-
(ABN 22 102 912 783)
AND CONTROLLED ENTITIES
ANNUAL REPORT
FOR THE YEAR ENDED
30 JUNE 2014
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Annual Report 2014
CONTENTS
CORPORATE DIRECTORY ______________________________________________________ 1
DIRECTORS’ REPORT _________________________________________________________ 2
AUDITOR’S INDEPENDENCE DECLARATION _______________________________________ 21
CORPORATE GOVERNANCE STATEMENT _________________________________________ 22
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME _________________________ 30
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ______________________________ 31
CONSOLIDATED STATEMENT OF CASH FLOWS ____________________________________ 32
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ______________________________ 33
NOTES TO THE FINANCIAL STATEMENTS _________________________________________ 34
DIRECTORS’ DECLARATION ___________________________________________________ 77
INDEPENDENT AUDITOR’S REPORT _____________________________________________ 78
ADDITIONAL ASX INFORMATION _______________________________________________ 80
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CORPORATE DIRECTORY
EXECUTIVE CHAIRMAN
Antony Sage
EXECUTIVE DIRECTOR
Brett Smith
NON-EXECUTIVE DIRECTORS
Qiu Derong
Amy Wang – appointed effective 9 June 2014
Anson Huang – appointed effective 29 July 2014
COMPANY SECRETARY
Catherine Grant – appointed effective 31 January 2013
Claire Tolcon – resigned effective 31 January 2013
PRINCIPAL & REGISTERED OFFICE
32 Harrogate Street
West Leederville WA 6007
Telephone: (08) 9380 9555
Facsimile: (08) 9380 9666
AUDITORS
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
SHARE REGISTRAR
Advanced Share Registry
110 Stirling Hwy
Nedlands WA 6009
Telephone: (08) 9389 8033
Facsimile: (08) 9262 3723
STOCK EXCHANGE LISTING
Australian Securities Exchange
(Home Exchange: Perth, Western Australia)
Code: CXU
BANKERS
National Australia Bank
50 St Georges Terrace
Perth WA 6000
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Annual Report 2014
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 2014.
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
Interest in Shares & Options
Mr Sage has in excess of 30 years’ experience in the fields of
corporate advisory services, funds management and capital raising.
Mr Sage is based in Western Australia and has been involved in the
management and financing of listed mining and exploration companies
for the last 18 years. Mr Sage has operated in Argentina, Brazil, Peru,
Romania, Russia, Sierra Leone, Guinea, Cote d’Ivoire, Congo, South
Africa, Indonesia, China and Australia. Mr Sage is currently chairman
of listed ASX-listed companies, Cape Lambert Resources Ltd (which
was AIM Company of the year in 2008), Cauldron Energy Ltd and Fe
Ltd. Mr Sage is also a Non-Executive Director of the following ASX-
listed companies, Kupang Resources Ltd, Caeneus Minerals Ltd; and
National Stock Exchange of Australia (“NSX”) listed International
Petroleum Ltd. Mr Sage is also the sole owner of A League football
club Perth Glory that plays in the National competition in Australia.
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
Caeneus Minerals Limited
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
Fully Paid Ordinary Shares
5,894,600
Brett Smith
Executive Director
Qualifications
B.Sc(Geol), M.AusIMM MAIG.
Experience
Directorships of listed
companies held within the
last 3 years
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.
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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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
28,930,324
Options 3,000,000
Amy Wang
Experience
Directorships of listed
companies held within the last
3 years
Non-Executive Director
Dr Wang is an Australian national who holds a Bachelor of Materials
Engineering from the Shanghai Jiaotong University, P.R. China, a Master
of Materials Engineering from the Shanghai Jiaotong University, P.R.
China and a Doctorate of Philosophy from Monash University, Australia.
None
Interest in Shares & options
Fully Paid Ordinary Shares
80,000
Anson Huang
Non-Executive Director
Experience
Mr Huang is a Chinese national with Australian permanent residence. He
holds a Bachelor of Commerce from the University of Melbourne and
Masters of Applied Finance from the University of Macquarie.
Mr Huang has more than ten years investment banking experience in
both Australia and China. He has assisted many companies in public
listings and financing transactions through IPO, M&A, PIPE pre Pre-IPO
types.
None
Directorships of listed
companies held within the last
3 years
Interest in Shares & options
Fully Paid Ordinary Shares
Nil
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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 15 to 20. 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 Catherine Grant has been Chief Financial Officer of Cauldron since July 2013, and its Company
Secretary since 31 January 2014. She commenced her career at Ernst & Young, where she qualified as
an Accountant with the Institute of Chartered Accountants Australia (ICAA) in 2007. Ms Grant has 10
years’ experience in accounting and finance and currently provides accounting and company secretarial
services to several listed resource companies.
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 $3,944,234 (30 June
2013: $7,896,865). The loss for the year includes impairment losses in respect of capitalised exploration
and evaluation to the extent of $1,731,119 for the year ended 30 June 2014 (30 June 2013: $2,168,174)
following the decision not to continue exploration and for costs associated with tenements not granted
in certain areas of Lake Frome, South Australia, the Amadeus project in the Northern Territory and
Argentina.
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 July 2013, the Consolidated Entity secured $1.5 million in funding via the execution of converting loan
agreements with two of its major shareholders (Cape Lambert Resources Ltd and Mr Qiu Derong).
Pursuant to the terms of the converting loan agreements, the Consolidated Entity received a total of
$1.5 million, which automatically converted into ordinary shares in the Consolidated Entity, upon receipt
of shareholder approval at the Consolidated Entity’s 2013 Annual General Meeting on 22 November
2013. The converting loans, plus interest at 10% per annum were converted into 13,824,102 fully paid
ordinary shares, at a conversion price of $0.1125 per share. The conversion price was calculated based
on 80% 10 day VWAP of shares on ASX before the date of the shareholder approval on 22 November
2013.
Convertible notes issued
Two major Cauldron shareholders advanced the Consolidated Entity short term loans totaling $400,000
($200,000 each from Cape Lambert Resources Ltd and Mr Qiu Derong) for operating expenses that are
either repayable or convertible into shares (subject to receipt of shareholder approval).
Converting loan
In a further show of support, Cape Lambert Resources Ltd agreed to provide $1 million to the Company
pursuant to a converting loan agreement (“Converting Loan Agreement”). As at 30 June 2014, $650,000
has been utilized by the Company. Unless the loan (together with the interest that accrues daily at 10%
per annum) is repaid in full by the Company, the loan funds will automatically convert into ordinary
shares in the Company, subject to receipt of shareholder approval at the Company’s 2014 Annual
General Meeting. If converted, the conversion price will be 80% of the volume weighted average closing
price of the shares as quoted on ASX over the last ten (10) days immediately preceding the day of
receipt of shareholder approval. On 4 August 2014, $325,000 was repaid in cash to Cape Lambert
Resources Limited.
New substantial shareholder
During the period the Consolidated Entity announced one of its major shareholders, Mr Derong Qiu,
signed a share transfer agreement with one of the leading investment companies in China Beijing Joseph
Investment Corporation Ltd (“Joseph Investments”). Mr Qiu, a non-executive director of the
Consolidated Entity, held a 26.25% stake in Cauldron. Pursuant to the terms of the agreement, Mr Qiu
transferred approximately half of his shareholding in Cauldron (representing 13% of the Consolidated
Entity) to Joseph Investments in consideration for 5.46% of the corporate shares of Joseph Investment.
Following this share exchange, Joseph Investments became a significant shareholder of Cauldron,
holding 13% of the Consolidated Entity’s shares at the time (increasing to 14.25% following the
Placement for $600,000 detailed below).
As at the date of this report, Joseph Investments holds a 12.69% interest in Cauldron.
Initial Placement
In December 2013, the Consolidated Entity completed a placement of 4,615,385 fully paid ordinary
shares at $0.13 per share to Joseph Investments to raise $600,000 (before capital raising costs).
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Placement Funding: A$15 million funding secured
As announced on 10 June 2014 and 1 July 2014, the Company has entered into a series of placement
agreements (“Placement Agreements”) with a range of Chinese investors to issue a total of 127,118,756
Shares (“Placement Shares”) at an issue price of $0.118 per share (“Issue Price”) to raise A$15 million
(“Placement Funds”) (before capital raising costs). The Issue Price of the Placement Shares was
determined at 80% of the volume weighted average closing price of Shares as quoted on ASX over the
last ten (10) trading days immediately preceding 29 May 2014. The Placement Shares are to be issued
(and the Placement Funds received) in various tranches, with the final tranche due to be received in
December 2015.
Pursuant to the terms of the Placement Agreements, the investors will also be issued with unlisted
options (subject to Shareholder approval). Refer to ASX Announcements dated 10 June 2014 and 1 July
2014 for details).
As announced on 20 June 2014, the Company received an initial $4,000,000 in Placement Funds from
new investor Guangzhou City Guangrong Investment Management Co., Ltd (“Guangrong Investment”).
The Company used its remaining capacity under Listing Rule 7.1 to issue 16,476,621 fully paid shares to
Guangrong Investment, making $1,944,241 (of the $4,000,000) immediately available to the Company
(before capital raising costs) (being Tranche 1 of the Placement Funds). The balance of these funds
($2,055,759) are being held in trust by the Company until the Placement Shares can be issued.
On 28 July 2014, the Company received $1m of the Placement Funds from Starry World Investments Ltd
(“Starry World”). These funds are being held in trust by the Company (together with the $2,055,759
from Guangrong Investments) until the Placement Shares can be issued.
The Company will seek shareholder approval at the upcoming general shareholder meeting (“Meeting”),
in respect of A$11 million of the Placement Funds and associated Placement Shares issued/to be issued
(including ratification of 16,476,621 shares issued under Listing Rule 7.1 and approval to issue a
further 76,743,779 shares within 3 months of the Meeting). The remaining Placement Funds (A$4
million) and Placement Shares agreed to be issued beyond this 3 month period are outside of Listing
Rule 7.1, and as such shareholder approval cannot be sought at the upcoming Meeting). A Notice of
General Meeting will be dispatched to all Shareholders shortly.
Options issued
In November 2013, the Consolidated Entity issued 3,000,000 unlisted options exercisable at $0.20 each
on or before 30 September 2015 to a director in consideration for overseas marketing services
performed on behalf of the Consolidated Entity, as approved at Cauldron’s Annual General Meeting on
22 November 2013.
On 26 February 2014, the Consolidated Entity issued 5,000,000 unlisted options to consultants and
employees with an exercise price of $0.20 on or before 30 June 2015 (subject to vesting conditions).
Options exercised
During June 2014, 1,900,000 share options were exercised at $0.20 each providing $380,000 funding to
the Company.
Options lapsed
On 30 June 2014, 900,000 unlisted employee and consultant options exercisable at $0.20 each in the
Company lapsed.
Energia Minerals takeover bid
Earlier in 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 share for eight (8)
Energia shares basis (“Takeover Offer”).
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On 6 February 2014 the Consolidated Entity announced that it had varied the Energia Takeover Offer by
extending the offer period to 1 May 2014.
On 2 May 2014 the Consolidated Entity announced that the offer period for the off market takeover bid
closed and the conditions to the offer were not met. Accordingly the offer lapsed.
Board changes
Dr Amy Wang was appointed as Non-executive Director with effect from 9 June 2014.
Mr Anson Huang was appointed as Non-executive Director with effect from 29 July 2014.
Change in Company Secretary
On 30 January 2014 Cauldron announced that Company Secretary Claire Tolcon had resigned from her
position with the Company effective 31 January 2014. Following the resignation of Ms Tolcon, the
Board announced the appointment of Ms Catherine Grant as Company Secretary.
PROJECT INFORMATION
In Australia, Cauldron has two project areas (Figure 1) covering more than 6,000km2 in two known
uranium provinces in South Australia and Western Australia. Projects include:
Yanrey Project (“Yanrey”) and Uaroo Joint Venture in
Western Australia. Yanrey comprises 14 granted
exploration licences (2,991km2) and 3 applications for
exploration licences (241km2). Uaroo Joint Venture
comprises 2 granted exploration licences (114km2).
Yanrey is prospective for large sedimentary hosted
uranium deposits.
Marree Joint Venture in South Australia comprising 5
granted exploration licences (2,794km2) prospective
for sedimentary-hosted uranium deposits as well as
base metal mineralisation.
YANREY URANIUM PROJECT, WESTERN AUSTRALIA
Figure 1: Major Project Locations in Australia
JORC 2012 resource for Bennet Well near completion
Cauldron has been working with Ravensgate on the revised JORC 2012 uranium resource for the Bennet
Well region and this work is near completion.
The completion of the resource was anticipated in the previous quarter but additional time has been
spent finalising the detailed geological 3D Micromine model. This geological model will allow for both a
more robust resource to be calculated as well as assist with planning of future drill holes at the project.
The revised resource is now expected to be finalised by August 2014.
Cauldron is in the process of planning for a mud rotary or air-core exploration drilling program in the
September 2014 quarter. The aim of this program is to further define the areas of known uranium
mineralisation as well as identify new uranium resources in the overall project area.
This planned exploration work is expected to continue into larger programs in early 2015 including
further drill holes, core drilling as well as possible field leach test programs.
Cauldron have also been working with geophysicist, Kim Frankcombe on re-interpretation of current
geophysical images, re-processing of current images and looking at additional geophysical surveys that
can be completed to assist in the planning of drill hole locations.
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Figure 2: Yanrey Project – Deposit, Prospect and Target Locations
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Figure 3: Bennet Well prospect location map on E08/1493 showing the location of the various Bennet Well
resources and geological interpretation shown on a bouguer gravity image
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MARREE BASE METALS PROJECT, SOUTH AUSTRALIA
Despite an initial desire to immediately drill test the geophysical anomaly beneath the historical Ooloo
Mine, a review of Kim Frankcombe’s (Frankcombe) interpretation report indicates that detailed regional
structural information through mapping and more detailed geophysical surveys are required. Based on
initial geological reconnaissance conducted in the June 2013 quarter, as well as the results of
Frankcombe’s IP and gravity reports, the currently developing hypothesis for Ooloo involves a regional
structural control given the mineralisation at Ooloo and its similarities with Mount Freeling 20km to the
south. This being the case, the collection of wider and more detailed structural orientation data is highly
critical for the design of drilling programs at Ooloo, Mount Freeling and other new prospective targets
arising from the previously completed mapping (Figure 4).
During the June 2014 quarter Cauldron have been working with geophysicist Kim Frankcombe in sourcing
quotes for additional geophysical surveys over selected parts of the project area. No final decision on the
final geophysical survey has been made but it’s likely to be an air-borne magnetic survey to define the
structural setting to improve drill orientation.
It is planned to complete the selected geophysical survey by 31 December 2014 so that a decision on
what the next step will be for this project including the possibility of drilling.
Figure 4 : Marree Project – Location of identified prospects
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TENEMENT ADMINISTRATION: AUSTRALIA
Objection to Cauldron’s Applications for exploration licences 08/2385-2387
Cauldron has lodged applications for exploration licences 08/2385-2387 (“Exploration Licences”) to which
Forrest & Forrest Pty Ltd has objected. The applications and objections were heard before the Perth Mining
Warden over 9 to 12 December 2013. As announced on 14 February 2014, the Mining Warden recommended
that the uranium exploration licences sought by Cauldron to conduct exploration on and adjacent to pastoral
leases on the Minderoo pastoral station in Western Australia’s Pilbara region be refused. The Warden has
recommended that the Minister refuse to grant the exploration licences on the ground of financial capacity.
The Minister is not bound to follow the Warden’s recommendation and may grant the exploration licences
irrespective of the Warden’s recommendation. The Company awaits the Minister’s decision on this matter. The
Company’s recent success in fund raising may be taken into consideration on the final decision.
Energia Mineral’s Objection and Application for Forfeiture
On 14 August 2013 Energia lodged objections to applications for exemption from expenditure and applications
for forfeiture affecting exploration licences 08/2160, 08/2161 and 08/2165 held by Cauldron (“Tenements”).
The applications for exemption (and associated objections) and applications for forfeiture relate to the
expenditure year ending 20 May 2013 (in relation to exploration licence 08/2160) and 14 June 2013 (in relation
to exploration licences 08/2161 and 08/2165). The proceedings are administrative in nature and are
commenced under the Mining Act 1978 (WA) (“Act”). In relation to the applications for exemption and
objections, under the Act the Warden hears the applications and delivers a report and recommendation to the
Minister for Mines and Petroleum as to the grant or refusal of certificates of exemption for the Tenements.
Upon receipt of the Warden’s report and recommendation, the Minister for Mines and Petroleum determines
whether certificates of exemption are granted for the Tenements. If certificates of exemption are granted,
Cauldron will have a complete defence to the applications for forfeiture. In relation to the applications for
forfeiture, under the Act the Warden conducts a hearing of the applications and may recommend to the
Minister the forfeiture of the Tenements, impose a penalty not exceeding $10,000 per Tenement or dismiss
the applications for forfeiture. If the Warden makes a recommendation for forfeiture of the Tenements, the
Minister may declare the Tenements forfeited, impose a penalty not exceeding $10,000 per Tenement or
determine not to forfeit the Tenements or impose any penalty. The proceedings are currently at an early stage
before the Perth Mining Warden.
EXPLORATION ACTIVITES: ARGENTINA
In Argentina, Cauldron controls, through its wholly-owned subsidiary Cauldron Minerals Limited (“Cauldron
Minerals”), and an agreement with Caudillo Resources S.A. (“Caudillo”) more than 3,400 km2 of ground in 6
project areas (Figure 5) in 4 Provinces.
Following the recently announced $15 million funding being secured, the focus for exploration in Argentina has
changed from consolidation and cost saving measures to a focus on completing further exploration to add
value to the current projects and define resources. This coincides with the announcement of the continued
expansion of the Federal government’s nuclear power generation capacity.
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Figure 5: Argentina – Location of Prospects
Below is a summary of the Company’s project areas in Argentina:
Cauldron Minerals Ltd
The Rio Colorado Project, Catamarca Province: covers an area of 454 km2 and comprises 4 granted
mining leases (minas), 6 granted exploration licences (cateos) and 4 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; and
Las Marias, San Juan Province: comprises 2 granted exploration licences and 9 applications
covering an area of 793 km2. The project displays outcropping sandstone hosted uranium
deposits, but is also prospective for copper, silver and gold.
Caudillo Resources S.A.
Los Colorados Project, La Rioja Province: comprises 1 granted mining lease and 1 granted
exploration licence. The project includes the old Los Colorados Uranium Mine, which has a quoted
production of approximately 55 tonnes of uranium concentrate (1992 and 1996), from roll-front,
sandstone-hosted uranium mineralisation.
Esperanza Project, La Rioja Province: comprising 8 licences (756km2) prospective for sandstone
hosted uranium deposits.
The Company also has several applications pending for exploration licences in the Catamarca, San
Juan, La Rioja and Santa Cruz provinces.
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Annual Report 2014
Competent Person Statement
The information in this announcement to which this statement is attached that relates to Cauldron
Energy Limited’s exploration results is based on information compiled by Mr Brett Smith who is a
Member of the Australasian Institute of Mining and Metallurgy and the Australian Institute of
Geoscientists. Mr Smith is a part-time employee of Cauldron Energy Limited and has sufficient
experience relevant to the styles of mineralisation and types of deposits under consideration. Mr Smith
is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves.’ Mr Smith consents to the
inclusion in the announcement of the matters based on their 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
Subsequent to 30 June 2014, the following took place:
- Mr Anson Huang was appointed as a Non-executive Director with effect from 29 July 2014.
- On 28 July 2014, the Company received $1m of the Placement Funds from Starry World Investments
Ltd (“Starry World”). These funds are being held in trust by the Company (together with the
$2,055,759 from Guangrong Investments) until the Placement Shares can be issued.
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.
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.
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Annual Report 2014
10.
SHARES UNDER OPTION
Details of unissued shares under option as at the date of this report are:
Grant Date
Class of
Shares
Exercise
Price
Number of
Options
Expiry Date
Listed /
Unlisted
20 October 2010
19 September 2012
22 November 2013
25 February 2014
Ordinary
Ordinary
Ordinary
Ordinary
$0.45
$0.20
$0.20
$0.20
500,000
1,000,000
3,000,000
5,000,000
20 October 2015
18 September 2015
30 September 2015
30 June 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 2014 there were 1,900,000 ordinary shares issued for $380,000
consideration (2013: 2,663,124 ordinary shares issued for $1,198,406) 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 meetings 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 2014 has been received and is
included on page 21 of the annual report.
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Annual Report 2014
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 2014.
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
Amy Wang
Anson Huang
Executive Chairman
Executive Technical Director
Non-Executive Director
Non-Executive Director (Appointed 9 June 2014)
Non-Executive Director (Appointed 29 July 2014)
The named persons held their positions for the duration of the financial year and up to the date of this
report, unless otherwise indicated.
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 2014
REMUNERATION REPORT
Executive remuneration for the years ended 30 June 2014 and 30 June 2013
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
(i)
Antony Sage – Executive Chairman
2014
2013
120,000
120,000
-
-
2014
2013
Brett Smith – Executive Technical Director
109,008
112,982
-
-
Qiu Derong – Non Executive Director (ii)
-
-
Amy Wang – Non Executive Director (iv)
-
100,000
365,068
2014
2013
2014
-
Total Remuneration Directors
2014
2013
329,008
598,050
-
-
Other Key Management Personnel
Simon Youds – Consultant (Head of Operations)
2014
2013
150,000
150,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Catherine Grant – Company Secretary and Chief Financial Officer (iii)
2014
2013
114,749
-
-
-
-
-
Total Remuneration – Other Key Management Personnel
2014
2013
264,749
150,000
Total Remuneration
2014
2013
593,757
748,050
-
-
-
-
-
-
-
-
7,940
-
7,940
-
7,940
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
230,801
-
120,000
120,000
109,008
112,982
330,801
365,068
-
-
230,801
-
559,809
598,050
51,540
108,949
29,206
-
80,746
108,949
311,547
108,949
201,540
258,949
151,895
-
353,435
258,949
913,244
856,999
-
-
-
-
70%
-
-
41%
-
26%
42%
19%
-
23%
42%
34%
13%
(i)
(ii)
(iii)
There are no employment contracts between the company and the directors.
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.
Ms Catherine Grant has been Chief Financial Officer of Cauldron since July 2013, and its
Company Secretary since 31 January 2014. A portion of Ms Grant’s salary is recharged to
related entities Fe Limited and Kupang Resources Limited; and another non-related entity.
(iv)
Dr Amy Wang was appointed as Non-executive Director on 9 June 2014.
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Annual Report 2014
REMUNERATION REPORT
Additional disclosure relating to options and shares
Options awarded, vested and lapsed during the year
The table below discloses the number of share options granted to executives as remuneration during
the year ended 30 June 2014 as well as the number of options that vested or lapsed during the year.
Share options do not carry any voting or dividend rights and can be exercised once the vesting
conditionals have been met until their expiry date.
Year
Options
awarded
during the
year
No.
Award date
Fair
value of
options
at award
date
$
Vesting
date
Exercise
price
Expiry date
No. vested
during the
year
No. lapsed
during the
year
2014
Directors
Qiu Derong (i)
Other Key Management Personnel
Simon Youds
Simon Youds
Catherine Grant
2014
2013
2014
3,000,000
1,500,000
2,000,000
850,000
22-Nov-13
$0.08
22-Nov-13
$0.20
30-Sep-15
3,000,000
-
25-Feb-14
7-Jun-12
25-Feb-14
$0.03
$0.07
$0.03
(ii)
(iii)
(ii)
$0.20
$0.20
$0.20
30-Jun-15
30-Jun-14
30-Jun-15
-
1,350,000
-
-
650,000
-
(i)
(ii)
Unlisted options were issued to Mr Qiu Derong as reasonable remuneration for overseas
marketing services performed on behalf of the Company.
Share options shall vest as follows:
a. One half shall vest on the Company achieving a JORC resource at the Company’s Yanrey
Project in WA containing more than 30 million lbs of Uranium;
b. One quarter shall vest on the progression of the Bennet well resource area to pre-
feasibility;
c. One quarter shall vest on the commencement of drilling by the Company at the Rio
Colorado project in Argentina.
(iii)
Share options shall vest as follows:
a. 650,000 vest on the Company achieving the start of drilling at the Company’s Rio Colorado
project in Argentina;
b. 650,000 vest on the Company achieving a resource at the Company’s Yanrey project in WA
containing more than 10 million lbs of Uranium or equivalent;
c. 700,000 vest on the Company achieving a resource at the Company’s Yanrey project in WA
containing more than 15 million lbs of Uranium or equivalent.
Value of options awarded, exercised and lapsed during the year
Value of
options
granted
$
Value of
options
exercised
during the year
$
Value of
options lapsed
during the year
$
Remuneration
consisting of
share options for
the year
%
Directors
Qiu Derong
Other Key Management Personnel
Simon Youds
Catherine Grant
230,801
51,540
29,206
-
200,000
-
-
42,876
-
70%
26%
19%
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Annual Report 2014
REMUNERATION REPORT
Shares issued on exercise of options
Shares issued
Paid per
share
Unpaid
per share
No.
$
$
Other Key Management Personnel
Simon Youds
1,350,000
$0.20
-
Additional disclosure relating to options and shares
Option holdings of key management personnel
Balance
1 July 2013
Granted
Exercised
Lapsed
Balance
30 June 2014
Vested and
Exercisable
30 June 2014
Un-exercisable
30 June 2014
Directors
Antony Sage
Brett Smith
Qiu Derong
Other Key Management Personnel
Simon Youds
Catherine Grant
-
-
-
2,000,000
-
2,000,000
-
-
3,000,000
1,500,000
850,000
5,350,000
-
-
-
-
-
-
(1,350,000)
-
(1,350,000)
(650,000)
-
(650,000)
-
-
3,000,000
1,500,000
850,000
5,350,000
-
-
3,000,000
-
-
3,000,000
-
-
-
1,500,000
850,000
2,350,000
Shareholdings key management personnel
Shares held in Cauldron Energy Limited
Directors
Antony Sage
Brett Smith
Qiu Derong
Amy Wang
Other Key Management Personnel
Simon Youds
Catherine Grant
Balance
1 July 2013
Issued
Received on
exercise of
options
Net Change Other
Balance
30 June 2014
5,894,600
11,844
41,900,000
-
250,000
-
48,056,444
-
-
7,781,263 (a)
-
-
-
-
-
-
-
(20,750,939) (b)
80,000 (c)
-
-
7,781,263
1,350,000
-
1,350,000
(447,136) (d)
8,888 (e)
(21,189,187)
5,894,600
11,844
28,930,324
80,000
1,152,864
8,888
35,998,520
(a) Shares were issued in satisfaction of a loan (and interest) of $875,774 to the Company.
(b) Mr Qiu Derong, signed a share transfer agreement with one of the leading investment companies in
China Beijing Joseph Investment Corporation Ltd (“Joseph Investments”). Pursuant to the terms of
the agreement, Mr Qiu transferred approximately half of his shareholding in Cauldron (representing
13% of the Consolidated Entity) to Joseph Investments in consideration for 5.46% of the corporate
shares of Joseph Investment.
(c) Ms Amy Wang held shares at the date of her appointment as Non-Executive Director on 9 June
2014, which had previously been purchased on market.
(d) Mr Simon Youds acquired 102,864 shares on market and sold 550,000 shares on market during the
year.
(e) Ms Catherine Grant held shares at the date of her appointment as Company Secretary on 31 January
2014, which had previously been purchased on market.
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Annual Report 2014
REMUNERATION REPORT
Loans with key management personnel and their related parties
Details of loans made to Cauldron Energy Limited by directors and entities related to them are set out
below.
30 June 2014
Cape Lambert Resources Limited (a)
Mr Qiu Derong (a)
Cape Lambert Resources Limited (b)
Mr Qiu Derong (b)
Cape Lambert Resources Limited (c)
TOTAL
Balance at
the start of
the year
Loan advanced
Interest paid
and payable for
the year
Conversion of
loan to shares
Balance at
the end of
the year
-
-
-
-
-
-
655,685
844,315
200,000
200,000
650,000
2,550,000
24,431
31,459
12,948
11,032
13,038
92,908
(680,116)
(875,774)
-
-
-
-
-
212,948
211,032
663,038
(1,555,890)
1,087,018
(a) In July 2013, the Consolidated Entity secured $1,500,000 in funding via the execution of
converting loan agreements with two of its major shareholders ($655,685 from Cape Lambert
and $844,315 from Mr Qiu Derong). Pursuant to the terms of the converting loan agreements,
the Consolidated Entity received a total of $1,500,000, which automatically converted into
ordinary shares in the Consolidated Entity, upon receipt of shareholder approval at the
Consolidated Entity’s 2013 Annual General Meeting on 22 November 2013. The converting
loans, plus interest at 10% per annum ($1,555,890) were converted into 13,824,102 fully paid
ordinary shares, at a conversion price of $0.1125 per share (refer note 17). The conversion
price was calculated based on 80% 10 day VWAP of shares on ASX before the date of the
shareholder approval on 22 November 2013. Mr Sage is a director of Cape Lambert Resources
Limited.
(b) In November 2013, the Consolidated Entity entered into short term loan agreements with
Cape Lambert Resources limited and Mr Qiu Derong. Cape Lambert and Mr Qiu Derong have
each lent the Consolidated Entity $200,000 which may be converted into shares at a
conversion rate of $0.13 per share (with an interest rate of 10% per annum).
(c) In March 2014, the Consolidated Entity entered into a converting loan agreement. Pursuant to
the Converting Loan Agreement, the loan funds, subject to receipt of shareholder approval at
the Company’s 2014 Annual General Meeting, will automatically convert into ordinary shares
in the Company. Subject to receipt of shareholder approval, the conversion will be 80% of the
volume weighted average closing price of the Shares as quoted on the ASX over the last ten
trading days immediately preceding the day of receipt of shareholder approval. If shareholder
approval is not obtained, the loan (together with interest accrues daily at 10% per annum) is
repayable by the Company by 31 December 2014. As at 30 June 2014, $650,000 had been
drawn down by the Consolidated Entity. On 4 August 2014, $325,000 was repaid in cash to
Cape Lambert Resources Limited.
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REMUNERATION REPORT
Other transactions and balances with key management personnel and their related parties
Details and terms and conditions of other transactions with key management personnel and their
related parties:
Director related entities
Fe Limited
Fe Limited
Cape Lambert Resources Limited
Cape Lambert Resources Limited
Kupang Resources Limited
Kupang Resources Limited
Sales to related
parties
Purchases from
related parties
Amounts owed
by related
parties*
Amounts owed
to related
parties*
2014
2013
2014
2013
2014
2013
45,329
-
-
-
61,146
-
-
54,435
166,035
143,667
-
-
-
-
-
-
-
-
-
-
33,135
-
-
-
* Amounts are classified as trade receivables and trade payables, respectively.
Mr Sage is a director of Fe Limited, Cape Lambert Resources Limited and Kupang Resources Limited.
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.
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 2014.
This report of the Directors, incorporating the Remuneration Report is signed in accordance with a
resolution of the Board of Directors.
Mr Brett Smith
Executive Director
PERTH
21 August 2014
20
Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
DECLARATION OF INDEPENDENCE BY BRAD MCVEIGH TO THE DIRECTORS OF CAULDRON ENERGY
LIMITED
As lead auditor of Cauldron Energy Limited for the year ended 30 June 2014, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Cauldron Energy Limited and the entities it controlled during the
period.
Brad McVeigh
Director
BDO Audit (WA) Pty Ltd
Perth, 21 August 2014
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BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
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Annual Report 2014
CORPORATE GOVERNANCE STATEMENT
This statement outlines the corporate governance framework and practices of ASX-listed Cauldron Energy
Limited (Cauldron) in the form of a report against the ASX Corporate Governance Principles and
Recommendations (2nd Edition) (ASX Principles). Cauldron will report against the 3rd Edition ASX Principles in
the next financial year.
Principle 1 – Lay solid foundations for management and oversight
The Board’s primary responsibility is the creation, promotion and protection of long-term shareholder value.
The Board has ultimate responsibility for the successful operations of the Company. The Board is responsible
for, and has the authority to determine, all matters relating to the policies, practices, management and
operations of the Company. The functions reserved to the Board, the Board’s responsibilities and other
matters relating to Board governance are set out in the Board Charter which is available on the Company’s
website at www.cauldronenergy.com.au.
The Board Charter also sets out the responsibilities of the CEO. The Board has delegated authority and
responsibility to the manage and administer the Company’s general and financial operations to the CEO. The
Company has put in place formal letters of engagement for its senior management, which set out in further
detail the responsibilities specifically delegated to those persons.
The Board establishes the strategic direction and policy framework within which the business of the Company
is managed. The role of Management is to manage the Company within the parameters of direction and
delegation set by the Board, and the Board is responsible for oversight of the activities of Management in
carrying out those 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.
Board members are required to commit sufficient time to enable them to carry out their duties as Directors of
Cauldron Energy. Director candidates must confirm that they are in a position to devote the necessary time to
their Board position prior to appointment. Non-executive Directors enter into formal letters of appointment
setting out the key terms, conditions and expectations of their appointment.
The Board Charter provides that the Company Secretary is accountable to the Board, through the Chairman, on
all governance matters and reports directly to the Chairman. The Company Secretary is appointed by the
Board and all Directors have the right of access to the Company Secretary.
Principle 2 – Structure the Board to add value
Cauldron Energy currently has five Directors, one of whom (Tony Sage) is the Executive Chairman and one of
whom (Brett Smith) is an Executive Director. Mr Sage and Mr Smith jointly discharge the role of Chief Executive
Officer of the Company.
The Company does not comply with Principle 2.1 which requires that a majority of the Board should be
independent. The Board believes that, given the size of the Company, the nature and scale of its operations
and the ability of the Directors to bring independent judgement to bear in their deliberations, a five member
Board with two independent Directors is appropriate for the Company at its current stage of development.
It is intended that the Board comprise a balance of Directors with an appropriate mix of skills, experience,
expertise and qualifications relevant to the Company’s business, together with other attributes such as
decision-making and judgement skills. The qualifications, experience and tenure of each of the Directors is set
out in the Directors’ Report.
The Board consider that independent decision-making is critical to effective governance. Independent
directors are those who are able to exercise their duties unfettered by business or other relationships, and are
willing to express and objective opinion.
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Annual Report 2013
CORPORATE GOVERNANCE (cont)
The Board has determined that for the purposes of the ASX Mr Anson Huang and Dr Amy Wang are
independent Directors. The Board has taken into account the commentary in the ASX Principles set out in Box
2.1 in determining whether the Directors are independent.
Mr Qiu Derong is a Non-Executive Director but does not meet the Company’s criteria for independence as he is
a substantial shareholder of the Company.
Mr Smith and Mr Sage are Executive Directors of the Company and as they are employed in an executive
capacity do not meet the Company’s criteria for independence. The Board considers this is appropriate, taking
into account the size of the Company, its stage of development and nature of its operations. The Board has
also taken into account the experience and knowledge of Mr Smith and Mr Sage in its considerations.
Mr Sage is the Executive Chairman of the Company and does not meet the Company’s criteria for
independence, which is a departure from Recommendation 2.2. The Board believes Mr Sage’s experience and
knowledge of the Company makes him the most appropriate person to lead the Board at this time.
Mr Sage also acts in the capacity as both Executive Chairman and joint Chief Executive Officer and therefore
the Company does not comply with Recommendation 2.3.
The Company’s Constitution provides that at each Annual General Meeting (AGM) one-third of Directors and
any Director who has held office for three or more years since their last election must retire from office and are
eligible to stand for re-election. Any Director appointed by the Board since the previous AGM must stand for
election at the next AGM.
New Directors undergo an induction process in which they are given a full briefing on the Company, including
meetings with key members of senior management. Directors are also provided with an induction package
containing key corporate information and recent market presentations.
All Directors have the right of access to Company information and to senior management. The Board
collectively and each Director individually has the right, subject to agreement from the Executive Chairman, to
seek independent professional advice from a qualified advisor, at the Company’s expense. Any advice obtained
must be made available to other members of the Board.
The term in office held by each director in office at the date of this report is detailed in the Directors’ Report.
Performance Review/Evaluation
It is the policy of the Board to conduct an annual evaluation of its performance. The objective of this
evaluation is to provide best practice corporate governance to the Company.
The performance of Mr Sage and Mr Smith in their capacity as joint- Chief Executive Officer 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. No formal performance
evaluation of the Board, individual directors of senior management took place during the year. As a result of
the recent changes in the structure of the Board, the a performance evaluation will be performed in the future.
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.
Nomination Committee
The Board has not established a Nomination Committee. It considers this is not necessary, taking into account
the size of the Company, the size and structure of the Board and the stage of development of the Company.
The Board believes that it is best placed to consider the issues that would ordinarily be considered by a
Nomination Committee, and has processes in place to perform those functions.
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Criteria for selection of Directors
CORPORATE GOVERNANCE (cont)
Directors are appointed based on the specific skills and experience required by the Company, which may
include relevant industry experience, financial and accounting skills, and legal expertise at a senior level. This is
in addition to experience in a listed company environment and an understanding of best practice corporate
governance. Given the size of the Company and the business it operates, the Company aims at all times to
have at least one Director with relevant industry experience.
Principle 3 – Promote Ethical and Responsible Decision Making
The Board has established a Code of Conduct which is available on the Company’s website in the Corporate
Governance section. The Board, senior management and employees are committed to implementation of and
compliance with the Code. The Code requires that the Company and its employees, consultants, contractors,
advisors and all other people who represent Cauldron Energy operate to the highest standards of ethical
behaviour, honesty and fairness in relationships with stakeholders, government authorities, regulators,
creditors and the community as a whole.
All Cauldron Energy personnel must immediately report any possible breach of the Code to the Company
Secretary.
The external auditors of the Company are responsible for reviewing the operations of Cauldron Energy, which
includes reporting to the Board in relation to any breaches of the Code that have been identified.
Securities Trading Policy
The Company’s Securities Trading Policy provides that 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 10 days prior to, and 2 days after, the release of the Company’s half yearly or yearly
results. Prior approval by the Chairman (or the Board in the event of the Chairman undertaking a trade) is
required before any Director or employee may trade in the Company’s securities. The Securities Trading Policy
can be accessed on the Company’s website at www.cauldronenergy.com.au .
As required by the ASX Listing Rules, the Company notifies the ASX of any transaction conducted by a Director
in the securities of the Company within five days of the transaction.
Diversity Policy
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 the Company endeavours to provide a safe workplace in which there is
equal opportunity for all employees at all levels of the Company. The Company has not yet adopted a formal
diversity policy.
The Board has not set measurable objectives on achieving gender diversity. Due to the size and scale of
operations of the Company, and the nature of its activities the Board considers this is appropriate.
The proportion of women in the Company’s workforce are as follows:
(a)
(b)
(c)
the proportion of women employees in the whole organisation: 59% of employees, key consultants &
contractors;
women in senior executive positions: one – Company Secretary/Chief Financial Officer; and
women on the Board: one.
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Annual Report 2013
CORPORATE GOVERNANCE (cont)
Principle 4 – Safeguard integrity in financial reporting
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The Company has not established an Audit Risk Committee and therefore does not comply with
Recommendation 4.1. The Board believes this is appropriate taking into account the size of the Board, the size
of the Company and the nature of the Company’s operations and activities. The functions that would ordinarily
be undertaken by an Audit and Risk Committee are discharged by the Board as a whole.
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.
At the time of the half-year review and full-year audit of the Company’s financial statements, the external
auditor formally presents to the Board a certificate confirming their independence. The external auditor’s
independence statement is included in the Report provided to the Board.
Principle 5 – Make timely and balanced disclosure
The Board has adopted a Continuous Disclosure policy to ensure that the Company complies with the
disclosure requirements of the ASX Listing Rules. 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 can be accessed via
www.cauldronenergy.com.au.
the Company’s website at
Principle 6 – Respect the rights of shareholders
The Company is committed to communicating with shareholders regularly and clearly.
Cauldron Energy is committed to:
communicating effectively with shareholders through releases to the market via ASX, Cauldron Energy’s
website, 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; and
making it easy for shareholders to participate in general meetings of the Company.
The Annual Report, Half-Year Report, Annual General Meeting and specific investor briefings are all important
communication forums. The Company encourages shareholders to attend and participate at general meetings.
The Company welcomes questions from shareholders at any time and these will be answered subject to the
parameters of information that has been publicly released and is not market sensitive. The external auditor
attends the AGM and is available to answer any questions regarding the conduct of the audit and the Annual
Report.
Shareholder communication is conducted in accordance with the Company’s Continuous Disclosure Policy and
Shareholder Communication Policy, which are available on the Cauldron Energy website.
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 following
Company Policies and other Corporate Governance documents are available on the Company’s website in the
Corporate Governance Section (www.cauldronenergy.com.au).
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Annual Report 2013
CORPORATE GOVERNANCE (cont)
Board Charter
Director Selection Procedure
Code of Conduct
Remuneration Statement
Risk Management Strategy
Shareholder Communication Policy
Share Trading Policy
Board Performance Evaluation Policy
Audit Committee Charter
Principle 7 – Recognise and manage risk
The Board’s Charter provides that the Board 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 joint Chief Executive Officers
and Company Secretary are accountable to the Board for effective risk management. The Board undertakes a
review the management of material business risks at least annually. The Company’s Risk Management Policy is
located on its website in the Corporate Governance Section: www.cauldronenergy.com.au.
The Board receives assurance from the Chief Executive Officers and Chief Financial Officer in respect of the
financial statements and notes for the financial year that the declaration provided in accordance with section
295A of the Corporations Act 2001 (Cth) is founded on a sound system of risk management and internal control
and that the system is operating effectively in all material respects in relation to financial reporting risks.
The Board also receives assurance from the CEO and Chief Financial Officer in respect of its half-year financials
that in their opinion, the financial records of the entity have been properly maintained and that the financial
statements comply with the appropriate accounting standards and give a true and fair view of the financial
position and performance of the entity, and that the opinion has been formed on the basis of a sound system
of risk management and internal control which is operating effectively.
Principle 8 – Remunerate fairly and responsibly
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, 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 Executive Chairman, 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 performance, including, setting with the Chief Executive Officer goals and reviewing
progress in achieving those goals.
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Annual Report 2013
Remuneration Policy
CORPORATE GOVERNANCE (cont)
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
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 executives 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; and
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. Where shares or options are granted to senior executives the value will
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
Non-Executive Directors are paid fees out of the maximum aggregate amount approved by shareholders for the
remuneration of Non-Executive Directors. The current aggregate amount for remuneration of Directors is
$300,000.
There are no arrangements to provide retirement benefits, other than superannuation, for non-executive
directors.
Full details regarding the remuneration of Directors, is included in the Remuneration Report of the Annual
Report.
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Annual Report 2013
CORPORATE GOVERNANCE (cont)
Adherence to the Guide on Best Practice Recommendations
Recommendation
Comply
Yes / No
Principle 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
Principle 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
Principle 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.
Yes
Yes
Yes
No
No
No
No
Yes
Yes
Yes
Yes
No
Yes
Yes
Principle 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.
Principle 5 – Make timely and balanced disclosure
5.1
Companies should established written policies designed to ensure compliance with ASX
Comply
Yes / No
No
No
No
Yes
Yes
28
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
Yes
Yes
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Annual Report 2013
CORPORATE GOVERNANCE (cont)
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
Principle 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.
Principle 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.
6.2
7.2
7.3
7.4
Principle 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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Annual Report 2014
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2014
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Note
3(a)
3(b)
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4
5
6
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 profit/(loss) on financial assets
Profit/(loss) on disposal of financial assets
Depreciation
Finance costs
Realised foreign exchange loss
Impairment losses
Loss before income tax expense
Income tax benefit
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
Total comprehensive income attributable to
members of the Company
2014
$
2013
$
3,639
-
141,341
188,000
(256,488)
(284,050)
(274,504)
(288,229)
(127,783)
(342,870)
(853,560)
(10,332)
(52,435)
268,425
5,295
(17,014)
(92,908)
(36,627)
(1,931,452)
(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)
(3,429,426)
(4,290,893)
(7,896,865)
346,659
-
(3,944,234)
(7,896,865)
-
-
(436,009)
(158,166)
(436,009)
(158,166)
(4,380,243)
(8,055,031)
Earnings/(loss) Per Share
Basic earnings/(loss) per share (cents per share)
20
(2.30)
(5.16)
The accompanying notes form part of these financial statements.
30
Annual Report 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2014
CURRENT ASSETS
Cash and cash equivalents
Restricted cash
Trade and other receivables
Financial assets
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Restricted cash
Exploration and evaluation expenditure
Property, plant and equipment
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Borrowings
Subscription funds
Provisions
Note
2014
$
2013
$
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9
7
8
1,873,667
2,055,748
134,690
826,506
214,006
-
127,118
572,302
4,890,611
913,426
9
11
12
13
14
15
16
69,000
9,216,249
25,076
217,761
9,384,605
46,105
9,310,325
9,648,471
14,200,936
10,561,897
706,349
1,087,018
2,055,759
50,534
504,537
-
-
16,989
TOTAL CURRENT LIABILITIES
3,899,660
521,526
TOTAL LIABILITIES
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
TOTAL EQUITY
3,899,660
521,526
10,301,276
10,040,371
17
18
19
41,701,715
1,297,759
(32,698,198)
37,348,796
1,445,539
(28,753,964)
10,301,276
10,040,371
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The accompanying notes form part of these financial statements.
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Annual Report 2014
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2014
Note
2014
$
2013
$
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
R&D Tax Incentive received
Interest paid
Administration service fees received
(2,065,730)
4,573
346,906
-
-
(2,052,596)
51,948
(260,712)
89,119
Net cash used in operating activities
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(1,714,251)
(2,172,241)
Cash Flows from Investing Activities
Payments for exploration and evaluation
Reimbursement for exploration and evaluation
incurred on behalf of other parties
Refund of environmental bonds and deposits
Funding provided to Caudillo Resources SA
Proceeds from sales of equity investments
Payments for plant and equipment
Refund of deposits paid
11
(2,064,713)
(2,992,375)
17,028
148,761
(216,681)
20,265
-
-
751,850
-
(257,329)
-
(33,050)
3,830
Net cash used in investing activities
(2,095,340)
(2,527,074)
Cash Flows from Financing Activities
Proceeds from issue of shares and options, net of
transaction costs
Proceeds from issue of convertible loan note
14
2,924,241
2,550,000
1,989,281
-
Net cash from financing activities
5,474,241
1,989,281
Net increase/ (decrease) in cash held
Effects of exchange rate changes on cash
Cash and cash equivalents at beginning of financial
year
1,664,650
(4,989)
(2,710,034)
(3,071)
214,006
2,927,111
Cash and cash equivalents at end of financial year
1,873,667
214,006
The accompanying notes form part of these financial statements.
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Annual Report 2014
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR YEAR ENDED 30 JUNE 2014
Balance at 1 July 2013
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
$
$
$
$
$
37,348,796
(28,753,964)
2,357,499
(911,960)
10,040,371
-
-
-
(3,944,234)
-
(3,944,234)
4,352,919
-
-
-
-
-
-
-
288,229
-
(3,944,234)
(436,009)
(436,009)
(436,009)
(4,380,243)
-
-
4,352,919
288,229
Balance at 30 June 2014
41,701,715
(32,698,198)
2,645,728
(1,347,969)
10,301,276
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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
Balance at 30 June 2013
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
37,348,796
(28,753,964)
2,357,499
(911,960)
10,040,371
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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”) for the year ended 30 June 2014 and was authorised for issue in accordance
with a resolution of the directors on 21 August 2014.
Cauldron is a public listed company, incorporated and domiciled in Australia.
Cauldron is a for-profit entity for the purposes of preparing these financial statements.
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. Application of New and Revised Accounting Standards
Changes in accounting policies on initial application of Accounting Standards
The accounting policies adopted are consistent with those of the previous financial year.
From 1 July 2013, the Consolidated Entity has adopted all the standards and interpretations
mandatory for annual periods beginning on or after 1 July 2013. Adoption of these standards and
interpretations did not have any effect on the statements of financial position or performance of the
Consolidated Entity. The Consolidated Entity has not elected to early adopt any new standards or
amendments.
The following standards and interpretations would have been applied for the first time for entities
with period ending 30 June 2014 (unless early adopted):
Reference
Title
AASB 10
Consolidated Financial Statements
Application date
of standard
Application date
for Group
1 January 2013
1 July 2013
AASB 10 establishes a new control model that applies to all entities. It
replaces parts of AASB 127 Consolidated and Separate Financial
Statements dealing with the accounting for consolidated financial
statements and UIG-112 Consolidation - Special Purpose Entities.
The new control model broadens the situations when an entity is
considered to be controlled by another entity and includes new guidance
for applying the model to specific situations, including when acting as a
manager may give control, the impact of potential voting rights and when
holding less than a majority voting rights may give control.
Consequential amendments were also made to this and other standards
via AASB 2011-7 and AASB 2012-10.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Reference
Title
AASB 11
Joint Arrangements
Application date
of standard
Application date
for Group
1 January 2013
1 July 2013
AASB 11 replaces AASB 131 Interests in Joint Ventures and UIG-113 Jointly-
controlled Entities - Non-monetary Contributions by Ventures.
AASB 11 uses the principle of control in AASB 10 to define joint control,
and therefore the determination of whether joint control exists may
change. In addition it removes the option to account for jointly controlled
entities (JCEs) using proportionate consolidation. Instead, accounting for a
joint arrangement is dependent on the nature of the rights and obligations
arising from the arrangement. Joint operations that give the venturers a
right to the underlying assets and obligations themselves is accounted for
by recognising the share of those assets and obligations. Joint ventures
that give the venturers a right to the net assets is accounted for using the
equity method.
Consequential amendments were also made to this and other standards
via AASB 2011-7, AASB 2010-10 and amendments to AASB 128.
Amendments made by the IASB in May 2014 add guidance on how to
account for the acquisition of an interest in a joint operation that
constitutes a business.
AASB 12
Disclosure of Interests in Other Entities
1 January 2013
1 July 2013
AASB 12 includes all disclosures relating to an entity's interests in
subsidiaries, joint arrangements, associates and structured entities. New
disclosures have been introduced about the judgments made by
management to determine whether control exists, and to require
summarised information about joint arrangements, associates, structured
entities and subsidiaries with non-controlling interests.
AASB 13
Fair Value Measurement
1 January 2013
1 July 2013
AASB 13 establishes a single source of guidance for determining the fair
value of assets and liabilities. AASB 13 does not change when an entity is
required to use fair value, but rather, provides guidance on how to
determine fair value when fair value is required or permitted. Application
of this definition may result in different fair values being determined for
the relevant assets.
AASB 13 also expands the disclosure requirements for all assets or
liabilities carried at fair value. This includes information about the
assumptions made and the qualitative impact of those assumptions on the
fair value determined.
Consequential amendments were also made to other standards via AASB
2011-8.
AASB 119
Employee Benefits
1 January 2013
1 July 2013
The main change introduced by this standard is to revise the accounting
for defined benefit plans. The amendment removes the options for
accounting for the liability, and requires that the liabilities arising from
such plans is recognised in full with actuarial gains and losses being
recognised in other comprehensive income. It also revised the method of
calculating the return on plan assets.
The revised standard changes the definition of short-term employee
benefits. The distinction between short-term and other long-term
employee benefits is now based on whether the benefits are expected to
be settled wholly within 12 months after the reporting date.
Consequential amendments were also made to other standards via AASB
2011-10.
AASB 2012-2
Amendments to Australian Accounting Standards - Disclosures - Offsetting
Financial Assets and Financial Liabilities
1 January 2013
1 July 2013
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Reference
Title
Application date
of standard
Application date
for Group
AASB 2012-5
AASB 2012-9
AASB 2012-2 principally amends AASB 7 Financial Instruments: Disclosures
to require disclosure of the effect or potential effect of netting
arrangements, including rights of set-off associated with the entity's
recognised financial assets and recognised financial liabilities, on the
entity's financial position, when all the offsetting criteria of AASB 132 are
not met.
Amendments to Australian Accounting Standards arising from Annual
Improvements 2009-2011 Cycle
AASB 2012-5 makes amendments resulting from the 2009-2011 Annual
Improvements Cycle. The standard addresses a range of improvements,
including the following:
► Repeat application of AASB 1 is permitted (AASB 1)
► Clarification of the comparative information requirements when an
entity provides a third balance sheet (AASB 101 Presentation of
Financial Statements)
Amendment to AASB 1048 arising from the withdrawal of Australian
Interpretation 1039
AASB 2012-9 amends AASB 1048 Interpretation of Standards to evidence
the withdrawal of Australian Interpretation 1039 Substantive Enactment of
Major Tax Bills in Australia.
1 January 2013
1 July 2013
1 January 2013
1 July 2013
AASB 1053
Application of Tiers of Australian Accounting Standards
1 July 2013
1 July 2013
This standard establishes a differential financial reporting framework
consisting of two tiers of reporting requirements for preparing general
purpose financial statements:
a.
b.
Tier 1: Australian Accounting Standards
Tier 2: Australian Accounting Standards - Reduced Disclosure
Requirements
Tier 2 comprises the recognition, measurement and presentation
requirements of Tier 1 and substantially reduced disclosures
corresponding to those requirements.
The following entities apply Tier 1 requirements in preparing general
purpose financial statements:
a.
b.
For-profit entities in the private sector that have public accountability
(as defined in this standard)
The Australian Government and State, Territory and Local
governments
The following entities apply either Tier 2 or Tier 1 requirements in
preparing general purpose financial statements:
a.
b.
c.
For-profit private sector entities that do not have public
accountability
All not-for-profit private sector entities
Public sector entities other than the Australian Government and
State, Territory and Local governments.
Consequential amendments to other standards to implement the regime
were introduced by AASB 2010-2, 2011-2, 2011-6, 2011-11, 2012-1, 2012-
7 and 2012-11.
Amendments to Australian Accounting Standards to Remove Individual Key
Management Personnel Disclosure Requirements [AASB 124]
This amendment deletes from AASB 124 individual key management
personnel disclosure requirements for disclosing entities that are not
companies. It also removes the individual KMP disclosure requirements for
all disclosing entities in relation to equity holdings, loans and other related
party transactions.
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AASB 2011-4
1 July 2013
1 July 2013
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
New accounting standards and interpretations issued but yet effective
The following standards and interpretations have been issued by the AASB but are not yet effective for the
period ending 30 June 2014.
Application
date of
standard
Application
date for Group
1 January 2014 1 July 2014
1 January
2018^
1 July 2018^
Reference
Title
Summary
AASB 2012-3
Amendments to
Australian Accounting
Standards - Offsetting
Financial Assets and
Financial Liabilities
AASB 2012-3 adds application guidance to AASB 132
Financial Instruments: Presentation to address
inconsistencies identified in applying some of the offsetting
criteria of AASB 132, including clarifying the meaning of
"currently has a legally enforceable right of set-off" and that
some gross settlement systems may be considered
equivalent to net settlement.
AASB 9
Financial Instruments
AASB 9 includes requirements for the classification and
measurement of financial assets. It was further amended
by AASB 2010-7 to reflect amendments to the accounting
for financial liabilities.
These requirements improve and simplify the approach for
classification and measurement of financial assets compared
with the requirements of AASB 139. The main changes are
described below.
a.
Financial assets that are debt instruments will be
classified based on (1) the objective of the entity's
business model for managing the financial assets; (2)
the characteristics of the contractual cash flows.
b.
c.
Allows an irrevocable election on initial recognition to
present gains and losses on investments in equity
instruments that are not held for trading in other
comprehensive income. Dividends in respect of these
investments that are a return on investment can be
recognised in profit or loss and there is no impairment
or recycling on disposal of the instrument.
Financial assets can be designated and measured at
fair value through profit or loss at initial recognition if
doing so eliminates or significantly reduces a
measurement or recognition inconsistency that would
arise from measuring assets or liabilities, or
recognising the gains and losses on them, on different
bases.
d. Where the fair value option is used for financial
liabilities the change in fair value is to be accounted for
as follows:
►
►
The change attributable to changes in credit risk
are presented in other comprehensive income
(OCI)
The remaining change is presented in profit or
loss
If this approach creates or enlarges an accounting
mismatch in the profit or loss, the effect of the changes in
credit risk are also presented in profit or loss.
Consequential amendments were also made to other
standards as a result of AASB 9, introduced by AASB 2009-
11 and superseded by AASB 2010-7 and 2010-10.
The AASB issued a revised version of AASB 9 (AASB 2013-9)
during December 2013. The revised standard incorporates
three primary changes:
1.
New hedge accounting requirements including
changes to hedge effectiveness testing, treatment of
hedging costs, risk components that can be hedged
and disclosures
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Reference
Title
Summary
Application
date of
standard
Application
date for Group
AASB 2013-3
Annual
Improvements
2010–2012 Cycle
Annual
Improvements
2011–2013 Cycle
2.
3.
Entities may elect to apply only the accounting for
gains and losses from own credit risk without applying
the other requirements of AASB 9 at the same time
In February 2014, the IASB tentatively decided that the
mandatory effective date for AASB 9 will be 1 January
2018
Amendments to
AASB 136 – Recoverable
Amount Disclosures for
Non-Financial Assets
AASB 2013-3 amends the disclosure requirements in AASB
136 Impairment of Assets. The amendments include the
requirement to disclose additional information about the
fair value measurement when the recoverable amount of
impaired assets is based on fair value less costs of disposal.
1 January 2014 1 July 2014
Annual Improvements to
IFRSs 2010–2012 Cycle
This standard sets out amendments to International
Financial Reporting
1 July 2014
1 July 2014
Standards (IFRS) and the related bases for conclusions and
guidance made during the International Accounting
Standards Board’s Annual Improvements process. These
amendments have not yet been adopted by the AASB.
The following items are addressed by this standard:
►
►
►
►
►
IFRS 2 - Clarifies the definition of 'vesting conditions'
and 'market condition' and introduces the definition of
'performance condition' and 'service condition'.
IFRS 3 - Clarifies the classification requirements for
contingent consideration in a business combination by
removing all references to IAS 37.
IFRS 8 - Requires entities to disclose factors used to
identify the entity's reportable segments when
operating segments have been aggregated. An entity is
also required to provide a reconciliation of total
reportable segments' asset to the entity's total assets.
IAS 16 & IAS 38 - Clarifies that the determination of
accumulated depreciation does not depend on the
selection of the valuation technique and that it is
calculated as the difference between the gross and net
carrying amounts.
IAS 24 - Defines a management entity providing KMP
services as a related party of the reporting entity. The
amendments added an exemption from the detailed
disclosure requirements in paragraph 17 of IAS 24 for
KMP services provided by a management entity.
Payments made to a management entity in respect of
KMP services should be separately disclosed.
Annual Improvements to
IFRSs 2011–2013 Cycle
This standard sets out amendments to International
Financial Reporting.
1 July 2014
1 July 2014
Standards (IFRS) and the related bases for conclusions and
guidance made during the International Accounting
Standards Board’s Annual Improvements process. These
amendments have not yet been adopted by the AASB.
The following items are addressed by this standard:
►
►
IFRS 13 - Clarifies that the portfolio exception in
paragraph 52 of IFRS 13 applies to all contracts within
the scope of IAS 39 or IFRS 9, regardless of whether they
meet the definitions of financial assets or financial
liabilities as defined in IAS 32.
IAS 40 - Clarifies that judgment is needed to determine
whether an acquisition of investment property is solely
the acquisition of an investment property or whether it
is the acquisition of a group of assets or a business
combination in the scope of IFRS 3 that includes an
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Reference
Title
Summary
AASB 1031
Materiality
AASB 2013-9
Amendments to
Australian Accounting
Standards – Conceptual
Framework, Materiality
and Financial
Instruments
IFRS 14
Interim standard on
regulatory deferral
accounts
Amendments to
IAS 16 and IAS 38
Clarification of
Acceptable Methods of
Depreciation and
Amortisation
(Amendments to
IAS 16 and IAS 38)
investment property. That judgment is based on
guidance in IFRS 3.
The revised AASB 1031 is an interim standard that cross-
references to other Standards and the Framework (issued
December 2013) that contain guidance on materiality.
AASB 1031 will be withdrawn when references to AASB 1031
in all Standards and Interpretations have been removed.
The Standard contains three main parts and makes
amendments to a number Standards and Interpretations.
Part A of AASB 2013-9 makes consequential amendments
arising from the issuance of AASB CF 2013-1.
Part B makes amendments to particular Australian
Accounting Standards to delete references to AASB 1031
and also makes minor editorial amendments to various
other standards.
Part C makes amendments to a number of Australian
Accounting Standards, including incorporating Chapter 6
Hedge Accounting into AASB 9 Financial Instruments.
This interim standard provides first-time adopters of IFRS
with relief from derecognising rate-regulated assets and
liabilities until a comprehensive project on accounting for
such assets and liabilities is completed by the IASB. It is
intended to encourage rate-regulated entities to adopt IFRS
while bridging the gap with entities that already apply IFRS,
but do not recognise regulatory deferral accounts.
IAS 16 and IAS 38 both establish the principle for the basis of
depreciation and amortisation as being the expected pattern
of consumption of the future economic benefits of an asset.
The IASB has clarified that the use of revenue-based
methods to calculate the depreciation of an asset is not
appropriate because revenue generated by an activity that
includes the use of an asset generally reflects factors other
than the consumption of the economic benefits embodied in
the asset.
The IASB also clarified that revenue is generally presumed to
be an inappropriate basis for measuring the consumption of
the economic benefits embodied in an intangible asset. This
presumption, however, can be rebutted in certain limited
circumstances.
Application
date of
standard
Application
date for Group
1 January 2014 1 July 2014
^^
^^
1 January 2016 1 July 2016
1 January 2016 1 July 2016
*
*****
^
^^
Designates the beginning of the applicable annual reporting period unless otherwise stated.
These IFRS amendments have not yet been adopted by the AASB. In order to claim compliance with IFRS, these amendments should be noted in the
financial statements.
In February 2014, the IASB tentatively decided that the mandatory effective date for AASB 9 will be for annual reporting period on or after 1 January
2018, however it is available for application now.
The application dates of AASB 2013-9 are as follows:
Part A – periods ending on or after 20 Dec 2013 / Application date for the Group: period ending 30 June 2014
Part B – periods beginning on or after 1 January 2014 / Application date for the Group: period beginning 1 July 2014
Part C – reporting periods beginning on or after 1 January 2015 / Application date for the Group: period beginning 1 July 2015
The Consolidated Entity is in the process of determining the impact of the above on its financial statements.
The Consolidated Entity has not elected to early adopt any new Standards or Interpretations. At the date of
this report, management does not anticipate significant impact from adopting the new standards and
interpretations.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
d. Principles of Consolidation
Subsidiaries
(i)
Subsidiaries are all entities over which the group has control. The group controls an entity when the
group is exposed to, or has rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are
fully consolidated from the date on which control is transferred to the group. They are deconsolidated
from the date that control ceases. A list of controlled entities is contained in note 23 to the financial
statements.
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.
Joint arrangements
(ii)
Under AASB 11, Joint Arrangements investments in joint arrangements are classified as either joint
operations or joint ventures. The classification depends on the contractual rights and obligations of
each investor, rather than the legal structure of the joint arrangement.
Joint operations
Cauldron Energy Limited recognises its direct right to the assets, liabilities, revenues and expenses of
joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses.
These have been incorporated in the financial statements under the appropriate headings.
Joint ventures
Interests in joint ventures are accounted for using the equity method, after initially being recognised
at cost in the consolidated balance sheet.
e. 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.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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.
f. 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.
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Annual Report 2014
g.
Income Tax
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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
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.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
h. 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.
i.
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.
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.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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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.
Impairment
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.
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Annual Report 2014
j. Borrowing Costs
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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.
k. 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
2013
40%
40%
40%
2014
40%
40%
40%
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.
l.
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.
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.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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m. 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.
n. 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.
o. 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).
p. 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
estimated future obligation includes the costs of removing facilities, abandoning sites and restoring
the affected areas.
46
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Employee leave benefits
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be
settled wholly 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.
q. 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.
r. 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.
s. 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.
47
Annual Report 2014
Income taxes
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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.
t. Comparative Figures
Comparative figures have been adjusted to conform to changes in presentation for the current
financial year.
u. 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 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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 mineral 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 as 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 Mineral 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 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
2.
SEGMENT INFORMATION (continued)
Mineral exploration
2013
2014
$
$
Unallocated
Total
2014
$
2013
$
2014
$
2013
$
Interest received
Administration service fee
Termination of WLF joint venture
Total segment revenue and other
income
-
-
-
-
-
89,119
188,000
277,119
3,639
-
-
3,639
52,222
-
-
3,639
-
-
52,222
89,119
188,000
52,222
3,639
329,341
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/(loss) on disposal of financial
assets
Impairment of loan receivable
Impairment of exploration assets
(1,490,956)
(2,000,083)
(2,453,278)
(5,896,782)
(3,944,234)
(7,896,865)
-
-
-
-
(92,908)
(91,041)
(92,908)
(91,041)
268,425
(2,268,478)
268,425
(2,268,478)
-
-
(1,731,119)
-
-
(2,168,174)
5,295
(200,333)
-
(8,242)
(1,204,485)
-
5,295
(200,333)
(1,731,119)
(8,242)
(1,204,485)
(2,168,174)
Segment assets
9,358,944
9,972,618
4,841,990
589,279
14,200,936
10,561,897
Segment assets include:
Capitalised exploration expenditure
Financial assets
Restricted cash
Other assets
9,216,249
-
69,000
73,695
9,358,944
9,384,605
-
-
588,013
9,972,618
-
826,506
2,055,748
1,959,738
4,841,992
-
572,302
-
16,977
589,279
9,216,249
826,506
2,214,748
2,033,433
14,200,936
9,384,605
572,302
-
604,990
10,561,897
Segment liabilities
(706,349)
(126,493)
(3,193,311)
(395,033)
(3,899,660)
(521,526)
Segment information by geographical region
The analysis of the location of total assets is as follows:
Australia
Argentina
2014
$
2013
$
13,678,230
522,636
14,200,936
8,752,724
1,809,173
10,561,897
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
3.
REVENUE AND OTHER INCOME
(a) Revenue
Interest received
Administration fees received
(b) Other Income
Termination of West Lake Frome joint venture agreement
4.
FINANCE COSTS
Interest on convertible notes
5.
IMPAIRMENT LOSSES
Impairment of exploration and evaluation expenditure (a)
Impairment of loans
Impairment of other receivables
2014
$
2013
$
3,639
-
3,639
52,222
89,119
141,341
-
-
188,000
188,000
2014
$
2013
$
92,908
92,908
91,041
91,041
2014
$
1,731,119
200,333
-
1,931,452
2013
$
2,168,174
1,204,485
56,767
3,429,426
(a) The Consolidated Entity has assessed the carrying amount of the exploration and evaluation expenditure
in accordance with AASB 6 Exploration for and Evaluation of Mineral Resources and has recognised an
impairment expense of $1,731,119 during the year (30 June 2013: $2,168,174) following the decision not
to continue exploration in certain areas and costs associated with tenements not yet granted within
South Australia, Western Australia and in Argentina.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
6.
INCOME TAX EXPENSE
(a) The components of tax expense comprise:
Current tax benefit / (expense)
Deferred tax benefit / (expense)
2014
$
2013
$
346,659
-
346,659
-
-
-
(b) The prima facie tax benefit on loss from ordinary activities before
income tax is reconciled to the income tax as follows:
2014
$
2013
$
Loss before tax
(4,290,893)
(7,896,865)
Prima facie tax (benefit) on loss from ordinary activities before
income tax at 30% (2013: 30%)
(1,287,268)
(2,369,059)
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
R&D Tax Incentive for the prior year
Total income tax (income)/expense attributable to entity
373,708
-
913,560
1,099,734
585,232
671,134
-
12,959
(346,659)
(346,659)
-
-
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
6.
INCOME TAX EXPENSE (continued)
(c) Recognised deferred tax balances
Deferred tax balances have been recognised in respect of the
following:
Deferred tax assets
Annual Leave
Investments
Other receivables
Other accruals
Loan receivable
Previously expensed capital raising costs
Tax losses
Deferred tax liabilities
Exploration
Unearned income
Other receivables
2014
$
2013
$
15,160
2,047,588
61,658
75,490
309,548
35,363
89,586
2,634,393
5,097
1,948,095
-
2,328
363,107
35,363
-
2,353,990
(2,634,290)
(103)
-
(2,634,393)
(2,314,891)
(19,493)
(19,606)
(2,353,990)
Net recognised deferred tax assets/(liabilities)
-
-
(d) Unrecognised deferred tax balances
The Consolidated Entity has $19,509,354 (2013: $17,731,218) 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 $1,138,654 (2013: $1,138,654) which are available
indefinitely for offset against future taxable income subject to the Consolidated Entity continuing to
meet relevant statutory tests.
7.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Provision for non-recovery of trade receivables
Accrued interest
Other receivables
Prepayments
Provision for non-recovery of trade receivables
Movements:
Opening balance at beginning of the year
Provision for doubtful debts
53
2014
$
2013
$
322,799
(205,524)
345
-
17,070
134,690
164,746
(61,352)
1,279
5,468
16,977
127,118
2014
$
2013
$
(61,352)
(144,172)
(205,524)
-
(61,352)
(61,352)
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
7.
TRADE AND OTHER RECEIVABLES (continued)
A provision for impairment is recognised when there is objective evidence that an individual receivable is
impaired.
Credit risk
The Consolidated Entity has no significant concentration of credit risk with respect to any single counterparty or
group of counterparties.
The following table details the Group’s trade and other receivables exposure to credit risk with ageing analysis.
Amounts are considered ‘past due’ when the debt has not been settled, with the terms and conditions agreed
between the Consolidated Entity and the counter party to the transaction. Receivables that are past due are
assessed for impairment is ascertaining solvency of the debtors and are provided for where there are specific
circumstances indicating that the debt may not be fully recoverable by the Group.
2014
Trade receivables
2013
Trade receivables
8.
FINANCIAL ASSETS
Gross amount
Past due and
impaired
Within initial
trade terms
322,799
205,524
117,275
164,746
61,352
103,394
Financial assets
Financial assets at fair value through profit or loss
2014
$
2013
$
826,506
826,506
572,302
572,302
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
Recognition of equity securities
Disposal of equity securities
Fair value gain/(loss) through profit or loss
2014
$
2013
$
572,302
-
750
(14,971)
268,425
826,506
2,660,302
188,720
-
(8,242)
(2,268,478)
572,302
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Annual Report 2014
9.
RESTRICTED CASH
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Current
Restricted cash
Subscription funds held in trust (a)
Non-Current
Bank guarantees (b)
2014
$
2013
$
2,055,748
-
69,000
217,761
(a)
As announced on 20 June 2014, the Company received an initial $4,000,000 in Placement
Funds from new investor Guangzhou City Guangrong Investment Management Co., Ltd
(“Guangrong Investment”). The Company used its remaining capacity under Listing Rule 7.1 to
issue 16,476,621 fully paid shares to Guangrong Investment, making $1,944,241 (of the
$4,000,000) immediately available to the Company (before capital raising costs) (being Tranche
1 of the Placement Funds). The balance of these funds ($2,055,759) were placed and are being
held in trust by the Company until the Placement Shares can be issued. Refer note 15. The
Company will seek shareholder approval at the upcoming Meeting, in respect of $11,000,000
of the Placement Funds and associated Placement Shares issued/to be issued (including
ratification of 16,476,621 shares issued under Listing Rule 7.1 and approval to issue a
further 76,743,779 shares within 3 months of the Meeting). A Notice of General Meeting will
be dispatched to all Shareholders shortly.
(b)
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.
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Annual Report 2014
10.
LOAN RECEIVABLES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Non-current
Caudillo Resources SA (a)
Provision for non-recovery (a)
2014
$
2013
$
1,287,459
(1,287,459)
-
1,210,355
(1,210,355)
-
a) 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 2014, 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.
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 $216,681 (30 June 2013: $1,204,485) has been recognised in
the Statement of Profit or Loss and Other Comprehensive Income.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
11.
EXPLORATION AND EVALUATION EXPENDITURE
2014
$
2013
$
Exploration and evaluation expenditure
9,216,249
9,384,605
Movements:
Carrying value at beginning of year
Exploration expenditure incurred
Exploration expenditure reimbursed
Impairment of exploration expenditure (a)
Foreign exchange movements
Carrying value at end of year
9,384,605
2,064,713
(17,028)
(1,731,119)
(484,922)
9,216,249
9,332,498
2,972,131
(751,850)
(2,168,174)
-
9,384,605
a)
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 $1,731,119 during the current year (30 June 2013:
$2,168,174) following the decision not to continue exploration and for costs associated with
tenements not granted in certain areas of Lake Frome, South Australia, the Amadeus project in
the Northern Territory and Argentina. The impairment expense is shown as a separate line item
in the Statement of Profit or Loss and Other 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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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
12.
PLANT AND EQUIPMENT
Plant and equipment
At cost
Accumulated depreciation
Motor vehicles
At cost
Accumulated depreciation
2014
$
2013
$
177,955
(152,879)
25,076
190,287
(145,007)
45,280
-
-
-
2,500
(1,675)
825
Total plant and equipment
25,076
46,105
Movements:
2014
Plant & equipment Motor vehicles
$
$
Total
$
Carrying value at beginning of year
Depreciation expense
Written off
Foreign currency differences arising from
translating functional currency to presentation
currency
Carrying value at end of year
45,280
(16,685)
-
(3,519)
25,076
825
(329)
(496)
46,105
(17,014)
(496)
-
-
(3,519)
25,076
2013
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
13.
TRADE AND OTHER PAYABLES
Current
Trade payables
Other payables and accruals
2014
$
2013
$
163,236
543,113
706,349
338,440
166,097
504,537
Trade payables are non interest bearing and are normally settled on 30 day terms.
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Annual Report 2014
14.
BORROWINGS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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Unsecured
Convertible loan notes
Interest payable on convertible loan notes
Movements:
Carrying value at beginning of year
Converting loan funds received (a)
Converting loan funds received (b)
Converting loan funds received (c)
Interest on converting loans
Fully paid shares issued upon conversion (a)
Balance at the end of the year
2014
$
2013
$
1,050,000
37,018
1,087,018
-
1,500,000
400,000
650,000
92,908
(1,555,890)
1,087,018
-
-
-
-
-
-
-
-
-
-
(a) In July 2013, the Consolidated Entity secured $1,500,000 in funding via the execution of
converting loan agreements with two of its major shareholders ($655,685 from Cape Lambert
and $844,315 from Mr Qiu Derong). Pursuant to the terms of the converting loan agreements,
the Consolidated Entity received a total of $1,500,000, which automatically converted into
ordinary shares in the Consolidated Entity, upon receipt of shareholder approval at the
Consolidated Entity’s 2013 Annual General Meeting on 22 November 2013. The converting
loans, plus interest at 10% per annum ($1,555,890) were converted into 13,824,102 fully paid
ordinary shares, at a conversion price of $0.1125 per share (refer note 17). The conversion price
was calculated based on 80% 10 day VWAP of shares on ASX before the date of the shareholder
approval on 22 November 2013.
(b) In November 2013, the Consolidated Entity entered into short term loan agreements with Cape
Lambert Resources limited and Mr Qiu Derong. Cape Lambert and Mr Qiu Derong have each lent
the Consolidated Entity $200,000 which may be converted into shares at a conversion rate of
$0.13 per share (with an interest rate of 10% per annum).
(c) In March 2014, the Consolidated Entity entered into a converting loan agreement. Pursuant to
the Converting Loan Agreement, the loan funds, subject to receipt of shareholder approval at
the Company’s 2014 Annual General Meeting, will automatically convert into ordinary shares in
the Company. Subject to receipt of shareholder approval, the conversion will be 80% of the
volume weighted average closing price of the Shares as quoted on the ASX over the last ten
trading days immediately preceding the day of receipt of shareholder approval. If shareholder
approval is not obtained, the loan (together with interest accrues daily at 10% per annum) is
repayable by the Company by 31 December 2014. As at 30 June 2014, $650,000 had been
drawn down by the Consolidated Entity. On 4 August 2014, $325,000 was repaid in cash to Cape
Lambert Resources Limited.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
15.
SUBSCRIPTION FUNDS
Subscription funds received (a)
2014
$
2013
$
2,055,759
2,055,759
-
-
(a) As announced on 20 June 2014, the Company received an initial $4,000,000 in Placement Funds
from new investor Guangzhou City Guangrong Investment Management Co., Ltd (“Guangrong
Investment”). The Company used its remaining capacity under Listing Rule 7.1 to issue
16,476,621 fully paid shares to Guangrong Investment, making $1,944,241 (of the $4,000,000)
immediately available to the Company (before capital raising costs) (being Tranche 1 of the
Placement Funds). The balance of these funds ($2,055,759) are being held in trust by the
Company until the Placement Shares can be issued. Refer to note 9. The Company will seek
shareholder approval at the upcoming Meeting, in respect of $11,000,000 of the Placement
Funds and associated Placement Shares issued/to be issued (including ratification of 16,476,621
shares issued under Listing Rule 7.1 and approval to issue a further 76,743,779 shares within 3
months of the Meeting). A Notice of General Meeting will be dispatched to all Shareholders
shortly.
16.
PROVISIONS
Current
Employee benefits
2014
$
2013
$
50,534
50,534
16,989
16,989
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17.
ISSUED CAPITAL
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Ordinary shares issued and fully paid
41,701,715
37,348,796
2014
$
2013
$
Issued and fully paid up
ordinary shares
Opening balance
Shares issued during the year (a)
Shares issued during the year (b)
Shares issued upon conversion
of convertible notes (c)
Shares issued upon exercise of
options (d)
Shares issued pursuant to
underwriting agreement
Share issue costs
2014
No.
2014
$
2013
No.
2013
$
159,622,605
4,615,385
16,476,621
37,348,796
600,000
1,944,241
96,280,029
-
23,593,625
-
13,824,102
1,555,890
1,900,000
380,000
58,829,452
2,663,124
-
-
196,438,713
-
(127,212)
41,701,715
1,850,000
-
159,622,605
11,765,890
1,198,406
832,500
(41,625)
37,348,796
(a)
(b)
In December 2013, the Consolidated Entity completed a placement of 4,615,385 fully paid ordinary
shares at $0.13 per share to Joseph Investments to raise $600,000 (before capital raising costs).
As announced on 10 June 2014 and 1 July 2014, the Company has entered into a series of placement
agreements (“Placement Agreements”) with a range of Chinese investors to issue a total of
127,118,756 Shares (“Placement Shares”) at an issue price of $0.118 per share (“Issue Price”) to raise
A$15 million (“Placement Funds”) (before capital raising costs). The Issue Price of the Placement
Shares was determined at 80% of the volume weighted average closing price of Shares as quoted on
ASX over the last ten (10) trading days immediately preceding 29 May 2014. The Placement Shares
are to be issued (and the Placement Funds received) in various tranches, with the final tranche due
to be received in December 2015.
As announced on 20 June 2014, the Company received an initial $4,000,000 in Placement Funds from
Investment Management Co., Ltd (“Guangrong
new
Investment”).
investor Guangzhou City Guangrong
The Company used its remaining capacity under Listing Rule 7.1 to issue 16,476,621 fully paid shares
to Guangrong Investment, making $1,944,241 (of the $4,000,000) immediately available to the
Company (before capital raising costs) (being Tranche 1 of the Placement Funds). The balance of
these funds ($2,055,759) are being held in trust by the Company until the Placement Shares can be
issued.
The Company will seek shareholder approval at the upcoming Meeting, in respect of A$11 million of
the Placement Funds and associated Placement Shares issued/to be issued (including ratification of
16,476,621 shares issued under Listing Rule 7.1 and approval to issue a further 76,743,779 shares
within 3 months of the Meeting). A Notice of General Meeting will be dispatched to all Shareholders
shortly.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
(c) In July 2013, the Consolidated Entity secured $1.5 million in funding via the execution of converting
loan agreements with two of its major shareholders (Cape Lambert Resources Limited and Mr Qiu
Derong). Pursuant to the terms of the converting loan agreements, the Consolidated Entity received
a total of $1.5 million, which automatically converted into ordinary shares in the Consolidated Entity
upon receipt of shareholder approval at the Consolidated Entity’s 2013 Annual General Meeting on
22 November 2013. The converting loans, plus interest at 10% per annum were converted into
13,824,102 fully paid ordinary shares, at a conversion price of $0.1125 per share. The conversion
price was calculated based on 80% 10 day VWAP of shares on ASX before the date of shareholder
approval on 22 November 2013.
(d) In June 2014, 1,900,000 share options were exercised at $0.20 each providing $380,000 funding.
The Company has authorised share capital amounting to 196,438,713 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 $41,701,715 at 30 June 2014
(2013: $37,348,796). 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.
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18.
RESERVES
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Reserves
Option premium reserve (a)
Foreign currency translation reserve (b)
(a) Option premium reserve
Reserve balance at beginning of year
Share based payments (refer note 28)
Reserve balance at end of year
2014
$
2013
$
2,645,728
(1,347,969)
1,297,759
2,357,499
(911,960)
1,445,539
2014
$
2013
$
2,357,499
288,229
2,645,728
2,121,146
236,353
2,357,499
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
Reserve balance at beginning of the year
Foreign currency exchange differences arising on translation
of foreign operations
Reserve balance at end of year
2014
$
2013
$
(911,960)
(753,794)
(436,009)
(1,347,969)
(158,166)
(911,960)
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.
19.
ACCUMULATED LOSSES
Balance at beginning of year
Loss for the year
Balance at end of year
2014
$
2013
$
(28,753,964)
(3,944,234)
(32,698,198)
(20,857,099)
(7,896,865)
(28,753,964)
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20.
LOSS PER SHARE
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Basic loss per share
Continuing operations
Loss used in calculation of basic loss per share
Continuing operations
2014
Cents per
share
2013
Cents per
share
(2.30)
(2.30)
(5.16)
(5.16)
$
$
(3,944,234)
(3,944,234)
(7,896,865)
(7,896,865)
No.
No.
Weighted average number of ordinary shares outstanding during the
year used in the calculation of basic loss per share
171,474,347
152,938,145
There are 9,500,000 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.
21.
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
2014
$
2013
$
1,480,234
1,271,299
-
2,751,533
1,312,627
899,378
-
2,212,005
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.
Total office rental commitments for the Consolidated Entity are:
Within one year
Between one and five years
Longer than five years
64
2014
$
2013
$
51,099
91,796
-
142,895
38,390
105,574
-
143,964
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
22.
CONTINGENT ASSETS AND LIABILITIES
The Consolidated Entity has no contingent liabilities or assets at the year end.
23.
CONTROLLED ENTITIES
Details of Cauldron Energy Limited’s subsidiaries are:
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
24.
JOINT OPERATION
2014
%
100
2013
%
100
100
100
100
100
100
100
Ord
Ord
Ord
Ord
2014
$
2013
$
5
1
1
5
12
5
1
1
5
12
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 fund the
exploration works, thus diluting the Korean participants’ interests. As at 31 December 2013 (being the
most recent period for which audited financial statements are available in respect of the Maree Project),
the parties’ interests in the tenements were:
-
-
Cauldron 61.86%
Korean Participants 38.14%.
The Maree JV joint arrangement was set up as an unincorporated joint venture. The joint venture
agreement in relation to the Maree JV requires unanimous consent from all parties for all relevant
activities. The parties own the assets of the incorporate JV as tenants in common and are jointly and
severally liable for the liabilities incurred by the JV. This JV is therefore classified as a joint operation and
the consolidated entity recognises its direct right to the jointly held assets, liabilities, revenue and
expenses.
25.
FARM-IN AGREEMENT
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 2014
26.
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
(3,944,234)
(7,896,865)
2014
$
2013
$
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
Foreign exchange (gain)/loss
Impairment losses
Acquisition of equity securities
Interest accrued
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
17,014
288,229
(268,425)
(5,295)
36,627
1,931,452
-
92,908
17,084
22,107
236,353
2,268,478
8,242
(13,320)
3,435,296
(188,000)
-
54,140
(103,063)
935
151,953
33,546
37,018
(1,714,251)
(24,460)
(275)
124,478
1,917
(194,466)
(2,172,241)
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
Cash and cash equivalents
(c)
Non-cash activities
2014
$
2013
$
1,873,667
1,873,667
214,006
214,006
In July 2013, the Consolidated Entity secured $1.5 million in funding via the execution of converting
loan agreements with two of its major shareholders (Cape Lambert Resources Limited and Mr Qiu
Derong). Pursuant to the terms of the converting loan agreements, the Consolidated Entity received
a total of $1.5 million, which automatically converted into ordinary shares in the Consolidated Entity
upon receipt of shareholder approval at the Consolidated Entity’s 2013 Annual General Meeting on
22 November 2013. The converting loans, plus interest at 10% per annum were converted into
13,824,102 fully paid ordinary shares, at a conversion price of $0.1125 per share. The conversion
price was calculated based on 80% 10 day VWAP of shares on ASX before the date of shareholder
approval on 22 November 2013.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
27.
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
Financial Liabilities
Trade and other payables
Financial liabilities
Financial risk management policies
2014
$
2013
$
1,873,667
826,506
134,690
2,834,863
706,349
1,087,018
1,793,367
214,006
572,302
127,118
913,426
504,537
-
504,537
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.
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(b) Interest rate risk
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
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
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
2014
Change
$
2013
Change
$
+37,473
-37,473
+4,280
-4,280
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% (2013 – 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
Impact on Post-Tax Profit/(Loss)
2014
$
2013
$
82,651
57,230
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
27.
FINANCIAL RISK MANAGEMENT (continued)
(d) Credit risk
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:
Financial assets
Cash and cash equivalents (AA)
Trade and other receivables
2014
$
2013
$
1,873,667
134,690
2,008,357
214,006
127,118
341,124
(e) Liquidity risk
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.
2014
Financial assets
Cash
Held for trading investments
Receivables and loans
Financial Liabilities
Trade and other payables
Financial liabilities
2013
Financial assets
Cash
Held for trading investments
Receivables and loans
Financial Liabilities
Trade and other payables
Financial liabilities
Within 1
Year
$
1,873,667
826,506
134,690
2,834,863
706,349
1,087,018
1,793,367
Within 1
Year
$
214,006
572,302
127,118
913,426
504,537
-
504,537
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1 to 5
Years
$
2,124,749
-
-
2,124,749
-
-
-
1 to 5
Years
$
217,761
-
-
217,761
-
-
-
Over 5
Years
$
Over 5
Years
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2014
Total
$
3,998,416
826,506
134,690
4,959,612
706,349
1,087,018
1,793,367
2013
Total
$
431,767
572,302
127,118
1,131,187
504,537
-
504,537
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
(f) Fair value estimation
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
inputs for the asset or liability that are not based on observable market data (unobservable inputs)
(Level 3)
2014
Financial assets:
Level 1
$
Level 2
$
Level 3
$
Total
$
Financial assets at fair value through profit or loss:
Held for trading investments
826,506
2013
Financial assets:
Level 1
$
Level 2
$
Financial assets at fair value through profit or loss:
Held for trading investments
572,302
-
-
-
826,506
Level 3
$
Total
$
-
572,302
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
28.
SHARE BASED PAYMENTS
Total costs arising from share based payment transactions recognised as expense during the year were as
follows:
Options issued to employees and consultants (i)
Options issued to director (ii)
2014
$
2013
$
57,428
230,801
288,229
236,353
-
236,353
(i)
On 25 February 2014, the Consolidated Entity issued 5,000,000 unlisted options (subject to vesting
conditions set out below) with an exercise price of $0.20 and an expiry date of on or before 30
June 2015. The options were issued in consideration for services performed by employees and
consultants of the Company.
The share options shall vest as follows:
a. One half shall vest on the Company achieving a JORC resource at the Company’s
Yanrey Project in WA containing more than 30 million lbs of Uranium;
b. One quarter shall vest on the progression of the Bennet well resource area to pre-
feasibility;
c. One quarter shall vest on the commencement of drilling by the Company at the Rio
Colorado project in Argentina.
(ii)
On 22 November 2013, the Consolidated Entity issued 3,000,000 unlisted options to a director in
consideration for overseas marketing services performed on behalf of the Consolidated Entity with
an exercise price of $0.20 and an expiry date of on or before 30 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
Exercised during the year
Expired during the year
Outstanding at year end
Exercisable at the end of the year
Not exercisable at the end of the year
2014
No.
2014
WAEP
4,300,000
8,000,000
(1,900,000)
(900,000)
9,500,000
4,500,000
5,000,000
$0.23
$0.20
$0.20
$0.20
$0.21
$0.23
$0.20
The outstanding balance at 30 June 2014 is represented by:
-
1,000,000 Consultant Options with an exercise price of $0.20 each exercisable on or before
18 September 2015;
500,000 Employee Options with an exercise price of $0.45 each exercisable on or before
20 October 2015;
3,000,000 Director Options with an exercise price of $0.20 and an expiry date of on or before
30 September 2015; and
5,000,000 Consultant and Employee Options with an exercise price of $0.20 and an expiry date of
on or before 30 June 2015, with vesting conditions attached.
-
-
-
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
(b) Remaining contractual life
The remaining contractual life for Options outstanding at 30 June 2014 is 1.31 years.
(c) Fair value
The fair value of the 3,000,000 Options granted during the year was $0.08.
The fair value of the 5,000,000 Options granted during the year was $0.03.
(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:
November 2013
3,000,000
Director Options
Nil
126%
2.77%
$0.20
Nil
1.85
$0.14
$0.08
February 2014
5,000,000
Employee &
Consultant
Options
Nil
132%
2.50%
$0.20
Nil
1.34
$0.09
$0.03
Dividend yield (%)
Expected volatility (%)
Risk free interest rate (%)
Exercise price ($)
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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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
29.
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
Option Premium Reserve
Total equity
Financial Performance
Profit/(loss) for the year
Total comprehensive income/(loss)
Loans to Controlled Entities
2014
$
2013
$
1,970,676
11,752,278
13,722,954
278,787
10,248,804
10,527,591
3,822,294
-
3,822,294
487,220
-
487,220
41,701,715
(34,446,782)
2,645,728
9,900,660
37,348,796
(29,665,923)
2,357,498
10,040,371
(4,780,860)
(4,780,860)
(12,536,842)
(12,536,842)
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
Commitments
Total commitments for the Parent Entity are:
Within one year
Between one and five years
Longer than five years
73
2014
$
2013
$
23,329
7,545,579
1,063,812
25,775
8,658,495
24,197
7,081,763
853,025
26,643
7,985,628
2014
$
2013
$
1,531,333
1,363,095
-
2,894,428
1,351,017
1,004,952
-
2,355,969
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
Contingent Liabilities and Assets
The contingent liabilities and assets of the Parent Entity are consistent with the Consolidated Entity (refer
to note 22).
30.
RELATED PARTY INFORMATION
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 23 to the financial statements.
Note 23 provides the information about the Group’s structure including the details of the subsidiaries
and the holding company. The following table provides the total amount of transactions and outstanding
balances that have been entered into with related parties for the relevant year.
Sales to
related
parties
Purchases
from related
parties
Amounts
owed by
related
parties*
Amounts
owed to
related
parties*
Director related entities
Fe Limited
Fe Limited
Cape Lambert Resources Limited
Cape Lambert Resources Limited
Kupang Resources Limited
Kupang Resources Limited
2014
2013
2014
2013
2014
2013
* Amounts are classified as trade receivables and trade payables, respectively.
-
54,435
166,035
143,667
-
-
45,329
-
-
-
61,146
-
-
-
-
-
-
-
-
-
33,135
-
-
-
Sales to and purchases from director related entities are for the reimbursement of employee,
consultancy and occupancy costs.
Loan issue
date
Interest
earned
during the
year
Amounts
owed by
related
parties at 30
June 2014
(principal)
Mar 2014
Nov 2013
Nov 2013
July 2013
July 2013
12,948
13,038
11,032
24,431
31,459
650,000
200,000
200,000
-
-
Loan from / to related parties
Cape Lambert Resources Limited (a)
Cape Lambert Resources Limited (b)
Qiu Derong (b)
Cape Lambert Resources Limited (c)
Qiu Derong (c)
(a) In March 2014, the Consolidated Entity entered into a converting loan agreement. Pursuant to
the Converting Loan Agreement, the loan funds, subject to receipt of shareholder approval at
the Company’s 2014 Annual General Meeting, will automatically convert into ordinary shares in
the Company. Subject to receipt of shareholder approval, the conversion will be 80% of the
volume weighted average closing price of the Shares as quoted on the ASX over the last ten
trading days immediately preceding the day of receipt of shareholder approval. If shareholder
approval is not obtained, the loan (together with interest accrues daily at 10% per annum) is
repayable by the Company by 31 December 2014. As at 30 June 2014, $650,000 had been
drawn down by Cauldron. On 4 August 2014, $325,000 was repaid in cash to Cape Lambert
Resources Limited.
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Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
30.
RELATED PARTY INFORMATION (continued)
(b) In November 2013, the Consolidated Entity entered into short term loan agreements with Cape
Lambert Resources limited and Mr Qiu Derong. Cape Lambert and Mr Qiu Derong have each lent
the Consolidated Entity $200,000 which may be converted into shares at a conversion rate of
$0.13 per share (with an interest rate of 10% per annum).
(c) In July 2013, the Consolidated Entity secured $1,500,000 in funding via the execution of
converting loan agreements with two of its major shareholders (Cape Lambert and Mr Qiu
Derong). Pursuant to the terms of the converting loan agreements, the Consolidated Entity
received a total of $1,500,000, which automatically converted into ordinary shares in the
Consolidated Entity, upon receipt of shareholder approval at the Consolidated Entity’s 2013
Annual General Meeting on 22 November 2013. The converting loans, plus interest at 10% per
annum were converted into 13,824,102 fully paid ordinary shares, at a conversion price of
$0.1125 per share. The conversion price was calculated based on 80% 10 day VWAP of shares on
ASX before the date of the shareholder approval on 22 November 2013.
The ultimate parent
The ultimate parent of the Group is Cauldron Energy Limited and is based on and listed in Australia. There
were no transactions between the Group and Cauldron Energy Limited during the financial year.
Terms and conditions of transactions with related parties other than KMP
The sales to and purchases from related parties are made on terms equivalent to those that prevail in
arm’s length transactions. Outstanding balances at the year-end are unsecured and interest free and
settlement occurs in cash. There have been no guarantees provided or received for any related party
receivables or payables. For the year ended 30 June 2014, the Group has not recorded any impairment
of receivables relating to amounts owed by related parties (2013: nil). This assessment is undertaken
each financial year through examining the financial position of the related party and the market in which
the related party operates.
Financial Assets
At 30 June 2014, Cauldron held 15,695,835 shares in Fe Limited (ASX: FEL) (2013: 15,695,835) with a
market value of $659,225 (2013: $313,917). Mr Antony Sage is a director of FEL.
Significant shareholders
Qiu Derong holds a significant interest of 14.73% in the issued capital of Cauldron Energy at 30 June 2014
(30 June 2013: 26.25%). Mr Qiu Derong is a director of Cauldron.
Cape Lambert, via its wholly owned subsidiary Dempsey Resources Pty Ltd (“Dempsey”), holds a
significant interest of 21.00% (30 June 2013: 21.05%) in the issued capital of Cauldron at 30 June 2014. Mr
Antony Sage is a director of Cape Lambert.
Compensation of Key Management Personnel of the Group
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 2014.
The totals of remuneration paid to KMP of the Consolidated Entity during the year are as follows:
Short-term employee benefits
Post employment benefits
Share based payments
75
2014
$
2013
$
593,757
7,940
311,547
913,244
748,050
-
108,949
856,999
Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2014
31.
REMUNERATION OF AUDITORS
Paid or payable to Bentleys for:
-
Audit or review of the Consolidated Entity financial
report
Paid or payable to BDO for:
-
Audit or review of the Consolidated Entity financial
report
Remuneration of the auditors of subsidiaries for:
-
Audit or review of the financial report
32.
EVENTS SUBSEQUENT TO REPORTING DATE
Subsequent to 30 June 2014, the following took place:
2014
$
2013
$
850
36,650
48,249
-
8,329
57,428
6,485
43,135
- Mr Anson Huang was appointed as a Non-executive Director with effect from 29 July 2014;
- On 28 July 2014, the Company received $1m of the Placement Funds from Starry World Investments
Ltd (“Starry World”). These funds are being held in trust by the Company (together with the
$2,055,759 from Guangrong Investments) until the Placement Shares can be issued.
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 2014
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 2014 are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of its financial position as at 30 June 2014 and its performance
for the year ended on that date of the Consolidated Entity; and
(ii) complying with Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001;
the financial statements and notes also comply with International Financial Reporting
Standards as disclosed in note 1(b);
there are reasonable grounds to believe that the company will be able to pay its debts as and
when they become due and payable;
b)
c)
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 2014.
On behalf of the board
Mr Brett Smith
Executive Director
PERTH
21 August 2014
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Tel: +61 8 6382 4600
Fax: +61 8 6382 4601
www.bdo.com.au
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
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INDEPENDENT AUDITOR’S REPORT
To the members of Cauldron Energy Limited
Report on the Financial Report
We have audited the accompanying financial report of Cauldron Energy Limited, which comprises the
consolidated statement of financial position as at 30 June 2014, the consolidated statement of profit or
loss and other comprehensive income, the consolidated statement of changes in equity and the
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.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 1, the directors also state, in accordance with Accounting Standard AASB 101
Presentation of Financial Statements, that the financial statements comply with International
Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal control relevant to the company’s
preparation of the financial report that gives a true and fair view in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the company’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.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which
has been given to the directors of Cauldron Energy Limited, would be in the same terms if given to the
directors as at the time of this auditor’s report.
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN
77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK
company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under
Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
Opinion
In our opinion:
(a)
the financial report of Cauldron Energy Limited 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 2014
and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed in
Note 1.
Report on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June
2014. The directors of the company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of Cauldron Energy Limited for the year ended 30 June 2014
complies with section 300A of the Corporations Act 2001.
BDO Audit (WA) Pty Ltd
Brad McVeigh
Director
Perth, 21 August 2014
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Annual Report 2014
Shareholding
ADDITIONAL ASX INFORMATION
The distribution of members and their holdings of equity securities in the Company as at 15 August 2014 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
95,440
1,440,794
2,362,125
16,236,677
176,303,677
196,438,713
200
535
293
462
116
1,606
There are 1,606 shareholders holding a total of 196,438,713 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 15 August 2014:
Shareholder
Cape Lambert Resources Limited & Dempsey Resources Pty Ltd
Joseph Investment International Limited
Mr Derong Qiu
Guangzhou City Guangrong Investment Management Co Ltd
Citicorp Nominees Pty Ltd
Number
41,261,888
24,920,324
28,930,324
16,476,621
15,143,655
Options
Details of unissued shares under option as at the date of this report are:
Grant Date
Class of
Shares
Exercise
Price
Number of
Options
Expiry Date
Listed /
Unlisted
20 October 2010
19 September 2012
22 November 2013
25 February 2014
Ordinary
Ordinary
Ordinary
Ordinary
$0.45
$0.20
$0.20
$0.20
500,000
1,000,000
3,000,000
5,000,000
20 October 2015
18 September 2015
30 September 2015
30 June 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.
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Annual Report 2014
Voting Rights
Ordinary Shares
ADDITIONAL SHAREHOLDER INFORMATION
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.
Twenty Largest Shareholders
The names of the twenty largest ordinary fully paid shareholders in the Company as at 15 August 2014 are as
follows:
Shareholder
Number
% Held of Issued
Ordinary Capital
Dempsey Resources Pty Ltd
Joseph Investment International Limited
Mr Derong Qiu
Guangzhou City Guangrong Investment Management Co Ltd
Citicorp Nominees Pty Ltd
Mr Derong Qiu
Okewood Pty Ltd
Lanoti Pty Limited
Mr Yuanrong Luo
Mr Antony William Paul Sage
Canifare Pty Ltd
HSBC Custody Nominees (Australia) Limited
Miss Jacqueline Sarah Hearn
UOB Kay Hian (Hong Kong) Limited
System Nominees Pty Ltd
Sams Watchmaker Jeweller Pty Ltd
Ms Qiyuan Guo
Mr Andre Kunz & Mrs Grace Kunz
Australian Capital Markets Pty Ltd
41,261,888
24,920,324
21,149,061
16,476,621
15,143,655
7,781,263
3,300,000
3,000,000
2,626,257
2,594,600
1,917,450
1,756,238
1,400,000
1,294,660
1,152,864
1,130,019
1,125,000
1,040,000
1,006,625
850,000
21.00%
12.69%
10.77%
8.39%
7.71%
3.96%
1.68%
1.53%
1.34%
1.32%
0.98%
0.89%
0.71%
0.66%
0.59%
0.58%
0.57%
0.53%
0.51%
0.43%
150,926,525
76.83%
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Annual Report 2014
SCHEDULE OF MINERAL TENEMENTS
AS AT 21 AUGUST 2014
Tenement
reference
Project & Location
Interest held
E08/1489
E08/1490
E08/1493
E08/1501
E08/2017
E08/2081
E08/2152
E08/2160
E08/2161
E08/2165
E08/2205
E08/2244
E45/2405
E08/2478
E08/2479
E08/2480
165/2008
571/2009
393/2010
321/2008
322/2008
307/2008
312/2008
316/2008
317/2008
324/2008
YANREY - WESTERN AUSTRALIA
YANREY - WESTERN AUSTRALIA
YANREY - WESTERN AUSTRALIA
YANREY - WESTERN AUSTRALIA
YANREY - WESTERN AUSTRALIA
YANREY - WESTERN AUSTRALIA
BOOLALOO - WESTERN AUSTRALIA
YANREY - WESTERN AUSTRALIA
YANREY - WESTERN AUSTRALIA
YANREY - WESTERN AUSTRALIA
YANREY - WESTERN AUSTRALIA
YANREY - WESTERN AUSTRALIA
BEADELL - WESTERN AUSTRALIA
YANREY – WESTERN AUSTRALIA
YANREY – WESTERN AUSTRALIA
YANREY – WESTERN AUSTRALIA
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
1124-333-2008
Las Marias Project - San Juan, Argentina
1124-546-2010
Las Marias Project - San Juan, Argentina
100%
100%
100%
100%
100%
100%
20%
100%
100%
100%
100%
100%
20%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
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Annual Report 2013
SCHEDULE OF MINERAL TENEMENTS
AS AT 21 AUGUST 2014 (cont)
Mining tenements with beneficial interest held in farm-in/farm-out agreements:
Farm-in
Agreement and
Tenement
reference
E08/1494
E08/1495
140/2007
141/2007
142/2007
143/2007
144/2007-
581/2009
176/1997
232/2007
270/1995
271/1995
43/2007
EL4609
EL4610
EL4746
EL4794
Project & Location
Interest held
UAROO - WESTERN AUSTRALIA
UAROO - WESTERN AUSTRALIA
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
Rio Colorado Project - Catamarca, Argentina
MAREE - SOUTH AUSTRALIA
MAREE - SOUTH AUSTRALIA
MAREE - SOUTH AUSTRALIA
MAREE - SOUTH AUSTRALIA
70%*
70%*
92.50%
92.50%
92.50%
92.50%
92.50%
92.50%
92.50%
92.50%
92.50%
92.50%
60% (increasing)
60% (increasing)
60% (increasing)
60% (increasing)
60% (increasing)
EL5442
*Rights to uranium only
MAREE - SOUTH AUSTRALIA
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