance rights
granted
$(B)
value of
options exer-
cised in year
$(C)
value of
options lapsed
in year
$(D)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
300,148
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,000
173,214
-
-
-
-
-
-
-
-
-
-
(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
period 30 January 2012 to 31 December 2014).
(B)
The fair value of performance rights granted has been provisionally calculated using the 5 day volume weighted average share price prior to
30 June 2012, and will be subsequently revised upon grant date. In accordance with Australian Accounting Standards the fair value is recognised over
the service period which commenced prior to date of grant being 31 August 2012. The total value of the rights granted is included in the table above.
This amount is allocated to remuneration over the vesting period (i.e. in period 12 March 2012 to 30 June 2015).
(C)
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.
(D)
The value of unvested options that lapsed during the year represents the benefit forgone and is calculated at the date the options lapsed using the
Black Scholes option-pricing model assuming the performance criteria had been achieved.
CENTAURUS METALS ANNUAL REPORT 2012 51
51
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
4. CorPorAte GoverNANCe stAtemeNt (continued)
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 30 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.
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.
52 CENTAURUS METALS ANNUAL REPORT 2012
52
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
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 Group has a number of procedure documents including a Safety Risk Management Plan,
Environmental Procedures for Drilling and a Health and Safety Plan for Employees and Service Providers. 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.
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 senior managers is not permitted within the
following blackout periods:
(i)
(ii)
(iii)
1 week prior to the release of annual and half yearly accounts to the ASX;
1 week prior to the release of the quarterly results announcement to the ASX; and
two business days after the release of any ASX announcement.
The Chairman must be advised prior to any proposed transaction in the Company’s securities by directors. Directors and all
employees must not partake in short-term trading of the Company’s securities which is defined as less than a 30 day period
and no trading is permitted while in possession of inside information.
The Group has a policy that prohibits directors and employees who are granted share options and performance rights as
part of their remuneration from entering into arrangements that limit their exposure to losses that would result from share
price decreases.
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.
CENTAURUS METALS ANNUAL REPORT 2012 53
53
Centaurus Metals | Annual Report 2012
DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
4. CorPorAte GoverNANCe stAtemeNt (continued)
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.
4.8 Diversity
The Group values diversity in all aspects of its business and is committed to creating a working environment that recognises
and utilises the contribution of all its employees. The purpose of this policy is to provide diversity and equality relating to all
employment matters. The Group’s policy is to recruit and manage on the basis of ability and qualification for the position
and performance, irrespective of gender, age, marital status, sexuality, nationality, race/cultural background, religious or
political opinions, family responsibilities or disability. The Group opposes all forms of unlawful and unfair discrimination.
Gender Diversity
The Board is responsible for establishing and monitoring on an annual basis the achievement against gender diversity
objectives and strategies, including the representation of women at all levels of the organisation.
The proportion of women within the whole organisation was as follows:
Women employees in the whole organisation
Women in Senior Executive positions
Women on the Board of Directors
2012
26%
0%
0%
2011
29%
0%
0%
The Board acknowledges the absence of female participation on the Board of Directors. However, the Board has
determined that the composition of the current Board represents the best mix of Directors that have an appropriate range
of qualifications and expertise, can understand and competently deal with current and emerging business issues and can
effectively review and challenge the performance of management.
A copy of the Diversity Policy is available on the Company’s website.
54 CENTAURUS METALS ANNUAL REPORT 2012
54
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
4.9 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:
•
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 strategic objectives.
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.
The Company has not set or disclosed measurable objectives for achieving gender diversity. Due to the size of the
Company, the Board does not deem it practical to limit the Company to specific targets for gender diversity as it
operates in a very competitive labour market where positions are sometimes difficult to fill. However, every candidate
suitably qualified for a position has an equal opportunity of appointment regardless of gender, age, ethnicity or
cultural background.
•
•
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 benefit
Loss attributable to members
of Centaurus Metals Limited
2012 $
1,093,355
43,219
1,136,574
2011 $
1,163,472
3,773,648
4,937,120
(20,783,843)
(12,661,592)
-
457,374
(20,783,843)
(12,204,218)
Financial Position
At the end of the financial year the Group had net cash balances of $8,845,662 (2011: $10,351,397) and net assets of
$27,091,502 (2011: $34,357,361). Total liabilities amounted to $7,154,938 (2011: $8,173,591) and were limited to trade
and other payables, employee benefits and deferred tax liabilities.
CENTAURUS METALS ANNUAL REPORT 2012 55
55
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
6. oPerAtING AND FINANCIAL revIew (continued)
exploration
During the year the Group carried out exploration programs on a number of its iron ore exploration projects in Brazil.
At Centaurus’ flagship Jambreiro Iron Ore Project, an in-fill drilling program was completed together with beneficiation
testwork and the Company announced on 6 October 2011 a 65 per cent increase in the JORC compliant Resource estimate
to 116.5 million tonnes grading 26.8% Fe. A maiden Ore Reserve estimate was announced on 14 November 2011 with a
Proven and Probable Ore Reserve estimate of 49.0 million tonnes at an average grade of 28.2% for the friable component
of the ore body.
The updated Resource estimate provided the platform for a Pre-Feasibility Study (“PFS”) which was completed in November
2011. The PFS results outlined a 2Mtpa project of 66% Fe final product, capable of generating revenues of A$1.25 billion and
EBITDA of A$858 million over an initial 8.5 year life.
The strong results of the PFS facilitated the Board’s approval to commence a Bankable Feasibility Study (“BFS”). In
December 2011, a new in-fill drilling program commenced as part of the BFS work program to convert the first 4 years of
friable ore production into Proven Reserves. In May 2012 the Group received Government approval for the Final Exploration
Reports covering the Project’s key tenements. This allowed Centaurus to lodge the PAE (Economic Exploitation Plan), which
effectively represents the start of the approval process to secure the grant of a mining lease, on 10 July 2012.
On 19 June 2012 the Group announced an updated JORC Mineral Resource estimate of 125.2 million tonnes grading 26.7%
Fe. The new JORC Resource estimate included a significant increase in the Measured Resource estimate and confirmed the
consistency and widths of grades of mineralisation at Jambreiro.
In regards to environmental approvals, in March 2012 the Group lodged the key environmental approval document for the
Jambreiro Project, being the Environmental Impact Assessment with the state environmental authority SUPRAM in the state
of Minas Gerais. Following from this, in June 2012 a very positive public hearing was held with key stakeholders and the
local community. This marked another important step towards securing the main environmental approvals required for the
development of the Project.
Extensive bench scale testwork and an initial pilot plant testwork program were completed during the year showing that a
high grade product grading 65.6% Fe with low impurities can be produced from the Jambreiro Project using a simple and
cost effective two-stage magnetic separation process. A full pilot plant testwork program was commenced on a 30 tonne
sample as part of the BFS to finalise the process flowsheet and to produce a product for marketing purposes.
Work on the BFS was progressed during the year. Various consulting groups were appointed and commenced work on a
number of areas including resource, reserve and mining estimations, geotechnical, water and waste matters, beneficiation
flowsheet and equipment selection and engineering design work.
At the Candonga Iron Ore Project, trenching work was undertaken which enhanced the definition of drill targets for the next
round of exploration and drilling. Initial testwork was carried out which showed the mineralisation can be upgraded to a
63.5% Fe product.
At the Serra da Lontra Iron Ore Project, a detailed mapping and exploration program was completed followed by a ground
magnetic survey. Following the strong assay and survey results received, the Company commenced a maiden drill program
in January 2012. This drilling program continued through to the end of the year together with a beneficiation
testwork program.
At the Itambé Iron Ore Project, beneficiation testwork was carried out together with environmental data collection work in
the areas of flora, fauna and water monitoring.
At the Passabém Iron Ore Project, the Company completed its obligations to the original vendor and paid the final
consideration owing to remove the advanced royalty from the Project.
In May 2012 the Group acquired the Curral Velho Iron Ore Project in the state of Paraiba, in north-eastern Brazil. An
exploration program is scheduled to commence on the Project in early 2012/13.
Competent Person’s Compliance statement
The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by
Roger Fitzhardinge who is a Member of the Australasia Institute of Mining and Metallurgy and Volodymyr Myadzel who is a
Member of Australian Institute of Geoscientists. Roger Fitzhardinge is a permanent employee of Centaurus Metals Limited
and Volodymyr Myadzel is the Senior Resource Geologist of BNA Consultoria e Sistemas Limited, independent resource
consultants engaged by Centaurus Metals Limited.
Roger Fitzhardinge and Volodymyr Myadzel have sufficient experience which is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which they are 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
Reserve’. Roger Fitzhardinge and Volodymyr Myadzel consent to the inclusion in the report of the matters based on their
information in the form and context in which it appears.
56 CENTAURUS METALS ANNUAL REPORT 2012
56
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
The information in this report that relates to Ore Reserves is based on information compiled by Beck Nader who is a
professional Mining Engineer and a Member of Australian Institute of Geoscientists. Beck Nader is the Managing Director
of BNA Consultoria e Sistemas Ltda and is a consultant to Centaurus Metals Limited.
Beck Nader 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 Reserve’. Beck Nader consents
to the inclusion in the report of the matters based on their information in the form and context in which it appears.
Corporate
On 27 July 2011, the Company announced it had entered into a strategic alliance with Atlas Iron Limited (“Atlas”) pursuant
to which Atlas agreed to take a strategic 19.9% stake in the Company, and for Atlas to provide technical, development
and product marketing support as the Company looks to develop its export and domestic iron ore businesses in Brazil.
Centaurus and Atlas entered into a subscription agreement with respect to the strategic alliance (“Agreement”).
Under the Agreement, Atlas subscribed for a share placement comprising 26.5 million shares at 70.4 cents per share (post-
consolidation basis), raising a total of $18.7 million. In addition, Atlas subscribed for 3.75 million options at an exercise price
of $1.20 per share (post-consolidation basis), expiring on 31 August 2014. The share and option placement was approved by
Shareholders on 22 September 2011.
As part of the strategic alliance, Atlas was entitled to nominate a representative to the Centaurus Board of Directors.
On 23 September 2011, the Company appointed Atlas Iron’s Chief Commercial Officer, Mr Mark Hancock to the Board.
Pursuant to the strategic alliance, and subject to meeting various conditions including Atlas continuing to hold a 5% interest
in the share capital in the Company, ASX Limited have granted Centaurus a waiver from the listing rules to permit Atlas to
have a right to maintain its equity interest in the Company in the event that further equity issues are undertaken for future
funding requirements or as a means of securing further assets (other than by a takeover bid or scheme of arrangement).
Atlas will be given the opportunity to participate in these future equity issues of the Company on the same terms as those
being offered to third parties.
On 22 September 2011, Shareholders approved the consolidation of the Company’s capital on a 1-for-8 basis.
The consolidation took effect from 5 October 2011. The consolidation reduced the number of shares on issue from
1.068 billion to 133.5 million.
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.
CENTAURUS METALS ANNUAL REPORT 2012 57
57
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
8. eveNts sUBseqUeNt to rePortING DAte
On 9 July 2012 the Group announced a two-tranche share placement of up to $26.2 million of fully paid ordinary shares at
an issue price of $0.44 per share to new and existing institutional and strategic investors. The equity raising comprised of
an $11 million placement to Boston-based Liberty Metals & Mining Holdings (“LMM”), a $5.2 million placement to Atlas
Iron Limited (“Atlas”) and a $10 million placement to institutional and professional investor clients of Ord Minnett and Bell
Potter. Tranche 1 of the placement occurred on 13 July 2012 with 19.14 million shares issued. Tranche 2 of the placement,
comprising 40.41 million shares, was approved by shareholders on 31 August 2012 and was completed on 6 September
2012. Following the completion of the placement, LMM held a 12.77% interest in the Company whilst Atlas maintained its
interest in Centaurus at 19.58%.
On 28 August 2012 it was announced that the Group had entered into an agreement to dispose of several non-core
tenements to Orinoco Resources Limited (“ORL”). The consideration for the sale includes:
•
•
•
1 million ordinary shares in ORL;
1 million unlisted options in ORL exercisable at 25 cents and expiring 5 years from the date of issue; and
Royalty of 2.5% of the net smelter return, being the gross proceeds received during a quarter for any product sold less
certain allowable deductions.
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 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 (2)
Mr P E Freund (3)
Mr K G McKay
Mr R G Hill
Mr M D Hancock
(1) These options were issued as replacement awards pursuant to the takeover of Centaurus Resources Limited.
(2) Excludes 700,000 performance rights granted but not yet issued.
(3) Excludes 300,000 performance rights granted but not yet issued.
ordinary
shares
employee
options
1,613,405
6,769,791
25,000
377,375
1,569,430
33,333
312,500
750,000
2,000,000(1)
250,000
187,500
-
58 CENTAURUS METALS ANNUAL REPORT 2012
58
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
12. sHAre oPtIoNs & rIGHts
options & rights granted to directors and executives of the Company
During or since the end of the financial year, the Company granted options & performance rights for no consideration over
unissued ordinary shares in the Company to the following directors and to the key management personnel of the Company
as part of their remuneration:
directors
Mr D P Gordon
Mr P E Freund
Executives
Mr G A James
Mr R Fitzhardinge
Mr B Scarpelli
Mr A Moura
Number of
options granted
Number of
performance
rights granted
exercise price
expiry date
-
-
-
-
-
-
-
-
-
-
-
100,000
150,000
150,000
300,000
400,000
300,000
100,000
150,000
100,000
150,000
100,000
150,000
100,000
150,000
-
-
-
- (1)
- (1)
- (1)
- (1)
- (1)
- (1)
- (1)
- (1)
- (1)
- (1)
- (1)
0.80
0.80
0.80
31/12/2013
30/06/2015
31/12/2013
31/12/2013
30/06/2015
31/12/2013
30/06/2015
31/12/2013
30/06/2015
31/12/2013
30/06/2015
30/01/2017
30/01/2017
30/01/2017
(1) Performance rights issued with a zero exercise price.
All options were granted during the financial year. No options have been granted since the end of the financial year. With
the exception of performance rights granted to D P Gordon (refer 4.3.4) whereby the service period commenced in March
2012, prior to the grant date of 31 August 2012, no other performance rights were granted during the year, all were granted
subsequent to 30 June 2012.
CENTAURUS METALS ANNUAL REPORT 2012 59
59
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
12. sHAre oPtIoNs & rIGHts (continued)
Unissued share options and performance rights
At the date of this report unissued ordinary shares of the Company under option are:
employee options
Non - employee options
Expiry date
Exercise
price
Vested
Unvested
Vested
Unvested
62,500
62,500
62,500
-
12,500
300,000
50,000
-
125,000
281,250
406,250
125,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,250
162,500
2,000,000
-
-
-
-
2,000,000
-
-
-
62,500
-
-
-
-
625,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
625,000
3,750,000
-
-
-
-
-
6,250
-
12,500
62,500
62,500
62,500
6,250
12,500
6,250
62,500
37,500
100,000
300,000
200,000
-
-
31,250
218,750
-
250,000
-
-
31,250
75,000
31,250
62,500
150,000
300,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
200,000
400,000
-
-
-
-
-
-
-
-
-
-
-
-
Total
number of
shares
under
option
62,500
62,500
62,500
2,000,000
12,500
300,000
50,000
62,500
125,000
281,250
406,250
125,000
625,000
625,000
3,750,000
218,750
2,000,000
500,000
200,000
400,000
37,500
218,750
12,500
312,500
62,500
62,500
37,500
87,500
37,500
125,000
187,500
400,000
3,975,000
1,612,500
6,637,500
1,225,000
13,450,000
20/11/2012
20/11/2012
20/11/2012
14/02/2013
01/10/2013
31/12/2013
31/12/2013
01/01/2014
17/07/2014
17/07/2014
17/07/2014
17/07/2014
31/08/2014
31/08/2014
31/08/2014
01/10/2014
31/10/2014
31/12/2014
31/12/2014
31/12/2014
17/01/2015
15/02/2015
06/03/2015
31/03/2015
31/03/2015
31/03/2015
01/06/2015
19/07/2015
29/08/2015
30/11/2015
04/02/2016
30/01/2017
Total
$1.64
$1.96
$2.28
$0.80
$0.88
$0.64
$1.20
$1.04
$0.40
$0.60
$0.80
$0.96
$0.80
$0.96
$1.20
$0.88
$0.56
$0.80
$1.30
$1.80
$1.04
$0.64
$1.04
$0.64
$0.80
$0.96
$1.04
$0.76
$0.80
$0.88
$1.04
$0.80
60 CENTAURUS METALS ANNUAL REPORT 2012
60
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
These options do not entitle the holder to participate in any share issue of the Company and excludes 3,320,000 performance
rights which have been granted but not yet issued.
shares issued on exercise of options
During the financial year the Company issued 875,000 ordinary shares as a result of the exercise of options. Since the end of
the financial year the Company has issued 2,700,000 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
Services other than statutory audit:
Other services
Taxation compliance services (KPMG Australia)
Taxation compliance services (KPMG Brazil)
2012 $
2011 $
92,318
92,318
40,930
-
40,930
116,300
116,300
118,472
85,000
203,472
CENTAURUS METALS ANNUAL REPORT 2012 61
61
Centaurus Metals | Annual Report 2012 DIreCtor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
15. LeAD AUDItor’s INDePeNDeNCe DeCLArAtIoN
The Lead auditor’s independence declaration is set out on page 63 and forms part of the directors’ report for the financial
year ended 30 June 2012.
This report is signed in accordance with a resolution of the directors.
D P Gordon
Managing Director
Perth, Western Australia
20 September 2012
62 CENTAURUS METALS ANNUAL REPORT 2012
62
Centaurus Metals | Annual Report 2012 LeAD AUDItor’s
INDePeNDeNCe DeCLArAtIoN
For the year ended 30 June 2012
CENTAURUS METALS ANNUAL REPORT 2012 63
63
Centaurus Metals | Annual Report 2012 CoNsoLIDAteD stAtemeNt oF
ComPreHeNsIve INCome
For the year ended 30 June 2012
Other income
Exploration and evaluation expenses
Impairment of exploration and evaluation
Impairment of available for sale investments
Loss on sale of tenements
Provision for doubtful debts
Impairment of property plant and equipment
Personnel expenses
Share based payments
Occupancy expenses
Listing and share registry fees
Professional fees
Depreciation
Other expenses
Results from operating activities
Finance income
Finance expenses
Net finance income
Loss before income tax
Income tax benefit
Loss for the period
Other comprehensive income
Net change in fair value of available-for-sale-
financial assets reclassified to profit and loss
Foreign currency translation difference for foreign operation
Income tax on other comprehensive income
Other comprehensive income for the period, net of income tax
Total comprehensive income for the period
Earnings per share
Basic loss per share
Diluted loss per share
Notes
2012
$
7
43,219
8
27
9
10
11
2011
$
3,773,648
(9,487,861)
(2,509,982)
(384,444)
-
-
(65,287)
(1,856,613)
(1,112,910)
(308,595)
(108,847)
(591,816)
(177,164)
(845,660)
(13,038,892)
(52,157)
(1,299,409)
(1,736,849)
(176,576)
-
(2,424,314)
(459,813)
(342,717)
(121,107)
(477,212)
(142,929)
(1,320,352)
(21,549,108)
(13,675,531)
1,093,355
(328,090)
765,265
1,163,472
(149,533)
1,013,939
(20,783,843)
(12,661,592)
-
457,374
(20,783,843)
(12,204,218)
265,625
(165,625)
(6,066,755)
(732,313)
-
-
(5,801,130)
(897,938)
(26,584,973)
(13,102,156)
Cents
Cents
22
22
(16.07)
(16.07)
(12.48)
(12.48)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
64 CENTAURUS METALS ANNUAL REPORT 2012
64
Centaurus Metals | Annual Report 2012 CoNsoLIDAteD stAtemeNt
oF FINANCIAL PosItIoN
For the year ended 30 June 2012
Current assets
Cash and cash equivalents
Other receivables and prepayments
Total current assets
Non-current assets
Other receivables and prepayments
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
30 June 2012
$
30 June 2011
$
12(a)
13
8,845,662
682,728
9,528,390
13
14
15
16
17
18
19
476,593
563,726
963,707
22,714,024
24,718,050
34,246,440
3,609,005
444,787
4,053,792
3,101,146
3,101,146
7,154,938
10,351,397
1,933,937
12,285,334
-
1,829,071
878,739
27,537,808
30,245,618
42,530,952
4,016,265
229,722
4,245,987
3,927,604
3,927,604
8,173,591
27,091,502
34,357,361
72,710,747
(778,960)
53,851,446
4,562,357
(44,840,285)
(24,056,442)
27,091,502
34,357,361
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
CENTAURUS METALS ANNUAL REPORT 2012 65
65
Centaurus Metals | Annual Report 2012 CoNsoLIDAteD stAtemeNt
oF CHANGes IN eqUIty
For the year ended 30 June 2012
Issued
capital
$
option
reserve
$
share-
based
payment
reserve
$
trans-
lation
reserve
$
Available-
for-sale in-
vestments
revaluation
reserve
$
Accum-
ulated
losses
$
total
equity
$
53,851,446
2,966,597
2,064,756
(203,371)
(265,625)
(24,056,442)
34,357,361
-
(20,783,843)
(20,783,843)
265,625
(6,066,755)
-
(6,066,755)
265,625
-
-
-
265,625
(6,066,755)
(5,801,130)
(6,066,755)
265,625
(20,783,843)
(26,584,973)
-
-
-
-
-
-
-
-
-
-
-
18,656,000
(64,199)
267,500
459,813
19,319,114
(44,840,285)
27,091,502
Balance at 1 July 2011
Total comprehensive
income for the period
Loss for the period
Other comprehensive income
Net change in fair value of
available-for-sale financial assets
transferred to profit or loss, net of tax
Foreign currency translation difference
for foreign operation
Total other comprehensive income for
the period
Total comprehensive income for
the period
Transactions with owners, recorded
directly in equity
Contributions by and distributions
to owners
-
-
-
-
-
Issue of ordinary shares net of capital
raising costs
18,656,000
Share Issue costs
Issue of ordinary shares on exercise
of options
(64,199)
267,500
Share-based payment transactions
-
Total transactions with owners
18,859,301
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
459,813
459,813
-
-
-
-
-
-
-
Balance at 30 June 2012
72,710,747
2,966,597
2,524,569
(6,270,126)
The amounts recognised directly in equity are disclosed net of tax.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
66 CENTAURUS METALS ANNUAL REPORT 2012
66
Centaurus Metals | Annual Report 2012 CoNsoLIDAteD stAtemeNt
oF CHANGes IN eqUIty (CONTiNUEd)
For the year ended 30 June 2011
Issued
capital
$
option
reserve
$
share-
based
payment
reserve
$
trans-
lation
reserve
$
Available-
for-sale in-
vestments
revaluation
reserve
$
Accum-
ulated
losses
$
total
equity
$
53,851,446
2,966,597
2,064,756
(203,371)
(265,625)
(24,056,442)
34,357,361
Issued
capital
$
option
reserve
$
share-
based
payment
reserve
$
trans-
lation
reserve
$
Available-
for-sale
invest-
ments re-
valuation
reserve
$
Accum-
ulated
losses
$
total
equity
$
Balance at 1 July 2010
36,553,428
2,966,597
951,846
606,706
(100,000)
(10,135,336)
30,843,241
impact of change in accounting policy
-
-
-
(77,764)
-
(1,716,888)
(1,794,652)
36,553,428
2,966,597
951,846
528,942
(100,000)
(11,852,224)
29,048,589
Balance at 1 July 2010 (restated, refer
to note 2(e)
Total comprehensive income for
the period
Loss for the period
Other comprehensive income
Net change in fair value of
available-for-sale financial assets,
net of tax
Net change in fair value of
available-for-sale financial assets
transferred to profit or loss, net of tax
Foreign currency translation difference
for foreign operation
Total other comprehensive income for
the period
Total comprehensive income for the
period
Transactions with owners, recorded
directly in equity
Contributions by and distributions to
owners
Issue of ordinary shares net of capital
raising costs
Share Issue costs
Issue of ordinary shares on exercise
of options
-
-
-
-
-
-
18,189,375
(1,036,982)
145,625
Share-based payment transactions
-
Total transactions with owners
17,298,018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,112,910
1,112,910
-
-
-
(550,069)
384,444
(732,313)
-
(732,313)
(165,625)
-
(12,204,218)
(12,204,218)
-
-
-
-
(550,069)
384,444
(732,313)
(897,938)
(732,313)
(165,625)
(12,204,218)
(13,102,156)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
18,189,375
(1,036,982)
145,625
1,112,910
18,410,928
Total comprehensive income for
(6,066,755)
265,625
(20,783,843)
(26,584,973)
Balance at 1 July 2011
Total comprehensive
income for the period
Loss for the period
Other comprehensive income
Net change in fair value of
available-for-sale financial assets
transferred to profit or loss, net of tax
Foreign currency translation difference
for foreign operation
Total other comprehensive income for
the period
the period
Transactions with owners, recorded
directly in equity
Contributions by and distributions
to owners
raising costs
Share Issue costs
Issue of ordinary shares on exercise
of options
Share-based payment transactions
-
-
-
-
-
-
(64,199)
267,500
Issue of ordinary shares net of capital
18,656,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(20,783,843)
(20,783,843)
265,625
265,625
(6,066,755)
(6,066,755)
265,625
(6,066,755)
(5,801,130)
-
-
-
-
-
-
-
-
18,656,000
(64,199)
267,500
459,813
19,319,114
-
-
-
-
-
-
-
Total transactions with owners
18,859,301
459,813
459,813
Balance at 30 June 2012
72,710,747
2,966,597
2,524,569
(6,270,126)
(44,840,285)
27,091,502
The amounts recognised directly in equity are disclosed net of tax.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Balance at 30 June 2011
53,851,446
2,966,597
2,064,756
(203,371)
(265,625)
(24,056,442)
34,357,361
CENTAURUS METALS ANNUAL REPORT 2012 67
67
Centaurus Metals | Annual Report 2012 CoNsoLIDAteD stAtemeNt
oF CAsH FLows
For the year ended 30 June 2012
Cash flows from operating activities
Cash paid to suppliers and employees
Exploration and evaluation expenditure
Proceeds from court settlement
Receipts from customers
Interest received
Notes
2012
$
2011
$
(4,479,554)
(13,143,583)
965,811
-
1,005,433
(3,414,290)
(8,494,448)
1,340,792
19,893
702,866
Net cash used in operating activities
12(b)
(15,651,893)
(9,845,187)
Cash flows from investing activities
Payments for plant and equipment
Payment for investment
Refunds/(payments) for security deposits
Payments for acquisition of exploration assets
Proceeds from sale of plant and equipment
Payments for merger and acquisition costs
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of equity securities
net of capital raising costs
Net cash from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 July
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 30 June
12(a)
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
(489,283)
-
80,565
(576,827)
(88,888)
(16,633)
(3,722,529)
(1,305,000)
39,626
-
20,400
(20,000)
(4,091,621)
(1,986,948)
18,859,301
17,298,018
18,859,301
17,298,018
(884,213)
10,351,397
(621,522)
8,845,662
5,465,883
4,920,035
(34,521)
10,351,397
68 CENTAURUS METALS ANNUAL REPORT 2012
68
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts
For the year ended 30 June 2012
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
Reporting Entity
Basis of Preparation
Significant Accounting Policies
Determination of Fair Values
Financial Risk Management
Operating Segments
Other Income
Personnel Expenses
Depreciation
Finance Income and Expenses
Income Tax
Cash and Cash Equivalents
Other Receivables and Prepayments
Other Investments, Including Derivatives
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
Operating Leases
Share-Based Payments
Group Entities
Subsequent Events
Remuneration of Auditors
Parent Entity Information
70
70
71
80
81
83
83
83
83
84
84
85
86
87
87
89
90
90
90
90
91
91
92
95
98
98
99
104
104
104
105
CENTAURUS METALS ANNUAL REPORT 2012 69
69
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
1. rePortING eNtIty
Centaurus Metals Limited (“the Company”) is a company domiciled in Australia. 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 2012 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 Accounting 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 20 September 2012.
(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;
Available-for-sale financial assets are measured at fair value; and
Share based payments 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. The functional currency of the Brazilian subsidiaries is Brazilian real.
(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.
Exploration and Evaluation assets
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 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 statement of comprehensive income in accordance with accounting policy 3(g).
The carrying amounts of exploration and evaluation assets are set out in note 16.
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:
•
•
•
- determination of fair values
- exploration and evaluation assets
- financial instruments
Note 4
Note 16
Note 24
70 CENTAURUS METALS ANNUAL REPORT 2012
70
Centaurus Metals | Annual Report 2012
Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
(e) removal of parent entity financial statements
The Group has applied amendments to the Corporation Act (2001) that remove the requirement for the Group to lodge
parent entity financial statements. Parent entity financial statements have been replaced by the specific parent entity
disclosures in note 31.
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.
(a) Basis of consolidation
(i) Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the
date control is transferred to the Group. 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.
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.
(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.
CENTAURUS METALS ANNUAL REPORT 2012 71
71
Centaurus Metals | Annual Report 2012
Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
3. sIGNIFICANt ACCoUNtING PoLICIes (continued)
(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 average exchange rates for the period.
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.
(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.
72 CENTAURUS METALS ANNUAL REPORT 2012
72
Centaurus Metals | Annual Report 2012
Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
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.
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. Purchased 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.
CENTAURUS METALS ANNUAL REPORT 2012 73
73
Centaurus Metals | Annual Report 2012
Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
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 and evaluation costs are written off in the year they are incurred apart from acquisition costs which are
carried forward where right of tenure of the area of interest is current, and they are expected to be recouped through
sale or successful development and exploitation of the area of interest, or, where exploration and evaluation activities
in the area of interest have not reached a stage that permits reasonable assessment of the existence of economically
recoverable reserves.
Where an area of interest is abandoned, or the directors decide that it is not commercial, any accumulated acquisition
costs in respect of that area are written off in the financial period the decision is made. Each area of interest is also
reviewed at the end of each accounting period and accumulated costs written off to the extent that they will not be
recoverable in the future.
Amortisation is not charged on costs carried forward in respect of areas of interest in the development phase until
production commences. When production commences, accumulated costs for the relevant mineral project are
amortised on a units of production basis over the life of the economically recoverable reserves.
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.
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
commercially 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).
74 CENTAURUS METALS ANNUAL REPORT 2012
74
Centaurus Metals | Annual Report 2012
Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
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
statement of comprehensive income.
(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.
The Group considers evidence of impairment for receivables at both a specific asset and collective level.
All individually significant receivables and 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.
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Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
3. sIGNIFICANt ACCoUNtING PoLICIes (continued)
(g)
Impairment (continued)
(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.
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.
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Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
(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.
(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
(v)
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.
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 a finance cost.
(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.
CENTAURUS METALS ANNUAL REPORT 2012 77
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Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
3. sIGNIFICANt ACCoUNtING PoLICIes (continued)
(k) revenue (continued)
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 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.
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Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
(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) Good 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.
(q) segment reporting
Determination and presentation of operating segments
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 Managing Director
(‘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.
CENTAURUS METALS ANNUAL REPORT 2012 79
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Centaurus Metals | Annual Report 2012
Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
3. sIGNIFICANt ACCoUNtING PoLICIes (continued)
(r) 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 may be available for early adoption at 30 June 2012, but
have not been applied in preparing this financial report.
•
AASB 9 Financial Instruments applicable to annual reporting period beginning on or after 1 January 2015.
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 2016 financial statements. Retrospective application is
generally required, although there are exceptions. The Group has not yet determined the potential effect of the
standard.
AASB 10 Consolidated Financial Statements applicable to annual reporting periods beginning on or after
1 January 2013. The new standard introduces a new definition of control of an entity, which widens the scope of
the standard. The amendments become mandatory for the Group’s 30 June 2014 financial statements.
The Group has not yet determined the potential effect of the standard.
AASB 12 Disclosure of interest in Other Entities applicable to annual reporting periods beginning on or after
1 July 2013. The new standard includes all of the disclosures that are required related to an entity’s involvement
with other entities including subsidiaries, joint arrangements and associates. The Group has not yet determined
the potential effect of the standard.
AASB 11 Joint Arrangements applicable to annual reporting period beginning on or after 1 July 2013. The new
standard classifies a joint arrangement as either a joint operation or a joint venture, based on the contractual
rights and obligations of that joint arrangement. It also requires a joint venture (previously called a jointly
controlled entity) to be accounted for using the equity method. The Group has not yet determined the potential
effect of the standard.
AASB 13 Fair Value Measurement applicable to annual reporting periods beginning on or after 1 July 2013.
The new standard provides guidance on how to determine fair value when fair value is required or permitted.
The standard is not expected to have a significant impact on the financial statements.
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine applicable to annual reporting period
beginning on or after 1 January 2013. The interpretation requires production stripping costs to be capitalised as
part of an asset, if an entity can demonstrate that it is probable future economic benefits will be realised, the
costs can be reliably measured and the entity can identify the component of an ore body for which access has
been improved. The Group has not yet determined the potential effect of the standard.
•
•
•
•
•
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) Derivatives
The fair value of listed options is determined by reference to their quoted closing bid price at the reporting date.
The fair value of unlisted options is determined using a valuation model.
(iii) 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.
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Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
(iv) 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. The fair value of the
employee performance rights is measured using the 5 day weighted average share price prior to grant date, where
service period commences prior to grant date the fair value is provisionally calculated and subsequently revised
upon grant date.
5. FINANCIAL rIsK mANAGemeNt
overview
The Group has exposure to the following risks arising from the use of financial instruments:
•
•
•
This note presents information about the Group’s 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.
Credit Risk
Liquidity Risk
Market Risk
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 other receivables and cash from customers and investment
securities. Impairment in respect of court settlement proceeds as well as indirect tax credits has been recognised during the
period refer to note 24.
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. An allowance for
impairment has been recognised as at 30 June 2012.
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).
CENTAURUS METALS ANNUAL REPORT 2012 81
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Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
4. DetermINAtIoN oF FAIr vALUes (continued)
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 2012, the Group has current trade and other payables of $3,609,005 (2011: $4,016,265). 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.
Currency risk
The Group is exposed to currency risk on purchases that are denominated in currency other than the respective functional
currencies of the Group entities, primarily the Australian dollar and Brazilian Real. 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. These financial assets were acquired as a result of the
sale of tenements to Clancy Exploration Limited, Southern Crown Resources Limited and Antipa Minerals Limited.
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 an 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.
82 CENTAURUS METALS ANNUAL REPORT 2012
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Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
6. oPerAtING seGmeNts
The Group operates in the iron ore exploration industry. For management purposes the Group is organised into one main
operating segment which involves the exploration of minerals. All of the Group’s activities are interrelated and financial
information is reported to the Managing Director (Chief Operating Decision Maker) as a single segment. Accordingly, all
significant operating decisions are based upon an analysis on the Group as one segment. The financial results and financial
position from this segment are largely equivalent to the financial statements of the Group as a whole, with the exception of
corporate administration expenses in Australia and Brazil $4,680,665 (2011: $3,711,591) which are reviewed separately from
the Group’s operating segment.
Geographical Segment information
Brazil
Australia
Total
7. otHer INCome
Proceeds on court settlement
Net gain on disposal of mineral tenements
Proceeds from insurance claim
Other
2012
2012
2011
2011
Revenue
$
Non-current
assets
$
Revenue
$
Non-current
assets
$
-
-
-
23,858,746
859,304
24,718,050
-
-
-
2012
$
41,619
-
-
1,600
43,219
28,139,255
2,106,363
30,245,618
2011
$
1,965,646
1,716,727
71,382
19,893
3,773,648
Proceeds on court settlement relates to award of damages against Mineração Marsil Ltda a former Joint Venture partner in
the Liberdade Iron Ore Project. Centaurus was awarded damages which were adjusted for interest and inflation components.
8. PersoNNeL exPeNses
Salaries, fees and other benefits
Superannuation
Recognised in exploration expenditure expense
9. DePreCIAtIoN
Depreciation
Recognised in exploration expenditure expense
6,151,795
256,585
(3,984,066)
2,424,314
5,305,459
242,209
(3,691,055)
1,856,613
268,255
(125,326)
142,929
204,886
(27,722)
177,164
CENTAURUS METALS ANNUAL REPORT 2012 83
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Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
10. FINANCe INCome AND exPeNse
Finance income
Interest income on bank deposits
Interest income on court settlement
Finance expense
Net foreign exchange loss
Change in fair value of derivatives
Interest expense
Net finance income recognised in profit or loss
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
Loss on sale of tenement
Proceeds from court settlement
Foreign currency gains
Sundry items
Effect of tax rates in foreign jurisdictions
Deferred tax assets not recognised
Income tax benefit
(b) Tax losses
Tax losses
Capital losses
Potential tax benefit (between 30-34%)
2012
$
1,093,355
-
2011
$
670,866
492,606
1,093,355
1,163,472
(96,530)
(231,560)
-
(328,090)
765,265
-
(148,799)
(734)
(149,533)
1,013,939
(20,783,843)
(12,661,592)
(6,235,153)
(3,798,478)
399,903
137,944
521,055
-
-
309,297
433,862
333,873
-
(604,547)
(209,070)
10,772
(4,866,954)
(3,833,588)
(256,701)
5,123,655
-
33,425,663
2,473,264
35,898,927
11,083,086
(136,760)
3,512,974
(457,374)
25,721,093
2,473,264
28,194,357
8,637,423
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.
84 CENTAURUS METALS ANNUAL REPORT 2012
84
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
11. INCome tAx (CoNtINUeD)
(c) Deferred tax assets and liabilities are attributable to the following:
Assets
Liabilities
Net
2012
$
2011
$
2012
$
2011
$
2012
$
2011
$
Receivables
-
-
(103,523)
(179)
(103,523)
(179)
Available-for-sale financial assets
528,347
159,973
-
(209,070)
528,347
(49,097)
Exploration
Accrued expenses/provisions
Transaction costs relating to issue of capital
Tax losses carried forward
Set off of tax
Less DTA not recognised
Net tax asset/(liabilities)
5,503,724
2,452,873
(3,101,146)
(3,927,604)
2,402,578
(1,474,731)
527,232
36,800
254,269
312,313
11,083,086
8,637,423
-
-
-
-
-
-
527,232
36,800
254,269
312,313
11,083,086
8,637,423
(103,523)
(209,249)
103,523
209,249
-
-
17,793,135
11,390,133
(3,101,146)
(3,927,604)
14,691,989
7,462,529
(17,793,135)
(11,390,133)
-
-
(17,793,135)
(11,390,133)
-
-
(3,101,146)
(3,927,604)
(3,101,146)
(3,927,604)
Income tax recognised directly in equity
(d)
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: (2011: $nil).
12. (A) CAsH AND CAsH eqUIvALeNts
Cash at bank and on hand
Deposits - short term
2012
$
1,574,372
7,271,290
8,845,662
2011
$
14,105
10,337,292
10,351,397
Deposits
The deposits are bearing floating and fixed interest rates between 4.50% and 6.43% (2011: between 4.75% and 6.10%).
CENTAURUS METALS ANNUAL REPORT 2012 85
85
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
12. (B) reCoNCILIAtIoN oF CAsH FLows From oPerAtING ACtIvItIes
2012
$
2011
$
(20,783,843)
(12,204,218)
268,255
162,658
-
96,049
459,813
177,164
-
20,000
-
1,112,910
1,736,849
(1,716,727)
52,157
1,299,409
-
231,560
18,954
-
2,509,982
384,444
65,287
148,799
(71,382)
(457,374)
(16,458,139)
(10,031,115)
(398,868)
1,205,114
(15,651,893)
(1,165,237)
1,351,165
(9,845,187)
-
176,576
1,071,679
(747,963)
43,790
138,646
682,728
109,668
1,117,460
427,692
-
124,442
154,675
1,933,937
476,593
476,593
-
-
Loss for the period
Adjustments for:
Depreciation
Provision for doubtful debts
Merger and acquisition expenses
Unrealised foreign exchange loss
Non-cash employee benefits expense
– share based payments
(Profit)/ Loss on sale of mineral tenements
Impairment losses
Exploration and evaluation assets
Available-for-sale financial assets
Property plant and equipment
Change in fair value derivative instruments
(Profit)/loss on sale of plant and equipment
Income tax benefit
Operating loss before changes in
working capital and provisions
Change in other receivables
Change in trade creditors and provisions
Net cash used in operating activities
13. otHer reCeIvABLes AND PrePAymeNts
Current
Trade receivables
Receivable from court settlement
Other Receivables
Provision for impairment (1)
Security deposits
Prepayments
(1) Includes $571,387 for indirect tax credits
classified as exploration and evaluation expense.
Non - Current
Prepayments
86 CENTAURUS METALS ANNUAL REPORT 2012
86
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
14. otHer INvestmeNts, INCLUDING DerIvAtIves
Available-for-sale financial assets (1)
Derivative instruments (2)
2012
$
534,202
29,524
563,726
2011
$
1,567,987
261,084
1,829,071
(1) Shares in ASX listed entities consists of 4,444,444 listed ordinary shares in Clancy Exploration Limited (ASX: CLY), 1,562,500 listed ordinary shares in
Southern Crown Resources Limited (ASX: SWR) and 6,250,000 listed ordinary shares in Antipa Minerals Limited (ASX: AZY). The available-for sale financial
assets have been revalued to the market price at 30 June 2012 and as a result an impairment has been recognised. Further movement in share prices after
30 June 2012 have not been taken into account.
(2) Listed options in ASX listed entities consist of 1,111,111 listed options in Clancy Exploration (ASX: CLYO). Unlisted options in ASX listed entities consists of
2,000,000 unlisted options in Southern Crown Resources Limited and 3,125,000 unlisted options in Antipa Minerals Limited. The fair value of the listed options
has been determined by reference to the market price at 30 June 2012. The fair value of the unlisted options is determined using a Black-Scholes formula
taking into account the terms and conditions upon the instruments were granted.
15. ProPerty, PLANt AND eqUIPmeNt
software
$
Plant &
equipment
$
motor
vehicles
$
Furniture &
Fixtures
$
Leasehold
Improve-
ments
$
Land
$
total
$
74,222
157,064
216,078
52,990
248,204
81,463
830,021
99,440
-
-
(2,287)
54,333
(37,581)
-
(5,152)
343,943
(58,381)
(65,287)
(19,037)
46,819
(255)
-
(4,381)
32,354
-
-
-
-
-
(2,882)
(6,262)
576,889
(96,217)
(65,287)
(40,001)
171,375
168,664
417,316
95,173
277,676
75,201
1,205,405
171,375
168,664
417,316
95,173
277,676
75,201
1,205,405
92,824
-
(18,225)
173,563
(12,546)
(28,042)
62,628
(39,442)
(91,817)
42,014
(28,005)
(20,915)
189,187
(33,917)
(28,630)
-
-
(16,076)
560,216
(113,910)
(203,705)
245,974
301,639
348,685
88,267
404,316
59,125
1,448,006
Cost
Balance at
1 July 2010
Additions
Disposals
Impairment
Effect of
movements in
exchange rates
Balance at
30 June 2011
Balance at
1 July 2011
Additions
Disposals
Effect of
movements in
exchange rates
Balance at
30 June 2012
CENTAURUS METALS ANNUAL REPORT 2012 87
87
Centaurus Metals | Annual Report 2012 Land
$
total
$
-
-
-
-
-
-
-
-
-
-
205,875
204,886
(74,915)
(9,180)
326,666
326,666
268,155
(57,143)
(53,379)
484,299
624,146
878,739
878,739
963,707
Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
15. ProPerty, PLANt AND eqUIPmeNt (CoNtINUeD)
software
$
Plant &
equipment
$
motor
vehicles
$
Furniture &
Fixtures
$
14,673
80,939
56,252
33,116
30,335
83,429
-
(657)
(35,283)
(1,361)
(39,377)
(3,787)
9,480
7,825
(255)
(713)
Leasehold
Improve-
ments
$
44,531
50,181
-
(2,662)
47,132
74,630
96,517
16,337
92,050
47,132
74,630
96,517
16,337
92,050
67,053
47,334
87,276
10,046
56,446
-
(4,628)
(4,311)
(7,924)
(8,918)
(32,357)
(9,997)
(3,160)
(33,917)
(5,310)
109,557
109,729
142,518
13,226
109,269
depreciation
Balance at
1 July 2010
Depreciation for
the year
Disposals
Effect of
movements in
exchange rates
Balance at
30 June 2011
Balance at
1 July 2011
Depreciation for
the year
Disposals
Effect of
movements in
exchange rates
Balance at
30 June 2012
Carrying
amounts
at 1 July 2010
At 30 June 2011
59,549
124,243
at 1 July 2011
At 30 June 2012
124,243
136,417
76,125
94,034
94,034
191,910
159,826
320,799
320,799
206,167
43,510
78,836
78,836
75,041
203,673
185,626
185,626
295,047
81,463
75,201
75,201
59,125
88 CENTAURUS METALS ANNUAL REPORT 2012
88
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
16. exPLorAtIoN AND evALUAtIoN Assets
Cost
Balance at 1 July 2010
Additions
Disposals
Effect of movements in exchange rate
Balance at 30 June 2011
Balance at 1 July 2011
Additions
Impairment loss
Disposals (1)
Effect of movements in exchange rate
Balance at 30 June 2012
Provision for impairment
Balance at 1 July 2010
Impairment of capitalised exploration expenditure
Balance at 30 June 2011
Balance at 1 July 2011
Balance at 30 June 2012
Carrying amounts
Balance at 1 July 2010
Balance at 30 June 2011
Carrying amounts
Balance at 1 July 2011
Balance at 30 June 2012
(1) During the year the Company entered into an agreement to exchange tenements resulting in a loss on sale of $1,736,849.
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.
$
27,681,242
3,159,320
(226,906)
(565,866)
30,047,790
30,047,790
3,024,757
(52,157)
(1,845,046)
(5,951,338)
25,224,006
-
2,509,982
2,509,982
2,509,982
2,509,982
27,681,242
27,537,808
27,537,808
22,714,024
CENTAURUS METALS ANNUAL REPORT 2012 89
89
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
17. trADe AND otHer PAyABLes
Trade and other creditors
Accrued expenses
18. emPLoyee BeNeFIts
Liability for annual leave
19. DeFerreD tAx LIABILItIes
2012
$
2,012,402
1,596,603
3,609,005
2011
$
3,222,531
793,734
4,016,265
444,787
229,722
Deferred tax liability attributable to exploration and evaluation assets
3,101,146
3,927,604
The deferred tax liability relates to Brazil exploration assets acquired through a business combination. Potential deferred tax
assets of the same amount in Brazil have not been recognised on the basis that the ability to utilise these losses has not yet
been determined probable.
20. CAPItAL AND reserves
On issue at 1 July
Consolidation *
Issue of ordinary shares for share
placement at $0.60 per share
Issue of ordinary shares for share
purchase plan at $0.60 per share
Issue of ordinary shares for share placement at $0.704
Exercise of options
On issue at 30 June – Fully paid
2012
Number of
shares
2011
Number of
shares
848,998,637
604,398,639
(742,873,285)
-
-
-
192,000,000
50,524,998
26,500,000
-
875,000
2,075,000
133,500,352
848,998,637
* On 22 September 2011, Shareholders approved the consolidation of the Company’s capital on a 1-for-8 basis.
The consolidation took effect from 5 October 2011.
Issue of ordinary shares
The Company issued a total of 26,500,000 post consolidation ordinary fully paid shares at $0.704 per share as part of a Share
Placement completed in two tranches. Tranche 1 consisted of 13,750,000 post consolidation ordinary fully paid shares which
were issued on 27 July 2011 and ratified at a general meeting held on 22 September 2011. Tranche 2 consisted of 12,750,000
post consolidation ordinary fully paid shares which were issued on 27 September 2011. On 1 September 2011, 875,000 post
consolidation ordinary fully paid shares were issued as a result of the exercise of vested options. Options were exercised at
an average price of $0.306.
option reserve
The option reserve is used to recognise the fair value of options issued in the year ended 30 June 2010 in exchange of the
Centaurus existing Bid and Replacement Options.
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.
90 CENTAURUS METALS ANNUAL REPORT 2012
90
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
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 27.
share-based payments reserve
The share-based payments reserve is used to recognise the fair value of options and performance rights 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.
options
At 30 June 2012, in addition to the unissued shares under options and performance rights disclosed in note 27,
the company has the following options on issue.
3,750,000
3,000,000
2,000,000
exercisable at $1.20
expiring 31 August 2014
exercisable at $0.25
expiring 4 August 2012
exercisable at $0.80
expiring 14 February 2013
21. DIvIDeNDs
There were no dividends paid or declared during the year (2011: nil).
22. eArNINGs/(Loss) Per sHAre
Basic (loss) per share
The calculation of basic and diluted earnings per share at 30 June 2012 was based on the loss attributable to ordinary
shareholders of $20,783,843 (2011: $12,204,218) and a weighted average number of ordinary shares outstanding of
129,298,297 (2011: 97,651,567), calculated as follows:
Loss attributable to ordinary shareholders
Loss for the period
Loss attributable to the shareholders
2012
$
2011
$
(20,783,843)
(12,204,218)
(20,783,843)
(12,204,218)
weighted average number of ordinary shares
2012 Number
2011 Number
Issued ordinary shares at 1 July
Effect of shares issued related to share placement
Effect of shares issued related to share purchase plan
Effect of shares issued on exercise of options
106,125,352
22,446,575
-
726,370
75,549,830
17,330,958
4,637,226
133,553
Weighted average number of ordinary shares 30 June *
129,298,297
97,651,567
* On 22 September 2011, Shareholders approved the consolidation of the Company’s capital on a 1-for-8 basis.
The consolidation took effect from 5 October 2011. Prior year comparatives have been restated.
CENTAURUS METALS ANNUAL REPORT 2012 91
91
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
22. eArNINGs/(Loss) Per sHAre (CoNtINUeD)
Diluted earnings per share
Potential ordinary shares were not considered to be dilutive as the Group made a loss for the year ended 30 June 2012 and
the exercise of potential ordinary shares would not increase that loss.
23. reLAteD PArtIes
Key management personnel compensation
Short term employee benefits
Post-employment benefits
Share-based payments
2012
$
2011
$
2,150,212
2,150,772
142,651
279,407
146,289
576,659
2,572,270
2,873,720
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 and in section 4.3 of the Directors report, 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 and rights 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 2011
Consol-
idation
1-for-8
Granted as
compen-
sation
exercise
other
changes(3)
Held at 30
June 2012
vested
during the
year
vested and
exercis-
able at 30
June 2012
Post 1-for-8 Consolidation
directors
Mr D M Murcia
2,500,000
(2,187,500)
-
Mr D P Gordon
7,600,000
(6,650,000)
700,000(4)
Mr K G McKay
2,000,000
(1,750,000)
Mr P E Freund
16,000,000
(14,000,000)
Mr G T Clifford (1)
1,500,000
(1,312,500)
Mr R G Hill
Executives
9,677,720
(8,468,005)
Mr M Papendieck(2)
10,000,000
(8,750,000)
Mr G A James
2,500,000
(2,187,500)
Mr K Petersen
11,400,000
(9,975,000)
Mr R Fitzhardinge
2,000,000
(1,750,000)
Mr B Scarpelli
1,500,000
(1,312,500)
-
-
-
-
-
-
-
-
-
Mr A Moura
-
-
400,000
(1) Resigned on 12 August 2011.
(2) Resigned on 5 August 2011.
(3) Other changes represent options that expired or were forfeited during the year.
-
-
-
-
-
-
-
312,500
125,000
250,000
500,000
250,000
-
-
(200,000)
1,450,000
250,000
-
-
2,000,000
1,000,000
2,000,000
(187,500)
-
-
-
(22,215)
1,187,500
62,500
1,187,500
875,000
(375,000)
-
-
-
-
-
-
-
-
(93,750)
218,750
62,500
125,000
-
-
-
-
1,425,000
150,000
1,300,000
250,000
187,500
400,000
-
-
50,000
37,500
100,000
100,000
(4) Performance rights were approved by shareholders at a general meeting held on 31 August 2012. The service period commenced in March 2012.
92 CENTAURUS METALS ANNUAL REPORT 2012
92
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
23. reLAteD PArtIes (CoNtINUeD)
Held at 1
July 2010
Granted as
compensa-
tion
exercise
other
changes(2)
Held at 30
June 2011
vested
during the
year
vested and
exercis-
able at 30
June 2011
1,500,000
1,000,000
7,600,000
2,000,000
16,000,000
1,500,000
9,677,720
10,000,000
2,500,000
4,000,000
11,400,000
-
-
-
-
-
-
-
-
-
-
-
2,000,000
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,500,000
500,000
1,000,000
7,600,000
2,000,000
5,600,000
2,000,000
500,000
2,000,000
16,000,000
4,000,000
8,000,000
1,500,000
1,000,000
1,250,000
9,677,720
500,000
9,177,720
10,000,000
-
7,000,000
2,500,000
250,000
1,250,000
(2,000,000)
(2,000,000)
-
-
-
-
-
-
-
11,400,000
2,000,000
1,500,000
-
600,000
400,000
300,000
-
9,200,000
400,000
300,000
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(1)
Mr K Petersen
Mr R Fitzhardinge
Mr B Scarpelli
(1) Resigned on 12 November 2010.
(2) 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 2011
Consol-
idation
1-for-8
Purchases
other (3)
received
on thte
exercise of
options
sales
Post 1-for-8 consolidation
Mr D M Murcia
12,907,235
(11,293,830)
-
Mr D P Gordon
52,558,328
(45,988,537)
200,000
Mr K G McKay
3,019,000
(2,641,625)
Mr P E Freund
Mr G T Clifford(1)
Mr R G Hill
Mr M Hancock
200,000
1,200,000
8,555,440
-
(175,000)
(1,050,000)
(7,486,010)
-
Mr M Papendieck(2)
9,696,000
(8,484,000)
Mr G A James
660,652
(578,070)
Mr K Petersen
4,780,000
(4,182,500)
-
-
-
-
-
-
-
-
Mr R Fitzhardinge
418,651
(366,319)
20,000
Mr B Scarpelli
Mr A Moura
-
-
-
-
-
-
(1) Resigned on 12 August 2011.
(2) Resigned on 5 August 2011.
(3) Other relates to balances held on commencing or resignation of employment.
-
-
-
-
(150,000)
-
33,333
-
-
-
-
-
-
-
(2,087,000)
875,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(55,500)
-
-
-
Held at
30 June
2012
1,613,405
6,769,791
377,375
25,000
-
1,069,430
33,333
-
82,582
542,000
72,332
-
-
CENTAURUS METALS ANNUAL REPORT 2012 93
93
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
23. reLAteD PArtIes (CoNtINUeD)
movement in shares (continued)
Mr D M Murcia
Mr D P Gordon
Mr K G McKay
Mr P E Freund
Mr G T Clifford
Mr R G Hill
Mr M Papendieck
Mr G A James
Mr I Cullen
Mr K Petersen
Mr R Fitzhardinge
Mr B Scarpelli
Held at
1 July 2010
Purchases
other (1)
9,373,902
3,533,333
52,358,328
2,419,000
200,000
1,000,000
8,555,440
9,196,000
460,652
-
5,280,000
200,000
600,000
-
200,000
-
500,000
200,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
600,000
200,000
-
-
received on
the exercise
of options
sales
Held at
30 June 2011
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
(2,000,000)
-
-
-
(500,000)
(381,349)
-
12,907,235
52,558,328
3,019,000
200,000
1,200,000
8,555,440
9,696,000
660,652
-
4,780,000
418,651
-
(1) Other relates to balances held on commencing employment.
transactions with related parties
Transactions between each parent company and its subsidiaries which are related parties of that company are eliminated
on consolidation and are not disclosed in this note.
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:
Consolidated
Key management person
Mr K G McKay
Mr D M Murcia (1)
Total and current liabilities
transaction value year ended
30 June
Balance outstanding as at
30 June
Transaction
2012
$
2011
$
2012
$
2011
$
Consulting
fees
Legal fees
-
41,725
8,800
65,453
-
-
6,675
6,675
5,000
5,000
(1) Payable to Murcia Pestell Hillard Pty Ltd, a firm in which Mr D M Murcia is a partner.
94 CENTAURUS METALS ANNUAL REPORT 2012
94
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
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
2012
$
8,845,662
544,082
9,389,744
2011
$
10,351,397
1,779,262
12,130,659
The cash and cash equivalents are held with bank and financial institution counterparties, which are rated
BBB to AA- based on rating agency Standard and Poor’s rating.
The Group’s maximum exposure to credit risk for other receivables at the reporting date by geographic region was:
Australia
Brazil
These balances are net of provision for impairment.
Provision for Impairment
The movement in the provision in respect of other receivables during the year was as follows.
Balance at 1 July
Provision for impairment
Carrying amount
2012
$
105,458
438,624
544,082
2012
$
-
747,963
747,963
2011
$
180,623
1,598,639
1,779,262
2011
$
-
-
-
Amounts receivable as a result of the Court Settlement award relating to Liberdade are past due and a provision for
impairment has been recognised of $176,576. Amounts receivable for indirect tax credits which are not yet considered to be
recoverable have been provided for amounting to $571,387. None of the Company’s other receivables are past due (2011: nil).
The Group believes that no impairment allowance is necessary in respect of the other receivables not past due.
CENTAURUS METALS ANNUAL REPORT 2012 95
95
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
24. FINANCIAL INstrUmeNts (CoNtINUeD)
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 2012
Trade and other
payables
30 June 2011
Trade and other
payables
3,609,005
(3,609,005)
(2,652,930)
(956,075)
3,609,005
(3,609,005)
(2,652,930)
(956,075)
4,016,265
(4,016,265)
(4,016,265)
4,016,265
(4,016,265)
(4,016,265)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly
different amounts.
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 Equivalents
Trade and other payables
Net exposure
30 June 2012
UsD $
30 June 2011
UsD $
(956,075)
(956,075)
-
-
Sensitivity analysis
A strengthening of the AUD, as indicated below, against the BRL and the USD at 30 June would have 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 2012
USD (10 percent strengthening)
30 June 2011
USD (10 percent strengthening)
equity
$
Profit or loss
$
-
-
95,607
-
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.
96 CENTAURUS METALS ANNUAL REPORT 2012
96
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
24. FINANCIAL INstrUmeNts (CoNtINUeD)
Interest rate risk
Profile
At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:
Variable rate instruments
Financial assets
2012
$
2011
$
8,845,662
8,845,662
10,351,397
10,351,397
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 2011.
30 June 2012
Variable rate instruments
Cash flow sensitivity (net)
30 June 2011
Variable rate instruments
Cash flow sensitivity (net)
Profit or loss
equity
100bp
increase
$
100bp
decrease
$
100bp
increase
$
100bp
decrease
$
88,457
88,457
103,514
103,514
(88,457)
(88,457)
(103,514)
(103,514)
-
-
-
-
-
-
-
-
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:
Cash and cash equivalents
Other receivables
Available-for-sale financial assets
Held for trading derivatives instruments
30 June 2012
30 June 2011
Carrying
amount
$
8,845,662
544,082
534,201
29,525
Fair value
$
Carrying
amount
$
Fair value
$
8,845,662
10,351,397
10,351,397
544,082
534,201
29,525
1,779,262
1,567,987
261,084
1,779,262
1,567,987
261,084
9,953,470
9,953,470
13,959,730
13,959,730
Trade and other payables
3,609,005
3,609,005
3,609,005
3,609,005
4,016,265
4,016,265
4,016,265
4,016,265
CENTAURUS METALS ANNUAL REPORT 2012 97
97
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
24. FINANCIAL INstrUmeNts (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 2012
Available-for-sale financial assets
Derivative instruments (i)
30 June 2011
Available-for-sale financial assets
Derivative instruments (i)
Level 1
$
534,201
4,444
538,645
1,567,987
16,667
1,584,654
Level 2
$
Level 3
$
-
25,081
25,081
-
244,417
244,417
-
-
-
-
-
-
total
$
534,201
29,525
563,726
1,567,987
261,084
1,829,071
There have been no transfers of assets from Levels during the year ended 30 June 2012
(2011: no transfers in either direction).
(i) Decline in fair value of derivative instruments of $231,559 has been charged to finance expense (2011: $148,799).
25. CoNtINGeNt LIABILItIes
Guarantees
Guarantees given in respect of bank security bonds amounting to $43,790 (2011: $124,442), secured by cash deposits lodged
as security with the bank.
No material losses are anticipated in respect of any of the above contingent liabilities.
There are no other contingent liabilities that require disclosure.
26. 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
2012
$
284,567
319,855
-
604,422
2011
$
248,754
125,927
-
374,681
The Group leases a number of offices and apartments under operating lease. The leases run for a period of one to four
years, with an option to renew the lease after that date.
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.
98 CENTAURUS METALS ANNUAL REPORT 2012
98
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
27. 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 2010 annual general meeting.
All employees (including directors) are eligible to participate in the Plan. Options granted carry no dividend or voting rights.
When exercisable, each option is converted into one ordinary share of the Company with full dividend and voting rights.
Options were issued to Consultants outside of the ESOP.
The terms and conditions relating to the grant of options for the year ended 30 June 2012 are as follows:
Grant Date
Employee Options
29/08/2011
29/08/2011
29/08/2011
01/01/2012
01/01/2012
30/01/2012
30/01/2012
30/01/2012
Sub total
Consultant Options
01/01/2012
01/01/2012
01/01/2012
Subtotal
Total
Number of options vesting Conditions
option term
Vested immediately
See note 1
See note 2
See note 3
See note 4
Vested immediately
See note 5
See note 6
Vested immediately
Vest on 30/09/2012
Vest on 30/06/2013
4 years
4 years
4 years
3 years
3 years
5 years
5 years
5 years
3 years
3 years
3 years
6,250
15,625
15,625
150,000
150,000
100,000
150,000
150,000
737,500
200,000
200,000
400,000
800,000
1,537,500
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.
Note 3: Options vest on execution of a land access agreement with relevant government body in Bahia, for Centaurus to secure
the necessary land and port allocations at Ilheus Port for a minimum of 2mtpa of Iron Ore.
Note 4 Options vest on the State of Bahia commencing the dredging of the Ilheus Port to 14 metres to accommodate Panamax Vessels.
Note 5: Options vest on achievement of iron ore production from the Company’s iron ore projects at an average rate of
150,000 tonnes per month over a consecutive 3 month period.
Note 6: Options vest on achievement of first iron ore shipment from Brazil into the international iron ore export market
CENTAURUS METALS ANNUAL REPORT 2012 99
99
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
27. sHAre-BAseD PAymeNts (CoNtINUeD)
Description of the share-based payment arrangements (continued)
Employee Share Option Plan (continued)
The terms and conditions relating to the grant of options for the year ended 30 June 2011 were as follows:
Grant Date
Employee Options
Number of options vesting Conditions
option term
19/07/2010
19/07/2010
19/07/2010
01/10/2010
01/10/2010
01/10/2010
01/10/2010
01/10/2010
01/10/2010
17/01/2011
17/01/2011
17/01/2011
4/02/2011
4/02/2011
4/02/2011
6/03/2011
1/06/2011
1/06/2011
1/06/2011
Sub total
director Options
30/11/2010
30/11/2010
Sub total
Consultant Options
20/10/2010
20/10/2010
01/01/2011
01/01/2011
Subtotal
Total
Vested immediately
See note 1
See note 2
See note 3
See note 4
Vested immediately
Vested immediately
See note 1
See note 2
Vested immediately
See note 1
See Note 2
Vested Immediately
See note 1
See note 2
Vested immediately
Vested immediately
See note 1
See note 2
5 years
5 years
5 years
4 years
4 years
3 years
4 years
4 years
4 years
4 years
4 years
4 years
5 years
5 years
5 years
4 years
4 years
4 years
4 years
Vest on 30/05/2012
Vest on 30/11/2013
5 years
5 years
Vested on 31/03/2011
Vest on 31/12/2011
3.87 years
3.87 years
Note 5
Note 6
3 years
3 years
100,000
300,000
300,000
500,000
500,000
200,000
500,000
200,000
200,000
50,000
125,000
125,000
300,000
600,000
600,000
100,000
50,000
125,000
125,000
5,000,000
500,000
500,000
1,000,000
5,000,000
5,000,000
500,000
500,000
11,000,000
17,000,000
100 CENTAURUS METALS ANNUAL REPORT 2012
100
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
27. sHAre-BAseD PAymeNts (CoNtINUeD)
Employee Share Option Plan (continued)
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.
Note 3: Options vest on definition of JORC Inferred Resource that delivers over 100Mt of iron ore from the Company’s iron ore projects in Brazil.
Note 4: Options vest on definition of JORC Inferred Resource that delivers over 250Mt of iron ore or JORC Measured and Indicated Resource
that delivers over 100Mt of iron ore from the Company’s iron ore projects in Brazil.
Note 5: Options vest on identification and subsequent acquisition of a new project to support the Company’s domestic Iron and Steel business
in Brazil, subject to approval by the Board of Directors.
Note 6: Options vest on identification and subsequent acquisition of a new project that has the ability to support the Company’s export business
from Brazil, subject to approval by the Board of Directors.
The number and weighted average exercise prices of share options issued under employee share option plan and
issued to consultants are as follows:
Outstanding at 1 July
Forfeited during the period
Expired during the period
Exercised during the period
Granted during the period
Outstanding at 30 June
Exercisable at 30 June
weighted
average
exercise price
2012
Number of
options
2012
weighted
average
exercise price
2011 *
Number of
options
2011 *
$0.776
$0.689
$1.040
$0.640
$1.125
$0.833
$0.757
7,393,750
(512,500)
(593,750)
(125,000)
1,537,500
7,700,000
5,487,500
$0.760
$0.896
$1.760
$0.560
$0.904
$0.776
$0.800
6,233,750
(555,625)
(150,000)
(259,375)
2,125,000
7,393,750
3,812,500
* On 22 September 2011, Shareholders approved the consolidation of the Company’s capital on a 1-for-8 basis. The consolidation took effect from
5 October 2011. Comparatives have been restated.
The options outstanding at 30 June 2012 have an exercise price in the range of $0.40 to $2.28 (2011: $0.40 to $2.28)
and the weighted average remaining contractual life is 2.42 years (2011: 3.2 years).
The weighted average share price at the date of exercise for share options exercised in 2012 was $0.64 (2011: $0.848).
CENTAURUS METALS ANNUAL REPORT 2012 101
101
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
27. sHAre-BAseD PAymeNts (CoNtINUeD)
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 2012 was $0.225 (2011: $0.504).
The fair value at grant date is measured 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. Expected volatility is estimated by considering historic
average share price volatility.
The model inputs for 2012 include:
Grant date expiry date
Employee Options
29/08/2011
29/08/2015
29/08/2011
29/08/2015
29/08/2011
29/08/2015
01/01/2012
31/12/2014
01/01/2012
31/12/2014
30/01/2012
30/01/2017
30/01/2012
30/01/2017
30/01/2012
30/01/2017
Consultant Options
01/01/2012
31/12/2014
01/01/2012
31/12/2014
01/01/2012
31/12/2014
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
$0.80
$0.80
$0.80
$0.80
$0.80
$0.80
$0.80
$0.80
$0.80
$1.30
$1.80
4.00 years
4.00 years
4.00 years
3.00 years
3.00 years
5.00 years
5.00 years
5.00 years
3.00 years
3.00 years
3.00 years
$0.73
$0.73
$0.73
$0.50
$0.50
$0.51
$0.51
$0.51
$0.50
$0.50
$0.50
88.25%
88.25%
88.25%
85.81%
85.81%
85.77%
85.77%
85.77%
85.81%
85.81%
85.81%
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
4.01%
4.01%
4.01%
3.29%
3.29%
3.35%
3.35%
3.35%
3.29%
3.29%
3.29%
$0.4491
$0.4491
$0.4491
$0.2283
$0.2283
$0.3128
$0.3128
$0.3128
$0.2283
$0.1730
$0.1385
The model inputs for 2011 include:
Grant date expiry date
Employee Options
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
19/07/2010
19/07/2015
$0.095
5.00 years
01/10/2010
01/10/2014
01/10/2010
01/10/2013
17/01/2011
17/01/2015
04/02/2011
04/02/2016
06/03/2011
06/03/2015
01/06/2011
01/06/2015
Consultant Options
20/10/2010
31/08/2014
20/10/2010
31/08/2014
01/01/2011
01/01/2014
director Options
$0.110
$0.110
$0.130
$0.130
$0.130
$0.130
$0.100
$0.120
$0.130
4.00 years
3.00 years
4.00 years
5.00 years
4.00 years
4.00 years
3.87 years
3.87 years
3.00 years
$0.07
$0.08
$0.08
$0.15
$0.12
$0.12
$0.09
$0.09
$0.09
$0.13
99.80%
99.14%
91.54%
96.48%
96.20%
94.37%
91.49%
92.09%
92.09%
97.72%
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
4.77%
4.95%
4.87%
5.28%
5.44%
5.36%
5.09%
4.63%
4.63%
5.24%
$0.0509
$0.0527
$0.0494
$0.1083
$0.0893
$0.0813
$0.0509
$0.0591
$0.0561
$0.0782
30/11/2010
30/11/2015
$0.110
5.00 years
$0.10
99.10%
Nil
5.18%
$0.0754
102 CENTAURUS METALS ANNUAL REPORT 2012
102
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
27. sHAre-BAseD PAymeNts (CoNtINUeD)
Performance rights Plan
A Performance Share Plan (PSP) was adopted by the Board of Directors on 23 July 2012 and was approved by shareholders
on 31 August 2012. Under the PSP, the Board may from time to time in its absolute discretion grant performance rights
to eligible persons including executives and employees, in the form and subject to terms and conditions as the Board
determines. Performance rights are, in effect, options to acquire unissued shares in the Company, the exercise of which
is subject to certain performance milestones. Performance rights are granted under the PSP for no consideration and are
granted for a period not exceeding 5 years.
Details of performance rights issued as compensation to directors and key management personnel during the
financial year are as follows:
Grant Date
Employee Options
31/08/2012
31/08/2012
Number of
rights
vesting
Conditions
term
300,000
400,000
See note 1
See note 2
16 months
34 months
Sub total
700,000
Note 1: Rights vest on first sale of iron ore from the Jambreiro Iron Ore Project on or before 31 December 2013.
Note 2: On first sale of iron ore into the export market from the Company’s current or future Brazilian Projects on or before 30 June 2015.
Inputs for measurement of grant date fair values
The fair value of performance rights issued during the year ended 30 June 2012 was provisionally calculated at $0.4288
based on the 5 day volume weighted average share price at valuation date and is subject to revision upon grant date.
valuation date
expiry date
exercise price
vesting days
Fair value
Employee Rights
300,000
400,000
30/06/2012
30/06/2012
31/12/2013
30/06/2015
Nil
Nil
659
1,024
$0.4288
$0.4288
expenses arising from share based payment transactions
Equity – settled share options and performance rights granted during:
Period ended 30 June 2009
Period ended 30 June 2010
Period ended 30 June 2011
Period ended 30 June 2012
Total expense recognised as share based payment
2012
$
-
93,502
251,786
114,525
459,813
2011
$
2,215
485,318
625,377
-
1,112,910
CENTAURUS METALS ANNUAL REPORT 2012 103
103
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
28. GroUP eNtItIes
Parent entity
Centaurus Metals Limited
Subsidiaries
Centaurus Resources Pty Ltd
San Greal Resources Pty Ltd
Centaurus Brasil Mineração Ltda
CSLJ Limited
Glengarry Sabah Pty Ltd
Semporna Mining Sdn Bhd
Mineração Passo das Pedras Ltda
Centaurus Export Mineração Ltda
Centaurus Manganês Mineração Ltda
Country of
incorporation
ownership interest
2012
2011
Australia
Australia
Brazil
Channel Islands
Australia
Malaysia
Brazil
Brazil
Brazil
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
29. sUBseqUeNt eveNts
On 9 July 2012 the Group announced a two-tranche share placement of up to $26.2 million of fully paid ordinary shares at
an issue price of $0.44 per share to new and existing institutional and strategic investors. The equity raising comprised of
an $11 million placement to Boston-based Liberty Metals & Mining Holdings (“LMM”), a $5.2 million placement to Atlas
Iron Limited (“Atlas”) and a $10 million placement to institutional and professional investor clients of Ord Minnett and Bell
Potter. Tranche 1 of the placement occurred on 13 July 2012 with 19.14 million shares issued. Tranche 2 of the placement,
comprising 40.41 million shares, was approved by shareholders on 31 August 2012 and was completed on 6 September
2012. Following the completion of the placement, LMM held a 12.77% interest in the Company whilst Atlas maintained its
interest in Centaurus at 19.58%.
On 28 August 2012 it was announced that the Group had entered into an agreement to dispose of several non-core
tenements to Orinoco Resources Limited (“ORL”). The consideration for the sale includes:
•
•
•
1 million ordinary shares in ORL;
1 million unlisted options in ORL exercisable at 25 cents and expiring 5 years from the date of issue; and
Royalty of 2.5% of the net smelter return, being the gross proceeds received during a quarter for any product sold less
certain allowable deductions.
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.
30. remUNerAtIoN oF AUDItors
Audit services
Audit and review of the Company KPMG
Other services
Auditor of the Company
KPMG: Taxation services
104 CENTAURUS METALS ANNUAL REPORT 2012
104
2012
$
2011
$
92,318
116,300
40,930
203,472
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
31. PAreNt eNtIty INFormAtIoN
As at and throughout the financial year ending 30 June 2012 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
Total comprehensive loss for the year
Financial position of the parent entity at the year end
Current assets
Non-current assets (1)
Total assets
Current liabilities
Total liabilities
Net assets
Share capital
Reserves
Accumulated losses
Total equity
Company
2012
$
2011
$
(5,460,090)
(3,571,897)
-
(265,625)
265,625
-
265,625
(265,625)
(5,194,465)
(3,837,522)
2012
$
6,667,108
52,881,296
59,548,404
516,807
516,807
2011
$
7,716,671
37,637,923
45,354,594
578,077
578,077
59,031,597
44,776,517
72,710,747
5,532,550
53,851,446
4,676,681
(19,211,700)
(13,751,610)
59,031,597
44,776,517
Parent entity contingencies
The parent entity had no contingent liabilities as at 30 June 2012 (2011: nil).
(1) Included within non-current assets are loans to subsidiaries for which the ultimate recoupment is dependent
on successful development and commercial exploitation or, alternatively, sale of the respective project areas.
Parent entity capital commitments
The parent entity had no capital commitments at 30 June 2012 (2011: nil).
CENTAURUS METALS ANNUAL REPORT 2012 105
105
Centaurus Metals | Annual Report 2012 Notes to tHe CoNsoLIDAteD
FINANCIAL stAtemeNts (CONTiNUEd)
For the year ended 30 June 2012
31. PAreNt eNtIty INFormAtIoN (CoNtINUeD)
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
2012
$
113,560
-
-
113,560
2011
$
166,872
111,248
-
278,120
106 CENTAURUS METALS ANNUAL REPORT 2012
106
Centaurus Metals | Annual Report 2012 DIreCtor’s
DeCLArAtIoN
For the year ended 30 June 2012
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 2012 and of its performance, for
the financial year ended on that date; and
Complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001;
(ii)
(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 2012.
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, Western Australia
20 September 2012
CENTAURUS METALS ANNUAL REPORT 2012 107
107
Centaurus Metals | Annual Report 2012
INDePeNDeNt AUDItor’s
rePort
For the year ended 30 June 2012
108 CENTAURUS METALS ANNUAL REPORT 2012
108
Centaurus Metals | Annual Report 2012 INDePeNDeNt AUDItor’s
rePort (CONTiNUEd)
For the year ended 30 June 2012
CENTAURUS METALS ANNUAL REPORT 2012 109
109
Centaurus Metals | Annual Report 2012 sHAreHoLDer INFormAtIoN
For the year ended 30 June 2012
The shareholder information set out below was applicable as at 28 September 2012.
A. sUBstANtIAL sHAreHoLDers
The names of substantial shareholders who have notified the Company in accordance with section 671B of the Corporations
Act 2001 are:
Atlas Iron Limited (1) – 38,320,264 shares and 3,750,000 unlisted options
Liberty Metals & Mining Holdings, LLC – 25,000,000 shares
Lujeta Pty Ltd – 11,172,727 shares
(1) On 27 July 2011, the Company announced it had entered into a strategic alliance with Atlas Iron Limited (“Atlas”) pursuant
to which Atlas agreed to take a strategic 19.9% stake in the Company, and for Atlas to provide technical, development
and product marketing support as the Company looks to develop its export and domestic iron ore businesses in Brazil.
Centaurus and Atlas entered into a subscription agreement with respect to the strategic alliance. Pursuant to the strategic
alliance, and subject to meeting various conditions including Atlas continuing to hold a 5% interest in the share capital in
the Company, ASX Limited have granted Centaurus a waiver from the listing rules to permit Atlas to have a right to maintain
its equity interest in the Company in the event that further equity issues are undertaken for future funding requirements
or as a means of securing further assets (other than by a takeover bid or scheme of arrangement). Atlas will be given
the opportunity to participate in these future equity issues of the Company on the same terms as those being offered to
third parties.
B. CLAss oF sHAres AND votING rIGHts
(a) At 28 September 2012 there were 4,076 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 28 September 2012, there were 24 holders of options over 13,450,000 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 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Class of equity security
Ordinary Shares
Options
617
1,481
665
1,139
174
4,076
-
-
-
10
14
24
(b) There were 1,207 holders of less than a marketable parcel of ordinary shares.
110 CENTAURUS METALS ANNUAL REPORT 2012
110
Centaurus Metals | Annual Report 2012 sHAreHoLDer INFormAtIoN
For the year ended 30 June 2012
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:
ordinary shares
Number Held
Percentage of issued
Shares
Atlas Iron Limited
Liberty Metals & Mining Holdings, LLC
Lujeta Pty Ltd
Mr Darren Gordon
JP Morgan Nominees Aust Limited
Bridgelane Capital Pty Ltd
Lion Selection Group Limited
Citicorp Nominees Pty Ltd
HSBC Custody Nominees (Aust) Limited
Vulcan Custodian Limited
UBS Nominees Pty Ltd
Mr Bradley George Bolin
Brispot Nominees Pty Ltd
HSBC Custody Nominees (Aust) Limited
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