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(ABN 22 102 912 783)
AND CONTROLLED ENTITIES
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2013
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Annual Report 2013
CONTENTS
CORPORATE DIRECTORY ______________________________________________________ 1
DIRECTORS’ REPORT _________________________________________________________ 2
AUDITOR’S INDEPENDENCE DECLARATION _______________________________________ 14
CORPORATE GOVERNANCE STATEMENT _________________________________________ 15
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME _________________________ 23
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ______________________________ 24
CONSOLIDATED STATEMENT OF CASH FLOWS ____________________________________ 25
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ______________________________ 26
NOTES TO THE FINANCIAL STATEMENTS _________________________________________ 27
DIRECTORS’ DECLARATION ___________________________________________________ 59
INDEPENDENT AUDITOR’S REPORT _____________________________________________ 60
ADDITIONAL ASX INFORMATION _______________________________________________ 62
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Annual Report 2013
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CORPORATE DIRECTORY
EXECUTIVE CHAIRMAN
Antony Sage
EXECUTIVE DIRECTOR
Brett Smith
NON-EXECUTIVE DIRECTOR
Qiu Derong
COMPANY SECRETARY
Claire Tolcon
PRINCIPAL & REGISTERED OFFICE
32 Harrogate Street
West Leederville WA 6007
Telephone: (08) 9380 9555
Facsimile: (08) 9380 9666
AUDITORS
Bentleys
Level 1, 12 Kings Park Road
West Perth WA 6005
SHARE REGISTRAR
Advanced Share Registry
150 Stirling Hwy
Nedlands WA 6009
Telephone: (08) 9389 8033
Facsimile: (08) 9389 7871
STOCK EXCHANGE LISTING
Australian Securities Exchange
(Home Exchange: Perth, Western Australia)
Code: CXU
BANKERS
National Australia Bank
50 St Georges Terrace
Perth WA 6000
ANZ
77 St Georges Terrace
Perth WA 6000
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Annual Report 2013
DIRECTORS’ REPORT
The directors of Cauldron Energy Limited (“Cauldron”) submit their report, together with the consolidated
financial statements comprising Cauldron and its controlled entities (together the “Consolidated Entity”) for
the financial year ended 30 June 2013.
1.
INFORMATION ON DIRECTORS
The names and particulars of the directors of the Consolidated Entity during or since the end of the
financial year are as follows. Directors have been in office since the start of the financial year to the
date of this report unless otherwise stated.
Antony Sage
Executive Chairman
Qualifications
B.Bus, FCPA, CA, FTIA
Experience
Directorships of listed
companies held within the
last 3 years
Mr Sage has in excess of 25 years’ experience in the fields of corporate
advisory services, funds management, capital raising and management of
several mining/exploration companies. Mr Sage is based in Western
Australia and was formerly a successful funds manager with Growth
Equities Mutual for a period of 13 years. During the last 15 years he has
been
listed
exploration and mining companies.
in the management and financing of several
involved
December 2000 to present
Cape Lambert Resources Limited
August 2009 to present
Fe Limited
September 2010 to present
Kupang Resources Limited
December 2010 to present
Matrix Metals Ltd
June 2012 to present
Global Strategic Metals NL
January 2006 to present
International Petroleum Limited*
African Iron Limited
January 2011 to March 2012
African Petroleum Corporation Limited * October 2007 to June 2013
International Goldfields Limited February 2009 to May 2013
* Listed on National Stock Exchange of Australia
Interest in Shares & Options
Fully Paid Ordinary Shares
5,894,600
Brett Smith
Executive Director
Qualifications
B.Sc(Geol), M.AusIMM MAIG.
Experience
Mr Smith has over 21 years of experience in the mining and exploration
industry as a geologist, manager, consultant and director. His industry
experience is broad, dominated by exploration and resource definition for
mining operations. Mr Smith is primarily responsible for Cauldron's
strategic move into Argentina.
Directorships of listed
companies held within the
last 3 years
Jacka Resources Limited October 2009 to present
Corazon Mining Limited
July 2010 to present
Metals of Africa Limited October 2012 to present
Eclipse Metals Limited March 2010 to November 2011
Blackham Resources Limited July 2007 to June 2013
Interest in Shares & Options
Fully Paid Ordinary Shares
11,844
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Annual Report 2013
Qiu Derong
Experience
Non-Executive Director
Mr Qiu is a highly experienced industrialist with more than 26 years’
experience in the architecture, construction and real estate industries
in China as well as over 16 years of experience in the management of
enterprises and projects throughout the country.
Mr Qiu has a MBA obtained from the Oxford Commercial College, a
joint program operated by Oxford University in China.
Directorships of listed
companies held within the
last 3 years
None
Interest in Shares & options
Fully Paid Ordinary Shares
41,900,000
Remuneration of key management personnel
Information about the remuneration of directors and senior management is set out in the remuneration
report of this director’s report, on pages 11 to 12. The term key management personnel refers to those
persons having authority and responsibility for planning, directing and controlling the activities of the
Consolidated Entity, directly or indirectly, including any director (executive or otherwise) of the
Consolidated Entity.
COMPANY SECRETARY
Ms Claire Tolcon has over 15 years’ experience in the legal profession, primarily in the areas of equity
capital markets, mergers and acquisitions, corporate restructuring, corporate governance and mining
and resources. She has previously practised as a partner of a corporate law firm for a number of years
before joining the Company. Ms Tolcon holds a Bachelor of Law and Bachelor of Commerce
(Accounting) degree and has completed a Graduate Diploma of Applied Corporate Governance with the
Chartered Secretaries Australia Ltd and a Graduate Diploma in Applied Finance with FINSIA.
2.
PRINCIPAL ACTIVITIES AND SIGNIFICANT CHANGES IN NATURE OF ACTVITIES
The principal activity of the Consolidated Entity during the financial year was uranium exploration.
There were no significant changes in the nature of the Consolidated Entity’s principal activities during
the financial year.
3.
OPERATING RESULTS
The loss of the Consolidated Entity after providing for income tax amounted to $7,896,865 (2012:
$380,737).
4.
REVIEW OF OPERATIONS
Cauldron is an Australian exploration company resulting from the merger of Scimitar Resources Limited
and Jackson Minerals Limited. Cauldron retains an experienced board of directors with proven success in
the resources sector.
Cauldron controls over 6,000km2 of uranium prospective tenements across South Australia and Western
Australia, and large projects with defined uranium mineralisation in Argentina; this allows for
diversification, both geologically and with regards to differing political sentiment and policy towards
uranium exploration and mining within each region.
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CORPORATE
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The following significant transactions occurred during the financial year:
Conversion of convertible notes
In early August 2012, 100% of the convertible notes in Cauldron, totalling $11.3 million, were converted
into fully paid ordinary shares in the company. The convertible notes were converted at a deemed issue
price of $0.20 per share, which represented an 81% premium to the closing price of the shares at the
time of conversion of $0.11 per share.
Underwriting and exercise of listed options
In late October 2012, Cauldron entered into an agreement with Barclay Wells Limited to partially
underwrite the exercise of the outstanding listed options in the company, to $832,500. The
underwriting and the exercise of listed options generated $1,989,281 proceeds (net of fees) for
Cauldron during the year.
Shares and Options Issued
During the year ended 30 June 2013, the following equity instruments were issued:
Shares issued
On 2 August 2012 the Consolidated Entity issued 58,829,452 shares upon the conversion of 100% of the
convertible notes in Cauldron, totalling $11.3 million, at a deemed issue price of $0.20 per share.
On 31 October 2012 the Consolidated Entity issued 2,663,124 shares upon the exercise of listed options
at $0.45 per share to raise $1,198,406. The Consolidated Entity also issued 1,850,000 shares upon the
underwriting of listed options at $0.45 per share to raise $832,500 (before costs).
Unlisted options issued
On 1 August 2012, the Consolidated Entity issued 800,000 unlisted options to a Consultant with an
exercise price of $0.20 and can be exercised on or before 30 June 2014.
On 19 September 2012, the Consolidated Entity issued 1,000,000 unlisted options to a Consultant with
an exercise price of $0.20 and can be exercised on or before 18 September 2015.
Options lapsed / forfeited
During the period, the following options were forfeited or lapsed:
Number
10,203,338
Exercise price
$0.45
Expiry date
31 October 2012
Uranium Equities Limited Withdrawal from West Lake Frome Joint Venture
The West Lake Frome Project was the subject of a Farm-in and Joint Venture agreement with Uranium
Equities Limited (ASX: UEQ) (Uranium Equities) whereby Uranium Equities was to manage and fund $5
million of exploration expenditure over 5 years to earn an 80% interest in West Lake Frome Project. In
October 2012, following a strategic review of its Frome Basin Projects, Uranium Equities elected to
withdraw from the West Lake Frome Joint Venture. In satisfaction of its obligations to the Consolidated
Entity under the Farm-In and Joint Venture agreement, Uranium Equities issued 4,000,000 Uranium
Equities shares to the Consolidated Entity.
Energia Minerals takeover bid
In March 2013, the Consolidated Entity announced its intent to bid for all of the shares in Energia
Minerals Limited (ASX:EMX) (Energia) in an all scrip takeover on a one (1) Cauldron Energy share for
eight (8) Energia shares basis (Takeover Offer). If successful, the merged entity will hold a contiguous
tenement package with a strike of over 190km in a highly prospective uranium province in the
Carnarvon Basin region of Western Australia.
The Takeover Offer is subject to, amongst other conditions, a minimum acceptance condition of 90% of
the issued shares in Energia at the end of the offer period. The Consolidated Entity has extended the
offer period to 16 November 2013 (unless further extended).
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Annual Report 2013
PROJECT INFORMATION
AUSTRALIA
YANREY URANIUM PROJECT, WESTERN AUSTRALIA (100%) INCLUDING THE UAROO JV (70% AND
MANAGER)
The Yanrey Project is located 70km south of Onslow in Western Australia. The project covers Mesozoic
sediments, which are highly prospective for sandstone hosted roll front uranium mineralisation
amenable to In-situ Recovery (ISR) mining. Other uranium projects in the district include Paladin Energy
Ltd’s (ASX: PDN) adjoining 24 million lbs Manyingee uranium deposit in the north and Energia Minerals
Limited’s (ASX: EMX) 12 million lbs Carley Bore uranium deposit to the south.
The Yanrey Project includes:
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the Bennet Well deposits with a total Inferred and Indicated Mineral Resource of 15.7 Mlb at 270
ppm eU3O8 estimated at a 150 ppm cut-off (refer ASX announcement dated 7 February 2013 for full
details); and
an Exploration Target1 estimate of 30 to 115 million pounds U3O8 at a grade of 250 to 900 ppm in
11 paleochannel systems (refer ASX announcement dated 21 February 2013 for full details).
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The new paleochannels confirmed in the Bennet Well area include additional high grade Well East and
Bennet Well South indicate a larger area of mineralisation reflected in the Exploration Target size
upgrade.
The recent increase in actual mineralisation, which has led to a significantly improved potential for the
Yanrey region creates the need for a scoping study for ISR production be initiated for the region.
Following the success of the October 2012 drilling at Yanrey, a 300% increase in the inferred resource at
the Bennet Well prospect was announced. This drilling success resulted in the re-interpretation of the
target model and the confirmation of two additional areas of potentially economic mineralisation
(Bennet Well East and South). This has resulted in the review of the Exploration Target for the Yanrey
Project (refer ASX Announcement 21 February 2013).
MARREE URANIUM PROJECT JOINT VENTURE, SOUTH AUSTRALIA (60% (increasing))
The Marree Uranium Project, located 550km north of Adelaide, comprises five Exploration Licences in
the Eromanga Basin adjacent to the uranium-rich Mount Babbage Inlier.
The Marree Project was formed by way of a joint venture agreement between Cauldron and a Korean
consortium, comprising of the Korean Government (KORES), Daewoo International Corporation and LG
International Corporation. Cauldron is the Manager of the project. The terms of the joint venture
agreement enabled the Korean participants to earn up to an aggregate 50% interest in the Marree
Project by funding $6.0 million of exploration activities over an earn-in period. Exploration activities
commenced in mid-2009. The earn-in period of this joint venture agreement ended in January 2013, at
which point the Korean participants had contributed a total of $4.9 million. At the end of the earn-in
period, the parties’ interests in the tenements are as follows:
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Cauldron 60%; and
Korean participants 40%.
In line with the terms of the joint venture agreement, following the earn-in period, the parties are
required to participate in expenditure of the Marree Project pro-rata to their ownership interests,
otherwise the parties interests will be diluted. Since January 2013, Cauldron has continued to the
exploration works, thus diluting the Korean participants’ interests.
At the Company’s Marree Base Metals Project in South Australia, analysis of historical captured Induced
Polarisation (“IP) data identified potential extensions to the Ooloo Silver-Lead Mine (“Ooloo”). A large
1 The Exploration Target has yet to be fully drill tested and is conceptual in nature. There has been insufficient exploration to define a
mineral resource and it is uncertain if future exploration will result in the determination of a mineral resource.
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Annual Report 2013
high-grade polymetallic zone at the Mt Freeling Prospect (Figure 1) was identified during the quarter’s
planned field mapping programme. This new prospect at Mt Freeling and the discovery of the large
resistive body at Ooloo highlights the growing potential of Marree’s exciting base metal and precious
metal region.
In April 2013 the Company contracted ExploreGeo to undertake the reprocessing of historical IP data of
the Ooloo Mine region, originally completed by McPhar Geophysics in 1970 for Mid-East Minerals NL.
The analysis of the IP data at Ooloo identified a large resistive zone southwest of the historical Ooloo
Silver-Lead Mine, estimated to be 1.5km long by 500m wide. This analysis has provided Cauldron with
new potential drill targets both undercover and close to known mineralisation.
Following the signing of Heritage Agreements with the Traditional Owners, Cauldron now has permission
to access to the Ooloo mine region to conduct exploration activities including drilling. Priority work at
Ooloo includes geochemical confirmation of resistivity response; and pending results, additional
mapping may be conducted, followed by a drilling program later in 2013.
Recently completed field mapping by the Company at Marree has identified a large series of workings
within a 2km2 radius including a 1.6m long mineralised fault zone with an alteration corridor up to 200m
wide at Marree’s Mt Freeling Prospect.
Geochemical assays of field samples have confirmed consistent high-grade base and precious metal
values over a large area including peak results of:
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2,830 g/t silver
33.9% lead
6.45 g/t gold
3.23% zinc
2.52% copper
Priority work at Mt Freeling includes the completion of additional field mapping and geochemical
sampling to identify the extent and tenor of any mineralization later in 2013. The Consolidated Entity is
currently conducting a mapping programme, to be followed up by an exploration drilling programme to
test the already defined areas.
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Figure 1: Marree Project – Location of recently completed work
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WEST LAKE FROME PROJECT, SOUTH AUSTRALIA
The West Lake Frome Project comprises three granted exploration licences covering 1,444 km2 in the
Curnamona Province of South Australia.
In October 2012, following a strategic review of its Frome Basin Projects, Uranium Equities elected to
withdraw from the West Lake Frome Joint Venture. In satisfaction of its obligations to the Consolidated
Entity under the Farm-In and Joint Venture agreement, Uranium Equities issued 4,000,000 Uranium
Equities shares to the Consolidated Entity.
Following this withdrawal, the Consolidated Entity conducted a strategic review of the tenements
comprising the West Lake Frome Project and the decision was made to surrender these tenements.
These tenements were surrendered in early 2013.
BEADELL PROJECT, WESTERN AUSTRALIA (20% - 40%)
The Beadell Project is located 450km east of Newman in Western Australia in the south-eastern part of
the Rudall Complex in a highly prospective region with several base metal deposits, including Mount
Cotton (Cu, Pb, Zn, U), Nifty (Cu), Maroochydore (Cu, Pb, Zn), Kintyre (U) and Copper Hills (Cu, Au).
In September 2011, Cauldron divested interest in the Boolaloo and Beadell Projects to Rumble Resources
Ltd (Rumble). Pursuant to the terms of the transactions, Cauldron transferred to Rumble a 60% interest
in E45/2405 and E/2406 and an 80% interest in ELA 45/3799 and ELA 45/3823 (comprising the Beadell
Project).
BOOLALOO PROJECT, WESTERN AUSTRALIA (20%)
The Boolaloo Project is located 270km east of Exmouth in the Ashburton Basin within a known base
metal province with numerous historical and current mines including Paulsens Gold Mine and Mount
Clement Gold Mine.
In September 2011, Cauldron divested interest in the Boolaloo and Beadell Projects to Rumble Resources
Ltd (Rumble). Pursuant to the terms of the transactions, Cauldron has transferred to Rumble an 80%
interest in the Boolaloo Project (which is comprised of EL08/0605, EL08/1756, EL08/2123, EL08/2141,
EL08/2152 and ELA08/2153.
AMADEUS URANIUM PROJECT, NORTHERN TERRITORY (100%)
The Amadeus Project is located in the Amadeus Basin 50km south of Alice Springs.
In late 2012 the decision was made to surrender the three tenements comprising the Amadeus Uranium
Project. After reviewing these tenements, it was not considered prudent to assign resources to this
project given the high potential alternative investments elsewhere in the Consolidated Entity’s portfolio.
GLENCOE PROJECT (100%)
The Glencoe Uranium Project is located in the Lake Frome region 450km northeast of Adelaide. The
Project is prospective for roll front type uranium mineralisation within sediments of the Tertiary Lake
Eyre Basin, contained within the Carnanto and Yalkapo Paleochannels which traverse the Project.
In early 2013 the decision was made to surrender the Glencoe project tenement. After reviewing these
tenements, it was not considered prudent to assign resources to this project given the high potential
alternative investments elsewhere in the Consolidated Entity’s portfolio.
MAWSON PROJECT (100%)
The Mawson Uranium Project is located in the prospective Mount Painter Complex, 500km north of
Adelaide. The licence is 5km to the southwest of the Marathon Resources Limited’s 66 million lbs Mt Gee
uranium deposit. The project covers the southern extension of the Mount Painter Complex and the
continuation of the Paralana Fault zone. Reactivation of this fault is believed to be an important factor in
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the localisation of the uranium mineralisation at the Mount Gee and Mount Painter Breccia hosted
uranium deposits. No work was completed on this project during the current year.
ARGENTINA
RIO COLORADO URANIUM PROJECT, ARGENTINA (CXU earning 92.5%)
Rio Colorado in Catamarca Province covers an area of 454 km2 and comprises four granted mining leases
(minas), six granted exploration licences (cateos) and four mining lease applications. The deposit
intermittently outcrops over a strike of 17 km with numerous small scale historical workings focused on
the sandstone hosted uranium-copper-silver mineralisation.
Cauldron, through its wholly owned subsidiary Cauldron Minerals Ltd (formerly Jackson Global Ltd), has
the right to earn 92.5% of the Rio Colorado uranium-copper-silver project in Catamarca, one of the
principal mining provinces in Argentina.
The Rio Colorado Project comprises a 17km long zone of outcropping mineralised (uranium, copper and
silver) continental red bed sandstones. Extensive surface sampling of uranium mineralised outcrop
indicates ore zones 10-20m wide, including zones between 300 to 3,000 ppm U3O8 over widths up to
10.7m. Mapping and sampling at the northern end of the mineralised sandstones indicates continuity
over at least 5 km, which remains open to the south.
The team in Argentina continues to assist with recent Government efforts in the process of
communication and education in the local community. Cauldron’s strategy throughout the current year
was to progress exploration in a cost effective manner, whilst implementing measures to preserve cash.
LAS MARIAS URANIUM PROJECT, ARGENTINA (100%)
Las Marias in San Juan Province comprising two granted exploration licences and nine applications
covering an area of 793 km2. The project displays outcropping sandstone hosted uranium deposits, but
is also prospective for copper, silver and gold.
Cauldron, through its wholly owned subsidiary Cauldron Minerals Ltd (formerly Jackson Global Ltd) has
granted leases and applications over ground prospective for uranium mineralisation in San Juan, one of
the principal mining provinces in Argentina. The Las Marias Project includes areas of historical uranium
exploration, dating from the 1970s. Cauldron Minerals Ltd is the first company to receive environmental
clearance for the exploration and bulk testing for uranium in this province.
Within the Las Marias Project, outcropping uranium mineralisation is defined within strata bound
sandstones, with over 7km of strike, conformable with the local stratigraphy. Radiometric anomalism
suggests that the mineralised units extend under cover, throughout the project area. Initial
investigations by the Company, indicates an average outcropping uranium anomalism of between 100 to
550 ppm U3O8 up to three metres in width, with samples peaking at 1,305 ppm U3O8.
The review of the Las Marias gold sampling program continues, however, to date shortfalls in the
sampling program have been identified, resampling is being conducted. There remains a strong potential
for gold mineralisation in the area and an effective geochemical program is needed to understand this
potential value to the Company.
LOS COLORADOS PROJECT, ARGENTINA (CXU earning 80%)
Cauldron through its wholly owned subsidiary Jakaranda Minerals Limited (Jakaranda), entered into an
agreement with Argentinean company Caudillo Resources SA (Caudillo) early in 2011 to explore the
historic Los Colorados Uranium Mine in the province of La Rioja in Argentina.
The uranium mineralisation mined from 1992-1996 is of the sandstone hosted roll front style and is
hosted within Carboniferous age clastic sediments and is observed in the walls of the open pit. This,
along with historical drill records, indicates the mineralisation extends beyond the boundary of the
mined area. Old mine records indicate grades from 0.26 to 1.22% U3O8 in dark shale units within and on
the margins of the open pit that host the uranium mineralisation. Additionally, this style of deposit
supports the likelihood of further roll-front horizons existing elsewhere within the project. The Los
Colorados deposit was discovered solely because it outcropped at the surface.
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Annual Report 2013
In August 2011, Caudillo completed a 20 hole reverse circulation drilling program for a total of 1,027
metres of drilling aimed at testing for extensions to the Los Colorados mine. Geochemical assay results
confirm the presence of roll-front style uranium mineralisation adjacent to the old mine with the most
significant result from geochemical assay being 0.5m @ 1946 ppm U3O8.
COMPETENT PERSON STATEMENT
The information in this Annual Report that relates to Cauldron Energy Limited’s Exploration Results,
Mineral Resources or Ore Reserves is based on information compiled by Mr Brett Smith, who is a
Member of the Australasian Institute of Mining and Metallurgy. Mr Smith is a director of Cauldron
Energy Limited. Mr Smith has sufficient experience which is relevant to the style of mineralisation and
types of deposits under consideration and he is undertaking to qualify as a Competent Person as defined
in the 2004 Edition of the “Australasian Code of Reporting of Exploration Results, Mineral Resources and
Ore Reserves.” Mr Smith is consents to the inclusion in this Annual Report of the matters based on his
information, in the form and context in which it appears.
5.
BUSINESS STRATEGIES AND PROSPECTS FOR THE FORTHCOMING YEAR
The Consolidated Entity intends to continue its focus on the uranium sector.
6.
SIGNFICANT CHANGES IN STATE OF AFFAIRS
There have been no changes in the state of affairs of the Consolidated Entity other than those disclosed
in the review of operations.
7.
SUBSEQUENT EVENTS
Funding secured via Converting Loan Agreements with major shareholders
On 10 July 2013, the Consolidated Entity announced that it had secured $1.5 million in funding via the
execution of converting loan agreements with its two major shareholders. Pursuant to the terms of the
converting loan agreements, the Consolidated Entity received $1.5 million funding on 31 July 2013,
which will be automatically converted into ordinary shares in the Consolidated Entity, subject to receipt
of shareholder approval at its 2013 Annual General Meeting.
Government grant secured – Royalties for Regions Co-funded Government-Industry Drilling Program
On 10 July 2013, the Consolidated Entity announced that it had secured government grants as part of
the WA Exploration Incentive Scheme up to $300,000 to assist in funding drilling activities in the Yanrey
region of Western Australia. These funds are subject to strict guidelines and are to be utilised for direct
drilling costs only.
Extension of closing date for takeover offer for Energia Minerals
On 26 July 2013, the Consolidated Entity announced that it had resolved to extend the Energia takeover
offer period to 16 November 2013 (unless further extended).
Apart from the above, no matters or circumstances have arisen since the end of the financial year which
significantly affected or may significantly affect the operations of the Consolidated Entity, the results of
those operations, or the state of affairs of the Consolidated Entity in future financial years.
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Annual Report 2013
8.
ENVIRONMENTAL ISSUES
The Consolidated Entity is aware of its environmental obligations with regards to its exploration
activities and ensures that it complies with all regulations when carrying out any exploration work.
9.
DIVIDENDS PAID OR RECOMMENDED
The directors do not recommend the payment of a dividend and no amount has been paid or declared
by way of a dividend to the date of this report.
10.
SHARES UNDER OPTION
Details of unissued shares under option as at the date of this report are:
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Grant Date
Class of
Shares
Exercise
Price
Number of
Options
Expiry Date
Listed /
Unlisted
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20 October 2010
11 June 2012
1 August 2012
19 September 2012
Ordinary
Ordinary
Ordinary
Ordinary
$0.45
$0.20
$0.20
$0.20
500,000
2,000,000
800,000
1,000,000
20 October 2015
30 June 2014
30 June 2014
18 September 2015
Unlisted
Unlisted
Unlisted
Unlisted
Option holders do not have any rights to participate in any issues of shares or other interests in the
company or any other entity.
No person entitled to exercise the option had or has any right by virtue of the option to participate in
any share issue of any other body corporate.
During the year ended 30 June 2013 there were 2,663,124 ordinary shares issued for $1,198,406
consideration (2012: nil) as a result of the exercise of options.
11.
INDEMNITY AND INSURANCE PREMIUMS FOR DIRECTORS AND OFFICERS
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001 every
Officer or agent of the Consolidated Entity shall be indemnified out of the property of the Consolidated
Entity against any liability incurred by him in his capacity as Officer, auditor or agent of the Consolidated
Entity or any related corporation in respect of any act or omission whatsoever and howsoever occurring
or in defending any proceedings, whether civil or criminal. The contracts of insurance contain
confidentiality provisions that preclude disclosure of the premiums paid, the nature of the liability
covered by the policies, the limit of liability and the name of the insurer.
12. MEETINGS OF DIRECTORS
Two directors meeting were held during the year and all directors were in attendance. The Consolidated
Entity does not have a formally constituted audit committee or remuneration committee as the board
considers that the Consolidated Entity’s size and type of operation do not warrant such committees.
13.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration for the year ended 30 June 2013 has been received and is
included on page 14 of the annual report.
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Annual Report 2013
14.
REMUNERATION REPORT
This remuneration report, which forms part of the directors’ report, sets out information about the
remuneration of Cauldron’s directors for the financial year ended 30 June 2013.
KEY MANAGEMENT PERSONNEL
The following persons acted as directors of Cauldron during or since the end of the financial year:
Antony Sage
Brett Smith
Qiu Derong
Executive Chairman
Executive Technical Director
Non-Executive Director
The named persons held their positions for the duration of the financial year and up to the date of this
report.
REMUNERATION POLICY
The remuneration policy of Cauldron has been designed to align director objectives with shareholder
and business objectives by providing a fixed remuneration component which is assessed on an annual
basis in line with market rates. The board believes the remuneration policy to be appropriate and
effective in its ability to attract and retain appropriately skilled directors to run and manage the
Consolidated Entity, as well as create goal congruence between directors and shareholders.
The board policy is to remunerate non-executive directors at market rates for comparable companies
for time, commitment and responsibilities. The executive directors in consultation with independent
advisors determine payments to the non-executive directors and review their remuneration annually,
based on market practice, duties and accountability. The maximum aggregate amount of fees that can
be paid to non-executive directors is subject to approval by shareholders at the Annual General
Meeting. Fees for non-executive directors are not linked to the performance of the Consolidated Entity.
However, to align directors’ interests with shareholder interests, the directors are encouraged to hold
shares in the Consolidated Entity.
COMPANY PERFORMANCE, SHAREHOLDER WEALTH AND DIRECTORS AND EXECUTIVES’
REMUNERATION
The remuneration policy has been tailored to increase goal congruence between shareholders and
directors. This has been achieved by the issue of options to the majority of directors to encourage the
alignment of personal and shareholder interest.
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Annual Report 2013
REMUNERATION OF DIRECTORS
Details of the nature and amount of emoluments of each director are as follows:
SHORT-TERM BENEFITS
POST EMPLOYMENT
SHARE-BASED
PAYMENTS
TOTAL
Remuneration
share based
payment
Salary, Fees
& Leave
Other
Non-
Monetary
Super-
annuation
Retirement
Benefits
Equity
Options
$
%
Directors
Antony Sage – Executive Chairman
2013
2012
120,000
120,000
-
-
Brett Smith – Executive Technical Director
2013
2012
112,982
109,003
-
-
Qiu Derong – Non Executive Director (i)
2013
2012
365,068
-
Total Remuneration Directors
598,050
-
-
-
2013
2012
(i)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
120,000
120,000
112,982
109,003
365,068
-
598,050
-
-
-
-
-
-
-
-
-
-
229,003
In his capacity as Non-Executive Director of Cauldron Energy Ltd, Mr Qiu Derong is entitled to
a fee of $100,000 per annum, back-dated to his appointment on 6 November 2009. The
amount of $365,068 recognised in 2013 relates to the fee paid and accrued for the period
from the date of appointment to 30 June 2013.
229,003
-
-
-
-
Performance related Bonuses and Share Based Payments
There were no options or shares issued to directors as remuneration during the year ended 30 June
2013 (2012: nil).
There are no employment contracts between the company and the directors.
15.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in
any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of
the Company for all or any part of these proceedings.
The Company was not a party to any such proceedings during the year.
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Annual Report 2013
16. NON AUDIT SERVICES
No other fees were paid or payable to the auditors for non-audit services performed during the year
ended 30 June 2013.
This report of the Directors, incorporating the Remuneration Report is signed in accordance with a
resolution of the Board of Directors.
Mr Antony Sage
Executive Chairman
PERTH
5 September 2013
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To The Board of Directors
As lead audit director for the audit of the financial statements of Cauldron Energy Limited
for the financial year ended 30 June 2013, I declare that to the best of my knowledge
and belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
CHRIS WATTS CA
Director
DATED at PERTH this 5th day of September 2013
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Annual Report 2013
CORPORATE GOVERNANCE
The Board of Directors of Cauldron Energy Limited (Cauldron) is responsible for establishing the corporate
governance framework of the Company having regard to the ASX Corporate Governance Council’s (CGC)
Corporate Governance Principles and Recommendations (Recommendations) and CGC published guidelines.
In accordance with ASX Listing Rule 4.10.3, this corporate governance statement discloses the extent to which
the Company has followed the Recommendations by detailing the Recommendations that have not been
adopted by the Company and the reasons why they have not been adopted. The Company is pleased to advise
that the Company’s practices are largely consistent with CGC guidelines, however, in areas where they do not
correlate, the Company is working toward compliance or do not consider that the practices are appropriate for
the current size and scale of operations.
Cauldron corporate governance practices were in place throughout the year ended 30 June 2012. The current
corporate governance policies are posted in a dedicated corporate governance information section of the
Company’s website at www.cauldronenergy.com.au.
Adherence to the Guide on Best Practice Recommendations
Recommendation
Comply
Yes / No
Principal 1 – Lay solid foundations for management and oversight
1.1
Establish and disclose the functions reserved to the Board and those delegated to senior
executives.
Disclose the process for evaluating the performance of senior executives.
Provide the information indicated in the guide to reporting on Principle 1.
1.2
1.3
Principal 2 – Structure the Board to add value
2.1
2.2
2.3
A majority of the Board should be independent directors.
The chairperson should be an independent director.
The roles of chairperson and chief executive officer should not be exercised by the same
individual.
The Board should establish a nomination committee.
Disclose the process for evaluating the performance of the Board, its committees and
individual directors.
Provide the information indicated in the guide to reporting on Principle 2.
2.4
2.5
2.6
Principal 3 – Promote ethical and responsible decision-making
3.1
Companies should establish a code of conduct and disclose the code or a summary of
the code as to:
3.1.1 The practices necessary to maintain confidence in the Company’s integrity.
3.1.2 The practices necessary to take into account their legal obligations and the
reasonable expectations of their stakeholders.
3.1.3 The responsibility and accountability of individuals for reporting and investigating
reports of unethical practices.
3.2
3.3
3.4
3.5
Companies should establish a policy concerning diversity and disclose the policy or a
summary of that policy. The policy should include requirements for the board to
establish measurable objectives for achieving gender diversity for the board to assess
annually both the objectives and progress in achieving them.
Companies should disclose in each annual report the measurable objectives for
achieving gender diversity set by the board in accordance with the diversity policy and
progress towards achieving them.
Companies should disclose in each annual report the proportion of women employees in
the whole organisation, women in senior executive positions and women on the board.
Provide the information indicated in the guide to reporting on Principle 3.
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Yes
Yes
Yes
No
No
No
No
Yes
Yes
Yes
Yes
No
Yes
Yes
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CORPORATE GOVERNANCE (cont)
Principal 4 – Safeguard integrity in financial reporting
4.1
4.2
The Board should establish an audit committee.
The audit committee should be structured so that it:
consists only of non-executive directors;
consists of a majority of independent directors;
is chaired by an independent chairperson, who is not chairperson of the Board;
and
has at least three members.
4.3
4.4
The audit committee should have a formal charter
Provide the information indicated in the guide to reporting on Principle 4.
Principal 5 – Make timely and balanced disclosure
5.1
Companies should established written policies designed to ensure compliance with ASX
Listing Rule disclosure requirements and to ensure accountability at a senior executive
level for that compliance and disclose those policies or a summary of those policies.
Provide the information indicated in the guide to reporting on Principle 5.
5.2
6.2
7.2
7.3
7.4
Principal 6 – Respect the rights of shareholders
6.1
Companies should design a communication policy for promoting effective communication
with shareholders and encourage their participation at general meetings and disclose
their policy or a summary of that policy.
Provide the information indicated in the guide to reporting on Principle 6.
Principal 7 – Recognise and manage risk
7.1
Companies should establish policies for the oversight and management of material
business risks and disclose a summary of those policies.
The Board should require management to design and implement the risk management
and internal control system to manage the Company’s material business risks and report
to it on whether those risks are being managed effectively. The Board should disclose
that management has reported to it as to the effectiveness of the Company’s
management of its material business risks.
The Board should disclose whether it has received assurances from the chief executive
officer (or equivalent) and the chief financial officer (or equivalent) that the declaration
provided in accordance with section 295A of the Corporations Act is founded on a sound
system of risk management and internal control and that the system is operating
effectively in all material respects in relation to financial reporting risks.
Provide the information indicated in the guide to reporting on Principle 7.
Principal 8 – Remunerate fairly and responsibly
8.1
8.2
The Board should establish a remuneration committee.
The remuneration committee should be structured so that it:
consists of a majority of independent directors;
is chaired by an independent chair; and
has at least three members.
8.3
8.4
Companies should clearly distinguish the structure of non-executive directors’
remuneration from that of executive directors and senior executives.
Provide the information indicated in the guide to reporting on Principle 8.
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Comply
Yes / No
No
No
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
Annual Report 2013
The Board of Directors
CORPORATE GOVERNANCE (cont)
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The Board’s role is to govern the Company rather than to manage it. In governing the Company, the Directors
must act in the best interests of the Company as a whole. It is the role of senior management to manage the
Company in accordance with the direction and delegations of the Board and it is the responsibility of the Board
to oversee the activities of management in carrying out these delegated duties.
In carrying out its governance role, the main task of the Board is to drive the performance of the Company.
The Board must also ensure that the Company complies with all of its contractual, statutory and any other legal
obligations, including the requirements of any regulatory body. The Board has the final responsibility for the
successful operations of the Company.
To assist the Board in carrying out its functions, it has developed a Code of Conduct to guide the Directors, the
Chief Executive Officer, the Chief Financial Officer and other key executives in the performance of their roles.
In general, the Board is responsible for, and has the authority to determine, all matters relating to the policies,
practices, management and operations of the Company. It is required to do all things that may be necessary to
be done in order to carry out the objectives of the Company. Full details of the Board’s role and responsibilities
is available on the Company’s website:
are contained
www.cauldronenergy.com.au.
in the Board Charter, a copy of which
Without intending to limit this general role of the Board, the principal functions and responsibilities of the
Board include the following:
Leadership of the Organisation: overseeing the Company and establishing codes that reflect the
values of the Company and guide the conduct of the Board.
Strategy Formulation: to set and review the overall strategy and goals for the Company and ensuring
that there are policies in place to govern the operation of the Company.
Overseeing Planning Activities: the development of the Company’s strategic plan.
Shareholder Liaison: ensuring effective communications with shareholders through an appropriate
communications policy and promoting participation at general meetings of the Company.
Monitoring, Compliance and Risk Management: the development of the Company’s risk management,
compliance, control and accountability systems and monitoring and directing the financial and
operational performance of the Company.
Company Finances: approving expenses and approving and monitoring acquisitions, divestitures and
financial and other reporting.
Human Resources: appointing, and, where appropriate, removing the Chief Executive Officer (CEO)
and Chief Financial Officer (CFO) as well as reviewing the performance of the CEO and monitoring the
performance of senior management in their implementation of the Company’s strategy.
Ensuring the Health, Safety and Well-Being of Employees: in conjunction with the senior management
team, developing, overseeing and reviewing the effectiveness of the Company’s occupational health
and safety systems to ensure the well-being of all employees.
Delegation of Authority: delegating appropriate powers to the CEO to ensure the effective day-to-day
management of the Company and establishing and determining the powers and functions of the
Committees of the Board.
Structure of the Board
To add value to the Company the Board has been formed so that it has effective composition, size and
commitment to adequately discharge its responsibilities and duties given its current size and scale of
operations. The names of the Directors and their qualifications and experience are stated in the Directors’
Report. Directors are appointed based on the specific skills required by the Company and on other attributes
such as their decision-making and judgment skills.
The Company recognises the importance of Non-Executive Directors and the external perspective and advice
that Non-Executive Directors can offer. Mr Qiu Derong is a Non-Executive Director but he does not meet the
Company’s criteria for independence. Mr B Smith and Mr A Sage are Executive Directors of the Company and
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CORPORATE GOVERNANCE (cont)
do not meet the Company’s criteria for independence. However, their experience and knowledge of the
Company makes their contribution to the Board such that it is appropriate for them to remain on the Board.
An Independent Director is a Non-Executive Director and:
is not a substantial shareholder of the Company or an officer of, or otherwise associated directly with,
a substantial shareholder of the Company;
within the last three years has not been employed in an executive capacity by the Company or another
group member, or been a Director after ceasing to hold any such employment;
within the last three years has not been a principal of a material professional adviser or a material
consultant to the Company or another group member, or an employee materially associated with the
service provided;
is not a material supplier or customer of the Company or another group member, or an officer of or
otherwise associated directly or indirectly with a material supplier or customer;
has no material contractual relationship with the Company or other group member other than as a
Director of the Company;
has not served on the Board for a period which could, or could reasonably be perceived to, materially
interfere with the Director’s ability to act in the best interests of the Company; and
is free from any interest and any business or other relationship which could, or could reasonably be
perceived to, materially interfere with the Director’s ability to act in the best interests of the
Company.
Mr Antony Sage is the Executive Chairman of the Company and does not meet the Company’s criteria for
independence. The Board believes his experience and knowledge of the Company makes him the most
appropriate person to lead the Board.
The role of Chief Executive Officer of the Company has been discharged jointly by Executive Directors, Mr Brett
Smith and Mr Tony Sage. The Board considers relevant industry experience and specific expertise important in
providing strategic guidance and oversight of the Company, and it believes, Mr Brett Smith and Mr Tony Sage
acting jointly in this role remain the most appropriate people to fulfil this role.
There are procedures in place, agreed by the Board, to enable directors, in furtherance of their duties, to seek
independent professional advice at the Company’s expense.
The term in office held by each director in office at the date of this report is as follows:
Mr Antony Sage
Mr Brett Smith
Mr Qiu Derong
4 years & 3 months
4 years & 3 months
3 year & 10 months
(Executive Chairman)
(Executive Director)
(Non-Executive Director)
Performance Review/Evaluation
It is the policy of the Board to conduct evaluation of its performance. The objective of this evaluation is to
provide best practice corporate governance to the Company.
The performance of the Chief Executive Officer (Executive Director) is monitored by the Board as a whole. A
formal performance review of the Chief Executive Officer did not occur during the year.
The performance of senior management is monitored by the Executive Chairman.
The Board has established formal practices to evaluate the performance of the Board, committees, non-
executive Directors, the Chief Executive Officer, and senior management. Details of these practices are
available on the Company’s website. No formal performance evaluation of the Board, individual directors of
senior management took place during the year.
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Annual Report 2013
CORPORATE GOVERNANCE (cont)
In order to achieve continuing improvement in Board performance, all Directors are encouraged to undergo
continual professional development. Specifically, Directors are provided with the resources and training to
address skill gaps where they are identified.
Securities Trading Policy
Under the Company’s Securities Trading Policy, a Director, executive or other employee must not trade in any
securities of the Company at any time when they are in possession of unpublished, price-sensitive information
in relation to those securities. Additionally, the Board and other employees may not deal in the Company’s
securities 1 day prior to, and 1 day after, the release of the Company’s half yearly or yearly results.
Approval is required by Directors and employees before they trade in securities.
As is required by the ASX Listing Rules, the Company notifies the ASX of any transaction conducted by a
Director in the securities of the Company.
Diversity Policy
Recommendation 3.2 of the Recommendations states that companies should establish a policy concerning
diversity and disclose the policy or a summary of that policy. The policy should include requirements for the
board to establish measureable objectives for achieving gender diversity and for the board to assess annually
both the objectives and progress in achieving them.
The Company recognises that a talented and diverse workforce is a key competitive advantage and that an
important contributor to the Company’s success is the quality, diversity and skills of its people.
Under the Company's Code of Conduct, employees must not harass, discriminate or support others who harass
and discriminate against colleagues or members of the public on the grounds of sex, pregnancy, marital status,
age, race (including their colour, nationality, descent, ethnic or religious background), physical or intellectual
impairment, homosexuality or transgender. Such harassment or discrimination may constitute an offence
under legislation.
The Company has adopted a diversity policy which provides a framework for the Company to achieve:
a diverse and skilled workforce, leading to continuous improvement in service delivery and
achievement of corporate goals;
a workplace culture characterised by inclusive practices and behaviours for the benefit of all staff;
improved employment and career development opportunities for women;
a work environment that values and utilises the contributions of employees with diverse backgrounds,
experiences and perspectives through improved awareness of the benefits of workforce diversity and
successful management of diversity; and
awareness in all staff of their rights and responsibilities with regards to fairness, equity and respect for
all aspects of diversity.
The Board is primarily responsible for setting achievable objectives on gender diversity and monitoring the
progress of the Company towards them on an annual basis. Due to the size and scale of operations of the
Company, the Board has determined that a long term gender diversity objective is more appropriate.
Recommendation 3.3 of the Recommendations states that the board should disclose in each annual report the
measurable objective for achieving gender diversity set by the board in accordance with the diversity policy
and progress towards achieving them.
Given the size of the Company, the Company has not yet set measurable objectives for achieving gender
diversity. The Board will review progress against any objectives identified on an annual basis.
Recommendation 3.4 of the Recommendations states that the board should disclose in each annual report:
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Annual Report 2013
CORPORATE GOVERNANCE (cont)
(a)
(b)
(c)
the proportion of women employees in the whole organisation;
women in senior executive positions; and
women on the board.
While there are no female board members, the roles of Company Secretary and Chief Financial Officer are
discharged by females. As at 30 June 2013, 50% of the employees of the Company were females.
Audit and Risk Committee
Due to the current size of the Board, the functions of the Audit and Risk Committee are discharged by the
Board as a whole. The Board reviews the audited annual and half-yearly financial statements and any reports
which accompany published financial statements and recommends their approval. The Board each year
reviews the appointment of the external auditor, their independence, the audit fee, and any questions of
resignation or dismissal.
The Board as a whole is also responsible for establishing policies on risk oversight and management.
Risk Management Policies
The Board’s Charter clearly establishes that it is responsible for ensuring there is a good sound system for
overseeing and managing risk. Due to the size and scale of the operations of the Company and the size of the
Board, risk management issues are considered by the Board as a whole. In accordance with Recommendation
7.1, the Board has established a formal policy for risk management and a framework for monitoring and
managing material business risks on an ongoing basis. The policies and procedures adopted are directed at
meeting the following objectives:
effectiveness and efficiency in the use of the Company’s resources.
compliance with applicable laws and regulations.
preparation of reliable published financial information.
In developing its risk management policies, the Board has taken into consideration any legal obligations and the
reasonable expectations of its stakeholders in relation to risk management The Chair is accountable to the
Board for effective risk management. The Board undertakes to review the management of material business
risks at least annually.
The Company’s Risk Management Policy is located on its website: www.cauldronenergy.com.au.
Attestations by CEO
It is the Board’s policy, that the CEO makes the attestations recommended by the CGC as to the Company’s
financial condition prior to the Board signing the Annual Report. However, as at the date of this report the role
of CEO is being discharged by the Executive Chairman and the Executive Director jointly. The certification
required in accordance with section 295A of the Corporations Act is provided by the Executive Chairman prior
to acceptance by the Board as a whole. The Board has received assurance that the declaration provided in
accordance with section 295A of the Corporations Act is founded on a sound system of risk management and
internal control and that the system is operating effectively in all material respects in relation to financial
reporting risks.
Remuneration Committee
Due to the current size of the Board, the functions of the Remuneration Committee are discharged by the
Board as a whole. The Board as a whole, is charged with the responsibility in respect of establishing
appropriate remuneration levels and incentive policies for employees, executives and directors.
The Board is responsible for setting policies for senior officers’ remuneration, setting the terms and conditions
of employment for the Chief Executive Officer, reviewing and amending the Company’s incentive schemes and
superannuation arrangements, reviewing the remuneration of both Executive and Non-Executive Directors and
making recommendations on any proposed changes and undertaking reviews of the Chief Executive Officer’s
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CORPORATE GOVERNANCE (cont)
performance, including, setting with the Chief Executive Officer goals and reviewing progress in achieving those
goals.
Remuneration Policy
Directors’ Remuneration has been approved by resolutions of the Board when Directors have been appointed
to the Company, and resolutions of Shareholders when the total remuneration of Non-Executive Directors has
increased.
Senior Executive Remuneration Policy
The Company is committed to remunerating its senior executives in a manner that is market-competitive and
consistent with best practice as well as supporting the interests of shareholders. Consequently, the
remuneration of senior executive may be comprised of the following:
fixed fee that is determined from a review of the market and reflects core performance requirements
and expectations;
a performance bonus designed to reward actual achievement by the individual of performance
objectives and for materially improved Company performance;
participation in any share/option scheme with thresholds approved by shareholders;
statutory superannuation.
By remunerating senior executives through performance and long-term incentive plans in addition to their
fixed remuneration the Company aims to align the interests of senior executives with those of shareholders
and increase Company performance.
The value of shares and options were they to be granted to senior executives would be calculated using the
Black-Scholes option pricing model.
The objective behind using this remuneration structure is to drive improved Company performance and
thereby increase shareholder value as well as aligning the interests of executives and shareholders.
The Board may use its discretion with respect to the payment of bonuses, stock options and other incentive
payments.
Non-Executive Director Remuneration Policy
Non-Executive Directors are to be paid their fees out of the maximum aggregate amount approved by
shareholders for the remuneration of Non-Executive Directors.
Current Director Remuneration
Full details regarding the remuneration of Directors, is included in the Directors’ Report.
Nomination Committee
The role of a Nomination Committee is to help achieve a structured Board that adds value to the Company by
ensuring an appropriate mix of skills are present in Directors on the Board at all times. As the whole Board only
consists three members, the Company does not have a nomination committee because it would not be a more
efficient mechanism than the full Board for focusing the Company on specific issues.
Responsibilities
The responsibilities of a Nomination Committee would include devising criteria for Board membership,
regularly reviewing the need for various skills and experience on the Board and identifying specific individuals
for nomination as Directors for review by the Board. The Nomination Committee would also oversee
management succession plans including the CEO and his/her direct reports and evaluate the Board’s
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Annual Report 2013
CORPORATE GOVERNANCE (cont)
performance and make recommendations for the appointment and removal of Directors. Currently the Board
as a whole performs this role.
Criteria for selection of Directors
Directors are appointed based on the specific governance skills required by the Company. Given the size of the
Company and the business that it operates, the Company aims at all times to have at least one Director with
relevant industry experience. In addition, Directors should have the relevant blend of personal experience in
accounting and financial management and Director-level business experience.
Continuous Disclosure
The Board has adopted a continuous disclosure policy to ensure that the Company complies with the disclosure
requirements of the ASX Listing Rules which is available on the Company’s website. The Board has designated
the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to
the ASX as well as communicating with the ASX. In accordance with the ASX Listing Rules the Company
immediately notifies the ASX of information:
concerning the Company that a reasonable person would expect to have a material effect on the price
or value of the Company’s securities; and
that would, or would be likely to, influence persons who commonly invest in securities in deciding
whether to acquire or dispose of the Company’s securities.
The Company’s Continuous Disclosure Policy is located on its website (www.cauldronenergy.com.au).
Shareholder Communication
The Company respects the rights of its shareholders and to facilitate the effective exercise of those rights the
Company is committed to:
communicating effectively with shareholders through releases to the market via ASX, information
mailed to shareholders and the general meetings of the Company;
giving shareholders ready access to balanced and understandable information about the Company and
corporate proposals;
making it easy for shareholders to participate in general meetings of the Company; and
requesting the external auditor 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
auditor’s report.
The Company also makes available a telephone number and email address for shareholders to make enquiries
of the Company and encourages shareholders to visit the Company’s website for information. The Company’s
Shareholder Communication Policy is available on the Company’s website (www.cauldronenergy.com.au).
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Annual Report 2013
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2013
Revenue
Other income
Administration expenses
Employee benefits expenses
Directors fees
Share based payments
Compliance and regulatory expenses
Consultancy expenses
Legal fees
Occupancy expenses
Travel expenses
Net fair value loss on financial assets
Profit/(loss) on disposal of financial assets
Depreciation
Finance costs
Realised foreign exchange loss
Impairment of receivables
Impairment of loan receivable
Impairment of plant and equipment
Impairment of exploration expenditure
Loss before income tax expense
Income tax expense
Loss for the year
Other comprehensive income; net of income tax
Items that will not be reclassified subsequently to
profit or loss:
-
Items that may be reclassified subsequently to
profit or loss:
Exchange differences arising on translation of
foreign operations
Other comprehensive income for the year
after income tax
Note
3(a)
3(b)
2013
$
2012
$
141,341
188,000
224,514
3,729,412
4
9(b)
10
5
(355,532)
(129,207)
(598,050)
(236,353)
(116,437)
(550,791)
(287,084)
(59,082)
(61,056)
(2,268,478)
(8,242)
(22,107)
(91,041)
(13,320)
(56,767)
(1,204,485)
-
(2,168,174)
(390,846)
(239,477)
(229,003)
(14,205)
(134,236)
(388,560)
(86,701)
(73,136)
(84,783)
(1,586,216)
72,632
(21,230)
(1,130,906)
(21,731)
-
-
(6,265)
-
(7,896,865)
(380,737)
-
-
(7,896,865)
(380,737)
-
-
(158,166)
(123,088)
(158,166)
(123,088)
Total comprehensive income attributable to
members of the Company
(8,055,031)
(503,825)
Earnings/(loss) Per Share
Basic earnings/(loss) per share (cents per share)
18
(5.16)
(0.40)
The accompanying notes form part of these financial statements.
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Annual Report 2013
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013
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CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Financial assets
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Restricted cash
Loan receivables
Exploration and evaluation expenditure
Property, plant and equipment
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Financial liabilities
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
Note
2013
$
2012
$
23(b)
6
7
214,006
127,118
572,302
2,927,111
145,789
2,660,302
913,426
5,733,202
8
9
10
11
12
13
14
217,761
-
9,384,605
46,105
221,592
996,010
9,332,498
36,290
9,648,471
10,586,390
10,561,897
16,319,592
504,537
-
16,989
900,643
11,300,000
15,071
521,526
12,215,714
521,526
12,215,714
10,040,371
4,103,878
15
16
17
37,348,796
1,445,539
(28,753,964)
23,593,625
1,367,352
(20,857,099)
10,040,371
4,103,878
The accompanying notes form part of these financial statements.
24
Annual Report 2013
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2013
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
Interest paid
Administration service fees received
Note
2013
$
2012
$
(2,052,596)
51,948
(260,712)
89,119
(1,814,383)
120,654
(782,269)
111,826
Net cash used in operating activities
23(a)
(2,172,241)
(2,364,172)
Cash Flows from Investing Activities
Payments for exploration and evaluation
Reimbursement for exploration and evaluation incurred
on behalf of other parties
Payments for plant and equipment
Proceeds from the sale of tenements
Refund of deposits paid
Loans repaid by other entities
Funding provided to Caudillo Resources SA
Proceeds from sales of equity investments
(2,992,375)
(2,032,379)
751,850
(33,050)
-
3,830
-
(257,329)
-
1,220,094
(5,045)
300,000
81,515
573,863
(648,001)
4,144,116
Net cash from/ (used in) investing activities
(2,527,074)
3,634,163
Cash Flows from Financing Activities
Proceeds from issue of shares and options, net of
transaction costs
Proceeds from issue of convertible loan note
1,989,281
-
693,500
-
Net cash from financing activities
1,989,281
693,500
Net increase/ (decrease) in cash held
Effects of exchange rate changes on cash
Cash and cash equivalents at beginning of financial year
(2,710,034)
(3,071)
2,927,111
1,963,491
(4,687)
968,307
Cash and cash equivalents at end of financial year
214,006
2,927,111
The accompanying notes form part of these financial statements.
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Annual Report 2013
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR YEAR ENDED 30 JUNE 2013
Balance at 1 July 2012
Loss attributable to members of the parent
entity
Other comprehensive income
Total comprehensive income for the year
Transaction with owners, directly in equity
Shares issued during the year, net of costs
Share based payments expense recognised for
value of options issued/vested during the year
Issued Capital
Accumulated
Losses
Option
Premium
Reserve
Foreign
Currency
Translation
Reserve
Total
$
$
$
$
$
23,593,625
(20,857,099)
2,121,146
(753,794)
4,103,878
-
-
-
(7,896,865)
-
(7,896,865)
13,755,171
-
-
-
-
-
-
-
236,353
-
(7,896,865)
(158,166)
(158,166)
(158,166)
(8,055,031)
-
-
13,755,171
236,353
Balance at 30 June 2013
37,348,796
(28,753,964)
2,357,499
(911,960)
10,040,371
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Balance at 1 July 2011
Loss attributable to members of the parent
entity
Other comprehensive income
Total comprehensive income for the year
Transaction with owners, directly in equity
Shares issued during the year, net of costs
Share based payments expense recognised for
value of options issued/vested during the year
Options forfeited during the year
Balance at 30 June 2012
22,900,125
(20,476,362)
2,106,941
(630,706)
3,899,998
-
-
-
(380,737)
-
(380,737)
693,500
-
-
-
-
-
-
-
-
-
29,529
(15,324)
-
(380,737)
(123,088)
(123,088)
(123,088)
(503,825)
-
-
-
693,500
29,529
(15,324)
23,593,625
(20,857,099)
2,121,146
(753,794)
4,103,878
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Preparation
The financial report covers Cauldron Energy Limited (“Cauldron”) and its controlled entities (“the
Consolidated Entity”). Cauldron is a public listed company, incorporated and domiciled in Australia.
The financial report is a general purpose financial report that has been prepared in accordance with
the requirements of the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board. The financial report
has been prepared on an accruals basis and is based on historical costs, modified, where applicable,
by the measurement at fair value of selected non-current assets, financial assets and financial
liabilities.
The financial report is presented in Australian dollars.
b. Compliance with IFRS
The financial report complies with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
c. Going concern
The financial statements have been prepared on a going concern basis which contemplates the
continuity of normal business activities and the realisation of assets and the settlement of liabilities in
the ordinary course of business.
The Consolidated Entity incurred a loss for the year of $7,896,865 and net cash outflows of
$2,172,241. At 30 June 2013, the Consolidated Entity has cash and cash equivalents of $214,006.
The ability of the Consolidated Entity to continue as a going concern is dependent upon the ability of
the Consolidated Entity to secure funding.
On 10 July 2013, the Consolidated Entity announced that it had secured $1.5 million in funding via the
execution of converting loan agreements with its two major shareholders. Pursuant to the terms of
the converting loan agreements, the Consolidated Entity received $1.5 million funding on 31 July
2013, which will be automatically converted into ordinary shares in the Consolidated Entity, subject
to receipt of shareholder approval at its 2013 Annual General Meeting. The funds raised will be
utilised to continue exploration activities at the Marree and Yanrey Projects in Australia and to fund
its general working capital requirements in the short term.
Additional funding is currently being sought by the directors, which at the date of this report has not
yet been finalised. This additional funding will be required to fund the Consolidated Entity’s future
planned expenditure.
The directors are confident that the Consolidated Entity will be able to secure additional funding to
enable it to meet its obligations as and when they fall due.
Should the Consolidated Entity not achieve the matters set out above, there is material uncertainty
whether it would continue as a going concern and therefore whether it would realise its assets and
extinguish its liabilities in the normal course of business and at the amounts stated in the financial
statements. The financial statements do not include any adjustment relating to the recoverability or
classification of recorded asset amounts nor to the amounts or classifications of liabilities that might
be necessary should the Consolidated Entity not be able to continue as a going concern and meet its
debts as and when they fall due.
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
d. Application of New and Revised Accounting Standards
Standards and Interpretations affecting amounts reported in the current period (and/or
prior periods)
The following new and revised Standards and Interpretations have been adopted in the current year
and have affected the amounts reported in these financial statements.
Standards affecting presentation and disclosure
Amendments to AASB 101 ‘Presentation
of Financial Statements’
The amendment (part of AASB 2011-9 ‘Amendments
to Australian Accounting Standards - Presentation of
Items of Other Comprehensive Income’ introduce
new terminology for the statement of comprehensive
income and income statement. Under the
amendments to AASB 101, the statement of
comprehensive income is renamed as a statement of
profit or loss and other comprehensive income. The
amendments to AASB 101 require items of other
comprehensive income to be grouped into two
categories in the other comprehensive income
section: (a) items that will not be reclassified
subsequently to profit or loss and (b) items that may
be reclassified subsequently to profit or loss when
specific conditions are met. Income tax on items of
other comprehensive income is required to be
allocated on the same basis – the amendments do not
change the option to present items of other
comprehensive income either before tax or net of tax.
The amendments have been applied retrospectively,
and hence the presentation of items of other
comprehensive income has been modified to reflect
the changes. Other than the above mentioned
presentation changes, the application of the
amendments to AASB 101 does not result in any
impact on profit or loss, other comprehensive income
and total comprehensive income.
Standards and Interpretations affecting the reported results or financial position
Amendments to AASB 112
‘Income Taxes’
The Consolidated Entity is not affected by the
adoption of this standard as the Company does not
hold investment property.
Accounting Standards & Interpretations in issue but not yet adopted
At the date of authorisation of the financial statements, the Standards and Interpretations listed
below were in issue but not yet effective.
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Annual Report 2013
Standard/Interpretation
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
Effective for annual
Expected to be
reporting periods
initially applied in the
beginning on or after
financial year ending
AASB 9 ‘Financial Instruments’, and the relevant amending standards
1 January 2015
30 June 2016
AASB 10 ‘Consolidated Financial Statements’ and AASB 2011-7 ‘Amendments to
1 January 2013
30 June 2014
Australian Accounting Standards arising from the consolidation and Joint
Arrangements standards’
AASB 11 ‘Joint Arrangements’ and AASB 2011- 7 ‘Amendments to Australian
1 January 2013
30 June 2014
Accounting Standards arising from the consolidation and Joint Arrangements
standards’
AASB 12 ‘Disclosure of Interests in Other Entities’ and AASB 2011-7 ‘Amendments to
1 January 2013
30 June 2014
Australian Accounting Standards arising from the consolidation and Joint
Arrangements standards’
AASB 127 ‘Separate Financial Statements’ (2011) and AASB 2011-7 ‘Amendments to
1 January 2013
30 June 2014
Australian Accounting Standards arising from the consolidation and Joint
Arrangements standards’
AASB 128 ‘Investments in Associates and Joint Ventures’ (2011) and AASB 2011-7
1 January 2013
30 June 2014
‘Amendments to Australian Accounting Standards arising from the consolidation and
Joint Arrangements standards’
AASB 13 ‘Fair Value Measurement’ and AASB 2011-8 ‘Amendments to Australian
1 January 2013
30 June 2014
Accounting Standards arising from AASB 13’
AASB 119 ‘Employee Benefits’ (2011) and AASB 2011-10 ‘Amendments to Australian
1 January 2013
30 June 2014
Accounting Standards arising from AASB 119 (2011)’
AASB 2011-4 ‘Amendments to Australian Accounting Standards to Remove Individual
1 January 2013
30 June 2014
Key Management Personnel Disclosure Requirements’
AASB 2012-2 ‘Amendments to Australian Accounting Standards – Disclosures –
1 January 2013
30 June 2014
Offsetting Financial Assets and Financial Liabilities’
AASB 2012-3 ‘Amendments to Australian Accounting Standards – Offsetting Financial
1 January 2013
30 June 2015
Assets and Financial Liabilities’
AASB 2012-5 ‘Amendments to Australian Accounting Standards arising from Annual
1 January 2013
30 June 2014
Improvements 2009–2011 Cycle’
AASB 2012-10 ‘Amendments to Australian Accounting Standards – Transition
1 January 2013
30 June 2014
Guidance and Other Amendments’
Interpretation 20 ‘Stripping Costs in the Production Phase of a Surface Mine’ and
1 January 2013
30 June 2014
AASB 2011-12 ‘Amendments to Australian Accounting Standards arising from
Interpretation 20’
The Consolidated Entity has not elected to early adopt any new Standards or Interpretations.
The Consolidated Entity is in the process of determining the impact of the above on its financial
statements.
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
e. Principles of Consolidation
A controlled entity is any entity over which Cauldron Energy Limited has the power to govern the
financial and operating policies so as to obtain benefits from its activities. In assessing the power to
govern, the existence and effect of holdings of actual and potential voting rights are considered. A list
of controlled entities is contained in note 21 to the financial statements.
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into the
consolidated financial statements as well as their results for the year then ended. Where controlled
entities have entered the Consolidated Entity during the year, their operating results have been
included from the date control was obtained.
All inter-group balances and transactions between entities in the Consolidated Entity, including any
unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with those adopted by the Parent Entity.
f.
Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Consolidated Entity’s companies is measured using the currency
of the primary economic environment in which that company operates. The consolidated financial
statements are presented in Australian dollars which is the parent entity’s functional and presentation
currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates
prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the reporting date. Non-monetary items
measured at historical cost continue to be carried at the exchange rate at the date of the transaction.
Non-monetary items measured at fair value are reported at the exchange rate at the date when fair
values were determined.
Exchange differences arising on the translation of monetary items are recognised in the statement of
comprehensive income, except where deferred in equity as a qualifying cash flow or net investment
hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in
equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange
difference is recognised in the statement of comprehensive income.
Group companies
The financial results and position of foreign operations whose functional currency is different from the
Consolidated Entity’s presentation currency are translated as follows:
-
-
-
assets and liabilities are translated at year-end exchange rates prevailing at the end of the
reporting period;
income and expenses are translated at average exchange rates for the period; and
retained earnings are translated at the exchange rates prevailing at the date of the
transaction.
Exchange differences arising on translation of foreign operations are transferred directly to the
Consolidated Entity’s foreign currency translation reserve in the statement of financial position. These
differences are recognised in the statement of comprehensive income in the period in which the
operation is disposed.
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
g. Goods and Services Tax
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST),
except:
(i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised
as part of the cost of acquisition of an asset or as part of an item of expense; or
for receivables and payables which are recognised inclusive of GST.
(ii)
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables.
Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows
arising from investing and financing activities which is recoverable from, or payable to, the taxation
authority is classified as operating cash flows.
h.
Income Tax
The income tax expense (revenue) for the year comprises current income tax expense (income) and
deferred tax expense (income).
Current income tax expense charged to the profit or loss is the tax payable on taxable income
calculated using applicable income tax rates enacted, or substantially enacted, as at the end of the
reporting period. Current tax liabilities (assets) are therefore measured at the amounts expected to be
paid to (recovered from) the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability
balances during the year as well unused tax losses.
Current and deferred income tax expense (income) is charged or credited directly to equity instead of
the profit or loss when the tax relates to items that are credited or charged directly to equity.
Deferred tax assets and liabilities are ascertained based on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax
assets also result where amounts have been fully expensed but future tax deductions are available.
No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding
a business combination, where there is no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the
period when the asset is realised or the liability is settled, based on tax rates enacted or substantively
enacted at the end of the reporting period. Their measurement also reflects the manner in which
management expects to recover or settle the carrying amount of the related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the
extent that it is probable that future taxable profit will be available against which the benefits of the
deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and
joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of
the temporary difference can be controlled and it is not probable that the reversal will occur in the
foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is
intended that net settlement or simultaneous realisation and settlement of the respective asset and
liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-
off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation
authority on either the same taxable entity or different taxable entities where it is intended that net
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
settlement or simultaneous realisation and settlement of the respective asset and liability will occur in
future periods in which significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
Tax consolidation
Cauldron Energy Limited and its wholly-owned Australian subsidiaries have formed an income tax
consolidated group under tax consolidation legislation. Each entity in the Consolidated Entity
recognises its own current and deferred tax assets and liabilities. Such taxes are measured using the
‘stand-alone taxpayer’ approach to allocation. Current tax liabilities (assets) and deferred tax assets
arising from unused tax losses and tax credits in the subsidiaries are immediately transferred to the
head entity. The Group notified the Australian Taxation Office that it had formed an income tax
consolidated group to apply from 1 July 2009.
i. Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand, cash in banks and investments in money market
instruments. Cash equivalents are short-term, highly liquid investments that are readily convertible to
known amounts of cash, which are subject to an insignificant risk of changes in value and have an
original maturity of three months or less.
j.
Financial Instruments
Recognition and initial measurement
Financial assets and financial liabilities are recognised when the Consolidated Entity becomes a party
to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that
the Consolidated Entity commits itself to either the purchase or sale of the asset (i.e. trade date
accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the
instrument is classified ‘at fair value through profit or loss’, in which case transaction costs are
expensed to profit or loss immediately.
Classification and subsequent measurement
Finance instruments are subsequently measured at either fair value, amortised cost using the effective
interest rate method, or cost. Fair value represents the amount for which an asset could be
exchanged or a liability settled, between knowledgeable, willing parties. Where available, quoted
prices in an active market are used to determine fair value. In other circumstances, valuation
techniques are adopted.
Amortised cost is calculated as:
the amount at which the financial asset or financial liability is measured at initial recognition;
less principal repayments;
plus or minus the cumulative amortisation of the difference, if any, between the amount
initially recognised and the maturity amount calculated using the effective interest method;
and
less any reduction for impairment.
The effective interest method is used to allocate interest income or interest expense over the relevant
period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts
(including fees, transaction costs and other premiums or discounts) through the expected life (or when
this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying
amount of the financial asset or financial liability. Revisions to expected future net cash flows will
necessitate an adjustment to the carrying value with a consequential recognition of an income or
expense in profit or loss.
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
The Consolidated Entity does not designate any interests in subsidiaries, associates or joint venture
entities as being subject to the requirements of accounting standards specifically applicable to
financial instruments.
The Consolidated Entity has the following financial instruments:
Financial Assets at Fair Value through Profit or Loss
Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading
for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they
are designated as such to avoid an accounting mismatch or to enable performance evaluation where a
group of financial assets is managed by key management personnel on a fair value basis in accordance
with a documented risk management or investment strategy. Such assets are subsequently measured
at fair value with changes in carrying value being included in profit or loss.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that are either designated as such
or that are not classified in any of the other categories. They comprise investments in the equity of
other entities where there is neither a fixed maturity nor fixed or determinable payments.
They are subsequently measured at fair value with gains or losses being recognised in other
comprehensive income (except for impairment losses). When the financial asset is derecognised, the
cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income
is reclassified into profit or loss.
Available-for-sale financial assets are included in non-current assets where they are expected to be
sold within 12 months after the end of the reporting period. All other financial assets are classified as
current assets.
Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity are classified
as held-to-maturity when the Group has the positive intention and ability to hold to maturity.
Investments that are intended to be held-to-maturity, such as bonds, are subsequently measured at
amortised cost.
Held-to-maturity investments are included in non-current assets, except for those which are expected
to mature within 12 months after the end of the reporting period. (All other investments are classified
as current assets).
Loans and Receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, except for those which are not expected to
mature within 12 months after the end of the reporting period. (All other loans and receivables are
classified as non-current assets.)
Debt and equity instruments
Debt and equity instruments are classified as either liabilities or as equity in accordance with the
substance of the contractual arrangement.
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Annual Report 2013
Impairment
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
At the end of each reporting period, the Consolidated Entity assesses whether there is objective
evidence that a financial instrument has been impaired.
Derecognition of financial assets
Financial assets are derecognised when the contractual rights to the cash flows from the asset expire,
or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset
to another entity. If the Consolidated Entity neither transfers nor retains substantially all the risks or
rewards of ownership and continues to control the transferred asset, the Consolidated Entity
recognises its retained interest in the asset and an associated liability for amounts it may have to pay.
If the Consolidated Entity retains substantially all the risk and rewards to ownership of a transferred
financial asset, the Consolidated Entity continues to recognise the financial asset and also recognises a
collateralised borrowing for the proceeds received.
k. Borrowing Costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying
asset (i.e. an asset that takes a substantial period of time to get ready for its intended use or sale) are
capitalised as part of the cost of that asset. All other borrowing costs are expensed in the period they
occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the
borrowing of funds.
l. Property, Plant and Equipment
Plant and equipment are stated at cost less accumulated depreciation and impairment. Cost includes
expenditure that is directly attributable to the acquisition of the item. In the event that settlement of
all or part of the purchase consideration is deferred, cost is determined by discounting the amounts
payable in the future to their present value as at the date of acquisition.
Depreciation is provided on plant and equipment. Depreciation is calculated on a diminishing value
basis so as to write off the net cost or other revalued amount of each asset over its expected useful life
to its estimated residual value. The estimated useful lives, residual values and depreciation method
are reviewed at the end of each annual reporting period.
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset
Plant and equipment
Office furniture and equipment
Motor vehicle
Depreciation Rate
2012
40.0%
40.0%
40.0%
2013
40.0%
40.0%
40.0%
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These
gains and losses are included in the statement of comprehensive income. When revalued assets are
sold, amounts included in the revaluation surplus relating to that asset are transferred to retained
earnings.
m. Exploration and Evaluation Expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of each
identifiable area of interest. These costs are only carried forward to the extent that they are expected
to be recouped through the successful development of the area or where activities in the area have
not yet reached a stage that permits reasonable assessment of the existence of economically
recoverable reserves.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
Accumulated costs in relation to an abandoned area are written off in full against profit in the year in
which the decision to abandon the area is made.
When production commences, the accumulated costs for the relevant area of interest are amortised
over the life of the area according to the rate of depletion of the economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing
to carry forward costs in relation to that area of interest.
n.
Impairment of Assets
The Consolidated Entity periodically reviews the carrying amounts of its assets to determine whether
there is any indication that those assets may be impaired. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, the
Consolidated Entity estimates the recoverable amount of the cash-generating unit to which the asset
belongs.
Goodwill, intangible assets with indefinite useful lives and intangible assets not yet available for use
are tested for impairment annually and whenever there is an indication that the asset may be
impaired. An impairment of goodwill is not subsequently reversed.
o. Trade and Other Payables
Trade and other payables represent the liability outstanding at the end of the reporting period for
goods and services received by the Consolidated Entity during the reporting period which remains
unpaid. The balance is recognised as a current liability with the amount being normally paid within 30
days of recognition of the liability.
p. Revenue Recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to
the extent it is probable that the economic benefits will flow to the Consolidated Entity and the
revenue can be reliably measured. The following specific recognition criteria must also be met before
revenue is recognised:
Interest revenue is recognised using the effective interest rate method, which, for floating rate
financial assets, is the rate inherent in the instrument.
Royalty revenue is recognised on an accrual basis in accordance with the substance of the relevant
agreement. All revenue is stated net of the amount of goods and services tax (GST).
q. Provisions and Employee Benefits
Provisions are recognised when the Consolidated Entity has a present obligation (legal or constructive)
as a result of a past event, it is probable that an outflow of resources embodying economic benefits
will be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation.
Provisions are measures at the present value of management’s best estimate of the expenditure
required to settle the present obligation at the reporting date. The discount rate used to determine
the present value reflects current assessments of the time value of money and the risks specific to the
liability. The increase in the provision resulting from the passage of time is recognised in finance costs.
Provision for restoration and rehabilitation
A provision for restoration and rehabilitation is recognised when there is a present obligation as a
result of exploration activities undertaken, it is probable that an outflow of economic benefits will be
required to settle the obligation, and the amount of the provision can be measured reliably. The
35
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
estimated future obligation includes the costs of removing facilities, abandoning sites and restoring
the affected areas.
Employee leave benefits
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled within 12 months of the reporting date are recognised in respect of employees’ services up to
the reporting date. They are measured at the amounts expected to be paid when the liabilities are
settled.
r. Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax, from the proceeds.
s. Share based payments
Equity-settled share based payments are measured at fair value at the date of grant. Fair value is
measured by use of the Black-Scholes options pricing model. The expected life used in the model has
been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise
restrictions, and behavioural considerations.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on
a straight-line basis over the vesting period, based on the Consolidated Entity’s estimate of shares that
will eventually vest.
For cash-settled share-based payments, a liability equal to the portion of the goods and services
received is recognised at the current fair value determined at each reporting date.
t. Critical accounting judgements, estimates and assumptions
The Consolidated Entity makes estimates and assumptions concerning the future. The resulting
accounting estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to carrying amounts of assets
and liabilities within the next financial year are discussed below.
Share based payment transactions
The Consolidated Entity measures the cost of equity-settled transactions by reference to the fair value
of the equity instruments at the date at which they are granted. The fair value of options is
determined by an internal valuation using Black-Scholes option pricing model, while the fair value of
shares is determined based on the market bid price at date of issue.
Exploration and evaluation costs
Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of
interest. These costs are carried forward in respect of an area that has not at balance date reached a
stage which permits a reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in or relating to, the area of interest are
continuing.
Environmental Issues
Balances disclosed in the financial statements and notes thereto are not adjusted for any pending or
enacted environmental legislation, and the directors understanding thereof. At the current stage of
the Consolidated Entity’s development and its current environmental impact the directors believe
such treatment is reasonable and appropriate.
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
Income taxes
The Consolidated Entity is subject to income taxes in Australia and jurisdictions where it has foreign
operations. Significant judgement is required in determining the worldwide provision for income
taxes. There are many transactions and calculations undertaken during the ordinary course of
business for which the ultimate tax determination is uncertain. The Consolidated Entity estimates its
tax liabilities based on the Consolidated Entity’s understanding of the tax laws in the relevant
jurisdictions. Where the final tax outcome of these matters is different from the amounts that were
initially recorded, such difference will impact the current and deferred income tax assets and liabilities
in the period in which such determination is made.
In addition, the Consolidated Entity has recognised deferred tax assets relating to carried forward tax
losses to the extent there are sufficient taxable temporary differences (deferred tax liabilities) relating
to the same taxation authority and the same subsidiary against which the unused tax losses can be
utilised. However, utilisation of the tax losses also depends on the ability of the entity to satisfy
certain tests at the time the losses are recouped.
u. Comparative Figures
Comparative figures have been adjusted to conform to changes in presentation for the current
financial year.
v. Operating Segments
An operating segment is a component of an entity that engages in business activities from which it
may earn revenues and incur expenses (including revenues and expenses relating to transactions with
other components of the same entity), whose operating results are regularly reviewed by the entity’s
chief operating decision maker to make decisions about resources to be allocated to the segment and
assess their performance and for which discrete financial information is available. This includes start-
up operations which are yet to earn revenues.
Operating segments have been identified based on the information provided to the chief operating
decision makers – being the board of directors.
Information about other business activities and operating segments that do not meet the quantitative
criteria set out in AASB 8 “Operating Segments” are combined and disclosed in a separate category
called “other.”
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
2.
SEGMENT INFORMATION
The Consolidated Entity has identified its operating segments based on the internal reports that are
reviewed and used by the board of directors (chief operating decision makers) in assessing performance
and determining the allocation of resources. During the year, the Consolidated Entity operated in one
business segment (for primary reporting) being uranium exploration and principally in two geographical
segments (for secondary reporting) being Australia and Argentina.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the board of directors as the chief decision maker with
respect to operating segments are determined in accordance with accounting policies that are consistent
to those adopted in the annual financial statements of the Consolidated Entity.
Inter-segment transactions
Inter-segment loans payable and receivable are initially recognised at the consideration received net of
transaction costs. If inter-segment loans receivable and payable are not on commercial terms, these are
not adjusted to fair value based on market interest rates. This policy represents a departure from that
applied to the statutory financial statements.
Segment assets
Unless indicated otherwise in the segment assets note, investments in financial assets, deferred tax assets
and intangible assets have not been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence of the liability
and the operations of the segment. Borrowings and tax liabilities are generally considered to relate to the
Consolidated Entity as a whole and are not allocated to specific segments. Segment liabilities include
trade and other payables and certain direct borrowings.
Unallocated items
The following items of revenue, expense, assets and liabilities are not allocated to the Uranium
Exploration segment as they are not considered part of the core operations of that segment:
-
-
-
-
-
-
administration and other operating expenses not directly related to uranium exploration
interest income
interest expense
convertible loan notes
loans to other entities
held for trading investments
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
Interest received
Gain on disposal of assets
Administration service fee
Termination of WLF joint venture
Total segment revenue and other
income
Segment net operating profit/ (loss)
after tax
Segment net operating profit/ (loss)
after tax includes the following
significant items:
Interest and other finance charges
Net fair value gain/(loss) on financial
assets
Gain/(l)oss on disposal of financial
assets
Impairment of loan receivable
Impairment of exploration assets
Gain on disposal of exploration assets
Uranium exploration
2012
2013
$
$
Other
Total
2013
$
2012
$
2013
$
2012
$
-
-
89,119
188,000
-
3,155,575
111,826
-
52,223
-
-
-
112,688
-
-
-
52,223
-
89,119
188,000
112,688
3,155,575
111,826
-
277,119
3,267,401
52,223
112,688
329,342
3,380,089
(2,000,083)
3,155,123
(5,896,782)
(3,535,860)
(7,896,865)
(380,737)
-
-
-
-
(91,041)
(1,130,906)
(91,041)
(1,130,906)
(2,268,478)
(1,586,216)
(2,268,478)
(1,586,216)
-
-
(2,168,174)
-
-
-
-
3,155,575
(8,242)
(1,204,485)
-
-
72,632
-
-
-
(8,242)
(1,204,485)
(2,168,174)
-
72,632
-
-
3,155,575
Segment assets
9,972,618
12,648,785
589,279
3,670,808
10,561,897
16,319,592
Segment assets include:
Capitalised exploration expenditure
Financial assets
Other assets
9,384,605
-
588,013
9,972,618
9,332,498
-
3,316,286
12,648,785
-
572,302
16,977
589,279
-
2,660,302
1,010,506
3,670,808
9,384,605
572,302
604,990
10,561,897
9,332,498
2,660,302
4,326,792
16,319,592
Segment liabilities
(126,493)
(1,596,238)
(395,033)
(10,619,476)
(521,526)
(12,215,714)
Segment information by geographical region
The analysis of the location of total assets is as follows:
Australia
Argentina
2013
$
2012
$
8,752,724
1,809,173
10,561,897
14,247,211
2,072,381
16,319,592
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
3.
REVENUE AND OTHER INCOME
(a) Revenue
Interest received
Administration fees received
(b) Other Income
Gain on sale of exploration assets
Reversal of provision for non-recovery of loans
Termination of West Lake Frome joint venture agreement
4.
FINANCE COSTS
Interest on convertible notes
5.
INCOME TAX EXPENSE
(a) The components of tax expense comprise:
Current tax
Deferred tax
2013
$
2012
$
52,222
89,119
141,341
-
-
188,000
188,000
112,688
111,826
224,514
3,155,575
573,837
-
3,729,412
2013
$
2012
$
91,041
91,041
1,130,906
1,130,906
2013
$
2012
$
-
-
-
-
-
-
(b) The prima facie tax benefit on loss from ordinary activities before
income tax is reconciled to the income tax as follows:
2013
$
2012
$
Loss before tax
(7,896,865)
(380,737)
Prima facie tax (benefit) on loss from ordinary activities before
income tax at 30% (2012: 30%)
(2,369,059)
(114,221)
Add tax effect of:
Non-deductible expenses
De-recognition of previously recognised tax losses
Current year tax losses not recognised
Less tax effect of:
Under/(over) provision for prior year
70,906
585,232
1,699,962
91,408
110,031
-
12,959
(87,218)
Total income tax expense/(income) attributable to entity
-
-
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
(c) Recognised deferred tax balances
Deferred tax balances have been recognised in respect of the
following:
Deferred tax assets
Annual Leave
Investments
Other Accruals
Loan receivable
Previously expensed capital raising costs
Tax losses
Deferred tax liabilities
Exploration
Unearned income
Other receivables
2013
$
2012
$
5,097
1,948,095
2,328
363,107
35,363
-
2,353,990
4,521
1,497,449
203,251
-
35,363
585,232
2,325,816
(2,314,891)
(19,493)
(19,606)
(2,353,990)
(2,325,515)
(301)
-
(2,325,816)
Net recognised deferred tax assets/(liabilities)
-
-
(d) Unrecognised deferred tax balances
The Consolidated Entity has $16,818,270 (2012: $14,123,862) gross tax losses arising in Australia that
are available indefinitely for offset against future profit of the Company in which the losses arose.
(e) The Consolidated Entity has unrecognised temporary differences for which no deferred tax asset is
recognised in the statement of financial position of $175,754 (2012: nil) which are available indefinitely
for offset against future taxable income subject to the Consolidated Entity continuing to meet relevant
statutory tests.
6.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Provision for non-recovery of trade receivables
Accrued interest
Other receivables
Prepayments
7.
FINANCIAL ASSETS
Financial assets
Financial assets at fair value through profit or loss
41
2013
$
2012
$
164,746
(61,352)
1,279
5,468
16,977
127,118
127,289
-
1,004
3,001
14,495
145,789
2013
$
2012
$
572,302
572,302
2,660,302
2,660,302
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
Financial assets comprise investments in the ordinary issued capital of various entities. There are no fixed
returns or fixed maturity dates attached to these investments.
The fair value of investments is calculated with reference to current market prices at balance date.
Movements:
Opening balance at beginning of the year
Acquisition of equity securities
Equity securities previously reclassified as an associate
Disposal of equity securities
Fair value gain/(loss) through profit or loss
8.
RESTRICTED CASH
Restricted cash
Bank guarantees
2,660,302
188,720
-
(8,242)
(2,268,478)
572,302
1,768,003
-
2,600,000
(121,485)
(1,586,216)
2,660,302
2013
$
2012
$
217,761
217,761
221,592
221,592
The above restricted cash balances relates to term deposits held with financial institutions as security
for bank guarantees issued to various environmental regulatory departments in respect of the potential
rehabilitation exploration areas.
9.
LOAN RECEIVABLES
Current
Unrelated parties (a)
Provision for non-recovery (a)
Non-current
Caudillo Resources SA (b)
Provision for non-recovery (b)
Other related parties
2013
$
2012
$
-
-
-
682,000
(682,000)
-
1,210,355
(1,210,355)
-
-
971,814
-
24,196
996,010
a)
b)
The loan was due for repayment in August 2010. The balance owing, including interest, was
provided for in full at 30 June 2011.
The Consolidated Entity’s wholly owned subsidiary Jakaranda Minerals Limited (“Jakaranda”)
has provided a draw-down facility (“First Loan”) up to $650,000 to Caudillo Resources SA
(“Caudillo”), which is included in this balance. The First Loan and interest (LIBOR + 2%) was
required to be repaid in cash by 21 February 2013, or Jakaranda may elect to convert the First
Loan into an 80% interest in the issued capital of Caudillo. At 30 June 2013, this draw-down
facility has been utilised. The Consolidated Entity intends to elect to convert the First Loan into
an 80% equity interest in Caudillo, and the execution of this is currently in the process of being
completed.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
The Consolidated Entity has agreed to provide a further draw-down facility (“Second Loan”)
from Jakaranda to Caudillo for $650,000. The Second Loan and interest (LIBOR + 2%) is
repayable, at the election of Caudillo, by way of:
(i)
(ii)
cash; or
subject to Caudillo and Jakaranda obtaining all necessary shareholder and regulatory
approvals, the issue to the Jakaranda of fully paid ordinary shares in the capital of
Caudillo based on a deemed issue price per Caudillo share of $100 (Argentinean
pesos).
Until such time as the First Loan and Second Loan are repaid or converted to an equity interest
in Caudillo the Consolidated Entity has conservatively provided for the non-recovery of the
loans in full. As a result of this, an impairment expense of $1,204,485 has been recognised in
the Statement of Comprehensive Income in the year ended 30 June 2013.
10.
EXPLORATION AND EVALUATION EXPENDITURE
2013
$
2012
$
Exploration and evaluation expenditure
9,384,605
9,332,498
Movements:
Carrying value at beginning of year
Exploration expenditure incurred (a)
Exploration expenditure reimbursed
Divestment of exploration assets
Impairment of exploration expenditure (b)
Carrying value at end of year
9,332,498
2,972,131
(751,850)
-
(2,168,174)
9,384,605
10,112,253
1,711,927
(1,397,257)
(1,094,425)
-
9,332,498
a)
Included in exploration expenditure incurred during 2013 is expenditure of $1,071,454 incurred
by the Consolidated Entity on behalf of the Marree Joint Venture Project. Of this amount,
$646,820 has been reimbursed by the Marree Joint Venture during 2013.
Included in exploration expenditure incurred during 2013 is expenditure of $462,800 incurred by
the Consolidated Entity on behalf of the UAROO Joint Venture. Of this amount $105,030 has
been reimbursed by Cauldron’s 30% partner in the joint venture.
b)
The Consolidated Entity has assessed the carrying amount of exploration and evaluation
expenditure in accordance with AASB 6 Exploration for and Evaluation of Mineral Resources and
has recognised an impairment expense of $2,168,174 during the current year (2012: nil)
following the decision not to continue exploration in certain areas of Lake Frome, South
Australia and the Amadeus project, Northern Territory. The impairment expense is shown as a
separate line item in the Statement of Comprehensive Income.
The carrying value of the Consolidated Entity’s interest in exploration expenditure is dependent upon:
-
-
-
the continuance of the Consolidated Entity’s rights to tenure of the areas of interest;
the results of future exploration; and
the recoupment of costs through successful development and exploitation of the areas of
interest, or alternatively, by their sale.
The Consolidated Entity’s Australian exploration properties may be subjected to claims under native
title, or contain sacred sites, or sites of significance to Aboriginal people. As a result, exploration
properties or areas within the tenements may be subject to exploration restrictions, mining restrictions
and/or claims for compensation. At this time, it is not possible to quantify whether such claims exist, or
the quantum of such claims.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
11.
PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Motor vehicles
At cost
Accumulated depreciation
Total plant and equipment
Movements:
2013
2013
$
2012
$
190,287
(145,007)
45,280
159,430
(124,512)
34,918
2,500
(1,675)
825
2,500
(1,128)
1,372
46,105
36,290
Plant &
equipment
$
Motor
vehicles
$
Total
$
Carrying value at beginning of year
Additions
Depreciation expense
Foreign currency differences arising from translating functional
currency to presentation currency
Carrying value at end of year
34,918
31,991
(21,560)
(69)
45,280
1,372
-
(547)
-
825
36,290
31,991
(22,107)
(69)
46,105
2012
Plant &
equipment
$
Motor
vehicles
$
Total
$
Carrying value at beginning of year
Additions
Depreciation expense
Impairment expense
Disposals
Foreign currency differences arising from translating functional
currency to presentation currency
Carrying value at end of year
50,923
6,228
(18,100)
(2,605)
-
(1,528)
34,918
8,617
-
(3,130)
(2,932)
(1,183)
59,540
6,228
(21,230)
(5,537)
(1,183)
-
1,372
(1,528)
36,290
12.
TRADE AND OTHER PAYABLES
Current
Trade payables
Accrued interest on convertible loan notes
Other payables and accruals
2013
$
2012
$
338,440
-
166,097
504,537
205,051
635,562
60,030
900,643
Trade payables are non interest bearing and are normally settled on 45 day terms.
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
13.
FINANCIAL LIABILITIES
Current
Convertible loan notes (a)
2013
$
2012
$
-
-
11,300,000
11,300,000
(a) In early August 2012, 100% of the convertible notes in Cauldron, totalling $11.3 million, were
converted into fully paid ordinary shares in the company (Shares). The convertible notes were
converted at a deemed issue price of $0.20 per Share, which represented an 81% premium to the
closing price of the Shares at the time of conversion of $0.11 per share.
Included in the convertible loan notes was an amount of $3,500,000 from Dempsey Resources Pty
Ltd (“Dempsey”), a wholly owned subsidiary of Cape Lambert Resources Ltd (ASX: CFE). Also
included in the convertible loan notes was an amount of $6,300,000 from Shanghai Yizhao
Investment Group Co Limited, a Chinese investment company controlled by Mr Qiu Derong, a
director of Cauldron.
14.
PROVISIONS
Current
Employee benefits
15.
ISSUED CAPITAL
Ordinary shares issued and fully paid
2013
$
2012
$
16,989
16,989
15,071
15,071
2013
$
2012
$
37,348,796
37,348,796
23,593,625
23,593,625
2013
No.
2013
$
2012
No.
2012
$
Issued and fully paid up ordinary shares
Opening balance
Shares issued during the year
Shares issued upon conversion of
convertible notes (refer note 13(a))
Shares issued upon exercise of options
Shares issued pursuant to underwriting
agreement (a)
Share issue costs
96,280,029
-
23,593,625 88,980,029
7,300,000
-
22,900,125
730,000
58,829,452
2,663,124
11,765,890
1,198,406
-
-
-
-
1,850,000
-
159,622,605
832,500
(41,625)
-
-
37,348,796 96,280,029
-
(36,500)
23,593,625
(a) In late October 2012, the Consolidated Entity entered into an agreement with Barclay Wells Ltd to
partially underwrite the exercise of the outstanding listed options in the Consolidated Entity, to
$832,500. The underwriting and exercise of listed options generated $1,989,281 proceeds (net of
fees).
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
The Company has authorised share capital amounting to 159,622,605 shares with no par value.
Terms and Conditions
Holders of ordinary shares are entitled to dividends as declared from time to time and are entitled to
one vote per share at shareholder meetings. In the event of winding up of the Consolidated Entity,
ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any
proceeds of liquidation.
Capital risk management
Capital managed by the Board includes shareholder equity, which was $37,348,796 at 30 June 2013
(2012: $23,593,625). The Consolidated Entity’s objectives when managing capital are to safeguard its
ability to continue as a going concern, so that it may continue to provide returns to shareholders and
benefits to other stakeholders. The Company’s capital includes ordinary share capital and financial
liabilities, supported by financial assets.
Due to the nature of the Consolidated Entity’s activities, being mineral exploration, it does not have
ready access to credit facilities, with the primary source of funding being equity raisings. Accordingly,
the objective of the Consolidated Entity’s capital risk management is to balance the current working
capital position against the requirements of the Consolidated Entity to meet exploration programmes
and corporate overheads.
16.
RESERVES
Reserves
Option premium reserve (a)
Foreign currency translation reserve (b)
2013
$
2012
$
2,357,499
(911,960)
1,445,539
2,121,146
(753,794)
1,367,352
2013
$
2012
$
(a) Option premium reserve
Reserve balance at beginning of year
Share based payments to employees & consultants (refer note 24)
Unlisted options forfeited during the year
Reserve balance at end of year
2,121,146
236,353
-
2,357,499
2,106,941
29,529
(15,324)
2,121,146
The option premium reserve arises on the grant of share options to employees, directors and
consultants (share based payments) and to record the issue, exercise and lapsing of listed options.
(b)
Foreign currency translation reserve
2013
$
2012
$
Reserve balance at beginning of the year
Foreign currency exchange differences arising on translation of foreign
operations
Reserve balance at end of year
(753,794)
(630,706)
(158,166)
(911,960)
(123,088)
(753,794)
Exchange differences relating to the translation from the functional currencies of the Consolidated
Entity’s foreign controlled entities into Australian dollars are recognised directly in the foreign currency
translation reserve.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
17.
ACCUMULATED LOSSES
Balance at beginning of year
Loss for the year
Balance at end of year
18.
LOSS PER SHARE
Basic loss per share
Continuing operations
Loss used in calculation of basic loss per share
Continuing operations
Weighted average number of ordinary shares outstanding during
the year used in the calculation of basic loss per share
2013
$
2012
$
(20,857,099)
(7,896,865)
(28,753,964)
(20,476,362)
(380,737)
(20,857,099)
2013
Cents per share
2012
Cents per
share
(5.16)
(5.16)
(0.40)
(0.40)
$
$
(7,896,865)
(7,896,865)
(380,737)
(380,737)
No.
No.
152,938,145
94,820,029
There are 4,300,000 share options excluded from the calculation of diluted earnings per share (that
could potentially dilute basic earnings per share in the future) because they are anti-dilutive for each of
the periods presented.
19.
COMMITMENTS
Mineral Tenement Discretionary Commitments
In order to maintain current rights of tenure to mining tenements, the Consolidated Entity has the
following discretionary exploration expenditure and rental requirements up until expiry of leases. These
obligations, which are subject to renegotiation upon expiry of the leases, are not provided for in the
financial statements and are payable:
Within one year
Between one and five years
Longer than five years
2013
$
2012
$
1,312,627
899,378
-
2,212,005
2,293,000
-
-
2,293,000
If the Consolidated Entity decides to relinquish certain tenement leases and/or does not meet these
obligations, assets recognised in the balance sheet may require review to determine the appropriateness
of their carrying values. The sale, transfer, farm-out of exploration rights to third parties or attainments
of exemptions to minimum spend commitments will reduce or extinguish these obligations.
Office Rental Commitments
The Consolidated Entity entered into a sub-lease for office premises for a period of 5 years terminating on
31 March 2017.
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FOR THE YEAR ENDED 30 JUNE 2013
Total office rental commitments for the Consolidated Entity are:
Within one year
Between one and five years
Longer than five years
20.
CONTINGENT ASSETS AND LIABILITIES
The Consolidated Entity has no contingent liabilities or assets at the year end.
21.
CONTROLLED ENTITIES
Details of Cauldron Energy Limited’s subsidiaries are:
2013
$
2012
$
38,390
105,574
143,964
38,390
143,964
-
182,354
Name
Country of
Incorporation
Date/Company
of Incorporation
Shares
Ownership
Interest
Investment
Carrying Amount
Australia
Ronin Energy Ltd
Cauldron Minerals Ltd
(formerly Jackson Global Ltd) Australia
Australia
Jakaranda Minerals Ltd
Australia
Raven Minerals Ltd
24 April 2006
24 April 2006
24 April 2006
24 April 2006
2013
%
2012
%
100
100
100
100
100
100
100
100
Ord
Ord
Ord
Ord
2013
$
2012
$
5
1
1
5
12
5
1
1
5
12
22.
JOINT VENTURES
The Consolidated Entity has the following significant interests in joint ventures:
(a) Marree - 60% (increasing)
The Marree Project was formed by way of a joint venture agreement between Cauldron and a Korean
consortium, comprising of the Korean Government (KORES), Daewoo International Corporation and LG
International Corporation. Cauldron is the Manager of the project. The terms of the joint venture
agreement enabled the Korean participants to earn up to an aggregate 50% interest in the Marree Project
by funding $6.0 million of exploration activities over an earn-in period. Exploration activities commenced
in mid-2009. The earn-in period of this joint venture agreement ended in January 2013, at which point the
Korean participants had contributed a total of $4.9 million. At the end of the earn-in period, the parties’
interests in the tenements are as follows:
-
-
Cauldron 60%; and
Korean participants 40%.
In line with the terms of the joint venture agreement, following the earn-in period, the parties are
required to participate in expenditure of the Marree Project pro-rata to their ownership interests,
otherwise the parties interests will be diluted. Since January 2013, Cauldron has continued to the
exploration works, thus diluting the Korean participants’ interests.
(b) Uaroo – 70%
The Consolidated Entity has earned in a 70% interest in, and is the manager of the Uaroo Joint Venture,
which comprises 2 granted exploration licenses in the Yanrey project area of Western Australia. The other
30% interest holder in the Joint Venture is Intra Energy Corporation Limited.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
23.
CASH FLOW INFORMATION
(a) Reconciliation of cash flows from operating activities with loss
from ordinary activities after income tax
Loss from ordinary activities after income tax
(7,896,865)
(380,737)
2013
$
2012
$
Non-cash flows in operating loss:
Depreciation
Equity settled share based payments
Net fair value (gain)/loss on investments
Realised gain on disposal of financial assets
Gain on divestment of exploration assets
Foreign exchange (gain)/loss
Impairment of loan
Impairment of exploration expenditure
Impairment of plant and equipment
Impairment of receivables
Reversal of provision for non-recovery of loans
Acquisition of equity securities
Other
Changes in assets and liabilities:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in interest receivable
Increase/(decrease) in trade and other payables
Increase/(decrease) in provisions
Increase/(decrease) in interest payable
Net cash inflows/(outflows) from operating activities
(b) Reconciliation of cash and cash equivalents
22,107
236,353
2,268,478
8,242
-
(13,320)
1,210,355
2,168,174
-
56,767
-
(188,000)
54,140
(24,460)
(275)
124,478
1,917
(194,466)
(2,172,241)
21,230
14,205
1,586,216
(72,632)
(3,155,575)
(21,731)
-
-
6,265
-
(573,837)
-
-
157,262
7,967
69,609
(22,414)
-
(2,364,172)
For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in
banks and investments in money market instruments, net of outstanding bank overdrafts. Cash and
cash equivalents at the end of the financial year as shown in the cash flow statement is reconciled to
the related items in the balance sheet as follows:
Cash at bank
Deposits at call
Cash in transit
Cash and cash equivalents
(c) Non-cash activities
2013
$
2012
$
214,006
-
-
214,006
2,895,137
-
31,974
2,927,111
In early August 2012, 100% of the convertible notes in Cauldron, totalling $11.3 million, were
converted into fully paid ordinary shares in the company (Shares). The convertible notes were
converted at a deemed issue price of $0.20 per Share, which represented an 81% premium to the
closing price of the Shares at the time of conversion of $0.11 per share. A total of 58,829,452 shares
were issued as a result.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
24.
FINANCIAL RISK MANAGEMENT
Financial risk management
The Consolidated Entity’s financial instruments consist mainly of deposits with banks, accounts receivable,
loan receivables, accounts payable, convertible loan notes and shares in listed companies.
The Consolidated Entity does not speculate in the trading of derivative instruments.
The totals for each category of financial instruments, measured in accordance with AASB 139 are as
follows:
Financial Assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Trade and other receivables
Loan receivables
Financial Liabilities
Trade and other payables
Financial liabilities
Financial risk management policies
2013
$
2012
$
214,006
572,302
127,118
-
913,426
2,927,111
2,660,302
145,789
996,010
6,729,212
504,537
-
504,537
900,643
11,300,000
12,200,643
The Consolidated Entity’s activities expose it to a variety of financial risks: market risk (including interest
rate risk), credit rate risk and liquidity risk.
The Consolidated Entity’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Consolidated
Entity. The Consolidated Entity uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and
other price risks and aging analysis for credit risk. Risk management is carried out by the Board and they
provide written principles for overall risk management.
Financial risk exposures and management
The main risks arising from the Consolidated Entity’s financial instruments are credit risk, liquidity risk and
market risk consisting of interest rate risk, foreign currency risk and equity price risk.
(a) Foreign currency risk
The Consolidated Entity undertakes certain transactions denominated in foreign currencies, hence
exposures to exchange rate fluctuations arise. Given the few transactions the Board does not consider
there to be a need for policies to hedge against foreign currency risk. The Consolidated Entity’s has no
significant exposure to foreign currency risk as at the reporting date.
(b) Interest rate risk
Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the
reporting period whereby a future change in interest rates will affect future cash flows or the fair value of
fixed rate financial instruments. Cash and cash equivalents on deposit at variable rates expose the
Consolidated Entity to cash flow interest rate risk. The Consolidated Entity is exposed to movements in
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
market interest rates on short term deposits. The policy is to monitor the interest rate yield curve out to
120 days to ensure a balance is maintained between the liquidity of cash assets and the interest rate
return.
The effect on loss and equity as a result of changes in the interest rate.
Change in loss:
Increase in interest rate by 200 basis points
Decrease in interest rate by 200 basis points
+4,280
-4,280
7,892,585
7,901,145
+58,542
-58,542
322,195
439,279
2013
2012
Change
$
Change
$
The above interest rate sensitivity analysis has been performed on the assumption that all other variables
remain unchanged.
(c) Price risk
The Consolidated Entity is exposed to equity securities price risk. This arises from investments held by the
Consolidated Entity and classified on the statement of financial position as current financial assets at fair
value through profit or loss. The Consolidated Entity is not exposed to commodity price risk.
To manage its price risk arising from investments in equity securities, the Consolidated Entity diversifies its
portfolio which is done in accordance with the limits set by the Consolidated Entity.
The majority of the Consolidated Entity’s equity investments are publicly traded and are included on the
ASX 200 Index.
The table below summarises the impact of increases/decreases of the index on the Consolidated Entity’s
post tax profit for the year and on equity. The analysis is based on the assumption that the equity indexes
had increased/decreased by 10% (2012 – 10%) with all other variables held constant and all the
Consolidated Entity’s equity instruments moved according to the historical correlation with the index.
Index
ASX 200
(d) Credit risk
Impact on Post-Tax Profit/(Loss)
2013
$
2012
$
57,230
266,030
Credit risk is managed on a consolidated basis. Credit risk arises from cash and cash equivalents and
credit exposures to wholesale and retail customers and suppliers. The Consolidated Entity has adopted
the policy of only dealing with credit worthy counterparties and obtaining sufficient collateral or other
security where appropriate, as a means of mitigating the risk of financial loss from defaults.
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference
to external credit ratings:
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Financial assets
Cash and cash equivalents (AA)
51
2013
$
2012
$
214,006
214,006
2,927,111
2,927,111
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(e) Liquidity risk
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
The Consolidated Entity manages liquidity risk by maintaining adequate reserves, banking facilities and
reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities.
Financial instrument composition and maturity analysis
The table below reflects the undiscounted contractual settlement terms for financial instruments of a
fixed period of maturity, as well as management’s expectations of the settlement period for all other
financial instruments.
2013
Financial assets
Cash
Held for trading investments
Receivables and loans
Financial Liabilities
Trade and other payables
Financial liabilities
2012
Financial assets
Cash
Held for trading investments
Receivables and loans
Financial Liabilities
Trade and other payables
Financial liabilities
(f) Fair value estimation
Within 1
Year
$
214,006
572,302
127,118
913,426
504,537
-
504,537
Within 1
Year
$
2,927,111
2,660,302
145,789
5,733,202
1 to 5
Years
$
217,761
-
-
217,761
-
-
-
1 to 5
Years
$
221,592
-
996,010
1,217,602
900,643
11,300,000
12,200,643
-
-
-
Over 5
Years
$
Over 5
Years
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2013
Total
$
431,767
572,302
127,118
1,131,187
504,537
-
504,537
2012
Total
$
3,148,703
2,660,302
1,141,799
6,950,804
900,643
11,300,000
12,200,643
The fair value of financial assets and liabilities must be estimated for recognition and measurement or for
disclosure purposes. The Directors consider that the carrying amount of financial assets and financial
liabilities recorded in the financial statements approximates their fair values as the carrying value less
impairment provision of trade receivables and payables are assumed to approximate their fair values due
to their short-term nature.
Financial Instruments Measured at Fair Value
The financial instruments recognised at fair value in the statement of financial position have been
analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making
the measurements. The fair value hierarchy consists of the following levels:
-
-
quoted prices in active markets for identical assets or liabilities (Level 1);
inputs other than quoted prices included within Level 1 that are observable for the asset or
liability, either directly (as prices) or indirectly (derived from prices) (Level 2); and
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
-
2013
inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3)
Level 1
$
Level 2
$
Level 3
$
Total
$
Financial assets:
Financial assets at fair value through profit or loss:
Held for trading investments
572,302
-
-
572,302
2012
Financial assets:
Financial assets at fair value through profit or loss:
Held for trading investments
2,606,594
53,708
-
2,660,302
25.
SHARE BASED PAYMENTS
Total costs arising from share based payment transactions recognised during the year were as follows:
Options issued to employees and consultants (i)
Options forfeited during the year
2013
$
2012
$
236,353
-
236,353
29,529
(15,324)
14,205
(i) On 1 August 2012, the Consolidated Entity issued 800,000 unlisted options with vesting conditions
to a Consultant with an exercise price of $0.20 and an expiry date of on or before 30 June 2014.
On 19 September 2012, the Consolidated Entity issued 1,000,000 unlisted options without vesting
conditions to a Consultant with an exercise price of $0.20 and an expiry date of on or before 18
September 2015.
(a) Summary of options granted
The following table details the number and weighted average exercise price (WAEP) of, and
movements in, unlisted options issued during the year:
Outstanding at the beginning of the year
Granted during the year
Outstanding at year end
Exercisable at the end of the year
Not exercisable at the end of the year
2013
No.
2013
WAEP
2,500,000
1,800,000
4,300,000
2,900,000
1,400,000
$0.25
$0.20
$0.23
$0.20
$0.29
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The outstanding balance at 30 June 2013 is represented by:
-
2,800,000 Consultant Options with an exercise price of $0.20 each exercisable on or before 30
June 2014;
1,000,000 Consultant Options with an exercise price of $0.20 each exercisable on or before 18
September 2015; and
500,000 Employee Options with an exercise price of $0.45 each exercisable on or before 20
October 2015.
-
-
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
(b) Remaining contractual life
The remaining contractual life for Options outstanding at 30 June 2013 is 4.41 years.
(c) Fair value
The fair value of the 800,000 Consultant Options granted during the year was $0.03.
The fair value of the 1,000,000 Consultant Options granted during the year was $0.09.
(d) Option pricing model
The fair value of the Options issued during the year is estimated as at the date of grant using the Black
Scholes option pricing model taking into account the terms and conditions upon which the Options were
granted.
The following table lists the inputs to the model:
2013
800,000
Consultant
Options
Nil
88%
2.86%
$0.20
Nil
1.91
$0.11
$0.03
2013
1,000,000
Consultant
Options
Nil
88%
2.55%
$0.20
Nil
3.00
$0.16
$0.09
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Exercise price ($)
Marketability discount (%)
Expected life of options (years)
Share price at grant date ($)
Value per Option ($)
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Exercise price ($)
Marketability discount (%)
Expected life of options (years)
Share price at grant date ($)
Value per Option ($)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
26.
PARENT ENTITY DISCLOSURES
Financial Position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Accumulated losses
Reserves
Total equity
Financial Performance
Profit/(loss) for the year
Total comprehensive income/(loss)
Loans to Controlled Entities
2013
$
2012
$
278,787
10,248,804
10,527,591
2,969,295
18,448,081
21,417,376
487,220
-
487,220
12,181,687
-
12,181,687
37,348,796
(29,665,923)
2,357,498
10,040,371
23,593,625
(17,129,081)
2,121,146
9,235,689
(12,536,842)
(12,536,842)
32,572
32,572
Loans are provided by the Parent Entity to its controlled entities for their respective operating activities.
Amounts receivable from controlled entities are non-interest bearing with no fixed term of repayment.
The eventual recovery of the loan will be dependent upon the successful commercial application of these
projects or the sale to third parties. Details of loans provided are listed below:
Subsidiaries
Ronin Energy Ltd
Cauldron Minerals Ltd (formerly Jackson Global Ltd)
Jakaranda Minerals Ltd
Raven Minerals Ltd
Total value of loans provided to subsidiaries
2013
$
2012
$
24,197
7,081,763
853,025
26,643
7,985,628
21,750
6,406,816
699,731
-
7,128,297
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
Commitments
Total commitments for the Parent Entity are:
Within one year
Between one and five years
Longer than five years
Contingent Liabilities and Assets
2013
$
2012
$
1,351,017
1,004,952
-
2,355,969
2,331,390
143,964
-
2,475,354
The contingent liabilities and assets of the Parent Entity are consistent with the Consolidated Entity (refer
to note 20).
27.
KEY MANAGEMENT PERSONNEL (KMP) COMPENSATION
Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid
or payable to each member of the Consolidated Entity’s key management personnel (“KMP”) for the year
ended 30 June 2013.
The totals of remuneration paid to KMP of the company and Consolidated Entity during the year are as
follows:
Short-term employee benefits
Options and Rights Holdings
2013
$
2012
$
598,050
598,050
229,003
229,003
Balance
1 July 2012
Granted
Exercised
Lapsed
Net
change
other (a)
Balance
30 June
2013
Vested and
Exercisable
30 June 2013
Unexercisable
30 June 2013
Antony Sage
559,460
Brett Smith
Qiu Derong
-
540,000
1,099,460
-
-
-
-
(300,000)
(259,460)
-
-
(300,000)
-
(540,000)
(799,460)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Shareholdings
Antony Sage
Brett Smith
Qiu Derong
Balance
1 July 2012
5,594,600
11,844
5,400,000
11,006,444
Received on
conversion of
convertible loan notes
-
-
31,500,000
31,500,000
Received on exercise
Net Change
Other (a)
Balance
30 June 2013
300,000
-
-
300,000
-
-
5,000,000
5,000,000
5,894,600
11,844
41,900,000
47,806,444
(a) Net Change Other refers to shares acquired or disposed of during the year.
Other Transactions with Key Management Personnel
For details of other transactions with KMP, refer to note 28.
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
28.
RELATED PARTY INFORMATION
Transactions with Directors, Director Related Entities and other Related Entities
Balances between the company and its subsidiaries which are related parties of the company, have been
eliminated on consolidation and are not disclosed in this note. Details of percentage of ordinary shares
held in subsidiaries are disclosed in note 21 to the financial statements.
Details of transactions between the group and other related parties are disclosed below.
Payments to Director Related Entities
During the year The Consolidated Entity paid $54,435 was paid, or was due and payable to Fe Limited for
the reimbursement of employee costs (2012: $56,070). Mr Sage is a director of Fe Limited.
During the year, an aggregate amount of $143,667 was paid, or was due and payable to Cape Lambert
Resources Ltd (“Cape Lambert”) for reimbursement of employee, consultancy and occupancy costs (2012:
$69,392). Mr Sage is a director of Cape Lambert.
Financial Assets
At 30 June 2013, Cauldron held 15,695,835 shares in Fe Limited (ASX: FEL) (2012: 15,695,835) with a
market value of $313,917 (2012: $486,571). Mr Antony Sage is a director of FEL.
Significant shareholders
Qiu Derong holds a significant interest of 26.25% in the issued capital of Cauldron Energy at 30 June 2013.
Cape Lambert, via its wholly owned subsidiary Dempsey Resources Pty Ltd (“Dempsey”), holds a
significant interest of 21.05% in the issued capital of Cauldron Energy at 30 June 2013. Mr Sage is a
director of Cape Lambert.
29.
REMUNERATION OF AUDITORS
Audit or review of the Consolidated Entity financial report
Paid or payable to Bentleys for:
-
Remuneration of the auditors of subsidiaries for:
-
Audit or review of the financial report
2013
$
2012
$
36,650
40,000
6,485
43,135
10,330
50,330
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Annual Report 2013
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2013
30.
EVENTS SUBSEQUENT TO REPORTING DATE
$1.5 million secured via Converting Loan Agreements with major shareholders
On 10 July 2013, the Consolidated Entity announced that it had secured $1.5 million in funding via the
execution of converting loan agreements with its two major shareholders. Pursuant to the terms of the
converting loan agreements, the Consolidated Entity received $1.5 million funding on 31 July 2013, which
will be automatically converted into ordinary shares in the Consolidated Entity, subject to receipt of
shareholder approval at its 2013 Annual General Meeting.
Government grant secured
On 10 July 2013, the Consolidated Entity announced that it had secured government grants totalling
$300,000 to assist in funding drilling activities in the Yanrey region of Western Australia. These funds are
subject to strict guidelines and are to be utilised for direct drilling costs only.
Extension of closing date for takeover offer for Energia Minerals
On 26 July 2013, the Consolidated Entity announced that it had resolved to extend the Energia takeover
offer period to 16 November 2013 (unless further extended).
Apart from the above, no matters or circumstances have arisen since the end of the financial year which
significantly affected or may significantly affect the operations of the Consolidated Entity, the results of
those operations, or the state of affairs of the Consolidated Entity in future financial year.
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Annual Report 2013
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of Cauldron Energy Limited, I state that:
1.
In the opinion of the directors:
a)
the financial statements and notes of Cauldron Energy Limited for the financial year ended 30
June 2013 are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of its financial position as at 30 June 2013 and its performance
for the year ended on that date of the company and the Consolidated Entity; and
(ii) complying with Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001;
b)
the financial statements and notes also comply with International Financial Reporting
Standards as disclosed in note 1(b);
c) Subject to the matters described in note 1(c), there are reasonable grounds to believe that the
Company will be able to pay its debts as and when they become due and payable;
2.
This declaration has been made after receiving the declarations required to be made to the Directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June 2013.
On behalf of the board
Mr Antony Sage
Executive Chairman
PERTH
5 September 2013
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We have audited the accompanying financial report of Cauldron Energy Limited (“the
Company”) and Controlled Entities (“the Consolidated Entity”), which comprises the
consolidated statement of financial position as at 30 June 2013, and the 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 then ended,
notes comprising a summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the Consolidated Entity, comprising the
Company and the entities it controlled at the year’s end or from time to time during the
financial year.
The directors of the Company are responsible for the preparation and fair presentation of
the financial report 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 1, the directors also state, in
accordance with Accounting Standards AASB 101: Presentation of Financial Statements,
that the financial statements comply with International Financial Reporting Standards.
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
judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
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In conducting our audit, we followed applicable independence requirements of Australian professional ethical
pronouncements and the Corporations Act 2001.
In our opinion:
a. The financial report of Cauldron Energy Limited and Controlled Entities is in accordance with the
Corporations Act 2001, including:
i.
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2013 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 1.
Without qualifying our opinion, we draw attention to Note 1 in the financial report which indicates that the
Consolidated Entity incurred a net loss of $7,896,865 during the year ended 30 June 2013. This condition,
along with other matters as set forth in Note 1, indicate the existence of a material uncertainty which may cast
significant doubt about the ability of the Consolidated Entity to continue as a going concern and whether it will
realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the
financial report.
We have audited the Remuneration Report included in directors’ report of the year ended 30 June 2013. The
directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
In our opinion, the Remuneration Report of Cauldron Energy Limited for the year ended 30 June 2013,
complies with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
CHRIS WATTS CA
Director
DATED at PERTH this 5th day of September 2013
Annual Report 2013
Shareholding
ADDITIONAL SHAREHOLDER INFORMATION
The distribution of members and their holdings of equity securities in the Company as at 2 September 2013 were as
follows:
Number Held
Fully Paid Ordinary Shares Number of shareholders
Class of Equity Securities
1-1,000
1,001 - 5,000
5,001 -10,000
10,001 -100,000
100,001 and over
TOTAL
99,840
1,495,496
2,607,724
21,039,337
134,380,208
159,622,605
206
551
325
559
145
1,786
There are 1,786 shareholders holding a total of 159,622,605 shares.
There are 689 shareholders holding less than a marketable parcel of shares.
Substantial Shareholders
The names of the substantial shareholders listed in the Company’s register as at 2 September 2013:
Shareholder
Mr Derong Qiu and Mr Dekang Qiu
Cape Lambert Resources Limited & Dempsey Resources Pty Ltd
Number
41,900,000
33,599,049
Options
The Company currently has 500,000 unlisted options exercisable at $0.45 each on or before 20 October 2015,
2,800,000 unlisted options exercisable at $0.20 each on or before 30 June 2014 and 1,000,000 unlisted options
exercisable at $0.20 each on or before 18 September 2015.
Voting Rights
Ordinary Shares
In accordance with the Company’s Constitution, on a show of hands every member present in person or by proxy
or attorney or duly authorised representative has one vote. On a poll every member present in person or by proxy
or attorney or duly authorised representative has one vote for every fully paid ordinary share held.
Options
Holders of options do not have a right to vote.
Restricted Securities
The Company does not currently have any restricted securities on issue.
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Annual Report 2013
ADDITIONAL SHAREHOLDER INFORMATION
Twenty Largest Shareholders
The names of the twenty largest ordinary fully paid shareholders in the Company as at 2 September 2013 are as
follows:
Shareholder
Number
% Held of Issued
Ordinary Capital
Mr Derong Qiu & Mr Dekang Qiu
Dempsey Resources Pty Ltd
Mr Michael Hoay-Chew Lim & Mrs Catherin Mae Lim
Okewood Pty Ltd
Lanoti Pty Limited
Mr Antony William Paul Sage
Canifare Pty Ltd
Kouta Bay Pty Ltd
Kouta Bay Pty Ltd
Mr Andre Kunz & Mrs Grace Kunz
Citcorp Nominees Pty Ltd
Mr Gregory John Loughridge & Mrs Kathryn Linda Loughridge
Australian Capital Markets Pty Ltd
Redmont Resources Pty Ltd
Bolo Pty Ltd
Rumble Resources Ltd
Agens Pty Ltd
Raass Pty Ltd
41,900,000
33,599,049
3,354,800
3,300,000
3,000,000
2,594,600
1,917,450
1,550,000
1,492,239
1,130,019
1,040,000
1,006,625
1,003,236
850,000
850,000
820,000
800,000
750,000
720,000
700,000
26.25%
21.05%
2.10%
2.07%
1.88%
1.62%
1.20%
0.97%
0.94%
0.71%
0.65%
0.63%
0.63%
0.53%
0.53%
0.51%
0.50%
0.47%
0.45%
0.44%
102,378,018
64.13%
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Annual Report 2013
SCHEDULE OF MINERAL TENEMENTS
AS AT 5 AUGUST 2013
AUSTRALIA
Beadell
Tenement
E45/2405
E45/2406
E45/3799
E45/3823
Boolaloo Project
Tenement
E08/1605
E08/1756
E08/2123
E08/2141
E08/2152
Lake Frome
Tenement
EL 4793
EL 4279
EL 4609
EL 4610
EL 4746
EL 4794
Yanrey
Tenement
EL 08/1489
EL 08/1490
EL 08/1493
EL 08/1494
EL 08/1495
EL 08/1501
EL 08/2017
EL 08/2081
EL 08/2160
EL 08/2161
EL 08/2164
EL 08/2165
EL 08/2205
EL 08/2244
EL 08/2245
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Status
Granted
Granted
Granted
Granted
Status
Granted
Granted
Granted
Granted
Granted
Status
Granted
Granted
Granted
Granted
Granted
Granted
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Equity
Comment
20%
20%
20%
20%
Equity
Comment
20%
20%
20%
20%
20%
Equity
Comment
100%
60% Marree Joint Venture
60% Marree Joint Venture
60% Marree Joint Venture
60% Marree Joint Venture
60% Marree Joint Venture
Equity
Comment
100%
100%
100%
70%
70%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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Annual Report 2013
SCHEDULE OF MINERAL TENEMENTS
AS AT 15 AUGUST 2013 (cont)
ARGENTINA
Rio Colorado Project - Catamarca
Tenement
165/2008
176/1997
270/1995
271/1995
142/2007
141/2007
140/2007
232/2007
144/2007
43/2007
143/2007
321/2008
317/2008
316/2008
324/2008
307/2008
322/2008
312/2008
567/09
568/09
569/09
570/09
571/09
Status
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Granted
Rejected
Rejected
Rejected
Rejected
Granted
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Comment
Earn In - Mining Lease
Earn In - Mining Lease
Earn In - Mining Lease
Earn In - Exploration Lease
Earn In - Exploration Lease
Earn In - Exploration Lease
Equity
100%
92.5%
92.5%
92.5%
100%
100%
100%
100%
92.5%
92.5%
92.5%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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SCHEDULE OF MINERAL TENEMENTS
AS AT 15 AUGUST 2013 (cont)
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Las Marias Project - San Juan
Status
Tenement
Application
1124-330-J-2007
Granted
1124-306-W-2007
Application
1124-331-J-2007
Application
1124-329-J-2007
Granted
1124-328-J-2007
Application
1124-327-J-2007
Application
1124-326-J-2007
Application
1124-325-J-2007
Application
1124-324-J-2007
Application
1124-323-J-2007
Application
1124-322-J-2007
Application
1124-228-J-2008
Application
1124-656-J-2007
Application
1124-178-J-2008
Application
1124-093-J-2008
Granted
1124-333-2008
Granted
1124-546-2010
Application
1124-365-2012
Application
1124-366-2012
Application
1124-367-2012
Bella Vista Project - Santa Cruz
Tenement
426.857/JGL/11
426.870/JGL/11
426.868/JGL/11
426.859/JGL/11
426.869/JGL/11
426.864/JGL/11
426.862/JGL/11
426.865/JGL/11
426.860/JGL/11
426.858/JGL/11
426.867/JGL/11
426.855/JGL/11
426.863/JGL/11
426.866/JGL/11
426.861/JGL/11
Status
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Application
Notes:
EL = Granted Exploration Licence
M = Granted Mining Lease
P = Granted Prospecting Licence
L = Miscellaneous Licence
Comment
Comment
Equity
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Equity
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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