ACN 009 468 099
Annual Report
31 December 2014
Contents
2
70
72
Annual Financial Report
Shareholder Information
Tenement Information
73 Mineral Resources and Ore Reserves Information
Centaurus Metals Limited ABN 40 009 468 099
And its controlled entities
Annual Financial Report
31 December 2014
Page 2 of 76
Contents
Corporate Directory ................................................................................................................................................ 5
Directors’ Report .................................................................................................................................................... 6
1 Directors .......................................................................................................................................................... 6
2 Directors and Officers ...................................................................................................................................... 6
3 Directors Meetings .......................................................................................................................................... 8
4 Corporate Governance Statement .................................................................................................................. 8
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
Board of Directors ............................................................................................................................... 8
Remuneration Committee ................................................................................................................ 10
Remuneration Report – Audited ....................................................................................................... 11
Audit & Risk Committee .................................................................................................................... 19
Risk Management ............................................................................................................................. 20
Ethical Standards .............................................................................................................................. 21
Continuous Disclosure and Shareholder Communication ................................................................ 22
Diversity ............................................................................................................................................ 22
Non-Compliance Statement.............................................................................................................. 23
5
Principal Activities ......................................................................................................................................... 23
6 Operating and Financial Review .................................................................................................................... 23
7 Dividends ....................................................................................................................................................... 26
8
9
Events Subsequent to Reporting Date........................................................................................................... 26
Likely Developments ..................................................................................................................................... 27
10 Environmental Regulation ........................................................................................................................... 27
11 Directors’ Interests ...................................................................................................................................... 27
12
13
Share Options & Rights ................................................................................................................................ 27
Indemnification and Insurance of Officers and Auditors ............................................................................. 28
14 Non- Audit Services ...................................................................................................................................... 28
15
Lead Auditor’s Independence Declaration .................................................................................................. 28
Auditor’s Independence Declaration .................................................................................................................... 29
Consolidated Statement of Profit or Loss and Other Comprehensive Income..................................................... 30
Consolidated Statement of Financial Position ...................................................................................................... 31
Consolidated Statement of Changes in Equity ..................................................................................................... 32
Consolidated Statement of Cash Flows ................................................................................................................ 34
Notes to the Consolidated Financial Statements ................................................................................................. 35
Note 1. Reporting Entity ................................................................................................................................ 35
Note 2. Basis of Preparation .......................................................................................................................... 35
Page 3 of 76
Note 3. Functional and Presentation Currency ............................................................................................. 36
Note 4. Use of Judgements and Estimates .................................................................................................... 36
Note 5. Significant Accounting Policies ......................................................................................................... 37
Note 6. Operating Segments ......................................................................................................................... 46
Note 7. Other Income .................................................................................................................................... 47
Note 8. Employee Benefits Expense .............................................................................................................. 47
Note 9. Depreciation ..................................................................................................................................... 47
Note 10. Finance Income and Expense ......................................................................................................... 47
Note 11. Share-based Payments ................................................................................................................... 48
Note 12. Income Tax ...................................................................................................................................... 50
Note 13. Dividends ........................................................................................................................................ 51
Note 14. Earnings / (Loss) Per Share ............................................................................................................. 51
Note 15 (a). Cash and Cash Equivalents ........................................................................................................ 51
Note 15 (b). Reconciliation of Cash Flows from Operating Activities ............................................................ 52
Note 16. Other Receivables and Prepayments .............................................................................................. 52
Note 17. Other Investments, Including Derivatives ...................................................................................... 53
Note 18. Property, Plant and Equipment ...................................................................................................... 54
Note 18. Property, Plant and Equipment (continued) ................................................................................... 55
Note 19. Exploration and Evaluation Assets .................................................................................................. 56
Note 20. Trade and Other Payables .............................................................................................................. 56
Note 21. Employee Benefits .......................................................................................................................... 56
Note 22. Provisions ........................................................................................................................................ 57
Note 23. Capital and Reserves ....................................................................................................................... 57
Note 24. Related Parties ................................................................................................................................ 58
Note 25. Financial Instruments – Fair Values and Risk Management ........................................................... 59
Note 26. Contingent Liabilities ...................................................................................................................... 64
Note 27. Operating Leases ............................................................................................................................ 64
Note 28. Capital Commitments ..................................................................................................................... 64
Note 29. Group Entities ................................................................................................................................. 65
Note 30. Subsequent Events ......................................................................................................................... 65
Note 31. Remuneration of Auditors .............................................................................................................. 65
Note 32. Parent Entity Disclosures ................................................................................................................ 65
Directors’ Declaration ........................................................................................................................................... 67
Independent Auditor’s Report .............................................................................................................................. 68
Page 4 of 76
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 3, 10 Outram 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
Rua Pernambuco, 1.077 - andar S - Funcionários
Belo Horizonte - MG - CEP: 30.130-151
BRAZIL
Telephone: +55 31 3194 7750
Facsimile: +55 31 9301 1938
Annual Financial Report – 31 December 2014
Corporate Directory
Directors
Mr D M Murcia AM, B.Juris, LL.B
Non-Executive Chairman
Mr D P Gordon B.Bus, CA, FFin, AGIA, MAICD
Managing Director
Mr P E Freund FAusIMM(CP), F.AIM
Non-Executive Director
Mr M D Hancock B.Bus, CA, FFin
Non-Executive Director
Secretary
Mr J W Westdorp B.Bus, CPA, MAICD
Chief Financial Officer/Company Secretary
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
Bankers
Australia
National Australia Bank
1232 Hay Street
West Perth WA 6005
Brazil
Banco Bradesco
ag: 2946. c/c:74404-2
Endereço: Rua da Bahia, 951 – 5º andar
Belo Horizonte, MG
Cep: 30130-008
Page 5 of 76
Annual Financial Report – 31 December 2014
Directors’ Report
Your directors present their report on the Consolidated Entity (“Group”) consisting of Centaurus Metals
Limited (“Centaurus” or “the Company”) and the entities it controlled at the end of, or during, the year ended
31 December 2014 together with the consolidated financial report and review report thereon.
1 Directors
The directors of the Company at any time during or since the end of the year are:
D M Murcia
D P Gordon
P E Freund
M Hancock
R G Hill
S Zaninovich
Independent Non- Executive Chairman
Managing Director
Non-Executive Director
Non-Executive Director
Independent Non-Executive Director (resigned 4 July 2014)
Independent Non-Executive Director (resigned 4 July 2014)
Unless otherwise disclosed, all directors held their office from 1 January 2014 until the date of this report.
2 Directors and Officers
Mr Didier M Murcia, AM, B.Juris, LL.B
Non-Executive Chairman, Age 52
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 MPH Lawyers.
Other Directorships
During the last three years Mr Murcia held directorships in the following ASX listed companies:
Cradle Resources Limited (appointed 13 August 2013)
Alicanto Minerals Limited (appointed 30 May 2012)
Gryphon Minerals Limited (appointed 28 July 2006)
Rift Valley Resources Limited (appointed 22 November 2010, resigned 4 June 2013)
Special Responsibilities
Chairman of the Board
Chairman of the Remuneration Committee
Mr Darren P Gordon, B.Bus, CA, FFin, AGIA, MAICD
Managing Director, Age 43
Experience and Expertise
Managing Director appointed 4 May 2009. Chartered Accountant with over 20 years resource sector
experience as a senior finance and resources executive. Former Chief Financial Officer for Gindalbie Metals
Limited.
Special Responsibilities
Managing Director
Mr Peter E Freund, FAusIMM(CP), F.AIM
Non-Executive Director, Age 68
Experience and Expertise
Former Operations director appointed 28 January 2010 until 11 July 2014 when he assumed a non-executive
directors role. 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.
Special Responsibilities
Member of the Remuneration Committee
Page 6 of 76
Annual Financial Report – 31 December 2014
Mr Mark D Hancock, B.Bus, CA, FFin
Non-Executive Director, Age 46
Experience and Expertise
Non-executive director appointed 23 September 2011. Currently Chief Commercial Officer 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, resigned 2 December 2014)
Special Responsibilities
Member of the Remuneration Committee
Mr Richard G Hill, B.Juris, LLB., BSc (Hons), FFin
Non-executive Director (resigned 4 July 2014), Age 46
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. Managing Director of
Strandline Resources Ltd.
Other Directorships
During the last three years Mr Hill held directorships in the following ASX listed companies:
Strandline Resources Ltd (appointed 23 October 2014)
Genesis Minerals Ltd (appointed 13 February 2013)
YTC Resources Limited (appointed 28 April 2006, resigned 11 July 2012)
Mr Steven E Zaninovich, B.E Civil
Non-executive Director (resigned 4 July 2014), Age 46
Experience and Expertise
Independent non-executive director appointed 10 January 2013. Civil Engineer with over 20 years experience
in mine development and construction predominately in overseas locations. Currently the Chief Operating
Officer of ASX Listed Gryphon Minerals Ltd.
Other Directorships
Gryphon Minerals Ltd (appointed 28 January 2010, resigned 22 May 2012 to take up Chief Operating Officer
role).
Mr John W Westdorp, B.Bus, CPA, MAICD
Chief Financial Officer & Company Secretary, Age 51
Experience and Expertise
Mr Westdorp was appointed as Chief Financial Officer on 3 December 2012. Mr Westdorp is a Certified
Practicing Accountant. He has over 20 years’ experience and was previously the Chief Financial Officer of
Murchison Metals Ltd. Mr Westdorp was appointed Company Secretary on the 11 July 2014.
Special Responsibilities
Chief Financial Officer
Company Secretary
Page 7 of 76
Annual Financial Report – 31 December 2014
3 Directors Meetings
The number of meetings of the Company’s Board of Directors and of each Board Committee held during the
year ended 31 December 2014 and the number of meetings attended by each director were:
Mr D M Murcia
Mr D P Gordon
Mr P E Freund
Mr R G Hill
Mr M D Hancock
Mr S E Zaninovich
Meetings of Directors
Meetings of Committees
Audit & Risk Committee(1)
Remuneration
Held
Attended
Held
Attended
Held
Attended
11
11
11
6
11
6
11
11
11
6
11
6
n/a
n/a
n/a
1
1
1
n/a
n/a
n/a
1
1
1
1
n/a
1
n/a
1
n/a
1
n/a
1
n/a
1
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.
(1) Subsequent to the restructure of the Board of Directors the Company does not have a formal Audit &
Risk Committee. This function is performed by the full Board.
The Company does not have a formal Nomination Committee. This function is performed by the full Board.
4 Corporate Governance Statement
This statement outlines the main corporate governance practices in place throughout the 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
Board Role and Responsibilities
The Board has approved a formal Board Charter which details the Board’s role, composition and
responsibilities. The Charter is available from the corporate governance information section of the Company’s
website at www.centaurus.com.au.
The central role of the Board is to approve the strategic direction of the Company, to guide and monitor the
Management of the Company in achieving its strategic plans and to oversee overall good corporate
governance.
The Board has delegated to the Managing Director all powers to manage the day-to-day business of the
Company, subject to those powers reserved to the Board and any specific delegations of authority approved
by the Board. The Managing Director is supported by the senior management team in the day-to-day
management of the Company.
Board Composition, Size and Structure
The Board is responsible for determining an appropriate mix of skills, knowledge, experience, expertise and
diversity on the Board. The number of directors on the board shall be determined in accordance with the
Company’s Constitution and the requirements of the Corporations Act. The Board shall consist of a majority of
non-executive directors. Where practical, at least half of the Board shall consist of independent directors who
satisfy the criteria for independence. The Board periodically reviews its composition and the duration of terms
served by the directors.
Page 8 of 76
Annual Financial Report – 31 December 2014
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 two independent non-executive directors, one executive director and one non independent non-
executive director at the date of signing the Directors’ Report.
The Board considers that collectively the directors have the range of skills, knowledge and experience
necessary to direct the Company.
Selection and Appointment of New Directors
When the need for a new director is identified, the Board reviews the range of skills, experience and expertise
on the Board, identifies its needs and prepares a short-list of candidates with appropriate skills and
experience. Where necessary, advice is sought from independent research consultants.
When considering new candidates for nomination, the Board takes into account:
the candidate’s competence and qualifications;
independence;
the range of skills, experience and expertise on the Board to identify the skills that will best increase
the effectiveness of the Board;
the candidate’s ability to devote the time required by a director to effectively undertake his or her
responsibilities; and
the extent to which the candidate is likely to work constructively with the existing directors and
contribute to the overall effectiveness of the Board.
The Board then appoints the most suitable candidate who must stand for election at the next Annual General
Meeting of the Company.
Directors’ Independence
The Board has adopted specific principles in relation to directors’ independence and these are set out in its
Charter. An independent director is a non-executive director who is not a member of management and who is
free of any business or other relationship that could materially interfere with, or could reasonably be
perceived to materially interfere with, the independent exercise of their judgement.
The names of the directors considered to be independent are set out in the Directors’ Report.
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
The Board, Board Committees or individual directors may seek independent external professional advice as
considered necessary at the Company’s expense, subject to prior consultation with the Chairman. A copy of
any such advice received will be made available to all members of the Board.
Director and Executive Education
The Group has a process to educate new directors about the nature of the business, current issues, the
corporate strategy and the expectations of the Group concerning performance of directors. Directors also
have the opportunity to visit Group facilities and meet with management to gain a better understanding of
business operations. Directors are given access to continuing education opportunities to update and enhance
their skills and knowledge.
The Group also has a process to educate new senior executives upon taking such positions. The induction
program
includes reviewing the Group’s structure, strategy, operations, financial position and risk
management policies. It also familiarises the individual with the respective rights, duties, responsibilities and
roles of the individual and the Board.
Page 9 of 76
Annual Financial Report – 31 December 2014
Performance Assessment of the Board and Senior Management
The Board is responsible for undertaking an annual evaluation process to review its performance and that of
its Committees. The evaluation process includes a self-assessment questionnaire to review performance
attributes. The most recent review of the Board was conducted in June 2014. The next Board performance
review will be undertaken during 2015.
The performance of senior management is assessed annually by the Managing Director. Performance is
measured against established targets specific to the individual role and responsibilities of each person. Senior
management performance evaluations have been conducted by the Managing Director for the financial year
ended 31 December 2014.
Board Committees
The Board may from time to time establish and delegate any powers to a Committee of the Board in
accordance with the Company’s Constitution. The Board is responsible for approving and reviewing the
charter terms and membership of each Committee established by the Board.
The Board has established a Remuneration Committee.
The Board has not established an Audit Committee or a Nomination Committee. The Board considers that
given its size, no efficiencies or other benefits are gained by establishing a separate Audit or Nomination
Committee.
All non-executive directors shall be entitled to attend meetings of Board Committees where there is no conflict
of interest.
4.2 Remuneration Committee
The Remuneration Committee operates in accordance with its Charter which is available on the Company’s
website. The role of the Committee is to review and assist the Board in developing the Company’s
remuneration, recruitment, retention and termination policies. The members of the Committee are appointed
by the Board.
The Committee shall consist of at least three non-executive directors, consisting of a majority of independent
directors. The Chairman of the Committee should be an independent director. All persons appointed to the
Committee should have sufficient professional expertise, knowledge and understanding to allow them to
discharge their duties.
Remuneration consultants are required to be appointed by, and report directly to, the Committee. The
Committee will ensure the remuneration consultant is sufficiently independent.
The Committee will meet as frequently as necessary, but at least once a year, in order to carry out the
responsibilities of the Committee. Any Committee member may convene a meeting of the Committee.
The Committee may extend an invitation to any person to attend all or part of any meeting which it considers
appropriate. The Committee may meet with external advisers, any executive or other employee, any other
non-executive director, and may do so with or without the presence of management.
If any such person has a material personal interest in a matter being considered that person must not be
present when that matter is being considered.
All Board members wishing to attend are entitled to be present at Committee Meetings (except in
circumstances where there is a conflict of interest). The Managing Director and Company Secretary will
normally be invited to attend meetings.
The Chairman of the Committee will report to the Board, at the following Board meeting, on the proceedings
of each meeting of the Committee, bringing forward all recommendations of the Committee which require
Board endorsement or approval. A copy of Committee papers should be circulated to all Directors who are not
members of the Committee.
Page 10 of 76
Annual Financial Report – 31 December 2014
The Company’s remuneration policy consists of:
a clear distinguished structure of non-executive remuneration from that of executive directors and
senior management;
balancing the Company’s desire to attract and retain personnel against its interest in not paying
excessive remuneration;
providing an appropriate balance between fixed and incentive pay, reflecting short and long term
performance objectives appropriate to the Company’s circumstances and goals;
motivating personnel to pursue the long term growth and success of the Company; and
demonstrating a clear relationship between personnel performance and remuneration.
Further information on directors’ and executives’ remuneration is set out in the Remuneration Report. Details
of the qualifications of directors of the Remuneration Committee and their attendance at Committee meetings
are set out in the Directors’ Report.
4.3 Remuneration Report – Audited
4.3.1 Principles of Remuneration
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. The Board ensures that
executive reward satisfies the following key criteria for good reward and governance practices:
competitiveness and reasonableness;
acceptability to shareholders;
performance linked executive compensation;
transparency; and
capital management.
The Group has structured an executive remuneration framework that
complimentary to the reward strategy of the organisation to ensure:
is market competitive and
(i)
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;
provides recognition for contribution; and
seeks to retain experienced and competent individuals in key executives roles
The remuneration framework currently consists of base pay, cash incentive bonuses and long-term incentives
through participation in the Employee Share Option Plan and/ or the 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 pre-development activities and therefore growth in earnings is not considered
relevant. Shareholder wealth is dependent upon exploration success and has fluctuated accordingly in addition
to being influenced by broader market factors.
The performance of the Group in respect of the current period and the previous four financial years is set out
below:
2014
$
2013
$
Dec 2012
$
June 2012
$
June 2011
$
Net Loss
(10,460,299)
(32,714,987)
(9,125,800)
(20,783,843)
(12,204,218)
Change in share price
($0.15)
($0.13)
($0.11)
($0.20)
$0.064
Market capitalisation at year end
$12.2 million
$39.2 million
$64.6 million
$58.7 million
$68 million
Iron Ore Price (USD/tonne) CFR China 62%
Fe at relevant year end date
71.75
134.75
144.50
135.25
170.75
Page 11 of 76
Annual Financial Report – 31 December 2014
During the years stated above, there were no returns of capital made by the Company to shareholders and no
dividends paid.
During the year financial year ended 31 December 2014, no salary or fee increases were awarded to non-
executive directors, executive directors or executives of the Company.
The executive pay and reward framework has four components:
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/ or the
Performance Share Plan; and
other remuneration such as superannuation.
The combination of these components comprises the executive’s total remuneration.
Base Pay
Base pay is 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 remuneration is competitive with the market. An executive’s base 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. When offered, bonus
amounts are pre-determined and are based on achievement of milestones relevant to the Company’s strategic
objectives. No cash bonuses were offered or paid for the year ended 31 December 2014.
Expatriate Benefits
Expatriate executives located in Brazil receive benefits including housing, relocation costs and return travel.
The Company’s focus is to minimise the number of executives on expatriate arrangements. Currently the
Company has one expatriate employee.
Retirement Benefits
In accordance with regulatory requirements, 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 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
No new STIs were offered in the year ended 31 December 2014. There are no short term incentives in place as
at the date of this report.
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.
Page 12 of 76
Annual Financial Report – 31 December 2014
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, exclusive of superannuation during the year ended 31 December 2014 was $400,000.
Base salary is reviewed annually. Subsequent to year end base salary has been reduced to $360,000
effective from 1 April 2015. Provision of four weeks annual leave.
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.
Long Term Incentive Options– subject to shareholder approval, options are issued under the
Company’s Employee Share Option Plan with vesting conditions based on performance conditions.
J W Westdorp – Chief Financial Officer
Term of agreement – commenced on 3 December 2012 with no set term. Mr Westdorp or the
Company may terminate the agreement by giving 2 months notice. Entitled to 6 months salary if
position is made redundant.
Base salary, exclusive of superannuation is $325,000 effective from 1 July 2014, reviewed annually.
Provision of four weeks annual leave.
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
and market capitalisation targets.
Long Term Incentive Options – subject to shareholder approval, options are issued under the
Company’s Employee Share Option Plan with vesting conditions based on service conditions.
P E Freund – Operations Director (resigned 11 July 2014)
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 2013, reviewed annually.
Provision of four weeks annual leave.
Expatriate benefits including accommodation, relocation expenses and tax equalisation are provided
for living in Brazil.
Non- Executive Directors
Fees and payments to non-executives reflect the demands which are made on, and the responsibilities of, the
directors. Non-Executive directors’ fees and payments are reviewed at least annually by the Board. The
Chairman’s fees are determined independently to the fees of non-executive based on comparative roles in the
external market.
Non-executive directors’ remuneration consists of set fee amounts and statutory superannuation. The level of
fees for Non-Executive directors during the year was $60,000 per annum and $90,000 per annum for the Non-
Executive Chairman. The current base remuneration has recently been adjusted with effect from 1 April 2015.
The level of fees for Non-Executive directors is set at $40,000 per annum and $60,000 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 $400,000. There is no provision for retirement
allowances for Non-Executive directors.
Non-Executives are eligible to be granted options and performance rights to provide a material additional
incentive for their ongoing commitment and dedication to the continued growth of the Group. There have
been no new grants of performance rights or options to Non-Executives during the year. Prior to issuing
incentives the Board considers whether the issue is reasonable in the circumstances. In the past incentives
have been offered to assist the Company in attracting and retaining the highest calibre of Non-Executive,
whilst maintaining the Group’s cash reserves.
Page 13 of 76
Annual Financial Report – 31 December 2014
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 other key
management personnel of the Group are:
Short Term Benefits
Post-
employment
Benefits
Long Term
Benefits
Share- based
Payments(4)
Salary & Fees
$
Other
Benefits(2)
$
Super-
annuation
$
Redundancy
Benefits
$
Long Service
Leave(3)
$
Options and
Rights
$
Total
$
90,000
26,062
60,000
27,460
30,000
400,000
254,115
325,000
1,212,637
-
-
-
-
-
23,736
22,830
18,750
65,316
-
2,476
-
2,540
-
25,000
23,701
25,000
78,717
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
53,260
34,567
-
90,000
28,538
60,000
30,000
30,000
536,563
483,295
182,649
-
-
-
182,649
53,260
73,722
108,289
442,472
1,700,868
S300A(1)(e)(i)
Proportion of
Remuneration
Performance
Related(5)
%
S300A(1)(e)(vi
) Value of
Options and
Rights as
Proportion of
Remuneration
%
-
-
-
-
-
-
-
-
6.4%
-
6.4%
-
16.7%
16.7%
Year Ended 31 December 2014
Non- Executive Directors
Mr D M Murcia
Mr P E Freund(1)
Mr M D Hancock
Mr R G Hill (resigned 4 July 2014)
Mr S E Zaninovich (resigned 4 July 2014)
Executive Directors
Mr D P Gordon
Mr P E Freund(1)
Executives
Mr J W Westdorp
Total
(1) Effective of 11 July 2014 Mr P E Freund stepped down from his executive position but remains on the Board as a non-executive Director.
(2) Other benefits include annual leave entitlements, measured on an accrual basis, and reflects the movement in entitlement over the 12 month period and non-cash benefits and expatriate benefits for
executives located in Brazil.
(3) Relates to pro rata long service leave which has been recorded as a provision for the first time during the year.
(4) 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.
(5) The vesting of performance rights and options is conditional on the achievement of future targets which if not achieved will result in the forfeiture of the related rights or options. The proportion of
performance related remuneration consists of short term incentives and long term incentives. The percentages disclosed include the value of options and performance rights expensed during the year in
accordance with Australian Accounting Standards. Details of the vesting conditions related to the options and rights have been disclosed in section 4.3.4.
Page 14 of 76
Annual Financial Report – 31 December 2014
Year Ended 31 December 2013
Non- Executive Directors
Mr D M Murcia
Mr R G Hill
Mr M D Hancock
Mr S E Zaninovich (appointed 10 January 2013)
Ms S Lyons (resigned 12 April 2013)
Mr K G McKay (resigned 10 January 2013)
Executive Directors
Mr D P Gordon
Mr P E Freund
Executives
Mr J W Westdorp
Short Term Benefits
Post-
employment
Benefits
Salary & Fees
$
Other Benefits(1)
$
Super-annuation
$
Share- based
Payments(2)
Options and
Rights
$
S300A(1)(e)(i)
Proportion of
Remuneration
Performance
Related(3)
%
S300A(1)(e)(vi)
Value of Options
and Rights as
Proportion of
Remuneration
%
Total
$
90,000
54,920
60,000
58,692
16,667
1,694
400,000
375,000
325,000
1,381,973
-
-
-
-
-
-
5,514
30,795
-
36,309
-
5,080
-
-
-
152
25,000
25,000
25,000
80,232
11,482
101,482
-
-
-
-
-
(96,209)
(36,647)
37,034
(84,340)
60,000
60,000
58,692
16,667
1,846
334,305
394,148
387,034
1,414,174
-
-
-
-
-
-
-
-
11.3%
-
-
-
-
-
-
-
9.5%
9.5%
Total
(1)
(2)
(3)
.
Other benefits include non-cash benefits and expatriate benefits for executives located in Brazil.
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. During the year performance rights were forfeited due to failure to meet vesting conditions. Share based payment expenses in relation to these performance rights and options were reversed
during the period. In addition a number of unvested options and performance rights are not expected to vest due to the revised development strategy for the Jambreiro Project and the expected timeframe
required to develop an economic export business for the Project. Share based payment expenses in relation to these performance rights and options which are not expected to vest were reversed during the
period.
The vesting of performance rights and options is conditional on the achievement of future targets which if not achieved will result in the forfeiture of the related rights or options. The proportion of
performance related remuneration consists of short term incentives and long term incentives. The percentages disclosed include the value of options and performance rights expensed during the year in
accordance with Australian Accounting Standards. Details of the vesting conditions related to the options and rights have been disclosed in section 4.3.4
Page 15 of 76
Annual Financial Report – 31 December 2014
4.3.3 Analysis of Bonuses
There were no cash bonuses awarded as remuneration to directors or other key management personnel of the
Company during the year or the prior year. There were no unvested cash bonuses as at 31 December 2014.
Unvested cash bonuses as at 31 December 2013 were forfeited during the year.
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, subject to such 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. The performance rights will only vest into shares if the
performance conditions relating to the targets are met.
Options are granted under the Employee Share Option Plan (ESOP) which was approved by shareholders at the
2013 annual general meeting. Eligibility to participate in the ESOP (including participation by Executive and
Non-Executive directors) is determined by the Board in its absolute discretion. Where provided, options
granted under the ESOP are for no consideration and are granted for a period of up to 5 years. The vesting and
exercise conditions of options granted are also 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.
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 of options and rights that vested during
the period are detailed below. On 5 September 2014 the Board announced that it had agreed to issue the
Managing Director, Mr Darren Gordon, share options and performance rights as part of his remuneration
arrangements. The issue was subject to shareholder approval. The Board and Mr Gordon have subsequently
agreed to cancel the issue and will not seek shareholder approval. There were no rights that vested during the
reporting period.
Analysis of Rights over Equity Instruments Granted as Compensation
Details of vesting profiles of the rights held by each key management person of the Group are detailed below:
PERFORMANCE
RIGHTS
Number Of
Performance
Rights Issued
Grant Date
Fair value per
right at grant
date
% Vest In Year % Forfeited In
Year
Financial Year
In Which
Grant Vests
Directors
Mr D Gordon
Mr P Freund
Executives
Mr J Westdorp
400,000
300,000
31/08/12
23/11/12
200,000
200,000
300,000
200,000
03/12/12
03/12/12
25/08/14
25/08/14
$0.2853
$0.3000
$0.2926
$0.2926
$0.0770
$0.0770
-
-
-
-
-
-
-
100%
-
-
-
-
2015(1)
-
2015(1)
2016(2)
2015(3)
2015(4)
Page 16 of 76
Annual Financial Report – 31 December 2014
Performance rights have a nil exercise price.
(1)
(2)
(3)
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.
Performance rights vest on market capitalisation exceeding $500 million by 30 June 2016.
Performance rights vest on first sale of Iron Ore from any of the Company’s current or future Brazilian
Projects on or before 30 April 2015.
(4)
Performance rights vest on a decision to mine in respect the Jambreiro Project by 30 June 2015.
Analysis of Options over Equity Instruments Granted as Compensation
Details of vesting profiles of the options granted as remuneration to key management personnel of the Group
are detailed below:
OPTIONS
Number
Of
Options
Issued
Grant
Date
Expiry
Date
Exercise
Price
Fair
value
per
option at
grant
date
% Vest
In Year
%
Forfeited
In Year
Financial
Year In
Which
Grant
Vests
Executive Director
Mr D Gordon
Executives
Mr J Westdorp
125,000
125,000
31/03/10
31/08/10
31/03/15
31/03/15
$0.6400
$0.6400
$0.5360
$0.5360
-
-
250,000
250,000
500,000
25/08/14
25/08/14
25/08/14
31/08/18
31/08/18
31/08/18
$0.1250
$0.1250
$0.1250
$0.0450
$0.0450
$0.0450
100%
-
-
-
-
-
-
-
2015(1)
2015(2)
2016(3)
2017(3)
(1)
(2)
Options vest on commencement of iron ore production on a Mining Lease from the Company’s iron ore
projects in Brazil.
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 vested on completion of service conditions.
Exercise of Options Granted as Compensation
There were no shares issued on exercise of options which were previously granted as compensation to key
management personnel.
Options and Rights Over Equity Instruments
The movement during the reporting period, by number of rights and options over ordinary shares in Centaurus
Metals Limited held, directly, indirectly and beneficially, by each key management person, including their
related parties, is as follows:
Page 17 of 76
Annual Financial Report – 31 December 2014
Held 1
January
2014
Granted as
Compensat
ion
Exercised
Other
Changes(2)
Directors
Mr D M Murcia
Mr D P Gordon
Mr P E Freund
Mr M Hancock
Mr R G Hill(1)
Mr S E
Zaninovich(1)
Executives
Mr J Westdorp
312,500
1,150,000
2,300,000
-
187,500
-
-
-
-
-
-
-
400,000
1,500,000
-
-
-
-
-
-
-
(187,500)
(500,000)
(2,300,000)
-
(187,500)
-
-
Held 31
December
2014
Vested
During
the
Period
Vested and
Exercisable
31
December
2014
125,000
650,000
-
-
-
-
-
-
-
-
-
-
125,000
-
-
-
-
-
1,900,000
250,000
250,000
(1)
(2)
Resigned 4 July 2014
Other changes represent options that expired or were forfeited during the year.
Analysis of Movements in Options and Rights
The movement during the reporting period, by value, of options and rights over ordinary shares in the
Company held by each director, key management person and each of the Company executives and relevant
Group executives is detailed below:
Value Of
Options
Granted $(A)
Value Of
Performance
Rights
Granted $(B)
Value Of
Options
Exercised In
Year $(C)
Value Of
Options
Lapsed In
Year $(D)
Value Of
Performance
Rights Lapsed
In Year $(E)
-
-
-
-
-
-
-
-
44,592
38,394
-
-
-
-
-
-
-
-
-
-
-
-
21,000
-
-
Director
Mr D M Murcia
Mr D P Gordon
Mr P E Freund
Mr R G Hill
Executives
Mr J W Westdorp
(1)
(2)
(3)
(4)
(5)
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.
The value of performance rights granted in the period is the fair value calculated using the 5 day volume
weighted average share price prior to grant date. This amount is allocated to remuneration over the
vesting period.
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.
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. The value of the Options which lapsed during the year is nil as
the options were out of the money.
The value of unvested performance rights that lapsed during the year represents the benefit forgone
and is calculated based on the share price at the date the performance rights lapsed assuming the
performance criteria had been achieved.
Page 18 of 76
Annual Financial Report – 31 December 2014
4.3.5 Key Management Personnel Transactions
Loans to Key Management Personnel and Their Related Parties
No loans have been 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:
Key Management Person
Mr D M Murcia(1)
Total and current liabilities
Transaction Value
Balance Outstanding As At
Transaction
Legal fees
2014
$
25,335
2013
$
28,691
2014
$
2013
$
-
-
-
-
(1)
Payable to MPH Lawyers, a firm in which Mr D Murcia is a partner.
Shareholdings of Key Management Personnel
The movement during the reporting period of ordinary shares in Centaurus Metals Limited held, directly,
indirectly and beneficially, by each key management person, including their related parties, is as follows:
Purchases
Received on
Exercise of
Options
Sales
Other(2)
Held 1
January
2014
1,613,405
6,769,791
25,000
33,333
1,569,430
6,250
120,000
120,000
40,000
120,000
-
-
Held at 31
December
2014
1,733,405
6,889,791
65,000
153,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,569,430)
(6,250)
Director
Mr D M Murcia
Mr D P Gordon
Mr P E Freund
Mr M Hancock
Mr R G Hill(1)
Mr S E Zaninovich(1)
Executives
Mr J Westdorp
-
-
-
-
All equity transactions with Key Management Personnel other than those arising from the exercise of
remuneration options have been entered into under terms and conditions no more favourable than those the
Group would have adopted if dealing at arms length.
(1)
(2)
Resigned 4 July 2014.
Other changes represent balances held on resignation.
4.4 Audit & Risk Committee
Following the restructure of the Board of Directors on 4 July 2014 the responsibilities of the Audit & Risk
Committee were assumed by the full Board. The Board is responsible for overseeing the Company’s financial
reporting, compliance with legal and regulatory requirements, internal control structure, risk management
procedures, and the internal audit (if and when appointed) and external audit functions.
Page 19 of 76
Annual Financial Report – 31 December 2014
The Board has ensured that the Managing Director and Chief Financial Officer have provided the following
written declarations prior to the sign-off of the annual financial reports:
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 Board is responsible for monitoring the Company’s external auditor relationship.
The Company appoints as external auditor an internationally recognised and respected accountancy firm
which has clearly demonstrable audit quality processes and resources to carry out the assignment and who is
independent from the Company.
The external auditor is required to provide an annual declaration of independence to the Board. 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.
The external auditor is required to rotate the audit and review partners at least once every five years. A
previous audit partner should not be involved in the Company’s audit for at least two years subsequent.
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 31 to the financial statements.
4.5 Risk Management
The Company recognises that risk is inherent to its business and effective management of risk is essential for
the achievement of the Company’s objectives and to sustainable success. Successful risk management can
enhance opportunities, reduce threats and maximise competitive advantage.
The objective of the Company’s risk management system is to provide a consistent process for the recognition
and management of risks across its business. The success of the Company’s risk management system lies in
the responsibility placed on everyone at all levels to proactively identify, manage, review and report on risks
relating to the objectives they are accountable for delivering.
The Company applies a structured approach to identifying key areas of business risk which include strategic,
health and safety, environment, human capital, finance, technology, reputation and brand, legal and
compliance, and social and cultural risks.
At a strategic level, the Board undertakes periodic reviews of strategic and corporate risks facing the Company.
The Board may use the services of external risk management consultants in these reviews. At an operational
level, senior management conduct regular reviews of operational risks. These reviews may include
participation by the Company’s key service providers and external risk management consultants.
A risk register is developed from the risk reviews. The risk register includes details of the risks identified,
qualitative risk assessment and the risk response plan. A consolidated report of key strategic, corporate and
operational risks and the appropriate management strategies is prepared and presented to the Board.
The Company’s risk profile may change over time. Part of the process of regular reviews of existing risks is to
identify new and emerging risks. Due to the size and nature of the Company, an internal audit function has not
been established or internal audit review conducted. The Board oversees the processes by which risks are
managed. This will include the Company’s risk appetite, monitoring of risk performance and those risks that
may have a material impact to the business. The Board is responsible for satisfying itself that management has
developed and implemented a sound system of risk management.
The Managing Director and Chief Financial Officer are required to state to the Board in writing that the
declaration relating to the integrity of the Company’s financial statements is founded on a sound system of risk
management and that the system is operating in all material respects in relation to financial reporting risks.
Senior management is responsible for the design and implementation of the risk management system to
manage the Company’s risks and report to the Board whether those risks are being effectively managed.
Page 20 of 76
Annual Financial Report – 31 December 2014
4.6
Ethical Standards
Code of Conduct
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 available on the Company’s
website. 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.
Securities Trading Policy
The Company has adopted a Securities Trading Policy which is available on the Company’s website. The Policy
applies to executive and non-executive directors, full-time, part-time and casual employees, and contractors,
consultants and advisers of the Company. Additional trading restrictions apply to directors and senior
managers who report directly to the Managing Director.
The Policy prohibits dealings in the Company’s securities when in possession of price-sensitive information
that is not generally available to the market.
Directors and employees must not partake in short-term trading of the Company’s securities which is defined
as less than a 30-day period. Directors and senior managers are prohibited from trading in the Company’s
securities during the following blackout periods:
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
2 business days after the release of any ASX announcement.
Trading during blackout periods may only be permitted with prior approval of the Chairman where there are
exceptional circumstances (such as severe financial hardship) and the director or senior manager is not aware
of inside information.
Before trading in the Company’s securities during periods outside of the Blackout Periods (if permitted by the
Policy), directors and senior managers must comply with the following:
Directors must advise the Chairman prior to any proposed trading; and
In the case of the Chairman and senior managers, the Managing Director and Company Secretary
must be advised.
Directors must notify the Company Secretary promptly of sufficient details of any trading to enable notice to
be filed in accordance with the ASX Listing Rules within 5 business days of the trading.
Before any director or senior manager enters into a loan arrangement (for example margin lending) whereby
the Company’s securities are mortgaged, provided as security, lent or charged to a financier, they must comply
with the following:
Directors must seek approval from the Chairman; and
In the case of the Chairman and senior managers, approval from the Managing Director is required.
Directors and senior managers must also inform the Company Secretary of all loan arrangements affecting the
Company’s securities. This includes the creation, variation or discharge of security arrangements.
Directors and employees participating in an equity-based incentive plan are prohibited from entering into any
transaction which would have the effect of hedging or otherwise transferring to any other person the risk of
any fluctuation in the value of any unvested entitlement in the Company’s securities.
Anti-Bribery & Corruption Policy
The Company has an established Anti-Bribery & Corruption Policy which is available on the Company’s
website.
The Company is committed to operating in a manner consistent with the laws of the jurisdictions in which it
operates, including those relating to anti-bribery and corruption. Honesty, integrity and fairness are
considered integral to the way the Company operates, and conduct associated with bribery and corruption is
inconsistent with these values.
Page 21 of 76
Annual Financial Report – 31 December 2014
The Company has a strict policy which forbids its personnel, suppliers and all third parties with whom the
Company transacts from engaging in any activity that constitutes bribery or corruption. The Company strictly
prohibits the payment, offer or authorisation of a bribe, as well as the receipt or acceptance of a bribe.
The Anti-Bribery and Corruption Policy sets out the Company’s policy requirements and procedures to ensure
compliance with applicable anti-bribery and anti-corruption laws. A breach of the Policy is a serious matter
which will be investigated and addressed by the Company.
Disciplinary action will be taken against any personnel who breach the Policy. This includes failure to report
breaches of the Policy. The action taken will depend on the severity of the breach but may include:
reprimands;
formal warnings;
demotions; and
termination of employment or engagement arrangements.
In the case of third parties to whom the Policy also applies, the Company will terminate its relationship with a
third party who has been found to breach the Policy.
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 being 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:
2014
2013
Women employees in the whole organisation
Women in Managerial positions
Women on the Board of Directors
38%
25%
0%
36%
0%
0%
Page 22 of 76
Annual Financial Report – 31 December 2014
The Board recognises that there is a gender imbalance amongst managerial and non-executive director
positions, and that an opportunity exists to address this upon future appointments to these positions. A copy
of the Diversity Policy is available on the Company's website.
4.9 Non-Compliance Statement
The Company has not followed all of the Recommendations set out in Australian Securities Exchange Limited’s
Listing Rule 4.10.3. The Recommendations that have not been followed and the explanation of any departures
are as follows:
A majority of the Board should be independent directors. The Board is comprised of four directors,
three non-executive and one executive. Of the three non-executive directors, two are deemed to be
independent directors. The other non-executive director, Mr Hancock, is the representative of the
Company’s largest shareholder, and as such does not meet the requirement to qualify as an
independent director. The current size of the Company does not justify a larger Board with a majority
of independent directors.
The Board should establish a Nomination Committee. 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 Board should establish an Audit Committee. The Company complied with this recommendation
until 4 July 2014 when it restructured the Board of Directors. From 4 July 2014 the responsibilities of
the Audit Committee were assumed by the Board.
The Audit Committee should be structured so that it: consists of only Non-Executive Directors, consist
of a majority of independent Directors, is chaired by an independent Chair; who is not Chair of the
Board and has at least three members. The Board considers that the size and complexity of the
Company’s affairs do not merit establishment of a separate Audit Committee. The Board meets on a
regular basis and discusses matters normally included within the terms of reference of an Audit
Committee, being company risk, control and general and specific financial matters.
Companies should establish 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. When filling a position every candidate suitably qualified for a position has an equal
opportunity of appointment regardless of gender, age, ethnicity or cultural background.
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 that
there are circumstances where the issue of options is reasonable and will 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.
5 Principal Activities
During the period the principal activities of the Group consisted of exploration and pre-development activities
related to iron ore mineral resources. There were no 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
31 December
2014
$
31 December
2013
$
252,806
318,180
570,986
693,518
494
694,012
(10,460,299)
-
(35,921,292)
3,206,305
Loss attributable to members of Centaurus Metals Limited
(10,460,299)
(32,714,987)
Page 23 of 76
Annual Financial Report – 31 December 2014
Financial Performance
During the year ended 31 December 2014 the Group received proceeds from the Liberdade court settlement
of $512,270, which resulted in a reversal of a provision for impairment of $181,618 and a gain of $330,652.
During the year the Group recognised an impairment loss of $1,397,191 on the carrying values of its Passabém
Iron Ore Project. The project was assessed for impairment as a result of the Group’s intent to focus on the
Candonga project. Exploration and Evaluation costs totalling $5,136,663 (2013 $12,240,270) were expensed in
accordance with the Group’s accounting policy. The exploration and evaluation costs primarily comprise costs
in relation detailed engineering work at Jambreiro and exploration and feasibility studies at the Candonga
project in Brazil.
Financial Position
At the end of the year the Group had a net cash balance of $891,990 (2013: $4,843,508) and net assets of
$6,507,522 (2013: $12,008,268). Total liabilities amounted to $1,019,303 (2013: $1,680,558) and were limited
to trade and other payables, provisions, employee benefits and deferred tax liabilities.
Strategy
The key focus of the Group during the year has remained on its Domestic Iron & Steel Strategy, which is based
on commencing production from its Candonga Iron Ore Project in Brazil. The Group achieved a number of
important milestones during year towards achieving this goal.
Production from the Candonga Project is planned to be sold into the large domestic steel industry in south-
eastern Brazil, which is based in and around the world class iron ore mining region known as the “Iron
Quadrangle”.
In the longer term Centaurus holds a portfolio of iron ore assets that will be evaluated as potential future
production centres or hubs for the Company’s Domestic Strategy.
In addition to producing iron ore to sell into the Brazilian steel industry, Centaurus also plans in the future to
sell iron ore into the seaborne market. This Export Market Strategy would leverage off the cash flow to be
generated by the domestic iron ore business to develop projects around existing port and rail infrastructure.
Project Activities
Candonga Project
During the year the Company fast-tracked the development of its 100% owned Candonga Direct Shipping Ore
(DSO) Project. Exploration activities during the year included completing a drilling program and a feasibility
study which was completed in September. Key highlights of the Candonga Feasibility Study included low
forecast mine gate operation costs (C1+ royalities) of A$14.9/tonne from a very low pre-production capital
costs of A$3.6 million. The updated JORC 2012 compliant Candonga Mineral Resource estimate now stands at
9.4 million tonnes (Mt) grading 43.7% Fe(1). The high grade component of the Resource is expected to produce
a DSO product with a simple crush and screen process and has the potential to supply high grade lump and
sinter feed products into the Brazilian domestic market.
Important milestones in the permitting process were achieved during the year which included completing the
approval process for the Trial Mining Licence (GUIA de Utilizacao-“GU”) which are required in order to develop
a low-cost operation producing 300,000tpa2 of DSO. The Company also lodged, and received approval from
the Brazilian Department of Mines (DNPM), the Final Exploration Report for the tenement that covers the
project.
The approval of the Final Exploration Report supports the quality of the exploration and project development
work undertaken by Centaurus and provides a strong degree of confidence that the DNPM is satisfied with the
viability of a future full-scale mining operation. The approval of the Final Exploration Report cleared the way
for the Company to lodge the full Mining lease application known as the PAE on the 6 January 2015.
1
Refer to ASX announcement on 1 September 2014 for full details of the JORC 2012 Resource estimate.
2 Refer to ASX announcement on 30 September 2014 for full details of the Candonga Feasibility Study.
Page 24 of 76
Annual Financial Report – 31 December 2014
Conquista DSO Project
During the year Centaurus took the first step towards expanding its DSO business in south-east Brazil after
securing an option to acquire a 100% interest in a portfolio of highly prospective tenements with extensive
DSO mineralization located just 8km along well maintained gravel roads from the Candonga Project. The
Company has completed initial surface exploration programs which have confirmed a substantial strike length
of DSO mineralisation, providing an attractive exploration target for the Company for 2015 and laying the
foundations for it to either expand or extend the mine life of its 300,000tpa Candonga DSO operation.
Jambreiro Iron Ore Project
During the year discussions for offtake and debt funding continued and progressed to an advanced stage,
however, in June the Company announced, in light of the deterioration in market sentiment and conditions in
the iron ore sector, it did not expect to be able to finalise a debt and equity funding package in time to meet its
previously announced mid-2014 construction timeline.
From ongoing discussions with potential financiers, it has become evident that debt funding for Jambreiro will
remain conditional on securing off-take. The finalisation of a long-term off-take agreement has, in part, been
awaiting the re-commencement of construction and the finalisation of development of the Sudeste port
development in south-eastern Brazil. Construction activity on the port ramped up significantly in the latter half
of the period.
The new port is an important asset for many resource groups in the region and, in the case of Centaurus,
provides the opportunity to establish long-term supply arrangements with potential off-takers for lower cost
Jambreiro supply as a substitute for some of their existing integrated supply which is likely to be more
profitably delivered into the export market. The commencement of export operations at Sudeste will be an
important catalyst in promoting the completion of a suitable off-take arrangement for Jambreiro as existing
domestic supply is diverted to the export market.
During the year work on a re-interpretation of the Jambreiro geology was carried out which has resulted in the
preparation of an updated JORC 2012 Mineral Resource estimate for the Jambreiro Project. The overall JORC
Mineral Resource (combined Measured, Indicated and Inferred) reflected a minor increase in Fe grade from
the July 2013 estimate of 128.0Mt grading 27.2%(3) Fe to 128.5Mt grading 28.0% Fe (4).
Corporate
In July 2014, following the decision to defer the development of Jambreiro, the Company made changes to its
Board and senior management team, consistent with its focus on reducing costs and optimising its
organisational structure. As a result Mr Peter Freund stepped down from an executive role but remains a non-
executive director. Mr Steven Zaninovich and Mr Richard Hill stepped down from the Board as non-executive
Directors.
During the year the Company completed a $5.5m capital raising.
The Annual General Meeting of Centaurus Metals Limited was held on Thursday 29 May 2014. All resolutions
were passed on a show of hands.
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, a Competent Person who is a Member of the Australasia Institute of Mining and Metallurgy and
Volodymyr Myadzel, a Competent Person who is a Member of the 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 that 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 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves’. 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.
3 Refer to ASX announcement on 29 July 2013 for full details of the Resource estimate.
4 Refer to ASX announcement on 30 July 2014 for full details of the JORC 2012 Resource estimate.
Page 25 of 76
Annual Financial Report – 31 December 2014
Factors and Business Risks Affecting Future Business Performance
The following factors and business risks could have a material impact on the Company’s success in delivering
its strategy of becoming an iron ore producer:
Access to Funding
The Company’s ability to successfully develop future projects is contingent on the ability to fund those projects
from operating cash flows or through affordable debt and equity raisings. The development of the Candonga
Project is contingent on developing an appropriate funding solution.
Iron Ore Commodity Prices
The iron ore price fluctuates according to changes in demand and supply. The Company is exposed to changes
in the iron ore price, which could affect the profitability of the Company’s projects. Significant adverse
movements in the iron ore price could also affect the ability to raise debt and equity to fund the development
of projects.
Exchange Rates
The Company will be exposed to changes in the US Dollar and the Brazilian Real. Sales of iron ore will be
denominated in US Dollars. The Company’s CAPEX and OPEX costs will be primarily denominated in Brazilian
Real.
Project Implementation
The implementation of new projects on time and on budget is critical to maximising shareholder returns.
Operating Risks
Once in operations, the Company will be exposed to a number of factors and business risks including mining,
beneficiation of ore, health and safety and environmental issues.
Iron Ore Product Sales
The Company’s strategy is to sell iron ore products from its projects to domestic pig iron producers and
integrated steel mills. Whilst the specifications of the products proposed to be produced by the Company are
consistent with the purchasing specifications in the domestic market, there is no definitive certainty that the
Company will be able to enter into suitable sales arrangements with domestic purchasers.
Emphasis of Matter
The audit opinion for the year ended 31 December 2014 contains an emphasis of matter in relation to
potential uncertainty regarding continuation as a going concern. The Financial Statements have been prepared
on the basis of going concern. The Group will require funding in order to continue its exploration activities and
to fund development of the Candonga Iron Ore Project. Refer to Note 2 of the Financial Report for further
details.
Significant Changes in the State of Affairs
In the opinion of directors, other than as outlined in this report, there were no significant changes in the state
of affairs of the Group that occurred during the financial year under review.
7 Dividends
No dividend was declared or paid by the Company during the current or previous year.
8
Events Subsequent to Reporting Date
On 25 February 2015 The Company announced a $1.1M share placement at a price of $0.025 per share
together with one free attaching option for every three shares, completed to professional and sophisticated
investor clients of Canaccord Genuity Ltd and some of the Company’s major shareholders.
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 no 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, has arisen.
Page 26 of 76
Annual Financial Report – 31 December 2014
9
Likely Developments
Other than likely developments contained in the “Operating and Financial Review” and events subsequent,
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
Mr P E Freund
Mr M D Hancock
Ordinary Shares
Employee Options
Employee Rights
1,733,405
6,889,791
65,000
153,333
125,000
250,000
-
-
-
400,000
-
-
12 Share Options & Rights
Options & Rights Granted to Directors and Executives of the Company
During the year 1,000,000 options and 500,000 performance rights were issued to Mr John Westdorp. There
have been no options or performance rights granted to directors of the Company.
Unissued Share Options and Performance Rights
At the date of this report unissued ordinary shares of the Company under option (issued under the ESOP &
PSP) are:
Expiry Date
31/03/2015
19/07/2015
30/11/2015
04/02/2016
31/08/2018
Exercise Price
$0.64
$0.76
$0.88
$1.04
$0.125
Expiry Date
31/08/17
03/12/17
31/08/18
Exercise Price
$0.00
$0.00
$0.00
Employee Options
Vested
Unvested
-
12,500
125,000
37,500
750,000
925,000
250,000
75,000
-
150,000
2,250,000
2,725,000
Employee Rights
Vested
Unvested
-
-
-
-
855,000
400,000
1,700,000
2,955,000
Total Number Of
Shares Under Option
250,000
87,500
125,000
187,500
3,000,000
3,650,000
Total Number Of
Shares Under Rights
855,000
400,000
1,700,000
2,955,000
Page 27 of 76
Annual Financial Report – 31 December 2014
13 Indemnification and Insurance of Officers and Auditors
During the period, the Company paid insurance premiums to insure the directors, executive officers and
Company 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 period 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 Board, is satisfied that the provision of those non-audit
services during the year by the auditor, 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 Board 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
Taxation compliance services KPMG
31 December
2014
$
31 December
2013
$
139,240
129,932
24,775
42,988
15 Lead Auditor’s Independence Declaration
The lead auditor’s independence declaration is set out on page 29 and forms part of the directors’ report for
the period ended 31 December 2014.
This report is signed in accordance with a resolution of the directors.
D P Gordon
Managing Director
Perth
25 March 2015
Page 28 of 76
ABCD
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of Centaurus Metals Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial
year ended 31 December 2014 there have been:
(i)
(ii)
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit and
no contraventions of any applicable code of professional conduct in relation to the
audit.
KPMG
Graham Hogg
Partner
Perth
25 March 2015
KPMG, an Australian partnership and a member firm
of the KPMG network of independent member firms
affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme
approved under Professional
Standards Legislation.
Annual Financial Report – 31 December 2014
Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the year ended 31 December 2014
Note
31 December
2014
$
31 December
2013
$
7
19
8
11
9
10
12
Profit or Loss
Other income
Exploration expenditure
Impairment of available for sale investments
Impairment of exploration and evaluation
Net reversal of impairment on receivables
Employee benefits expense
Share based payments (expense)/ reversal
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
Items that may be reclassified subsequently to profit
or loss
Net change in fair value of available-for-sale financial
assets
Exchange differences arising on translation of foreign
operations
Other comprehensive income (loss) for the period
Total comprehensive loss for the period
318,180
(5,136,663)
(302,272)
(1,397,191)
109,672
(2,190,911)
(84,972)
(360,114)
(63,918)
(704,756)
(178,663)
(718,131)
(10,709,739)
252,806
(3,366)
249,440
494
(12,240,270)
(497,678)
(18,690,780)
-
(2,913,442)
80,413
(443,483)
(56,150)
(453,246)
(153,942)
(1,266,390)
(36,634,474)
716,096
(2,914)
713,182
(10,460,299)
-
(10,460,299)
(35,921,292)
3,206,305
(32,714,987)
(33,368)
(42,048)
(361,446)
499,733
(394,814)
(10,855,113)
457,685
(32,257,302)
Earnings per Share
Basic loss per share
Diluted loss per share
14
14
Cents
Cents
(5.03)
(5.03)
(16.71)
(16.71)
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in
conjunction with the accompanying notes.
Page 30 of 76
Annual Financial Report – 31 December 2014
Consolidated Statement of Financial Position
As at 31 December 2014
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
Provisions
Total current liabilities
Non-current liabilities
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Accumulated losses
Total equity
Note
15(a)
16
16
17
18
19
20
21
22
22
12 (c)
2014
$
2013
$
891,990
763,631
1,655,621
1,484,123
243,089
1,070,606
3,073,386
5,871,204
7,526,825
250,821
314,224
63,866
628,911
386,688
3,704
390,392
1,019,303
6,507,522
4,843,508
722,336
5,565,844
1,607,353
578,730
1,413,551
4,523,348
8,122,982
13,688,826
1,207,301
469,385
-
1,676,686
-
3,872
3,872
1,680,558
12,008,268
104,035,437
(386,544)
(97,141,371)
6,507,522
98,766,042
(76,702)
(86,681,072)
12,008,268
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying
notes.
Page 31 of 76
Annual Financial Report – 31 December 2014
Consolidated Statement of Changes in Equity
For the year ended 31 December 2014
Balance at 1 January 2014
Loss for the period
Net change in fair value of available-for-sale
financial assets
Foreign currency translation difference for
foreign operation
Total comprehensive loss for the period
Share-based payment/ (reversal) transactions
Issues of ordinary shares
Share issue costs
Total transactions with owners
Balance at 31 December 2014
Issued
Capital
$
Option
Reserve
$
Share-Based
Payments
Reserve
$
Fair Value
Reserve
$
Foreign
Currency
Translation
$
Accumulated
Losses
$
Total
Equity
$
98,766,042
-
2,966,597
-
2,711,201
-
68,924
-
(5,823,424)
-
(86,681,072)
(10,460,299)
12,008,268
(10,460,299)
-
-
-
5,530,000
(260,605)
5,269,395
-
-
-
-
-
-
-
-
84,972
-
-
84,972
(33,368)
-
-
(361,446)
-
-
(33,368)
(361,446)
(33,368)
(361,446)
(10,460,299)
(10,855,113)
-
-
-
-
-
-
-
-
-
-
-
-
84,972
5,530,000
(260,605)
5,354,367
104,035,437
2,966,597
2,796,173
35,556
(6,184,870)
(97,141,371)
6,507,522
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.
Page 32 of 76
Annual Financial Report – 31 December 2014
Balance at 1 January 2013
Loss for the period
Net change in fair value of available-for-sale
financial assets
Foreign currency translation difference for
foreign operation
Total comprehensive loss for the period
Share-based payment/ (reversal) transactions
Total transactions with owners
Balance at 31 December 2013
Issued
Capital
$
98,766,042
Option
Reserve
$
2,966,597
Share-Based
Payments
Reserve
$
2,791,614
-
-
-
-
-
-
-
-
-
-
-
-
Fair Value
Reserve
$
110,972
-
(42,048)
Foreign
Currency
Translation
$
(6,323,157)
-
-
-
499,733
Accumulated
Losses
$
(53,966,085)
Total
Equity
$
44,345,983
(32,714,987)
(32,714,987)
-
-
(42,048)
499,733
(42,048)
499,733
(32,714,987)
(32,257,302)
-
-
98,766,042
-
-
2,966,597
(80,413)
(80,413)
2,711,201
-
-
68,924
-
-
(5,823,424)
-
-
(86,681,072)
(80,413)
(80,413)
12,008,268
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.
Page 33 of 76
Annual Financial Report – 31 December 2014
Consolidated Statement of Cash Flows
For the year ended 31 December 2014
Note
12 Months
31 December
2014
$
12 Months
31 December
2013
$
Cash flows from operating activities
Exploration and evaluation expenditure
Payments to suppliers and employees (inclusive of goods
and services tax)
Proceeds from court settlement
Interest received
(5,717,946)
(12,510,697)
(4,009,970)
(5,228,180)
512,270
173,707
-
850,500
Net cash used in operating activities
15(b)
(9,041,939)
(16,888,377)
Cash flows from investing activities
Payments for plant & equipment
Acquisition of exploration assets
Proceeds from sale of plant & equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of equity securities
Capital Raising Costs
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at 31 December
15(a)
(63,220)
(137,040)
60,396
(139,864)
(784,974)
(961,467)
43,834
(1,702,607)
5,530,000
(260,605)
5,269,395
(3,912,408)
4,843,508
(39,110)
891,990
-
-
-
(18,590,984)
23,402,755
31,737
4,843,508
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Page 34 of 76
Annual Financial Report – 31 December 2014
Notes to the Consolidated Financial Statements
For the year ended 31 December 2014
Note 1. Reporting Entity
Centaurus Metals Limited (“the Company”) is a company domiciled in Australia. The Company’s registered
office is at Level 3, 10 Outram Street, West Perth WA 6005. The consolidated financial statements of the
Company as at and for the year ended 31 December 2014 comprise the Company and its subsidiaries
(collectively the “Group” and individually “Group entities”). The Group is a for-profit entity and primarily is
involved in exploration for and development of iron ore resources.
Note 2. Basis of Preparation
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 comply with International Financial Reporting Standards (IFRSs) adopted by
the International Accounting Standards Board (IASB).
The consolidated financial statements were authorised for issue by the Board of Directors on 25 March 2015.
Basis of Measurement
The consolidated financial statements have been prepared on the historical cost basis, 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.
Going Concern
The financial statements for the year ended 31 December 2014 have been prepared on a going concern basis,
which contemplates continuity of normal business activities and the realisation of assets and settlement of
liabilities in the ordinary course of business.
During the year, the Group incurred a loss after tax of $10,460,299 with net cash outflows of $3,912,407. The
Group has a working capital surplus of $1,026,710. During the year the company restructured its workforce in
Brazil and Australia in order to achieve cost savings.
The Group’s strategy is to develop its iron ore projects in south-eastern Brazil and is currently focused on the
development of its Candonga Iron Ore Project for which it recently received approval for a trial mining license
from the Brazilian Department of Mines (DNPM). The Group plans to continue exploration work on its other
iron ore projects during 2015 to the extent that funding is available. The Group has the ability to accelerate its
work programs or to reduce or defer expenditure.
The Group will require further funding in order to continue its exploration activities and fund development of
the Candonga Iron Ore Project. The Group intends to fund the development with a combination of debt and
equity or via the establishment of a joint venture. In the event the project does not proceed as planned, the
Group intends to raise funds via equity issues. Additionally, if necessary should such funding not be achieved,
interests in the Group’s projects can be sold or farmed out as required in order to maintain sufficient cash
reserves to enable the continuation of activities.
The Directors believe that the Group will be able to secure funding sufficient to meet requirements to continue
as a going concern due to the following:
The Group has successfully raised equity capital in the past;
The Company is conducting a rights issue pursuant to a prospectus dated 6 March 2015 to raise up to
$3,500,000. In the event that rights are not taken up by eligible shareholders, the Directors have 3
months in which to place any shortfall.
The Group is engaged in discussions with a debt provider regarding the funding of its planned
development; and
Page 35 of 76
Annual Financial Report – 31 December 2014
The Group is engaged in discussions with a potential joint venture partner for the project and has the
ability to undertake similar discussions with other parties.
The form, value and timing of such transactions is yet to be determined and will depend amongst other things,
on capital markets, iron ore prices and the outcome of planned exploration and evaluation activities. Should
the Group not secure additional funding, there is material uncertainty as to whether the Group will be able to
continue as a going concern and realise its assets and extinguish its liabilities in the normal course of business
at the amounts stated in the financial report.
The financial report does not include adjustments relating to the recoverability and classification of recorded
asset amounts nor to the amounts and classification of liabilities that might be necessary should the Group not
continue as a going concern.
Note 3. 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 the Brazilian Real.
Note 4. Use of Judgements and Estimates
In preparing these consolidated financial statements, management has made judgements, estimates and
assumptions that affect the application of the Group’s 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.
(a) Judgements
Information about judgements made in applying accounting policies that have the most significant effects on
the amounts recognised in the consolidated financial statements is included below and also in the following
notes:
Note 16 - Other Receivables and Prepayments;
Note 19 - Exploration and Evaluation Assets. The application of the Group’s accounting policy for
exploration and evaluation expenditure requires judgement to determine whether future economic
benefits are likely, from either future exploitation or sale, or whether activities have not reached a
stage that permits a reasonable assessment of the existence of reserves.; and
Note 25- Financial Instruments – Fair Values & Risk Management.
(b) Assumptions and Estimation Uncertainties
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a
material adjustment in the year ending 31 December 2014 is included in Note 19 – Exploration and Evaluation
assets. In addition to applying judgement to determine whether future economic benefits are likely to arise
from the Group’s Exploration and Evaluation assets or whether activities have not reached a stage that permits
a reasonable assessment of the existence of reserves, the Group has to apply a number of estimates and
assumptions. The Group is required to make 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 are 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
recoverability of ore reserves becomes available, may impact the assessment of the recoverable amount of
exploration and evaluation assets. If, after the expenditure is capitalised, information becomes available
suggesting that the recovery of expenditure is unlikely, the relevant capitalised amount is written off to profit
or loss in the period when that information becomes available.
(c) Measurement of Fair Values
A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both
financial and non-financial assets and liabilities.
Page 36 of 76
Annual Financial Report – 31 December 2014
Fair values have been determined for measurement and/or disclosure purposes based on the methods
described below. When applicable, further information about the assumptions made in determining fair
values is disclosed in the notes specific to that asset or liability.
When measuring the fair value of an asset or a liability, the Group uses market observable data where possible
and relevant. Fair values are categorised into difference levels in a fair value hierarchy based on the inputs
used in the value techniques as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in 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).
If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of
the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the
fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period
during which the change has occurred.
(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.
(iv) Share-based Payment Transactions
The fair value of the employee share options are estimated using the applicable valuation methodology.
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 and performance conditions attached to vesting are not taken into account in determining fair value.
The fair value of employee performance rights is measured using the 5 day weighted average share price prior
to grant date. Where the service period commences prior to grant date the fair value is provisionally calculated
and subsequently revised upon grant date.
Note 5. Significant Accounting Policies
Except for the changes explained in Note 5(q), the Group has consistently applied the following accounting
policies to all periods presented in these consolidated financial statements. 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
The Group accounts for business combinations using the acquisition method as at the acquisition date, which
is the date control is transferred to the Group. The consideration transferred in the acquisition is generally
measured at fair value, as are the identifiable net assets acquired.
Any goodwill that arises is tested annually for impairment. Transaction costs such as legal fees, due diligence
fees and other professional and consulting fees, are expensed as incurred, except if related to the issue of debt
or equity securities.
Page 37 of 76
Annual Financial Report – 31 December 2014
The consideration transferred does not
relationships. Such amounts are generally recognised in profit or loss.
include amounts related to the settlement of pre-existing
Any contingent consideration payable is measured at fair value at the acquisition date. If the contingent
consideration is classified as equity, then it is not remeasured and settlement is accounted for within equity.
Otherwise, subsequent changes in the fair value of the contingent consideration are recognised in profit or
loss.
If share-based payment awards (replacement awards) are required to be exchanged for awards held by the
acquiree’s employees (acquiree’s awards), then all or a portion of the amount of the acquirer’s replacement
awards is included in measuring the consideration transferred in the business combination. This determination
is based on the market-based measure of the replacement awards compared with the market-based measure
of the acquiree’s awards and the extent to which the replacement awards relate to pre-combination service.
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.
(ii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. 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.
(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 are retranslated to the functional currency
at the foreign exchange rate at the reporting 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.
Page 38 of 76
Annual Financial Report – 31 December 2014
(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 and presented in the foreign
currency translation reserve (translation reserve, or FCTR) within equity. 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
The Group classifies non-derivative financial assets into the following categories at fair value through profit
and loss, held-to-maturity financials assets, loans and receivables and available-for-sale financial assets.
The Group classifies non-derivative financial liabilities into the other financial liabilities category.
(i) Non- derivative Financial Assets and Financial Liabilities – Recognition and Derecognition
The Group initially recognises loans, receivables and deposits on the date when they are originated. All other
financial assets and financial liabilities are recognised initially on the trade date.
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, or it neither transfers
nor retains substantially all of the risks and rewards of ownership and does not retain control over the
transferred asset. Any interest in such derecognised financial assets that is created or retained by the Group is
recognised as a separate asset or liability.
The Group derecognises a financial liability when its contractual obligations are discharged, 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 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.
Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or
less.
Available-for-sale Financial Assets
These assets are recognised at fair value plus any directly attributable transaction costs. Subsequent to initial
recognition, they are measured at fair value and changes therein, other than impairment losses (refer Note
5(g)) and foreign currency differences on available-for-sale equity instruments (see Note 5(b)(i)), are
recognised in other comprehensive income and accumulated in the fair value reserve. When an investment is
derecognised, the cumulative gain or loss in equity is reclassified to profit or loss.
The Group’s investments in equity securities are classified as available-for-sale financial assets.
Page 39 of 76
Annual Financial Report – 31 December 2014
(ii) Non derivative Financial Liabilities – Measurement
Non-derivative financial liabilities are initially recognised at fair value less any directly attributable transaction
costs. Subsequent to initial recognition, these liabilities are measured at amortised cost using the effective
interest method.
(iii) Share Capital
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) Derivative Financial Instruments
Derivatives are recognised initially at fair value any directly 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.
(d) Property, Plant and Equipment
(i) Recognition and Measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and any
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. Purchased software that is integral to the functionality of the related equipment is capitalised
as part of that equipment.
If significant 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.
Any gains or loss on disposal of an item of property, plant and equipment are recognised in profit or loss.
When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained
earnings.
(ii) Subsequent Expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with
the expenditure will flow to the Group. The costs of the day-to-day servicing of property, plant and equipment
are recognised in profit and loss as incurred.
(iii) Depreciation
Depreciation is calculated to write off the cost of items of property, plant and equipment less their estimated
residual values using the straight-line method over their estimated useful lives and is generally recognised in
profit or loss. Leased assets are depreciated over the 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 of property, plant and equipment are as follows:
Plant & equipment
Motor Vehicles
Furniture, fittings and equipment
Software
Leasehold improvements
10-15 years
3-5 years
3-8 years
1-3 years
5 years
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted if
appropriate.
Page 40 of 76
Annual Financial Report – 31 December 2014
(e) Exploration and Evaluation Expenditure
Exploration and evaluation costs are expensed in the year they are incurred. Acquisition costs 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.
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.
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 5(g)(ii).
Farm-out Arrangements
Arrangements whereby an external party earns an ownership interest in an exploration or development
property via the sole-funding of a specified exploration, evaluation or development programme or by injection
of funds to be utilised for such a programme will be accounted so that the Group recognises its share of assets,
liabilities and equity associated with the property. Any gain or loss upon initial recognition of these items will
be recognised in the statement of comprehensive income.
(f) Leases
(i) Determining Whether an Arrangement Contains a Lease
At inception of an arrangement, the Group determines whether the arrangement is or contains a lease.
(ii) Leased Assets
Assets held by the Group under leases that transfer to the Group substantially all of the risks and rewards of
ownership are classified as finance leases. The leased assets are measured initially at an amount equal to the
lower of their fair value and the present value of the minimum lease payments. Subsequent to initial
recognition, the assets are accounted for in accordance with the accounting policy applicable to that asset.
Page 41 of 76
Annual Financial Report – 31 December 2014
Assets held under other leases are classified as operating leases and are not recognised in the Group’s
statement of financial position.
(iii) 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.
(g) Impairment
(i) Non- derivative Financial Assets
Financial assets not classified at fair value through profit or loss are assessed at each reporting date to
determine whether there is objective evidence of impairment. 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 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;
Adverse changes in the payment status of borrowers or issuers;
The disappearance of an active market for a security; or
Observable data indicating that there is measurable decrease in expected cash flows from a group of
financial assets.
In addition, for an investment in an equity security, objective evidence of impairment includes a significant or
prolonged decline in its fair value below its cost is objective evidence of impairment. The Group considers a
decline of 20% to be significant and a period of 9 months to be prolonged.
For Financial Assets measured at amortised cost the Group considers evidence of impairment for receivables
at both a specific asset and collective level. All individually significant receivables are assessed for specific
impairment. All individually significant receivables found not to be specifically impaired are then collectively
assessed for any impairment that has been incurred but not yet identified.
Receivables that are not individually significant are collectively assessed for impairment by grouping together
receivables with similar risk characteristics.
In assessing collective impairment the Group uses historical trends of the probability of default, timing of
recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current
economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by
historical trends.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the
asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance
account against receivables. Interest on the impaired asset continues to be recognised through the unwinding
of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in
impairment loss is reversed through profit or loss.
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated
in the fair value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost
(net of any principal repayment and amortization) and the current fair value, less any impairment loss
previously recognized in profit or loss.
If the fair value of an impaired available-for-sale debt security subsequently increases and the increase can be
related objectively to an event occurring after the impairment loss was recognized, then the impairment loss is
reversed through profit or loss; otherwise, it is reversed through other comprehensive income.
Page 42 of 76
Annual Financial Report – 31 December 2014
(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.
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 group of assets is referred
to as the Cash Generating Unit or CGU.
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.
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 re-measurement
are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.
(i) Employee Benefits
(i) Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions
into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for
contributions to defined contribution plans are recognised as an employee benefit expense in profit or loss in
the periods during which services are rendered by employees. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in future payments is available.
(ii) Other Long-term Employee Benefits
The Group’s net obligation in respect of long-term employee benefits other than defined benefit plans is the
amount of future benefit that employees have earned in return for their service in the current and prior
periods plus related on-costs; that benefit is discounted to determine its present value, and the fair value of
any related assets is deducted. The discount rate is the yield at the reporting date on AA credit-rated or
government bonds that have maturity dates approximating the terms of the Group’s obligations. The
calculation is performed using the projected unit credit method. Any actuarial gains or losses are recognised in
profit or loss in the period in which they arise.
Page 43 of 76
Annual Financial Report – 31 December 2014
(iii) Termination Benefits
Termination benefits are recognised as an expense when the Group is demonstrably committed, without
realistic possibility of withdrawal, to a formal detailed plan to either terminate employment before the normal
retirement date, or to provide termination benefits as a result of an offer made to encourage voluntary
redundancy. Termination benefits for voluntary redundancies are recognised as an expense if the Group has
made an offer of voluntary redundancy, it is probable that the offer will be accepted, and the number of
acceptances can be estimated reliably. If benefits are payable more than 12 months after the reporting
period, then they are discounted to their present value.
(iv) Short-term Benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the
amount expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a
result of past service provided by the employee and the obligation can be estimated reliably.
(v) Share-based Payment Transactions
The fair value of share-based payment awards granted to employees is recognised as an expense at grant date
with a corresponding increase in equity, over the period that employees 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 meet the related service and non-market performance
conditions at the vesting date. For share-based payment awards with non-market 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.
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.
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) 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.
Page 44 of 76
Annual Financial Report – 31 December 2014
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.
(m) 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 purpose
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.
(n) Goods and Services Tax and Equivalent Indirect Taxes
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST) and
equivalent indirect taxes, except where the amount of tax incurred is not recoverable from the taxation
authority. In these circumstances, the tax 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 tax included. The net amount of tax
recoverable from, or payable to, the taxation authority 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 tax components of cash flows
arising from investing and financing activities which are recoverable from, or payable to, the tax authority are
classified as operating cash flows.
(o) 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 for the effects of all
dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.
Page 45 of 76
Annual Financial Report – 31 December 2014
(p) Segment Reporting
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 minimal, not material 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.
(q) Changes in accounting policies
The Group has adopted the following amendment to standards, including any consequential amendments to
other standards, with a date of initial application of 1 January 2014. AASB 2013-3 Amendments to AASB 136
Recoverable Amount Disclosures for Non-Financial Assets. The adoption of this amendment has had no
material impact on the Group’s financial statements.
(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 31
December 2014, but have not been applied in preparing this financial report.
AASB 9 Financial Instruments published in July 2014, replaces the existing guidance in AASB 139 Financials
Instruments: Recognition and Measurement. AASB 9 includes revised guidance on the classification and
measurement of financial instruments, including a new expected credit loss model for calculating impairment
on financial assets, and the new general hedge accounting requirements. It also carries forward the guidance
on recognition and derecognition of financial instruments from AASB 139. AASB 9 is effective for annual
reporting periods beginning on or after 1 January 2018, with early adoption permitted.
The Group is assessing the potential impact on its consolidated financial statements resulting from the
application of AASB 9.
AASB 15 Revenue from Contracts with Customers establishes a comprehensive framework for determining
whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance
includes AASB 118 Revenue, AASB 111 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.
AASB 15 is effective for annual reporting periods beginning on or after 1 January 2017, with early adoption
permitted. The Group is assessing the potential impact on its consolidated financial statements resulting from
the application of AASB 15.
Note 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.
Geographical Segment Information
Brazil
Australia
Total
2014
Non-current
Assets
$
5,565,106
306,098
5,871,204
2013
Non-current
Assets
$
7,467,332
655,650
8,122,982
Page 46 of 76
Annual Financial Report – 31 December 2014
Note 7. Other Income
Gain on court settlement
Profit/ (loss) on sale of property plant and equipment
Other
Total
31 December
2014
$
330,652
(12,472)
-
318,180
31 December
2013
$
-
-
494
494
Gain 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.
Note 8. Employee Benefits Expense
Salaries, fees and other benefits
Superannuation
Recognised in exploration expenditure expense
Total
Note 9. Depreciation
Depreciation
Recognised in exploration expenditure expense
Total
Note 10. Finance Income and Expense
Finance income
Interest income on bank deposits
Net foreign exchange gain
Finance expense
Net foreign exchange loss
Change in fair value of derivatives
Interest expense
Net finance income recognised in profit or loss
31 December
2014
$
5,209,477
341,190
(3,359,756)
2,190,911
31 December
2013
$
6,997,755
211,121
(4,295,434)
2,913,442
31 December
2014
$
236,704
(58,041)
178,663
31 December
2013
$
341,680
(187,738)
153,942
31 December
2014
$
31 December
2013
$
252,806
-
252,806
(3,270)
-
(96)
(3,366)
249,440
693,518
22,578
716,096
-
(2,222)
(692)
(2,914)
713,182
Page 47 of 76
Annual Financial Report – 31 December 2014
Note 11. Share-based Payments
Employee Share Option Plan
The Employee Share Option Plan (“ESOP”) was approved by shareholders at the 2013 annual general meeting.
All employees (including directors) are eligible to participate in the ESOP. 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. There were 3,000,000 new options granted during the year (2013 nil).
Reconciliation of Outstanding Share Options
The number and weighted average exercise prices of share options issued under the employee share option
plan and issued to consultants are as follows:
Outstanding at start of period
Forfeited during the period
Expired during the period
Issued during the period
Outstanding at balance date
Exercisable at balance date
Weighted
Average
Exercise Price
2014
$0.809
$0.797
$0.811
$0.125
$0.248
$0.273
Number of
Options
2014
6,950,000
(1,212,500)
(5,087,500)
3,000,000
3,650,000
925,000
Weighted
Average
Exercise Price
2013
$0.807
$1.040
$0.731
-
$0.809
$0.813
Number of
Options
2013
7,356,250
(37,500)
(368,750)
-
6,950,000
5,587,500
The options outstanding at 31 December 2014 have an exercise price in the range of $0.125 to $1.04 (2013:
$0.40 to $1.80) and the weighted average remaining contractual life is 3.13 years (2013: 1.01 years).
There were no ESOP options exercised during the year (2013 nil.)
Details of the ESOP options issued during the year ended 31 December 2014 are as follows:
Grant Date
Number of Options
Vesting Conditions
Option Term
Key Management Personnel
25/08/14
25/08/14
25/08/14
25/08/14
25/08/14
25/08/14
Sub total
Employees
Sub total
Total
250,000
250,000
500,000
1,000,000
500,000
500,000
1,000,000
2,000,000
3,000,000
-
See note 1
See note 2
-
See note 1
See note 2
48 months
48 months
48 months
48 months
48 months
48 months
Note 1: Options vest 18 months from the date of issue subject to continued employment.
Note 2: Options vest 36 months from the date of issue subject to continued employment.
Inputs for Measurement of Grant Date Fair Values
The model inputs for 2014 include:
Grant Date
Expiry Date
Exercise
Price
Life of
option
Share
price at
grant date
25/08/14
31/08/18
$0.125
4.00 years
$0.07
Expected
share
price
volatility
103%
Risk-free
interest
rate
Fair Value
at grant
date
2.97%
$0.0445
Page 48 of 76
Annual Financial Report – 31 December 2014
Performance Share 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 determined by the Board. 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. The fair value at grant date is measured using the 5 day
weighted average share price.
The number of performance rights on issue are as follows:
Reconciliation of Outstanding Performance Rights
Outstanding at start of period
Issued during the period
Forfeited during the period
Expired during the period
Balance at 31 December
Number of Performance Rights
2014
2,080,000
1,700,000
(525,000)
(300,000)
2,955,000
Number of
Performance
Rights
2013
3,700,000
-
(250,000)
(1,370,000)
2,080,000
Details of performance rights granted during the year ended 31 December 2014 are as follows (2013 nil):
Grant Date
Number of Rights
Vesting Conditions
Term
Key Management Personnel
Total
Employees
25/08/14
25/08/14
25/08/14
25/08/14
300,000
200,000
500,000
900,000
300,000
1,200,000
See note 1
See note 2
60 months
60 months
See note 1
See note 2
60 months
60 months
Total
Note 1: Rights vest on first sale of iron ore from any of the Company’s projects by 30 April 2015
Note 2: Rights vest on the decision to mine in respect the Jambreiro project by 30 June 2015.
1,700,000
Inputs for Measurement of Grant Date Fair Values
31 December 2014
1,200,000
500,000
Valuation
Date
25/08/14
25/08/14
Expiry Date
Exercise
Price
Vesting
Days
Fair Value
31/08/19
31/08/19
Nil
Nil
248
309
$0.0768
$0.0768
Expenses Arising From Share based Payment Transactions
Share options
Performance rights
Total expense recognised as share based payment
2014
$
(8,899)
93,871
84,972
2013
$
(137,054)
56,641
(80,413)
During the year a number of options and performance rights were forfeited due to failure to meet vesting
conditions. Share based payment expenses in relation to these were reversed during the period.
Page 49 of 76
Annual Financial Report – 31 December 2014
Note 12. Income Tax
(a) Numerical Reconciliation of Income Tax Expense to Prima Facie Tax Payable
Loss from continuing operations before income tax expense
Tax at the Australian tax rate of 30%
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
Overseas project generation and review costs
Share-based payments
Sundry items
Effect of tax rates in foreign jurisdictions
Under provision from prior year
Deferred tax assets not recognised
Income tax benefit, being deferred tax
(b) Tax Losses
Tax losses
Capital losses
Potential tax benefit (between 30-34%)
2014
$
2013
$
(10,460,299)
(3,138,090)
(35,921,292)
(10,776,387)
458,701
25,492
17,603
(2,636,294)
(42,407)
84,725
2,593,976
-
2014
$
48,535,699
2,473,264
51,008,963
16,083,990
611,414
(24,124)
23,668
(10,165,429)
(316,128)
-
7,275,252
3,206,305
2013
$
46,094,215
2,473,264
48,567,479
15,341,391
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.
(c) Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities are attributable to the following:
Receivables
Available-for-sale financial
assets
Exploration
Accrued
expenses/provisions
Transaction costs relating
to issue of capital
Tax losses carried forward
Set off of tax
Assets
Liabilities
Net
2014
$
2013
$
2014
$
-
765,636
65
802,729
(673)
-
2013
$
(3,790)
-
2014
$
(673)
765,636
2013
$
(3,725)
802,729
12,210,508
975,750
11,091,472
65,041
(3,704)
-
(3,872)
-
12,206,804
975,750
11,087,600
65,041
217,635
361,961
-
-
217,635
361,961
16,083,990
(673)
30,252,846
15,341,391
(3,790)
27,658,869
-
673
(3,704)
-
3,790
(3,872)
16,083,990
-
30,249,142
15,341,391
-
27,654,997
Less DTA not recognised
(30,252,846)
(27,658,869)
-
-
(30,252,846) (27,658,869)
Net tax asset/(liabilities)
-
-
(3,704)
(3,872)
(3,704)
(3,872)
Page 50 of 76
Annual Financial Report – 31 December 2014
The deferred tax liability relates to Brazil exploration assets acquired through a business combination. During
the year ended 31 December 2013 an impairment charge was raised resulting in the reversal of a recognised
deferred tax liability of $3,206,305 offset by foreign currency movements of $126,082. 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.
(d) Income Tax Recognised Directly in Equity
Recovery of net tax assets is not considered probable. Accordingly, net deferred tax credited directly to other
comprehensive income for changes in the fair value of available-for-sale financial assets is nil: (2013: $nil).
Note 13. Dividends
There were no dividends paid or declared during the period (2013: nil).
Note 14. Earnings / (Loss) Per Share
Basic Loss per Share
The calculation of basic and diluted earnings per share at 31 December 2014 was based on the loss
attributable to ordinary shareholders of $10,460,299 (2013: $32,714,987) and a weighted average number of
ordinary shares outstanding of 207,963,481 (2013: 195,747,919), calculated as follows:
Loss Attributable to Ordinary Shareholders
Loss attributable to the shareholders
Weighted Average Number of Ordinary Shares
Issued ordinary shares at beginning of the period
Effect of shares issued related to share placement
Weighted average number of ordinary shares at the end of the period
Diluted Earnings per Share
2014
$
2013
$
(10,460,299)
(32,714,987)
2014
Number
195,747,919
12,215,562
207,963,481
2013
Number
195,747,919
-
195,747,919
Potential ordinary shares were not considered to be dilutive as the Group made a loss for the year ended 31
December 2014 and the exercise of potential shares would not increase that loss.
Note 15 (a). Cash and Cash Equivalents
Cash at bank and on hand
Deposits - short term
Deposits
2014
$
68,843
823,147
891,990
2013
$
321,672
4,521,836
4,843,508
The deposits are bearing floating and fixed interest rates between 2.5% and 11.47% (31 December 2013:
between 1.18% and 6.48%).
Page 51 of 76
Annual Financial Report – 31 December 2014
Note 15 (b). Reconciliation of Cash Flows from Operating Activities
Loss for the period
Adjustments for:
Depreciation
Non-cash employee benefits expense/(reversal) – share based
payments
Impairment losses
Exploration and evaluation assets
Available-for-sale financial assets
Other receivables
Change in fair value derivative instruments
(Profit)/loss on sale of plant and equipment
Income tax expense/(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
Note 16. Other Receivables and Prepayments
Current
Receivable from court settlement
Provision for impairment
Other Receivables
Security deposits
Prepayments
Non – Current
Prepayments
Other Receivables
Provision for impairment
2014
$
2013
$
(10,460,299)
(32,714,987)
236,704
341,680
84,972
(80,413)
1,397,191
302,272
(109,672)
-
12,472
-
(8,536,360)
65,198
(570,777)
(9,041,939)
18,690,780
497,678
-
2,222
(8,504)
(3,206,305)
(16,447,849)
(80,364)
(330,164)
(16,888,377)
2014
$
2013
$
-
-
648,371
30,133
85,127
763,631
328,333
1,227,391
(71,601)
1,484,123
185,986
(182,009)
576,247
43,796
98,316
722,336
398,148
1,209,205
-
1,607,353
Non-current other receivables includes Brazilian federal VAT (“PIS-Cofins”) levied on the Groups purchases.
Recoverability of PIS-Cofins assets is dependent upon the Group generating a federal company tax liability,
which may be offset against the Groups PIS-Cofins assets if the Group elects to do so. As at balance date its
taxable profits are not considered probable in the next 12 months. Information about the Group’s exposure to
credit and market risk, and impairment losses for other receivables is included in Note 25 (c).
Page 52 of 76
Annual Financial Report – 31 December 2014
Note 17. Other Investments, Including Derivatives
Available-for-sale financial assets (1)
Derivative instruments (2)
2014
$
203,792
39,297
243,089
2013
$
483,924
94,806
578,730
During the year ended 31 December 2014 an impairment of $302,272 (2013: $497,678) was recognised.
(1)
(2)
Consists of listed ordinary shares in ASX listed entities. The available-for sale financial assets have been
revalued to the market price at 31 December 2014. Further movement in share prices after 31
December 2014 have not been taken into account.
Consists of unlisted options in ASX listed entities. The fair value of the unlisted options is determined
using Black-Scholes methodology taking into account the terms and conditions upon which the
instruments were granted.
Page 53 of 76
Annual Financial Report – 31 December 2014
Note 18. Property, Plant and Equipment
Cost
Balance at 1 January 2014
Additions
Disposals
Effect of movements in exchange rates
Balance at 31 December 2014
Balance at 1 January 2013
Additions
Disposals
Effect of movements in exchange rates
Balance at 31 December 2013
Software
$
Plant &
Equipment
$
Motor
Vehicles
$
Furniture &
Fixtures
$
Leasehold
Improvements
$
Land
$
Total
$
330,089
26,559
-
(8,677)
347,971
260,386
68,465
-
1,238
330,089
458,023
38,356
(24,869)
(12,736)
458,774
337,973
119,594
(434)
890
458,023
489,336
-
(77,674)
(18,786)
392,876
346,843
265,699
(126,248)
3,042
489,336
184,686
443
(2,081)
(7,747)
175,301
171,639
10,926
-
2,121
184,686
445,791
-
(223,594)
(9,510)
212,687
416,752
26,775
-
2,264
445,791
382,368
-
(45,094)
(15,173)
322,101
58,813
320,430
-
3,125
382,368
2,290,293
65,358
(373,312)
(72,629)
1,909,710
1,592,406
811,889
(126,682)
12,680
2,290,293
Page 54 of 76
Annual Financial Report – 31 December 2014
Note 18. Property, Plant and Equipment (continued)
Depreciation
Balance at 1 January 2014
Depreciation for the year
Disposals
Effect of movements in exchange rates
Balance at 31 December 2014
Balance at 1 January 2013
Depreciation for the year
Disposals
Effect of movements in exchange rates
Balance at 31 December 2013
Carrying amounts
At 1 January 2014
At 31 December 2014
At 1 January 2013
At 31 December 2013
Software
$
Plant &
Equipment
$
Motor
Vehicles
$
Furniture &
Fixtures
$
Leasehold
Improvements
$
Land
$
Total
$
234,957
55,122
(14)
(3,094)
286,971
149,066
85,674
-
217
234,957
95,132
61,000
111,320
95,132
212,638
74,697
(22,860)
(4,910)
259,565
139,882
72,697
(165)
224
212,638
245,385
199,209
198,091
245,385
181,989
36,044
(32,148)
(8,049)
177,836
176,449
96,548
(91,518)
510
181,989
307,347
215,040
170,394
307,347
39,119
18,809
(1,621)
(2,093)
54,214
20,400
18,688
-
31
39,119
145,567
121,087
151,239
145,567
208,039
52,031
(197,208)
(2,344)
60,518
141,020
66,985
-
34
208,039
237,752
152,169
275,732
237,752
-
-
-
-
-
-
-
-
-
876,742
236,703
(253,851)
(20,490)
839,104
626,817
340,592
(91,683)
1,016
876,742
382,368
322,101
58,813
382,368
1,413,551
1,070,606
965,589
1,413,551
Page 55 of 76
Annual Financial Report – 31 December 2014
Note 19. Exploration and Evaluation Assets
Net book value as at 1 July
Additions
Impairment of capitalised exploration expenditure
Effect of movements in exchange rate
2014
$
4,523,348
137,040
(1,397,191)
(189,811)
3,073,386
2013
$
22,446,311
-
(18,690,780)
767,817
4,523,348
During the year ended 31 December 2014 the Group recognised an impairment loss on the carrying value of its
Passabém Iron Ore Project. The project was assessed for impairment as a result of the decline in market
conditions and due to the Group’s intent to focus on the Candonga project. In assessing the recoverable
amount of Passabem the Group considered that in the current market and with the Group’s intent to focus on
its other projects that the assets value was nil.
During the year ended 31 December 2013 the Group recognised an impairment loss on the carrying values of
two of its Iron Ore Projects, Itambe and Passabem. The projects were assessed for impairment as a result of
the Group’s intent to focus on the Jambreiro project. The Group engaged the services of valuation experts
both in Brazil and Australia to assist in the calculation of the recoverable amount of these underlying assets.
The method applied to calculate the recoverable amount (being the fair value less cost to sell) was the
Enterprise Value method. This method incorporates the entity’s current market value and allocates the value
on a reasonable basis to the underlying assets. This resulted in the recognition of an impairment loss as
follows:
Project
Passabém
Itambé
Total
31 December
2013
Recoverable
Amount
Impairment
Charge
Carrying Amount
12,330,973
1,570,000
10,760,973
8,409,807
480,000
7,929,807
20,740,780
2,050,000
18,690,780
The impairment charge resulted in a reversal of a recognised deferred tax liability of $3,206,305 resulting in a
net impact on the Consolidated Statement of Profit or Loss of $15,484,475.
These assets form part of the Brazil geographical reporting segment.
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.
Note 20. Trade and Other Payables
Trade and other creditors
Accrued expenses
Note 21. Employee Benefits
Liability for annual leave
2014
$
213,869
36,952
250,821
2013
$
998,728
208,573
1,207,301
2014
$
314,224
2013
$
469,385
Page 56 of 76
Annual Financial Report – 31 December 2014
Note 22. Provisions
Balance at beginning of the period
Provisions made during the year
Balance at end of the period
Current
Non Current
2014
$
-
450,554
450,554
63,866
386,688
450,554
2013
$
-
-
-
-
-
-
A provision has been raised for tax obligations, the timing and amount of which are uncertain.
Note 23. Capital and Reserves
On issue at beginning of period
Issue of ordinary shares for share placement at $0.125 per share
On issue at the end of the period – Fully paid
Ordinary Shares
2014
Number of
Shares
195,747,919
44,240,000
239,987,919
2013
Number of
Shares
195,747,919
-
195,747,919
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.
Employee Share Options and Performance Rights
Information relating to the Employee Share Option Plan and Performance Share Plan, including details of
options and rights issued, exercised, lapsed during the financial year and outstanding at the end of the
financial year are set out in Note 11.
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.
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
During the year ended 31 December 2014 in addition to the unissued shares under options and performance
rights disclosed in Note 11, the Company had the following options on issue.
Number options
3,750,000
Expiry
Expiring 31 August 2014
Exercise Price
exercisable at $1.20
Page 57 of 76
Annual Financial Report – 31 December 2014
No share options were exercised during the year.
Note 24. Related Parties
(a) Key Management Personnel
(i) Key management personnel compensation is comprised of the following:
Short term employee-benefits
Redundancy benefits
Long term employee benefits
Post – employment benefits
Share-based payments expense/ (reversals)
31 December
2014
$
1,277,953
182,649
53,260
78,717
108,289
1,700,868
31 December
2013
$
1,418,281
-
-
80,233
(84,340)
1,414,174
Individual Directors and Executives Compensation Disclosures
Information regarding individual directors’ and executives’ compensation and equity instruments disclosures
as required by Corporations Regulation 2M.3.03 is provided in the Remuneration Report section of the
Directors’ Report.
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:
Key Management Person
Mr D M Murcia(1)
Total and current liabilities
Transaction
Legal fees
Transaction Value
2014
2013
$
$
25,335
28,691
Balance Outstanding As At
2014
$
2013
$
-
-
-
-
(1) Payable to MPH Lawyers, a firm in which Mr D Murcia is a partner
(b) Transactions With Related Parties
Transactions between the parent company and its subsidiaries which are related parties of that company are
eliminated on consolidation and are not disclosed in this note.
Page 58 of 76
Annual Financial Report – 31 December 2014
Note 25. Financial Instruments – Fair Values and Risk Management
(a) Accounting Classifications and Fair Values
The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. It does not include
fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value.
Carrying amount
Fair Value
31 December 2014
Financial assets measured at fair
value
Equity securities
Derivative instruments (i)
Financial assets not measured at
fair value
Trade and other receivables (ii)
Cash and cash equivalents
Financial liabilities not measured
at fair value
Trade and other payables
Note
Held for
Trading
Loans and
Receivables
Available-
for-sale
Other
Financial
Liabilities
Total
Level 1
Level 2
Level 3
Total
-
39,297
39,297
-
-
-
203,792
-
203,792
-
-
-
-
-
2,247,754
891,990
3,139,744
-
-
-
-
-
-
-
-
-
-
-
-
-
203,792
39,297
243,089
203,792
-
203,792
-
39,297
39,297
-
-
203,792
39,297
243,089
2,247,754
891,990
3,139,744
- 2,138,696
-
-
- 2,138,696
- 2,138,696
-
-
- 2,138,696
250,821
250,821
250,821
250,821
There have been no transfers of assets from Levels during the year ended 31 December 2014
(i)
(ii)
Valuation technique used in measuring Level 2 fair values is Black Scholes Options Price Model.
Fair value relates to non current receivables which have been discounted at a rate of 11% for all other receivables the carrying amount is deemed to
approximate fair value.
Page 59 of 76
Annual Financial Report – 31 December 2014
31 December 2013
Financial assets measured at
fair value
Equity securities
Derivative instruments (i)
Financial assets not measured
at fair value
Trade and other receivables (ii)
Cash and cash equivalents
Financial liabilities not
measured at fair value
Trade and other payables
Carrying amount
Fair Value
Note
Held for
Trading
Loans and
Receivables
Available-
for-sale
Other
Financial
Liabilities
Total
Level 1
Level 2
Level 3
Total
-
94,806
94,806
-
-
-
483,924
-
483,924
-
-
-
-
-
2,329,689
4,843,508
7,173,197
-
-
-
-
-
-
-
-
-
-
-
-
-
483,924
94,806
578,730
483,924
-
483,924
-
94,806
94,806
2,329,689
4,843,508
7,173,197
-
-
-
2,209,858
-
2,209,858
-
-
-
-
-
-
483,924
94,806
578,730
2,209,858
-
2,209,858
1,207,301
1,207,301
1,207,301
1,207,301
There have been no transfers of assets from Levels during the period ended 31 December 2013.
(i)
(ii)
Valuation technique used in measuring Level 2 fair values is Black Scholes Options Price Model.
Fair value relates to non current receivables which have been discounted at a rate of 11% for all other receivables the carrying amount is deemed to approximate
fair value
Page 60 of 76
Annual Financial Report – 31 December 2014
(b) Measurement of Fair Values
The following table shows the valuation technique used in measuring Level 2 fair values as well as significant
unobservable inputs used.
Type
Valuation Technique
Significant Unobservable
Inputs
Derivative instruments
Black-Scholes
Volatility
Inter-relationship
Between Significant
Unobservable Inputs and
Fair Value Measurement
The estimated fair value
would increase
(decrease) if there was an
increase (decrease) in the
volatility rate used, as
well as movements in the
underlying security price.
(c) Financial Risk Management
The Group has exposure to the following risks arising from the use of financial instruments:
Credit Risk (see (c)(ii))
Liquidity Risk (see (c)(iii))
Market Risk (see (c)(iv)).
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.
(i) Risk Management Framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s 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.
(ii) 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 investment
securities.
Other Receivables
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 consist of mainly refundable deposits and tax credits which include Brazilian federal VAT
(“PIS-Cofins”). The recoverability of PIS-Cofins assets is dependent upon the Group generating a federal
company tax liability, which may be offset against the Groups PIS-Cofins assets. An allowance for impairment
has been recognised as at 31 December 2014.
Investments
The Group limits its exposure to credit risk by investing predominantly in liquid securities listed on the
Australian Securities Exchange.
Page 61 of 76
Annual Financial Report – 31 December 2014
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 (i)
Other receivables
2014
$
891,990
1,692,693
2,584,683
2013
$
4,843,508
1,833,225
6,676,733
(i)
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
Carrying Amount
2014
$
32,375
1,660,318
1,692,693
2013
$
56,643
1,776,582
1,833,225
These balances are net of provision for impairment (refer to Note 16).
Provision for Impairment
The movement in the provision in respect of other receivables during the year was as follows.
Opening balance
Reversal of provision for impairment
Provision for impairment
Provision used
Foreign currency exchange
2014
$
182,009
(181,618)
71,946
-
(736)
71,601
2013
$
541,898
-
-
(362,332)
2,443
182,009
During the year ended 31 December 2014 proceeds of $512,270 were received from the Liberdade Court
Settlement which resulted in the reversal of a provision for impairment of $181,618 resulting in a net gain of
$330,652 recorded in other income. During the year $71,946 was provided for in relation to indirect tax credits
which was not considered to be recoverable. None of the Company’s other receivables are past due (31
December 2013: nil). The Group believes that no impairment allowance is necessary in respect of the other
receivables not past due.
(iii) 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 31 December 2014, the Group has current trade and other payables of $250,821 (31 December 2013:
$1,207,301). The Group believes it will have sufficient cash resources to meet its financial liabilities when due.
Refer Note 2 Going Concern.
The following table shows the contractual maturities of financial liabilities, excluding the impact of netting
agreements. It is not expected that the cash flows included in the maturity analysis could occur significantly
earlier, or at significantly different amounts.
Page 62 of 76
Annual Financial Report – 31 December 2014
Carrying
amount
Contractual
cash flows
6 mths or
less
6-12
mths
1-2
years
2-5
year
More
than
5
years
31 December 2014
Non- derivative financial
liabilities
Trade and other payables
31 December 2013
Non- derivative financial
liabilities
Trade and other payables
Market Risk
250,821
(250,821)
(250,821)
1,207,301
(1,207,301)
(1,207,301)
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 (AUD) and Brazilian Real
(BRL). The currencies in which these transactions primarily are denominated are AUD and BRL.
The Group investment in its Brazilian subsidiary is denominated in AUD and is not hedged as those currency
positions are considered to be long term in nature.
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
On issue at the end of the period
2014
$
2013
$
891,990
891,990
4,843,508
4,843,508
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 2012.
31 December 2014
Variable rate instruments
Cash flow sensitivity (net)
31 December 2013
Variable rate instruments
Cash flow sensitivity (net)
Commodity Risk
Profit or Loss
Equity
100bp
Increase
100bp
Decrease
100bp
Increase
100bp
Decrease
8,910
8,910
(8,910)
(8,910)
48,430
48,430
(48,430)
(48,430)
-
-
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.
Page 63 of 76
Annual Financial Report – 31 December 2014
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, Antipa
Minerals Limited and Orinoco Gold Ltd.
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 period.
Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.
Note 26. Contingent Liabilities
Guarantees
Guarantees given in respect of bank security bonds amounting to $30,133 (2013: $43,377), 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.
Note 27. Operating Leases
Leases as Lessee
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.
(i) Future Minimum Lease Payments
Non-cancellable operating lease rentals are payable as follows:
Less than one year
Between one and five years
More than Five years
Note 28. Capital Commitments
The Group had the following capital commitments:
Contract for but not provided and payable
Less than one year
Between one and five years
More than Five years
2014
$
2013
$
308,179
72,866
-
381,045
309,679
152,407
-
462,086
2014
$
2013
$
526,820
-
-
526,820
-
-
-
-
The agreement to which the commitment relates can be terminated without financial consequence.
Page 64 of 76
Annual Financial Report – 31 December 2014
Note 29. Group Entities
Parent Entity
Centaurus Metals Limited
Subsidiaries
Centaurus Resources Pty Ltd
San Greal Resources Pty Ltd
Centaurus Brasil Mineração Ltda
Glengarry Sabah Pty Ltd
Mineração Passo das Pedras Ltda
Centaurus Pesquisa Mineral Ltda
Centaurus Gerenciamento Ltda
Note 30. Subsequent Events
Country of
Incorporation
Ownership interest
2013
2014
Australia
Australia
Brazil
Australia
Brazil
Brazil
Brazil
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
On 25 February 2015, the Company announced a $1.1M share placement at a price of $0.025 per share
together with one free attaching option for every three shares, completed to professional and sophisticated
investor clients of Canaccord Genity Ltd and some of the Companys major shareholders.
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 no 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, has arisen.
Note 31. Remuneration of Auditors
Audit Services
Audit and review of the Company – KPMG
Other Services
Auditors of the Company
KPMG Taxation services
Note 32. Parent Entity Disclosures
31 December
2014
$
31 December
2013
$
139,240
129,932
24,775
42,988
As at, and throughout, the financial year ended 31 December 2014 the parent entity of the Group was
Centaurus Metals Limited.
Results of the Parent Entity
Loss for the period (1)
Other comprehensive income
Total comprehensive income for the period
Company
31 December
2014
$
31 December
2013
$
(26,863,098)
(33,368)
(26,896,466)
(54,558,442)
(42,048)
(54,600,490)
(1)
During the year the parent entity provided for an impairment of $18,100,000 (2013:$50,497,498)
relating to loans to subsidiaries based on an assessment of recoverability.
Page 65 of 76
Annual Financial Report – 31 December 2014
Financial Position of the Parent Entity at Year End
Current assets
Non-current assets(1)
Total assets
Current liabilities
Total liabilities
Net assets
Share capital
Reserves
Accumulated losses
Total equity
2014
$
2013
$
768,809
6,065,814
6,834,623
332,262
332,262
6,502,361
4,049,445
24,531,420
28,580,865
545,293
545,293
28,035,572
104,035,436
5,776,104
(103,309,179)
6,502,361
98,766,042
5,256,981
(75,987,451)
28,035,572
(1)
Included within non-current assets are investments in and loans to subsidiaries net of provision for
is dependent on successful development and commercial
impairment. Ultimate recoupment
exploitation or, alternatively, sale of the respective project areas.
Parent Entity Contingencies
The parent entity had no contingent liabilities as at 31 December 2014 (2013: nil).
Parent Entity Capital Commitments
The parent entity had no capital commitments at 31 December 2014 (2013: nil)
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
2014
$
2013
$
70,981
56,899
-
127,880
130,914
-
-
130,914
Page 66 of 76
Annual Financial Report – 31 December 2014
Directors’ Declaration
1.
In the opinion of the directors of Centaurus Metals Limited (the “Company”):
(a)
The consolidated financial statements and notes, and the Remuneration Report in the Directors’
Report are in accordance with the Corporations Act 2001, including:
(i)
(ii)
Giving a true and fair view of the Group’s financial position as at 31 December 2014 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;
(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.
3.
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 31 December
2014.
The financial report also complies with International Financial Reporting Standards as disclosed in Note
2.
Signed in accordance with a resolution of the directors.
D P Gordon
Managing Director
Perth
25 March 2015
Page 67 of 76
ABCD
Independent auditor’s report to the members of Centaurus Metals Limited
Report on the financial report
We have audited the accompanying financial report of Centaurus Metals Limited (the
company), which comprises the consolidated statement of financial position as at 31 December
2014, and consolidated statement of profit or loss and other comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the
year ended on that date, notes 1 to 32 comprising a summary of significant accounting policies
and other explanatory information and the directors’ declaration of the Group comprising the
company and the entities it controlled at the year’s end or from time to time during the financial
year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that
gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that is free from material misstatement whether
due to fraud or error. In note 2, the directors also state, in accordance with Australian
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
statements of the Group comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material misstatement of the financial report, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity’s preparation of the financial report that gives a true and fair view in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates made by the directors, as well as evaluating the overall presentation of the financial
report.
We performed the procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting
Standards, a true and fair view which is consistent with our understanding of the Group’s
financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.
KPMG, an Australian partnership and a member firm
of the KPMG network of independent member firms
affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
Liability limited by a scheme
approved under Professional
Standards Legislation.
ABCD
Independence
In conducting our audit, we have complied with the independence requirements of the
Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’s financial position as
at 31 December 2014 and of its performance for the year ended on that date; and
(ii)
complying with Australian Accounting Standards and the Corporations
Regulations
2001.
(b) the financial report also complies with International Financial Reporting Standards as
disclosed in note 2.
Material uncertainty regarding continuation as a going concern
Without modifying our opinion above, we draw attention to note 2 of the financial report. The
matters set forth in note 2 indicate the existence of material uncertainty that may cast significant
doubt on the Group’s ability to continue as a going concern and therefore, the Group may be
unable to realise its assets and discharge its liabilities in the normal course of business and at the
amounts stated in the financial report.
Report on the remuneration report
We have audited the Remuneration Report included in section 4.3 of the directors’ report for the
year ended 31 December 2014. The directors of the company are responsible for the preparation
and presentation of the remuneration report in accordance with Section 300A of the
Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report,
based on our audit conducted in accordance with auditing standards.
Auditor’s opinion
In our opinion, the remuneration report of Centaurus Metals Limited for the year ended 31
December 2014, complies with Section 300A of the Corporations Act 2001.
KPMG
Graham Hogg
Partner
Perth
25 March 2015
Shareholder Information
The shareholder information set out below was applicable as at 31 March 2015.
Substantial Shareholders
The names of substantial shareholders are:
Atlas Iron Limited (1) – 60,320,264 shares
Liberty Metals & Mining Holdings, LLC – 34,000,000 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 develops 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.
Class of Shares and Voting Rights
There were 3,791 holders of ordinary shares in the Company. The voting rights attaching to the ordinary
shares, set out in Clause 41 of the Company’s Constitution, are:
(a)
(b)
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.
There were 4 holders of options over 3,400,000 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.
There were 7 holders of performance rights over 2,955,000 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 performance rights have been exercised.
Page 70 of 76
Shareholder Information
Distribution of Equity Securities
The distribution of numbers of equity security holders by size of holding is shown in the table below. There
were 2,957 holders of less than a marketable parcel of ordinary shares.
1
1,001
5,001
10,001
100,001
1,000
-
5,000
-
-
10,000
- 100,000
and over
Equity Security Holders
Ordinary
Shares
596
1,288
558
1,112
237
3,791
Class of Equity Security
Options
-
-
-
-
4
4
Performance
Rights
-
-
-
1
6
7
The names of the twenty largest holders of each class of quoted equity security are listed below:
Ordinary Shares
Name
J P Morgan Nominees Australia Limited
1 Atlas Iron Limited
2 Liberty Metals & Mining Holdings, LLC
3
4 Lujeta Pty Ltd
5 Citicorp Nominees Pty Ltd
6 Mr Darren Gordon
7 Lion Selection Group Limited
8 Bridgelane Capital Pty Ltd
9 National Nominees Limited
10 Lomacott Pty Ltd
11 Mr Ianaki Semerdziev
12 Prof Anthony Craig Watson
13 Mr Kevin Press
14 BNP Paribas Noms (NZ) Ltd
15 HSBC Custody Nominees (Aust) Limited
16 Mr Behnam Fatahi & Mrs Fezeh Lotfi
17 Mr Antonio Aceti
18 Matzo Consulting Pty Ltd
19 Mr Bradley Bolin
20 Merrill Lynch (Australia) Nominees Pty Ltd
Total Top 20 Shareholders
Other Shareholders
Total Number of Issued Shares
Restricted Securities
The Company currently has no restricted securities.
On-market Buy Back
There is no current on-market buy back.
Number
Held
60,320,264
34,000,000
11,527,296
10,500,000
9,114,387
6,889,791
6,545,455
5,576,375
4,893,341
4,804,039
3,166,000
2,800,000
2,700,000
1,993,665
1,681,358
1,484,956
1,474,407
1,309,130
1,300,000
1,292,049
173,372,513
102,415,406
275,787,919
Percentage of
Issued Shares (%)
21.87
12.33
4.18
3.81
3.30
2.50
2.37
2.02
1.77
1.74
1.15
1.02
0.98
0.72
0.61
0.54
0.53
0.47
0.47
0.47
62.85
37.15
100.00
Page 71 of 76
Tenement Information
Brazilian Tenements
Tenement
831.638/2004
831.639/2004
831.629/2004
832.183/2014
832.776/2006
833.185/2006
833.624/2006
846.113/2009
846.114/2009
846.115/2009
846.232/2009
846.233/2009
846.234/2009
833.998/2008
833.999/2008
834.000/2008
834.001/2008
834.002/2008
834.003/2008
834.004/2008
832.316/2005
831.649/2004
833.409/2007
834.106/2010
831.645/2006
830.588/2008
870.028/2014
832.589/2008
832.590/2008
832.690/2009
832.190/2013
832.249/2006
832.792/2010
832.841/2011
832.902/2012
833.410/2007
Project Name
Canavial
Canavial
Candonga
Conquista
Conquista
Conquista
Conquista
Curral Velho
Curral Velho
Curral Velho
Curral Velho
Curral Velho
Curral Velho
G100
G100
G100
G100
G100
G100
G100
Itambé
Jambreiro (Mining Lease)
Jambreiro (Mining Lease)
Jambreiro (Mining Lease)
Passabém
Passabém
Pitu
Ponte de Pedra
Ponte de Pedra
Ponte de Pedra
Regional Guanhães
Regional Guanhães
Regional Guanhães
Regional Guanhães
Regional Guanhães
Regional Guanhães
Location
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Paraíba
Paraíba
Paraíba
Paraíba
Paraíba
Paraíba
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Bahia
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Minas Gerais
Interest
100%
100%
100%
100%
100%(1)
100%(1)
100%(1)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%(1)
100%
(1) These tenements were acquired under an option agreement requiring future payments to maintain the Group’s interest.
Australian Tenements
Tenement
EPM14233
Project Name
Mt Guide
Location
Queensland
Interest
10%(2)
(2) Subject to a Farm-Out and Joint Venture Exploration Agreement with Summit Resources (Aust) Pty Ltd. Summit has earned
a 90% interest in the Project. Aeon Metals Limited has earnt 80% of Summit’s interest in the Project.
Page 72 of 76
Mineral Resources & Ore Reserves Information
Total Mineral Resource Inventory
Following a revised Resource estimate for the Jambreiro and Candonga Projects during the year, the
Company’s total resource base at the end of the reporting period is shown in the table below.
Project
Jambreiro*
Candonga*
Canavial*
Guanhães Region
Passabém**
Itambé***
TOTAL
Million
Tonnes
128.5
9.4
27.6
165.5
39.0
10.0
214.5
Fe %
SiO2 %
Al2O3 %
28.0
43.7
30.5
29.3
31.0
36.6
30.0
51.3
28.5
37.0
47.6
53.6
39.1
48.3
3.7
3.7
6.0
4.1
0.8
4.0
3.5
P
0.05
0.07
0.07
0.05
0.07
0.05
0.05
LOI
1.5
2.9
6.4
2.4
0.1
2.4
2.0
* 20% Fe cut-off grade applied; ** 27% Fe cut-off grade applied; *** 25%Fe cut-off grade applied
Mineral Resources & Ore Reserves Statement
The Company’s Ore Reserves and Mineral Resource holdings are shown in the following tables.
Ore Reserves
Ore Reserves as at 31 December 2014
Ore Reserves as at 31 December 2013
Project
Million
Tonnes
Fe
%
SiO2
%
Al2O3
%
P
%
LOI
%
Million
Tonnes
Fe
%
SiO2
%
Al2O
3 %
P
%
LOI
%
Jambreiro Project *
Proved
35.4
Probable
TOTAL
28.5
27.2
49.6
49.0
13.1
48.5
28.1
49.4
4.3
5.3
4.6
0.04
0.04
0.04
35.4
13.1
28.5
27.2
49.6
49.0
48.5
28.1
49.4
4.3
5.3
4.6
0.04
0.04
0.04
1.7
2.4
1.9
Candonga Project**
Proved
Probable
0.8
0.4
59.9
61.5
10.5
9.1
1.9
1.4
0.03
0.03
-
-
-
-
-
-
-
-
-
-
1.2
60.5
TOTAL
TOTAL
COMBINED
*Cut-off 20% Fe ; Mine Dilution - 2% ; Mine Recovery - 98%; **45.0% Fe cut-off grade applied; Mine Dilution - 3% ; Mine
Recovery - 98%
0.03
28.1
48.5
0.04
49.4
0.04
28.9
49.7
10.0
48.5
0.6
1.7
4.5
4.6
1.8
-
-
-
-
-
-
-
-
1.9
1.7
2.4
1.9
0.7
0.4
Page 73 of 76
Mineral Resources & Ore Reserves Information
Mineral Resources
Mineral Resources as at 31 December 2014 Mineral Resources as at 31 December 2013
LOI
Million
%
Tonnes
Million
Tonnes
Al2O3
%
Al2O3
%
SiO2
%
SiO2
%
LOI
%
Fe
%
Fe
%
P
%
P
%
Project
Jambreiro Project*
Measured
45.3
29.2
50.3
Indicated
Inferred
TOTAL
37.7
27.5
51.0
45.5
27.3
52.6
128.5
28.0
51.3
Candonga Project*
Measured
Indicated
Inferred
TOTAL
0.8
3.1
5.5
9.4
60.4
10.1
43.8
29.0
41.3
30.9
43.7
28.5
Canavial Project*
Indicated
Inferred
TOTAL
6.5
33.6
33.6
21.1
29.6
38.0
27.6
30.5
37.0
Passabém Project**
Indicated
Inferred
TOTAL
2.8
33.0
48.8
36.2
30.9
54.0
39.0
31.0
53.6
Itambé Project***
3.9
3.7
3.4
3.7
1.7
3.5
4.1
3.7
7.1
5.7
6.0
1.9
0.7
0.8
0.04
0.04
0.05
0.05
0.03
0.08
0.08
0.07
0.10
0.07
0.07
0.03
0.07
0.07
Indicated
Inferred
4.7
5.3
37.1
37.0
36.2
40.9
4.5
3.5
0.06
0.04
1.5
1.7
1.3
1.5
0.6
2.7
3.3
2.9
7.9
5.9
6.4
0.6
0.1
0.1
2.7
2.1
45.7
28.7
50.7
38.2
27.0
51.0
44.1
25.9
52.0
128.0
27.2
51.2
-
3.7
8.2
-
-
45.5
26.2
41.8
30.2
11.9
43.0
29.0
6.5
33.6
33.6
21.1
29.6
38.0
27.6
30.5
37.0
2.8
33.0
48.8
36.2
30.9
54.0
39.0
31.0
53.6
4.1
3.9
4.0
4.0
-
3.8
4.4
4.2
7.1
5.7
6.0
1.9
0.7
0.8
0.04
0.05
0.05
0.05
-
0.08
0.08
0.08
0.10
0.07
0.07
0.03
0.07
0.07
4.7
5.3
37.1
37.0
36.2
40.9
4.5
3.5
0.06
0.04
36.6
10.0
TOTAL
TOTAL
COMBINED
* 20% Fe cut-off grade applied; ** 27% Fe cut-off grade applied; *** 25%Fe cut-off grade applied
216.5
214.5
46.2
29.6
0.05
0.05
36.6
10.0
39.1
48.3
30.0
39.1
3.7
2.0
2.4
4.0
3.5
4.0
0.05
0.06
1.6
1.7
1.4
1.5
-
2.7
3.1
3.0
7.9
5.9
6.4
0.6
0.1
0.1
2.7
2.1
2.4
2.0
(a)
(b)
Mineral Resources are reported inclusive of Ore Reserves.
Rounding may generate differences in last decimal place.
Mineral Resources and Ore Reserves Annual Statement and Review
The Company carries out an annual review of its Mineral Resources and Ore Reserves as required by the
Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code)
2012 edition and the ASX Listing Rules. The review was carried out as at 31 December 2014. The Jambreiro and
Candonga Resources and the Candonga Reserve estimates have been reported in accordance with the JORC
Code 2012 edition and the ASX Listing Rules. The remaining Ore Reserve and Mineral Resource estimates were
prepared and disclosed under the JORC Code 2004 edition.
The information prepared for the Jambreiro Reserve and Canavial, Itambé and Passabém Resource estimates
have not been updated to comply with the JORC Code 2012 edition on the basis that the information has not
materially changed since it was last reported.
The adjustment in the Jambreiro Mineral Resource estimate was due to re-interpretation of the Jambreiro
drilling and geology carried out during the year. There was no additional drilling data used in the Mineral
Resource update. The work resulted in the preparation of an updated Mineral Resource estimate compliant
with the JORC Code 2012.
Page 74 of 76
Mineral Resources & Ore Reserves Information
The Jambreiro Ore Reserve was completed in November 2012 using highly conservative iron ore price and
exchange rate assumptions to determine the mine gate price. As of 31 December 2014 the mine gate price
remained appropriate. There were no further changes to the modifying factors for the Jambreiro Ore Reserve.
Given there was no material change in the Mineral Resource estimate or to the modifying factors for the Ore
Reserve, the Ore Reserve has not been updated to comply with the JORC Code 2012 edition.
The adjustment in the Candonga Mineral Resource estimate is due to the drilling results and subsequent
Mineral Resource estimate update completed during the year in compliance with the JORC Code 2012 edition.
Based on the Mineral Resource estimate a maiden Ore Reserve Estimate was completed.
There has been no additional work or change to the Canavial, Itambé and Passabém Mineral Resource
estimates during the year. Information prepared and disclosed under the JORC Code 2004 Edition and which
has not materially changed since last reported has not been updated.
The Company is not aware of any new information or data that materially affects the information included in
this Annual Statement and confirms that all material assumptions and technical parameters underpinning the
estimates in the relevant market announcement continue to apply and have not materially changed.
Estimation Governance Statement
The Company ensures that all Mineral Resource and Ore Reserve calculations are subject to appropriate levels
of governance and internal controls. Exploration Results are collected and managed by competent qualified
staff geologists and overseen by the Exploration General Manager. All data collection activities are conducted
to industry standards based on a framework of quality assurance and quality control protocols covering all
aspects of sample collection, topographical and geophysical surveys, drilling, sample preparation, physical and
chemical analysis and data and sample management.
Mineral Resource and Ore Reserve estimates are prepared by qualified independent Competent Persons and
further verified by the Company’s technical staff. If there is a material change in the estimate of a Mineral
Resource, the modifying factors for the preparation of Ore Reserves, or reporting an inaugural Mineral
Resource or Ore Reserve, the estimate and supporting documentation in question is reviewed by a suitably
qualified independent Competent Person.
Approval of Mineral Resources and Ore Reserve Statement
The Company reports its Mineral Resources and Ore Reserves on an annual basis in accordance with the JORC
Code 2012 Edition.
The Ore Reserves and Mineral Resources Statement is based on and fairly represents information and
supporting documentation prepared by competent and qualified independent external professionals and
reviewed by the Company’s technical staff. The Ore Reserves and Mineral Resources Statement has been
approved by Roger Fitzhardinge, a Competent Person who is a Member of the Australasia Institute of Mining
and Metallurgy. Roger Fitzhardinge is a permanent employee of Centaurus Metals Limited. Mr Fitzhardinge
has consented to the inclusion of the Statement in the form and context in which it appears in this Annual
Report.
Competent Person’s Statement
The information in this Annual Report that relates to Exploration Results and Mineral Resources is based on
information compiled by Roger Fitzhardinge, a Competent Person who is a Member of the Australasia Institute
of Mining and Metallurgy and Volodymyr Myadzel, a Competent Person 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 Micromine BNA Consultoria e Sistemas Limited,
independent resource consultants engaged by Centaurus Metals.
Roger Fitzhardinge and Volodymyr Myadzel have sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves’. 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.
Page 75 of 76
Mineral Resources & Ore Reserves Information
The information in this Annual Report that relates to Ore Reserves is based on information compiled by Beck
Nader, a Competent Person who is a professional Mining Engineer and a Member of Australian Institute of
Geoscientists. Beck Nader is the Managing Director of Micromine BNA Consultoria e Sistemas Ltda and is a
consultant to Centaurus.
Beck Nader has sufficient experience that is relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012
Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.
Beck Nader consents to the inclusion in the report of the matters based on his information in the form and
context in which it appears.
Page 76 of 76