ABN: 23 101 049 334
and
Controlled Entities
Annual Financial Report
For the Year Ended
30 June 2009
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
CONTENTS
Corporate Directory
Directors’ Report
Auditors’ Independence Statement
Income Statement
Balance Sheet
Statement of Changes in Equity
Cash Flow Statement
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report To The Members
Of Cazaly Resources Limited
Additional Shareholder Information
3
4
15
16
17
18
19
20
51
52
54
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Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
CORPORATE DIRECTORY
MANAGING DIRECTOR
Nathan McMahon
MANAGING DIRECTOR
Clive Jones
NON-EXECUTIVE DIRECTOR
Kent Hunter
COMPANY SECRETARY
Lisa Wynne
PRINCIPAL & REGISTERED OFFICE
First Floor, 22 Oxford Close
WEST LEEDERVILLE WA 6007
Telephone: (08) 9380 4600
Facsimile: (08) 9381 5911
AUDITORS
Bentleys
Level 1,
12 Kings Park Road
WEST PERTH WA 6005
SHARE REGISTRAR
Advanced Share Registry Services
110 Stirling Highway
NEDLANDS WA 6009
Telephone: (08) 9389 8033
Facsimile: (08) 9389 7871
STOCK EXCHANGE LISTING
Australian Stock Exchange
(Home Exchange: Perth, Western Australia)
Code: CAZ
BANKERS
National Australia Bank
50 St Georges Terrace
PERTH WA 6000
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Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
DIRECTORS' REPORT
Your directors present their report on the company and its controlled entities for the financial year
ended 30 June 2009.
1.
DIRECTORS
The names of directors in office at any time during or since the end of the year are:
Nathan McMahon
Clive Jones
Kent Hunter
Directors have been in office since the start of the financial year to the date of this report unless
otherwise stated.
COMPANY SECRETARY
The following person held the position of company secretary at the end of the financial year:
Lisa Wynne
Ms Wynne has a Bachelor of Commerce and is a Chartered Accountant with significant
experience working with listed entities in senior financial roles responsible for management and
financial reporting, taxation, and ensuring continuous disclosure and compliance. Lisa
presently works with a number of emerging ASX listed resource companies and specialises in
financial and company secretarial transaction and corporate work.
2.
PRINCIPAL ACTIVITIES
The principal activity of the economic entity during the financial period was mineral
exploration.
There were no significant changes in the nature of the economic entity’s principal activities
during the financial period.
3.
OPERATING RESULTS
The loss of the economic entity after providing for income tax amounted to $5,290,296 (2008:
Gain $1,534,436).
4.
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.
4
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
5.
REVIEW OF OPERATIONS
PILBARA IRON ORE PROJECTS
The Company has five distinct project areas, within the Pilbara region, that are all prospective for iron
ore mineralisation. The Hamersley Project covers approximately 85km2 and is situated approximately
50km northeast of the Tom Price township in the Pilbara Region of Western Australia. Preliminary
work by Cazaly Iron and a review of historical work conducted highlighted the potential for both
channel iron deposits (CIDs) and bedded iron deposits (BIDs). Previous drilling within the tenement
has confirmed the presence of pisolitic material and the results of a recent close spaced gravity survey
have been particularly encouraging.
Previous drilling has returned intersection grading up to 61% Fe.
The project is very close to road and railway infrastructure providing potential future development
advantages. A competitor’s proposed rail corridor crosses the northern portion of the tenement.
Drilling is commencing in October 2008.
PARKER RANGE IRON ORE PROJECT, Yilgarn Iron Province
•
•
•
Upgraded Mineral Resource Estimate for Mount Caudan
Increased ownership from 80 to 100%
(cid:131) 23.5Mt @ 55.4% Fe Indicated and Inferred
Excellent results from 1st phase of metallurgical test work
(cid:131) Higher lump (>57%) to fines (<43%) ratio for premium ore
(cid:131) Lower than average hardness ores
(cid:131) Excellent ore chemistry, DSO product
•
Drilling Re-commences
(cid:131) Regional targets identified
(cid:131) Upgrade and Infill Mount Caudan Resource
•
•
Key Executive Appointments
Pre-Feasibility Study to commence
The Company has completed a resource update for Mount Caudan. The resource contains two primary
ore-types; a heamatite - goethite Banded Iron Formation (BIF) and smaller component of secondary
Canga and Detrital ore. All ore types have low levels of deleterious elements and are suitable for
Direct Shipping Ore (DSO).
5
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
5.
REVIEW OF OPERATIONS
The Indicated and Inferred Resource estimate was estimated by independent mining consultancy group
Runge Limited is as follows:
Cut-off
Fe
%
50
52
Cut-off
Fe
%
50
52
Cut-off
Fe
%
50
52
MOUNT CAUDAN RESOURCES – MAY 2009
Indicated
Tonnes
T
1,417,000
8,434,000
Fe
%
53.3
55.0
Al2O3
%
7.0
1.8
P
%
0.01
0.01
SiO2
%
8.7
6.7
LOI
%
6.2
9.2
Mn
%
0.9
2.3
S
%
0.06
0.08
9,851,000
54.8
2.6
0.01
7.0
8.8
2.1
0.08
Inferred
Tonnes
T
1,247,000
12,392,000
Fe
%
51.3
56.3
Al2O3
%
8.6
2.8
P
%
0.01
0.03
SiO2
%
9.8
6.1
LOI Mn
%
%
1.1
6.5
0.8
9.2
S
%
0.06
0.06
13,639,000
55.8
3.3
0.03
6.4
9.0
0.8
0.06
Tonnes
T
2,664,000
20,826,000
Fe
%
52.4
55.8
Al2O3
%
7.7
2.4
Total
P
%
0.01
0.02
SiO2
%
9.2
6.3
LOI
%
6.3
9.2
Mn
%
1.0
1.4
S
%
0.06
0.07
23,490,000
55.4
3.0
0.02
6.6
8.9
1.3
0.07
Type
Canga
BIF
Total
Type
Canga
BIF
Total
Type
Canga
BIF
Total
The May 2009 Mineral Resource has been classified into both Inferred and Indicated Mineral
Resource categories on the basis of continuity of mineralisation and drillhole spacing. The Indicated
portion of the deposit is situated within the central area of the deposit where drill section spacing is
less than 120m with relatively continuous mineralisation along strike and down dip.
There is considerable scope to greatly expand the resource through further exploration both along the
known strike extent of the enriched BIF and at depth. Currently the deposit has only been drilled down
to approximately 100m. The Company is confident infill drilling will confirm the consistency of
mineralisation and enable the resource category to be raised to Measured and Indicated status.
Metallurgical Test Work
Results from the first phase of testwork on ores from the Mount Caudan deposit at Parker Range were
highly encouraging with high Lump to Fines ratio and ore characteristics which indicate a potentially
highly marketable product.
A total of 32 composite samples were tested from four ore types recognised. The combined average
result for all of these intervals was as follows:
Product
Mass
Fe % Fe+Mn % SiO2 % Al2O3 % MnO %
P%
LOI %
Mount Caudan Lump to Fines – All Ore
Lump
Fines
%
53.2
46.8
57.4
55.5
Calc Head
100.0
56.6
58.8
56.7
57.9
5.
REVIEW OF OPERATIONS
4.06
5.98
4.90
6
1.43
2.48
1.89
1.81
1.59
1.72
0.018
0.020
0.019
10.1
10.0
10.0
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
The ore produced a higher than expected percentage of lump, with an average Fe content more typical
of Pilbara pisolites.
Recent work has also highlighted indicative options for products from the project. These include a
single ‘Fines only’ product or a dual ‘Lump & Fines’ product stream. Indicative ore chemistry is as
follows:
Table 1. Indicative Product Options
Two Product Option
Fe %
Al2O3 %
SiO2 % MnO %
P %
LOI %
Fe % (ex LOI)
57 - 59
1 – 1.8
3 - 5
0.7 – 1.2
0.015-0.025
9.8 - 10
62.0 – 65.5
55 - 57
1.5 – 3
4 - 6
0.7 – 1.2
0.015-0.025
9.8 - 10
59.8 – 63.3
Lump
Fines
Nb. Preliminary lump to fines ratio of 57% lump to 43% fines
Single Product Option
Fe %
Al2O3 %
SiO2 % MnO %
P %
LOI %
Fe % (ex LOI)
Fines Only
56 -58
1.4 – 2.5
3.5 – 5.5
0.7 – 1.2
0.015-0.025
9.8 - 10
60.9 – 64.4
Nb; Based on metallurgical test results to date from PQ drill core.
Fe % (ex LOI) (Calcined Fe) determined by Fe(100-LOI)*100.
This work has also shown that the ore has many similarities with Pilbara Channel Iron Deposits
(‘CID’s’) with low Phosphorus levels and good upgrades in Fe content when calcined.
Ongoing Exploration and Development
Recent exploration work has involved field mapping and sampling the mineralised Banded Iron
Formation (BIF) over the entire 16km strike length in the Project area. Significant discoveries include
a 1.2km extension of the Mount Caudan iron outcrop, known as the “Rainmaker Prospect”. Rockchip
results from Rainmaker reach up to 61.0% Fe and appear at surface to be a similar style of
mineralisation to that found at Mount Caudan. This area is a priority for drill testing.
RHODES RIDGE IRON ORE PROJECT
Cazaly has exploration licence applications in respect of the Rhodes Ridge project which contains one
of the largest undeveloped iron ore resources in Western Australia. Cazaly has agreed to transfer the
tenements to FMG upon grant in return for a royalty from future production. Upon transfer of the
tenements, Cazaly will receive an advance on future royalties calculated at $0.05 per tonne of the
inferred JORC compliant resource contained in the Rhodes Ridge Project with an agreed minimum
payment of $20 million and an agreed maximum of $100 million.
The Rhodes Ridge Joint Venture which comprises a subsidiary of Rio Tinto Limited, Hancock
Prospecting Pty Ltd and Wright Prospecting Pty Ltd, has objected to the grant of the tenements on the
basis that the Rhodes Ridge Joint Venture claims to hold rights of occupancy over the land pursuant to
the Iron Ore (Rhodes Ridge) Agreement Authorisation Act 1972 (WA). Cazaly contends that the
rights of occupancy have not been validly renewed and that the land is open for mining under the
Mining Act 1978 (WA).
7
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
5.
REVIEW OF OPERATIONS
The Mining Warden has determined that there should be a preliminary hearing in relation to whether
or not the Rhodes Ridge Joint Venture has valid and subsisting rights of occupancy. This preliminary
hearing was conducted in January 2009 and the decision is awaited.
If the Warden determines that the Rhodes Ridge Joint Venture does not hold valid and subsisting
rights of occupancy, there is no reason why the Rhodes Ridge Joint Venture should be heard in
opposition to the grant of the tenements and Cazaly believes there is no reason why the tenement
applications should not be granted.
West Kalgoorlie Project
The Company controls a substantial gold exploration and development portfolio in the Kunanalling,
Ora Banda, Grants Patch, Carbine and Split Rocks regions, collectively known as the West Kalgoorlie
project. These tenements cover approximately 533 square kilometres and now contain mineral
resources of 612,000 ounces of gold.
Activities for the period were focussed on completing the approvals stage for commencement of
mining of the Catherwood deposit and advancing exploration over known prospects.
Drill programmes were completed on the Backflip prospect at Grants Patch, the Boundary and
Carnage prospects in the Ora Banda Project Area and the Sabrina prospect and Picante deposit in the
Kunanalling Project Area. The Backflip prospect now represents a priority target for a significant
high-grade resources amenable to mechanised underground mining.
Financial Position
The net assets of the economic entity have decreased by $1,524,297 from 30 June 2008 to $13.93
million in 2009, due largely to the write off of exploration expenditure.
The economic entity currently has $3.8 million in cash assets which the Directors believe puts the
economic entity in a sound financial position with sufficient capital to effectively explore its current
landholdings.
Future Developments, Prospects and Business Strategies
The economic entity will continue its mineral exploration activity at and around its exploration
projects with the object of identifying commercial resources.
The economic entity will also continue to identifying new mineral exploration opportunities within
Australia and the rest of the world for further potential acquisitions which may offer value enhancing
opportunities for shareholders.
The following significant changes in the state of affairs of the economic entity occurred during the
financial period:
On 12 March, the Company completed a placement of 4,242,424 ordinary shares and 2,121,212
options exercisable at 20 cents each on or before 28 February 2011 to a range of institutional
investors. The placement raised $700,000 before costs. The funds raised were used for continued
exploration and to fund working capital.
On 11 May 2009 the Company issued a prospectus for a Non-Renounceable Entitlement Issue of
Shares and Options to shareholders of 1 share for every 3 shares held at an issue price of 16.5 cents
per share and one free attaching option for every two shares applied for to raise $3,587,093. The offer
was closed on 7 June 2009 and the shortfall of the issue was placed in full by 16 July 2009.
8
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
6.
AFTER BALANCE DATE EVENTS
On 3 July, the Company issued 1,577,940 Shares and 788,971 Options exercisable at 20 cents
on or before 28 February 2011 as part of the shortfall from its Non-Renounceable Entitlement
Issue offered pursuant to the Prospectus dated 11 May 2009.
On 15 July, the Company issued 860,758 Shares and 430,380 Options exercisable at 20 cents on
or before 28 February 2011 as part of the shortfall from its Non-Renounceable Entitlement Issue
offered pursuant to the Prospectus dated 11 May 2009.
On 28 July, the Company issued 544,538 Shares and 272,269 Options exercisable at 20 cents on
or before 28 February 2011 being the balance of the shortfall from its Non-Renounceable
Entitlement Issue offered pursuant to the Prospectus dated 11 May 2009.
Between the 15 July and 1 September, 8,501 Shares on exercise of 8,501 Options exercisable at
20 cents on or before 28 February 2011.
On 7 September 2009, the Company issued 2,377,040 to Gondwana Resources Limited as part
consideration for the acquisition of the remaining interest in the Parker Range Iron project.
On 8 September 2009, the Company issued 680,450 to William Robert Richmond as part
consideration for the acquisition of the remaining interest in the Parker Range Iron project to
take the Company’s ownership to 100%.
Apart from the above, no other matters or circumstances have arisen since the end of the
financial period which significantly affected or may significantly affect the operations of the
Company, the results of those operations, or the state of affairs of the Company in future
financial years.
7.
FUTURE DEVELOPMENTS
The economic entity will continue its mineral exploration activity at and around its exploration
projects with the object of identifying commercial resources.
8.
ENVIRONMENTAL ISSUES
The economic 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.
The directors have considered the recently enacted National Greenhouse and Energy Reporting
Act 2007 (the NGER Act) which introduces a single national reporting framework for the
reporting and dissemination of information about the greenhouse gas emissions, greenhouse gas
projects, and energy use and production of corporations. At the current stage of development,
the directors have determined that the NGER Act will have no effect on the company for the
current, nor subsequent financial year. The directors will reassess this position as and when the
need arises.
9
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
9.
INFORMATION ON DIRECTORS
Nathan McMahon
Managing Director (Corporate and Administration)
Qualifications
B.Com
Experience
Mr McMahon has provided tenement management advice to the mining
industry for approximately 14 years to in excess of 20 public listed mining
companies. Mr McMahon has specialised in native title negotiations, joint
venture negotiations and project acquisition due diligence. Mr McMahon is
a Director of several listed companies. These include on the ASX; joint
Managing Director of Cazaly Resources Ltd., a Director of Catalyst Metals
Ltd, Hodges Resources Ltd and Bannerman Resources Ltd. He is also a
Director of the AIM listed company Universal Coal PLC.
Interest in Shares and
Options
Fully Paid Ordinary Shares
$1.9436 Options expiring on 30 November 2009
$0.75 Options expiring on 30 November 2009
$0.20 Options expiring on 28 February 2011
8,500,358
1,000,000
1,000,000
678,803
Clive Jones
Managing Director (Technical)
Qualifications
B.App.Sc(Geol), M.AusIMM.
Experience
Mr Jones has been involved in mineral exploration for over 22 years and
has worked on the exploration for a range of commodities including gold,
base metals, mineral sands, uranium and iron ore. Mr Jones is a Director of
several ASX listed companies. He is Chairman of Cortona Resources Ltd.,
joint Managing Director of Cazaly Resources Ltd and a Director of Graynic
Metals Ltd and Bannerman Resources Ltd.
Interest in Shares and
Options
Fully Paid Ordinary Shares
$1.9436 Options expiring on 30 November 2009
$0.75 Options expiring on 30 November 2009
$0.20 Options expiring on 28 February 2011
7,453,338
1,000,000
1,000,000
856,669
Kent Hunter
Non-Executive Director
Qualifications
B.Bus, CA.
Experience
Mr Hunter is a Chartered Accountant with over 15 years’ corporate and
company secretarial experience. He has been involved in the listing of over
20 exploration companies on ASX in the past 8 years.. He has experience in
capital raisings, ASX compliance and regulatory requirements and is
currently a director of Cazaly Resources Limited, Scimitar Resources
Limited and Gryphon Minerals Limited and is company secretary of two
other ASX Listed entities.
Interest in Shares and
Options
Fully Paid Ordinary Shares
$1.9436 Options expiring on 30 November 2009
$0.75 Options expiring on 30 November 2009
$0.20 Options expiring on 28 February 2011
2,213,448
200,000
500,000
442,692
10
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
10. REMUNERATION REPORT
Directorships of other listed companies
Directorships of other listed companies held by directors in the three years immediately before the end of the
financial year are as follows:
Name
Nathan McMahon
Period of directorship
Since May 2008
Since July 2008
Since May 2005
Company
Hodges Resources Limited
Catalyst Metals Limited
Universal Coal PLC
Bannerman Resources Limited From June 2008 to 17 December 2008
Northern Mining Limited
Graynic Metals Limited
Jackson Gold Limited
Graynic Metals Limited
Cortona Resources Limited
Bannerman Resources
Elixir Petroleum Limited
Scimitar Resources Limited
Hamill Resources Limited
Venture Minerals Limited
Gryphon Minerals Limited
From April 2005 to December 2006
Since February 2005 to December 2006
Since March 2002
Since February 2005
Since January 2006
Since January 2008
From March 2004 to November 2008
Since November 2002
From November 2000 to September 2004
From May 2006 to July 2009
Since January 2004
Clive Jones
Kent Hunter
This report details the nature and amount of remuneration for each director of Cazaly Resources Limited.
Remuneration Policy
The remuneration policy of Cazaly Resources Limited 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 of Cazaly Resources Limited believes the remuneration policy
to be appropriate and effective in its ability to attract and retain the best directors to run and manage the
company, as well as create goal congruence between directors and shareholders.
The board’s policy for determining the nature and amount of remuneration for board members is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior staff
members, was developed by the managing director and approved by the board after seeking professional advice
from independent external consultants.
In determining competitive remuneration rates, the Board seeks independent advice on local and international
trends among comparative companies and industry generally. It examines terms and conditions for employee
incentive schemes, benefit plans and share plans. Independent advice is obtained to confirm that executive
remuneration is in line with market practice and is reasonable in the context of Australian executive reward
practices.
All executives receive a base salary (which is based on factors such as length of service and experience),
superannuation and fringe benefits.
The economic entity is an exploration entity, and therefore speculative in terms of performance. Consistent with
attracting and retaining talented executives, directors and senior executives are paid market rates associated with
individuals in similar positions, within the same industry. The Board however acquired and were issued shares
as part of the terms of the Initial Public Offer. Board members have retained these securities which assist in
aligning their objectives with overall shareholder value.
Options have been issued to Board members to provide a mechanism to participate in the future development of
the Company and an incentive for their future involvement with and commitment to the Company.
Options and performance incentives will be issued in the event that the entity moves from an exploration entity
to a producing entity, and key performance indicators such as profits and growth can be used as measurements
for assessing Board performance.
11
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
10. REMUNERATION REPORT (Cont’d)
The executive directors and executives receive a superannuation guarantee contribution required by the
government, which is currently 9% and do not receive any other retirement benefits.
All remuneration paid to directors is valued at the cost to the Company and expensed. Shares given to directors
and executives are valued as the difference between the market price of those shares and the amount paid by the
director or executive. Options are valued using the Black-Scholes methodology.
The board policy is to remunerate non-executive directors at market rates for comparable companies for time,
commitment and responsibilities. The managing director in consultation with independent advisors determines
payments to the non-executive directors and reviews 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 Company. However, to align directors’ interests with shareholder interests, the
directors are encouraged to hold shares in the company.
Company Performance, Shareholder Wealth and Directors’ and Executives’ Remuneration
The remuneration policy has been tailored to increase goal congruence between shareholders and directors and
executives. This has been achieved by the issue of shares to the majority of the directors and executives to
encourage the alignment of personal and shareholder interest.
Details of Remuneration for Year Ended 30 June 2009
The remuneration for each key management person and company executive of the company during the year was
as follows:
Short-term Benefits
Post-
employment
Benefits
Other
Long-term
Benefits
Share based
Payment
Total
Performance
Related
Cash, salary
Cash
Non-
Other
Super-
Other
Equity Options
&
profit
cash
annuation
commissions
share
benefit
$
Nathan McMahon – Managing Director (ii)
2009
2008
180,000
180,000
-
-
Clive Jones – Managing Director (ii)
2009
2008
180,000
180,000
-
-
Kent Hunter – Non Executive Director (iv)
2009
2008
26,312
25,000
-
-
Lisa Wynne – Company Secretary (v)
2009
2008
-
-
Total Remuneration
2009
2008
386,312
385,000
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
5,976
33,497
36,911
22,036
42,887
55,533
$
-
-
-
-
-
-
937
2,250
937
2,250
$
-
-
-
-
-
-
-
-
-
-
(i)
$
$
%
-
180,000
210,000
390,000
-
180,000
210,000
390,000
-
33,225
105,000
165,747
-
9,998
36,911
32,034
-
430,136
534,998
977,781
0%
54%
0%
54%
0%
63%
0%
31%
0%
55%
$
-
-
-
-
-
-
-
-
-
-
i) The fair value of the Options is calculated at the date of grant using a Black-Scholes model.
ii) An aggregate amount of $180,000 (2008:$ 180,000) was paid, or was due and payable to Kingsreef Pty Ltd, a company controlled by
Mr Nathan McMahon, for the provision of corporate and tenement management services to the Company.
iii) An aggregate amount of $180,000 (2008:$ 180,000) was paid, or was due and payable to Widerange Corporation Pty Ltd, a company
controlled by Mr Clive Jones, for the provision of geological services to the Company.
iv) An aggregate amount of $5,976 (2008: $33,497) was paid, or was due and payable to Mining Corporate Advisory Services Pty Ltd, a
company controlled by Mr Kent Hunter, for the provision of corporate advisory services to the Company.
v) An aggregate amount of $36,911 (2008: $22,036) was paid, or was due and payable to Sila Consulting Pty Ltd, a company of which Ms
Wynne is a Director, for the provision of company secretarial services to the Company.
12
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
10. REMUNERATION REPORT (Cont’d)
Options issued as part of remuneration for the year ended 30 June 2009
No Options were issued to directors and executives as part of their remuneration for the year
ended 30 June 2009.
Employment Contracts of Directors and Senior Executives
The employment conditions of the Managing Directors, Nathan McMahon and Clive Jones, are
formalised in a contract of employment. Other than the Managing Directors, all executives are
employees of Cazaly Resources Limited.
The employment contracts stipulate a range of one to three-month resignation periods. The
economic entity may terminate an employment contract without cause by providing one to three
months written notice or making payment in lieu of notice, based on the individual’s annual salary
component.
11. MEETINGS OF DIRECTORS
The number of directors' meetings held during the financial year each director held office during
the financial year and the number of meetings attended by each director are:
Directors Meetings
Director
N McMahon
C Jones
K Hunter
Number Eligible to Attend
7
7
7
Meetings Attended
7
7
7
The economic entity does not have a formally constituted audit committee as the board
considers that the company’s size and type of operation do not warrant such a committee.
12.
INDEMNIFYING OFFICERS OR DIRECTORS
In accordance with the constitution, except as may be prohibited by the Corporations Act 2001
every Officer, or agent of the Company shall be indemnified out of the property of the
Company against any liability incurred by him in his capacity as Officer or agent of the
Company 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 Company has insurance policies in place for Directors and Officers insurance.
13
To The Board of Directors
Auditor’s Independence Declaration under Section 307C of the Corporations
Act 2001
This declaration is made in connection with our audit of the financial report of Cazaly Resources Limited
and Controlled Entities for the year ended 30 June 2009 and in accordance with the provisions of the
Corporations Act 2001.
We declare that, to the best of our knowledge and belief, there have been:
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit;
no contraventions of the Code of Professional Conduct of the Institute of Chartered Accountants in
Australia in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
RANKO MATIC
Director
DATED at PERTH this 22nd day of September 2009
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
INCOME STATEMENT
FOR THE YEAR ENDED
30 JUNE 2009
Note
2
2
Economic Entity
2008
2009
$
$
Parent Entity
2009
$
2008
$
639,351
1,716,352
567,065
1,706,753
40,429
3,775,497
20,000
1,728,575
(235,667)
(25,508)
(3,361)
(405,221)
(746,429)
(56,737)
(272,767)
(126,269)
(175,228)
(1,347,773)
-
(3,055,420)
(1,178,943)
(8,917)
(1,073,884)
(28,079)
(3,344)
(230,004)
(219,675)
(24,257)
(183,947)
(114,337)
(120,912)
(168,813)
-
(1,457,244)
(6,194)
(16,067)
(235,667)
(25,508)
(3,361)
(337,425)
(27,613)
(56,737)
(272,767)
(125,189)
(175,228)
(515,210)
(2,537,906)
(2,484,368)
(986,360)
(8,917)
(1,073,884)
(28,079)
(3,339)
(156,927)
-
(24,257)
(183,947)
(154,111)
(120,912)
(48,477)
(3,425,814)
(833,595)
(6,194)
(15,568)
Revenue
Other Income
Employee benefits expense
Depreciation and amortisation expense
Finance costs
Administrative expense
Legal Fees
Advertising and promotional expenses
Consultancy expenses
Compliance and Regulatory expenses
Occupancy expenses
Written-off exploration expenditure
Impairment of loans to controlled entities
Provision for diminution in value of shares
Loss on disposal of shares
Other expenses
Profit/(loss) before income tax
Income tax (expense)/benefit
3
6
(6,958,460)
1,845,092
(7,205,191)
(2,639,776)
1,668,164
(310,656)
1,063,250
(192,727)
Net profit /(loss) attributable to members
(5,290,296)
1,534,436
(6,141,941)
(2,832,503)
Basic earnings (loss) per share (cents per
share)
18
(8.47)
2.57
The accompanying notes form part of these financial statements
16
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
BALANCE SHEET
AS AT
30 JUNE 2009
Note
Economic Entity
2009
$
2008
$
Parent Entity
2009
$
2008
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Prepayments
7
8
3,816,351
140,237
6,893
2,072,718
2,927,741
21,675
3,816,351
139,037
6,891
2,072,718
2,926,967
21,675
TOTAL CURRENT ASSETS
3,963,481
5,022,134
3,962,279
5,021,360
NON CURRENT ASSETS
Trade and other receivables
Financial assets
Property, plant and equipment
Exploration, evaluation and development
Deferred tax assets
8
9
10
11
6
57,505
788,767
55,736
9,725,338
2,903,684
56,605
4,844,744
74,105
8,488,493
1,032,012
19,505
638,441
55,736
3,227,832
1,835,508
18,605
3,860,782
74,105
3,114,656
919,470
TOTAL NON CURRENT ASSETS
13,531,030
14,495,959
5,777,022
7,987,618
TOTAL ASSETS
17,494,511
19,518,093
9,739,301
13,008,978
CURRENT LIABILITIES
Trade and other payables
Short-term provision
12
13
616,860
46,164
1,307,767
54,408
616,860
46,164
1,307,767
54,408
TOTAL CURRENT LIABILITIES
663,024
1,362,175
663,024
1,362,175
NON CURRENT LIABILITIES
Trade and other payables
Deferred tax liabilities
12
6
2,903,684
-
2,703,818
-
968,382
43,730
1,119,236
TOTAL NON CURRENT LIABILITIES
2,903,684
2,703,818
968,382
1,162,966
TOTAL LIABILITIES
3,566,708
4,065,993
1,631,406
2,525,141
NET ASSETS
EQUITY
13,927,803
15,452,100
8,107,895
10,483,837
Issued capital
Reserves
Retained profits/(Accumulated losses)
14
15
16
12,783,160
7,421,043
(6,276,400)
9,017,161
7,421,043
(986,104)
12,783,160
7,421,043
(12,096,308)
9,017,161
7,421,043
(5,954,367)
TOTAL EQUITY
13,927,803
15,452,100
8,107,895
10,483,837
The accompanying notes form part of these financial statements.
17
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
30 JUNE 2009
Economic Entity
Balance at 1 July 2007
Profit / (loss) attributable to
members
Shares issued during the year
Options exercised during the year
Transaction costs
Option reserve
Deferred tax liability component
Balance at 30 June 2008
Profit / (loss) attributable to
members
Shares issued during the year
Options exercised during the year
Transaction costs
Option reserve
Deferred tax liability component
Balance at 30 June 2009
Parent Entity
Balance at 1 July 2007
Profit / (loss) attributable to
members
Shares issued during the year
Options exercised during the year
Transaction costs
Option reserve
Deferred tax liability component
Balance at 30 June 2008
Profit / (loss) attributable to
members
Shares issued during the year
Options exercised during the year
Transaction costs
Option reserve
Deferred tax liability component
Balance at 30 June 2009
Issued Capital Retained
Profits/
Accumulated
Losses
$
$
Option
Reserve
Total
$
$
4,969,582
-
(2,520,540)
1,534,436
6,764,446
-
9,213,488
1,534,436
3,450,000
710,100
(117,000)
-
4,479
9,017,161
-
-
-
-
-
656,597
(986,104)
7,421,043
3,450,000
710,100
(117,000)
656,597
4,479
15,452,100
-
(5,290,296)
-
(5,290,296)
3,794,859
-
(32,501)
-
3,641
12,783,160
-
-
-
-
-
(6,276,400)
-
-
-
-
-
7,421,043
3,794,859
-
(32,501)
-
3,641
13,927,803
Issued
Capital
$
Retained
Profits/
Accumulated
Losses
$
Option
Reserve
Total
$
$
4,969,582
-
(3,121,864)
(2,832,503)
6,764,446
-
8,612,164
(2,832,503)
3,450,000
710,100
(117,000)
-
4,479
9,017,161
-
-
-
-
-
(5,954,367)
-
-
-
656,597
-
7,421,043
3,450,000
710,100
(117,000)
656,597
4,479
10,483,837
-
(6,141,941)
-
(6,141,941)
3,794,859
-
(32,501)
-
3,641
-
-
-
-
-
12,783,160 (12,096,308)
-
-
-
-
-
7,421,043
3,794,859
-
(32,501)
-
3,641
8,107,895
The accompanying notes form part of these financial statements
18
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
CASH FLOW STATEMENT
FOR THE YEAR ENDED
30 JUNE 2009
Note
Economic Entity
2009
$
2008
$
Parent Entity
2009
$
2008
$
Cash Flows from Operating Activities
- Payments to suppliers and employees
- Interest received
- Other revenue
- Payments for exploration and evaluation
(2,102,803)
64,844
420,745
(2,884,984)
(1,372,769)
156,225
377,695
(2,351,755)
(1,060,117)
63,404
420,745
(759,240)
(1,321,401)
154,884
377,695
(609,457)
Net cash used in operating activities
19
(4,502,198)
(3,190,604)
(1,335,208)
(1,398,279)
Cash Flows From Investing Activities
- Proceeds from sale of exploration assets
- Proceeds from sale of equity
investments
- Purchase of plant and equipment
- Purchase of equity investments
- Recoupment of exploration expenditure
from Joint Venture operations
- Proceeds for Joint Venture Management
- Loans (to)/receipts from associated
entities
1,327,702
535,000
1,257,272
335,000
580,555
(7,139)
(37,000)
170,770
241,311
(51,991)
(1,388,710)
1,041,945
510,552
(7,139)
(37,000)
1,257
38,794
(51,991)
(1,269,160)
810,066
178,710
296,854
153,302
288,596
-
-
(2,831,636)
(1,231,221)
Net cash used in investing activities
2,213,598
674,409
(953,392)
(1,079,916)
Cash Flows from Financing Activities
- Proceeds from issue of securities
- Payment for costs of issue of securities
4,064,735
(32,502)
4,160,100
(117,000)
4,064,735
(32,502)
4,160,100
(117,000)
Net cash provided by financing activities
4,032,233
4,043,100
4,032,233
4,043,100
Net increase in cash held
1,743,633
1,526,905
1,743,633
1,564,905
Cash and cash equivalents at beginning
of the financial year
2,072,718
545,813
2,072,718
507,813
Cash and cash equivalents at end of the
financial year
7
3,816,351
2,072,718
3,816,351
2,072,718
The accompanying notes form part of these financial statements
19
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report covers the economic entity of Cazaly Resources Limited and controlled
entities, and Cazaly Resources Limited as an individual parent entity. Cazaly Resources Limited is
a listed public company, incorporated and domiciled in Australia.
Basis of Preparation
The financial report is a general purpose financial report that has been prepared in accordance with
Australian Accounting Standards, Australian Accounting Interpretations, other authoritative
pronouncements of the Australian Accounting Standards Board1 and the Corporations Act 2001.
Australian Accounting Standards set out accounting policies that the AASB has concluded would
result in a financial report containing relevant and reliable information about transactions, events
and conditions to which they apply. Compliance with Australian Accounting Standards ensures that
the financial statements and notes also comply with International Financial Reporting Standards.
Material accounting policies adopted in the preparation of this financial report are presented below.
They have been consistently applied unless otherwise stated
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.
(a) Principles of Consolidation
A controlled entity is any entity over which Cazaly Resources Limited has the power to govern the
financial and operating policies so as to obtain benefits from its activities. In assessing the power to
govern, the existence and effect of holdings of actual and potential voting rights are considered.
A list of controlled entities is contained in Note 21 to the financial statements.
As at reporting date, the assets and liabilities of all controlled entities have been incorporated into
the consolidated financial statements as well as their results for the year then ended. Where
controlled entities have entered (left) the consolidated group during the year, their operating results
have been included (excluded) from the date control was obtained (ceased).
All inter-group balances and transactions between entities in the consolidated group, 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.
Minority interests, being that portion of the profit or loss and net assets of subsidiaries attributable
to equity interests held by persons outside the group, are shown separately within the Equity
section of the consolidated Balance Sheet and in the consolidated Income Statement.
(b) Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment.
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not
in excess of the recoverable amount from these assets. The recoverable amount is assessed on the
basis of the expected net cash flows that will be received from the asset’s employment and
subsequent disposal. The expected net cash flows have been discounted to their present values in
determining recoverable amounts.
20
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Depreciation
Depreciation is provided on property, plant and equipment, including freehold buildings but
excluding land. Depreciation is calculated on a straight line 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
Leasehold improvements
Depreciation Rate
40.0%
18.0%
22.5%
Term of Lease
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each
balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s
carrying amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount.
These gains and losses are included in the income statement. When revalued assets are sold,
amounts included in the revaluation reserve relating to that asset are transferred to retained
earnings.
(c) Exploration, Evaluation and Development Expenditure
Costs incurred during exploration and evaluation related to an area of interest are accumulated.
Costs carried forward provided such costs are expected to be recouped through successful
development, or by sale, or where exploration and evaluation activities have not at balance date
reached a stage to allow a reasonable assessment regarding the existence of economically
recoverable reserves. In these instances the entity must have rights of tenure to the area of interest
and must be continuing to undertake exploration operations in the area.
These assets are considered for impairment on an annual basis, depending on the existence of
impairment indicators including:
•
•
•
•
the period for which the Economic Entity has the right to explore in the specific area has
expired during the period or will expire in the near future, and is not expected to be renewed;
substantive expenditure on further exploration for and evaluation of mineral resources in the
specific area is neither budgeted nor planned;
exploration for and evaluation of mineral resources in the specific area have not led to the
discovery of commercially viable quantities of mineral resources and the Economic Entity
has decided to discontinue such activities in the specific area; and
sufficient key data exists to indicate that, although a development in the specific area is
likely to proceed, the carrying amount of the exploration and evaluation asset is unlikely to
be recovered in full from successful development or by sale.
Costs carried forward in respect of an area of interest that is abandoned are written off in the year
in which the decision to abandon is made.
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
21
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
(d) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership
of the asset, but not the legal ownership, are transferred to entities in the economic entity are
classified as finance leases. Finance leases are capitalised, recording an asset and a liability
equal to the present value of the minimum lease payments, including any guaranteed residual
values. Leased assets are depreciated on a diminishing value basis over their estimated useful
lives where it is likely that the economic entity will obtain ownership of the asset or over the
term of the lease. Lease payments are allocated between the reduction of the lease liability
and the lease interest expense for the period.
Lease payments for operating leases, where substantially all the risks and benefits remain with
the lessor, are charged as expenses in the periods in which they are incurred.
(e) Financial Instruments
Recognition and Initial Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised
when the entity becomes a party to the contractual provisions of the instrument. Trade date
accounting is adopted for financial assets that are delivered within timeframes established by
marketplace convention.
Financial instruments are initially measured at fair value plus transactions costs where the
instrument is not classified as at fair value through profit or loss. Transaction costs related to
instruments classified as at fair value through profit or loss are expensed to profit or loss
immediately. Financial instruments are classified and measured as set out below.
Derecognition
Financial assets are derecognised where the contractual rights to receipt of cash flows expires
or the asset is transferred to another party whereby the entity is no longer has any significant
continuing involvement in the risks and benefits associated with the asset. Financial liabilities
are derecognised where the related obligations are either discharged, cancelled or expire. The
difference between the carrying value of the financial liability extinguished or transferred to
another party and the fair value of consideration paid, including the transfer of non-cash assets
or liabilities assumed, is recognised in profit or loss.
Classification and Subsequent Measurement
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial assets at
fair value through profit or loss’. Financial assets are classified as held for trading if they are
acquired for the purpose of selling in the near term. Derivatives are also classified as held for
trading unless they are designated as effective hedging instruments. Gains or losses on
investments held for trading are recognised in profit or loss.
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(e) Financial Instruments (Cont’d)
22
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
(ii) 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 intended to be held for an undefined period are not included in this
classification. Investments that are intended to be held-to-maturity, such as bonds, are
subsequently measured at amortised cost. This cost is computed as the amount initially
recognised minus principal repayments, plus or minus the cumulative amortisation using the
effective interest method of any difference between the initially recognised amount and the
maturity amount. This calculation includes all fees and points paid or received between parties
to the contract that are an integral part of the effective interest rate, transaction costs and all
other premiums and discounts. For investments carried at amortised cost, gains and losses are
recognised in profit or loss when the investments are derecognised or impaired, as well as
through the amortisation process.
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. Such assets are carried at amortised cost using the
effective interest method. Gains and losses are recognised in profit or loss when the loans and
receivables are derecognised or impaired, as well as through the amortisation process.
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are designated as
available-for-sale or are not classified as any of the three preceding categories. After initial
recognition available-for sale investments are measured at fair value with gains or losses being
recognised as a separate component of equity until the investment is derecognised or until the
investment is determined to be impaired, at which time the cumulative gain or loss previously
reported in equity is recognised in profit or loss.
The fair value of investments that are actively traded in organised financial markets is
determined by reference to quoted market bid prices at the close of business on the balance
sheet date. For investments with no active market, fair value is determined using valuation
techniques. Such techniques include using recent arm’s length market transactions; reference
to the current market value of another instrument that is substantially the same; discounted
cash flow analysis and option pricing models.
(f) Cash and Cash Equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-
term highly liquid investments with original maturities of three months or less, and bank
overdrafts. Bank overdrafts are shown within short-borrowings in current liabilities on the
balance sheet.
(g) Trade and Other Receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at
original invoice amount less an allowance for any uncollectible amounts. An allowance for
doubtful debts is made when there is objective evidence that the entity will not be able to
collect the debts. Bad debts are written off when identified.
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(h) Revenue and Other Income
23
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
Revenue from the sale of goods is recognised upon the delivery of goods to customers.
Interest revenue is recognised on a proportional basis taking into account the interest rates
applicable to the financial assets.
Revenue from the rendering of a service is recognised upon the delivery of the service to the
customers.
All revenue is stated net of the amount of goods and services tax (GST).
(i) Impairment of Assets
At each reporting date, the Economic Entity reviews the carrying amounts of its tangible
assets to determine whether there is any indication that those assets have suffered an
impairment loss. 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 the other assets, the Economic Entity estimates
the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generated unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised in the Profit and Loss immediately,
unless the relevant asset is carried at fair value, in which case the impairment loss is treated as
a revaluation decrease. Where an impairment loss subsequently reverses, the carrying amount
of the asset (cash-generating unit) is increased to the revised estimate of its recoverable
amount, but only to the extent that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset
(cash-generating unit) in prior years.
.
A reversal of an impairment loss is recognised in the Profit and Loss immediately, unless the
relevant asset is carried at fair value, in which case the impairment loss is treated as a
revaluation increase
(j) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the
amount of GST incurred is not recoverable from the Australian Tax Office (“ATO”). In these
circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of
an item of the expense. Receivables and payables in the balance sheet are shown inclusive of
GST.
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
24
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
The net amount of GST recoverable from, or payable to, the ATO is included as a current asset
or liability in the balance sheet.
Cash flows are included in the cash flow statement on a gross basis. The GST components of
cash flows arising from investing and financing activities which are recoverable from, or
payable to, the ATO are classified as operating cash flows.
(k) Taxation
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 reporting
date. 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 reporting date. 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.
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Tax Consolidation
25
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
Cazaly Resources Limited and its wholly-owned Australian subsidiaries have formed an
income tax consolidated group under tax consolidation legislation. Each entity in the group
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 Tax Office that it
had formed an income tax consolidated group to apply from 1 July 2004.
(l) Foreign Currency
All foreign currency transactions during the financial year are brought to account using the
exchange rate in effect at the date of the transaction. Foreign currency monetary items at
reporting date are translated at the exchange rate existing at that date.
(m) Trade and Other Payables
Trade payables and other payables are carried at amortised costs and represent liabilities for
goods and services provided to the company prior to the end of the financial year that are
unpaid and arise when the company becomes obliged to make future payments in respect of
the purchase of these goods and services.
(n) Provisions
Provisions are recognised when the Economic Entity has a present obligation, the future
sacrifice of economic benefits is probable, and the amount of the provision can be reliably
measured.
The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at reporting date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the cash flows estimated to
settle the present obligation, its carrying amount is the present value of those cash flows.
(o) Share Based Payments
Equity-settled share based payments granted, are measured at fair value at the date of grant.
Fair value is measured by use of a binomial 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 Economic Entity’s
estimate of shares that will eventually vest.
For cash-settled share-based payments, a liability equal to the portion of the goods or services
received is recognised at the current fair value determined at each reporting date.
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(p) Issued Capital
26
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
Issued and paid up capital is recognised at the fair value of the consideration received by the
Company. Any transaction costs arising on the issue of ordinary shares are recognised
directly in equity as a reduction of the share proceeds received.
(q) Earnings Per Share
Basic earnings per share is calculated as net earnings attributable to members, adjusted to
exclude costs of servicing equity (other than dividends) and preference share dividends,
divided by the weighted average number of ordinary shares, adjusted for an bonus element.
Diluted EPS is calculated as net earnings attributable to members, adjusted for:
costs of servicing equity (other than dividends) and preference share dividends; the after tax
effect of dividends and interest associated with dilutive potential ordinary shares that would
have been recognised as expenses; and other non-discretionary changes in revenues or
expenses during the period that would result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary
shares, adjusted for any bonus element.
(r) Employee Benefits
Provision is made for the Economic Entity’s liability for employee benefits arising from
services rendered by employees to balance date. Employee benefits that are expected to be
settled within one year have been measured at the amounts expected to be paid when the
liability is settled, plus related on-costs. Employee benefits payable later than one year have
been measured at the present value of the estimated future cash outflows to be made for those
benefits.
(s) Joint Venture Entities
A joint venture entity is an entity in which Cazaly holds a long-term interest and which is
jointly controlled by Cazaly and one or more other venturers. Decisions regarding the
financial and operating policies essential to the activities, economic performance and financial
position of that venture require the consent of each of the venturers that together jointly
control the entity.
Cazaly has certain contractual arrangements with other participants to engage in joint activities
where all significant matters of operating and financial policy are determined by the
participants such that the operation itself has no significant independence to pursue its own
commercial strategy. These contractual arrangements do not create a joint venture entity due
to the fact that the policies are those of the participants, not a separate entity carrying on a
trade or a business of its own.
The financial statements of Cazaly include its share of the assets, liabilities and cash flows in
such joint venture operations, measured in accordance with the terms of each arrangement,
which is usually pro-rata to Cazaly’s interest in the joint venture operations.
(t) Royalty Assets
Royalty assets are valued in the accounts at cost of acquisition and are amortised over the
period in which their benefits are expected to be realised. The balances are reviewed annually
and any balance representing future benefits for which the realisation is considered to be no
longer probable are written off
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(u) Material correction to prior period
27
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
During the year ended 30 June 2008, tenement EL 47/1560 was sold to Flinders Mines Ltd
(‘FMS’). The consideration for the sale of the tenement included $700,000 cash and FMS
shares valued at $750,000. The share consideration was omitted from the June 2008 financial
statements in error. The prior year figures have been amended and restated to correct this
error. The impact of the restatement on the Income Statement and Balance Sheet for the
comparative financial year ended 30 June 2008 is as follows:
Income Statement for the year ended 30 June 2008:
Economic Entity
Previously
Reported
Balance
$
3,025,497
Impact
$
750,000
Restated
Balance
$
3,775,497
Restated
Balance
Parent Entity
Previously
Reported
Balance
$
20,000
Impact
$
-
$
20,000
-
-
-
(3,425,814)
(4,175,814)
750,000
1,845,092
1,095,092
750,000
(2,639,776)
(3,389,776)
750,000
(310,656)
(85,656)
(225,000)
(192,727)
32,273
(225,000)
1,534,436
1,009,436
525,000
(2,832,503)
(3,357,503)
525,000
2.57
1.69
0.88
-
-
-
Other Income
Impairment of
loans to
controlled entities
Profit/(loss)
before income tax
Income tax
(expense)/benefit
Net profit/(loss
attributable to
members
Basic
earnings(loss) per
share (cents per
share)
Balance Sheet as at 30 June 2008:
Economic Entity
Previously
Reported
Balance
$
2,177,741
Impact
$
750,000
Restated
Balance
$
2,927,741
-
-
-
-
-
-
Restated
Balance
$
Parent Entity
Previously
Reported
Balance
$
Impact
$
2,926,967
2,176,967
750,000
5,243,875
5,993,875
(750,000)
(5,243,875)
(5,993,875)
750,000
1,032,012
1,257,012
(225,000)
919,470
1,144,470
(225,000)
15,452,100
14,927,100
525,000
10,483,837
9,958,837
525,000
(986,104)
(1,511,104)
525,000
(5,954,367)
(6,479,367)
525,000
Trade and Other
Receivables
Loans to
associated entities
Provision for non-
recovery of loans
to associated
entities
Deferred tax
assets
Net assets
Retained
profits/(Accumula
ted Losses)
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(v) Critical Accounting Estimates and Judgments
28
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
The preparation of financial statements requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period in which the estimate is revised and in any
future periods affected.
The directors evaluate estimates and judgments incorporated into the financial report based on
historical knowledge and best available current information. Estimates assume a reasonable
expectation of future events and are based on current trends and economic data, obtained both
externally and within the group.
Key Judgements – Deferred exploration and evaluation expenditure
Exploration and evaluation costs are carried forward where right of tenure of the area of
interest is current. These costs are carried forward in respect of an area that has not at balance
sheet date reached a stage that permits reasonable assessment of the existence of economically
recoverable reserves, refer to the accounting policy stated in note 1(c).
Key Judgements Share based payment transactions
The Company measures the cost of equity-settled transactions with employees by reference to
the fair value of the equity instruments at the date at which they are granted. The fair value is
determined by an internal valuation using a Black-Scholes option pricing model, using the
assumptions detailed in note 26.
Key Judgment – 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 company’s development and its current environmental impact the directors
believe such treatment is reasonable and appropriate.
Key Estimate – Taxation
Balances disclosed in the financial statements and the notes thereto, related to taxation, are
based on the best estimates of directors. These estimates take into account both the financial
performance and position of the company as they pertain to current income taxation
legislation, and the directors understanding thereof. No adjustment has been made for pending
or future taxation legislation. The current income tax position represents that directors’ best
estimate, pending an assessment by the Australian Taxation Office.
The financial report was authorised for issue on 22 September 2009 by the board of directors.
29
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
2. REVENUE
Revenue
- interest received
- option fees
- management fees
- other revenue
Other Income
- profit on sale of tenement
- profit on sale of shares
3. LOSS FOR THE YEAR
(i) Expenses
Borrowing costs
- other persons
Depreciation of non-current assets
- plant and equipment
- motor vehicle
Rental expense on operating leases
- minimum lease payments
Fair value loss on other financial
assets at fair value through profit
or loss
Economic Entity
2008
2009
$
$
Parent Entity
2009
$
2008
$
56,413
100,000
62,193
420,745
639,351
165,286
765,000
408,371
377,695
1,716,352
54,536
50,000
41,784
420,745
567,065
163,945
765,000
400,113
377,695
1,706,753
40,429
-
40,429
3,717,483
58,014
3,775,497
20,000
-
20,000
1,728,575
-
1,728,575
3,361
3,344
3,361
3,339
23,580
1,928
25,508
25,585
2,494
28,079
23,580
1,928
25,508
25,585
2,494
28,079
24,160
87,453
24,160
87,453
3,055,420
1,457,244
2,484,368
833,595
Exploration expense written off
1,347,773
168,813
515,210
48,477
Employee benefits:
- Superannuation benefits
- Employee equity settled benefits
12,226
-
36,888
656,597
12,226
-
36,888
656,597
30
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
4.
KEY MANAGEMENT PERSONNEL COMPENSATION
a) Name and positions held by directors’ in office at any time during the financial year are:
Mr Nathan McMahon Managing Director
Managing Director
Mr Clive Jones
Director
Mr Kent Hunter
Details of the nature and amount of emoluments of each director are as follows:
Short-term employee benefits
Post-employment benefits
Equity based payments
2009
$
429,199
937
-
430,136
2008
$
440,533
2,250
534,998
977,781
The Company has taken advantage of the relief provided by Corporations Regulation 2M.6.04
and has transferred the detailed remuneration disclosures to the directors’ report. The relevant
information can be found in the remuneration report on pages 11 to 13 of the Directors report.
b) Shareholdings
Number of Shares held by Key Management Personnel
2009
Balance
1.7.08
Received as
Remuneration
Options
Exercised
Net Change
- Other
Balance
30.06.09
N McMahon
C Jones
K Hunter
5,222,796
5,140,001
1,328,066
11,690,863
-
-
-
-
1,207,602
1,713,337
442,691
3,363,630
6,430,398
6,853,338
1,770,757
15,054,493
2008
Balance
1.7.07
Received as
Remuneration
Options
Exercised
Net Change
- Other (i)
Balance
30.06.08
N McMahon
C Jones
K Hunter
5,510,910
4,140,001
1,328,066
10,978,977
-
-
-
-
1,000,000
1,000,000
-
2,000,000
(1,288,114)
-
-
(1,288,114)
5,222,796
5,140,001
1,328,066
11,690,863
(i)
Includes 661,886 of on-market purchase and an involuntary sale of 1,950,000 ordinary shares in April
2009 pursuant to the (purported) exercise of rights by a secured creditor of Opes Prime Group Ltd. No
consideration has been received by Mr McMahon at this time. Mr McMahon is pursuing actions
against the major financier of the Opes Prime Group Ltd.
31
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
4.
KEY MANAGEMENT PERSONNEL COMPENSATION (Cont’d)
c) Option Holdings
Number of $0.4436 (formerly $0.50) Options expiring 31 August 2008, held by Directors and Executives
Nathan McMahon
Clive Jones
Kent Hunter
Balance
1 July 08
500,000
1,000,000
250,000
1,750,000
Issued
Option
Exercised
-
-
-
-
Lapsed
(500,000)
(1,000,000)
(250,000)
(1,750,000)
-
-
-
-
Balance
30 June 09
-
-
-
-
Number of $1.9436 (formerly $2.00) Options expiring 30 November 2009, held by Directors and Executives
Nathan McMahon
Clive Jones
Kent Hunter
Balance
1 July 08
1,000,000
1,000,000
200,000
2,200,000
Issued
Option
Exercised
Lapsed
-
-
-
-
-
-
-
-
Balance
30 June 09
1,000,000
1,000,000
200,000
2,200,000
-
-
-
-
Number of $0.75 Options expiring 30 November 2009, held by Directors and Executives
Nathan McMahon
Clive Jones
Kent Hunter
Balance
1 July 08
1,000,000
1,000,000
500,000
2,500,000
Issued
Option
Exercised
Lapsed
-
-
-
-
-
-
-
-
Balance
30 June 09
1,000,000
1,000,000
500,000
2,500,000
-
-
-
-
Number of $0.20 Options expiring 28 February 2011, held by Directors and Executives
Nathan McMahon
Clive Jones
Kent Hunter
Balance
1 July 08
Issued
678,803
856,669
221,346
1,756,818
-
-
-
-
Option
Exercised
Lapsed
-
-
-
-
Balance
30 June 09
678,803
856,669
221,346
1,756,818
-
-
-
-
d) Compensation Options
No compensation options were granted to Directors and Executives during the period.
2008
N B McMahon
C B Jones
K M Hunter
Number
Granted
1,000,000
1,000,000
500,000
2,500,000
Number Vested
Grant Date
Expiry Date
Exercise Price
Fair Value at
$
$0.75
$0.75
$0.75
Grant Date
$
0.210
0.210
0.210
1,000,000
1,000,000
500,000
2,500,000
30.11.2007
30.11.2007
30.11.2007
30.11.2009
30.11.2009
30.11.2009
32
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
4.
KEY MANAGEMENT PERSONNEL COMPENSATION (Cont’d)
d) Compensation Options
(i) Key Management Personnel Option Valuation Calculation
Grant date share price
Exercise price
Expected volatility
Option life
Dividend yield
Risk-free interest rate
2009
-
-
-
-
-
-
-
2008
30.11.09 Options
$0.375
$0.75
135%
3 years
-
6.54%
e) Shares issued on exercise of compensation options
Date of exercise of options
Number of ordinary shares issued
on exercise of options during the
year
2009
-
-
-
2008
4 October 2008
18 July 2008
-
2009
-
-
-
2008
1,000,000
1,000,000
-
N McMahon
C Jones
K Hunter
The economic entity policy for determining the nature and amount of emoluments of board members
and senior executives of the company is as follows:
The remuneration structure for executive officers, including executive directors, is based on a number
of factors, including length of service, particular experience of the individual concerned, and overall
performance of the economic entity. The contracts for service between the economic entity and
specified directors and executives are on a continuing basis the terms of which are not expected to
change in the immediate future. Upon retirement specified directors and executives are paid employee
benefit entitlements accrued to date of retirement. The company may terminate the contracts without
cause by providing one to three months written notice or making payment in lieu of notice based on
the individual’s annual salary component at industry award redundancy rates.
33
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
Economic Entity
Parent Entity
2009
$
2008
$
2009
$
2008
$
5.
AUDITORS’ REMUNERATION
Remuneration of the auditor for:
- Auditing or reviewing the financial report
36,750
34,000
36,750
34,000
55,902
34,000
55,902
34,000
6.
INCOME TAX EXPENSE
the
tax expense/(income)
The components of
comprise:
Current tax
Deferred tax
(a) The prima facie tax on profit/(loss) from ordinary
activities before income tax is reconciled to the
income tax as follows:
Prima facie tax (benefit)/expense on loss/profit
from ordinary activities before income tax at 30%
(2008: 30%)
Add:
Tax effect of:
Other non-allowable items
Tax benefit of revenue losses not recognised
Effect of deferred tax assets not recognised
Loan write-down to subsidiaries in tax consolidated
group
Under provision of prior year
Recognition of (losses)/taxable income & gains of
subsidiaries in tax consolidated group
Less:
Tax effect of:
Tax benefit of deductible equity raising costs
Effect of tax losses derecognised/(recognised)
Under/Over provision of prior year
Recognition of subsidiary tax losses
Adjustments in respect of subsidiaries
Tax exempt revenues
Other
-
(1,668,164)
(1,668,164)
-
-
310,656 (1,063,250)
310,656 (1,063,250)
-
192,727
192,727
(6,958,460)
1,845,092 (7,205,191) (2,639,776)
(2,087,538)
553,527
(2,161,557)
(791,932)
7,574
274,463
15,845
199,006
-
-
-
-
-
-
536,369
-
(482,570)
1,027,594
-
125,511
(15,588)
420,251
7,137
(30,621)
-
(486,713)
(15,588)
1,074,070
(29,819)
(30,621)
-
(336,831)
Income tax (benefit)/expense attributable to entity
The applicable weighted average effective tax rates are as
follows:
(1,668,164)
310,656 (1,063,250)
192,727
(24.0%)
16.8%
(14.8%)
(7.3%)
34
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
6.INCOME TAX EXPENSE (Cont’d)
(b) Deferred tax assets at 30% (2008: 30%)
comprise the following
Carry forward revenue losses
Carry forward capital losses
Unrealised Fair Value Adjustment
Capital raising and future black hole deductions
Provisions and accruals
Other
Deferred tax liabilities at 30% (2008: 30%)
comprise the following
Exploration expenditure
Investments
Other
(c) Deferred tax recognised directly in equity:
Relating to equity raising costs
Other
Economic Entity
2008
2009
Parent Entity
2009
2008
1,384,109
377,549
751,015
264,460
42,551
84,000
2,903,684
750,940
23,892
-
151,458
21,722
84,000
1,032,012
788,042
319,799
566,086
35,030
42,551
84,000
1,835,508
750,940
23,891
-
38,917
21,722
84,000
919,470
2,903,496
-
188
2,903,684
2,532,447
165,612
5,759
2,703,818
968,336
-
46
968,382
934,396
179,224
5,616
1,119,236
(3,641)
(4,479)
(3,641)
(4,479)
(3,641)
(4,479)
(3,641)
(4,479)
35
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
7.
CASH AND CASH
EQUIVALENTS
Cash at bank
Petty cash
Deposits at call (i)
Economic Entity
Parent Entity
2009
$
2008
$
2009
$
2008
$
58,483
495
3,757,373
3,816,351
25,078
495
2,047,145
2,072,718
58,483
495
3,757,373
3,816,351
25,078
495
2,047,145
2,072,718
(i) The bank deposits are bank accepted bills maturing on 22 July 2009, with a yield of 7.56%.
8.
TRADE AND OTHER
RECEIVABLES
Current
Trade receivables
Other debtors
Non-Current
Bonds (i)
Loans to associated entities
Provision for non-recovery of
loans to associated entities
46,434
93,803
140,237
2,779,500
148,241
2,927,741
46,434
92,603
139,037
2,029,500
147,467
2,176,967
57,505
-
-
56,605
-
-
19,505
7,781,780
18,605
5,243,875
(7,781,780)
(5,243,875)
57,505
56,605
19,505
18,605
(i) Bonds are term deposits, held by way of bank guarantee.
9. FINANCIAL ASSETS
Current
Available-for-sale financial
assets:
Shares in controlled entities, at
cost
Shares in listed corporations, at
fair value through profit and loss
-
-
3
3
788,767
4,844,744
638,438
3,860,779
788,767
4,844,744
638,441
3,860,782
36
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
10. PROPERTY, PLANT AND EQUIPMENT
Plant and Equipment
At cost
Accumulated depreciation
Office Furniture and Equipment
At cost
Accumulated depreciation
Motor Vehicle
At cost
Accumulated depreciation
Leasehold Improvement
At cost
Accumulated amortisation
Economic Entity
2008
2009
$
$
Parent Entity
2009
$
2008
$
149,671
(112,363)
37,308
143,211
(91,647)
51,564
149,671
(112,363)
37,308
28,444
(16,679)
11,765
27,764
(13,815)
13,949
27,272
(20,609)
6,663
27,272
(18,680)
8,592
5,344
(5,344)
-
5,344
(5,344)
-
28,444
(16,679)
11,765
27,272
(20,609)
6,663
5,344
(5,344)
-
143,211
(91,647)
51,564
27,764
(13,815)
13,949
27,272
(18,680)
8,592
5,344
(5,344)
-
Movement in the carrying amounts for each class of plant and equipment between the beginning and end of
the current financial year.
55,736
74,105
55,736
74,105
Balance at the beginning of the year
Additions
Disposals
Depreciation/expense
Carrying amount at the end of the year
2009
$
Plant and
Equipment
51,564
6,460
-
(20,716)
37,308
Office
Furniture
Motor
Vehicles
13,949
680
-
(2,864)
11,765
8,592
-
-
(1,928)
6,664
2008
$
Plant and
Equipment
Office
Furniture
Motor
Vehicles
Balance at the beginning of the year
Additions
Disposals
Depreciation/expense
Carrying amount at the end of the year
23,741
50,417
-
(22,594)
51,564
15,365
1,574
-
(2,990)
13,949
11,087
-
-
(2,495)
8,592
Total
74,105
7,140
-
(25,508)
55,737
Total
50,193
51,991
-
(28,079)
74,105
37
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
Economic Entity
2008
2009
$
$
Parent Entity
2009
$
2008
$
11. EXPLORATION, EVALUATION
AND DEVELOPMENT COSTS
Non-Current
Costs carried forward in respect of
areas of interest in:
- Exploration and evaluation phases –
at cost – (a)
- Royalty assets
Movement
(a) Brought forward
Exploration expenditure capitalised
during the year
Recoupment of exploration
expenditure from joint venture partners
9,678,338
47,000
8,441,493
47,000
3,227,832
-
3,114,656
-
9,725,338
8,488,493
3,227,832
3,114,656
8,441,493
7,121,840
3,114,656
3,185,052
2,755,388
2,825,463
629,091
1,083,198
Exploration expenditure written off
(170,770) (1,336,997)
(168,813)
(1,347,773)
(705)
(515,210)
(1,105,117)
(48,477)
9,678,338
8,441,493
3,227,832
3,114,656
The value of the economic entity interest in exploration expenditure is dependent upon:
•
•
•
the continuance of the economic entity 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 economic entity exploration properties may be subjected to claim(s) 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.
38
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
Economic Entity
Parent Entity
2009
$
2008
$
2009
$
2008
$
225,093
391,767
616,860
-
616,860
548,109
759,658
1,307,767
-
-
1,307,767
225,093
391,767
616,860
-
616,860
548,109
759,658
1,307,767
43,730
43,730
1,351,497
46,164
54,408
46,164
54,408
12. TRADE AND OTHER PAYABLES
Current
Trade creditors
Other creditors and accrued expenses
Non-Current
Loans from controlled entities
13. PROVISION
Current
Provision for Annual Leave
14.
ISSUED CAPITAL
83,976,604 fully paid ordinary shares (2008:
60,977,456) with no par value
12,783,160
9,017,161
12,783,160
9,017,161
(a) Movements in Ordinary Shares
Opening balance at 1 July 2008
Placement
Placement
Placement
Transaction costs relating to share issues
Deferred tax liability component
Notes
Number of
shares
60,977,456
Issue
price
$
-
9,017,161
(i)
(ii)
(iii)
(iv)
4,242,424
11,119,252
7,637,472
-
-
$0.165
$0.165
$0.165
-
-
700,000
1,834,676
1,260,183
(32,501)
3,641
Closing balance at 30 June 2009
83,976,604
12,783,160
(i)
On 16 March 2009, the Company issued ordinary shares 4,242,424 to a range of institutional
investors by way of a placement pursuant to section 708 of the Corporations Act at a price of 16.5
cents.
(ii) On 17 July 2009, the Company issued 11,119,252 ordinary shares at a price of 16.5 cents pursuant to
the Non-Renounceable Entitlement Issue Prospectus dated 11 May 2009.
(iii) On 30 June 2009, the Company issued 7,637,472 ordinary shares at a price of 16.5 cents pursuant to
the Non-Renounceable Entitlement Issue Prospectus dated 11 May 2009.
(iv) Deferred tax recognised directly in equity relating to equity raising costs
Ordinary shares participate in dividends and the proceeds on winding up of the Company in
proportion to the number of shares held and in proportion to the amount paid up on the shares held.
At shareholders meetings each ordinary share is entitled to one vote in proportion to the paid up
amount of the share when a poll is called, otherwise each shareholder has one vote on a show of
hands.
39
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
14.
ISSUED CAPITAL
(a) Capital risk management
The Company’s objectives when managing capital are to safeguard their ability to continue as a going
concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the Company’s activities, being mineral exploration, the Company does not have
ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the
focus of the Company’s capital risk management is the current working capital position against the
requirements of the Company to meet exploration programmes and corporate overheads. The Company’s
strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a
view to initiating appropriate capital raisings as required.
The working capital position of the Company and the parent entity at 30 June 2009 and 30 June 2008 are
as follows:
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Working capital position
15. OPTION RESERVE
Economic Entity
Parent Entity
2009
$
2008
$
3,816,351
140,237
(616,860)
3,339,728
2,072,718
2,177,741
(1,307,767)
2,942,692
2009
$
3,816,351
139,037
(616,860)
3,338,528
2008
$
2,072,718
2,176,967
(1,307,767)
2,941,918
Economic Entity
Parent Entity
2009
$
7,421,043
2008
$
7,421,043
2009
$
7,421,043
2008
$
7,421,043
This reserve is used to record the value of equity benefits provided to the employees and directors as
part of their remuneration.
16. RETAINED PROFITS/
(ACCUMULATED LOSSES
Retained profits/(Accumulated losses) at
the beginning of the financial period
Net profit/(loss) attributable to members
Retained profits/(Accumulated losses) at
the end of the financial period
Economic Entity
Parent Entity
2009
$
2008
$
2009
$
2008
$
(986,104)
(5,290,296)
(2,520,540)
1,534,436
(5,954,367)
(6,141,941)
(3,121,864)
(2,832,503
(6,276,400)
(986,104)
(12,096,308)
(5,954,367)
40
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
17. FINANCIAL INSTRUMENTS
The Company’s principal financial instruments comprise receivables, payables, available for sale
investments, cash and short-term deposits.
The Board of Directors has overall responsibility for the oversight and management of the
Company’s exposure to a variety of financial risks (including fair value interest rate risk, credit
risk, liquidity risk and cash flow interest rate risk).
The Company’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
Company.
Interest rate risks
The Company’s exposure to market interest rates relates to cash deposits held at variable rates.
The Board constantly analyses its interest rate exposure. Within this analysis consideration is
given to potential renewals of existing positions.
Credit risk
The maximum exposure to credit risk at balance date is the carrying amount (net of provision
of doubtful debts) of those assets as disclosed in the balance sheet and notes to the financial
statements. The Company has adopted a policy of only dealing with creditworthy counterparties
and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of
financial loss from defaults. The Company’s exposure and the credit ratings of its counterparties
are continuously monitored and the aggregate value of transactions concluded are spread
amongst approved counterparties.
Liquidity risk
The responsibility for liquidity risk management rests with the Board of Directors. The
Company manages liquidity risk by maintaining sufficient cash or credit facilities to meet the
operating requirements of the business and investing excess funds in highly liquid short term
investments.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest
rates and equity prices will affect the Company’s income or the value of its holdings of financial
instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return.
Sensitivity Analysis
Interest Rate Risk and Price Risk
The group has performed sensitivity analysis relating to its exposure to interest rate risk,
foreign currency risk and price risk at balance date. This sensitivity analysis demonstrates
the effect on the current year results and equity which could result from a change in these
risks.
41
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
17. FINANCIAL INSTRUMENTS (Cont’d)
Interest Rate Sensitivity Analysis
At 30 June 2009, the effect on profit as a result of changes in the interest rate, with all other
variables remaining constant would be as follows:
Change in profit/loss
—
—
Increase in interest rate by 1.0%
Decrease in interest rate by 1.0%
2009
$
38,163
(38,163)
2008
$
20,722
(20,722)
Price Sensitivity Analysis
Management believes the estimated fair values resulting from the valuation of listed investments
and recorded in the balance sheet and the related changes in fair values recorded in the income
statement are reasonable and the most appropriate at balance sheet date. At 30 June 2009, the
effect on profit as a result of changes in the ASX All Ordinaries, with all other variables
remaining constant would be as follows:
2009
$
2008
$
Change in profit/loss
—
—
Increase in ASX all ordinaries by 10%
Decrease in ASX all ordinaries 10%
Maturity profile of financial instruments
The following table details the Company’s exposure to interest rate risk as at 30 June 2009:
484,474
(484,474)
78,876
(78,876)
2009
Floating
Interest
Rate
$
Fixed
Interest
maturing
in 1 year
or less
$
Fixed
Interest
maturing
over 1 to 5
years
Non-
interest
bearing
Total
$
$
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Financial assets
Weighted average
Interest rate
Financial Liabilities
Trade and other
payables
Weighted average
interest rate
58,483
3,757,373
-
495
3,816,351
-
-
58,483
-
-
-
3,757,373
1.21%
57,505
-
57,505
140,237
197,742
788,767
929,499
788,767
4,802,860
616,860
616,860
616,860
616,860
-
-
-
-
42
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
17. FINANCIAL INSTRUMENTS (Cont’d)
The following table details the Company’s exposure to interest rate risk as at 30 June 2008:
2008
Floating
Interest
Rate
$
Fixed
Interest
maturing
in 1 year
or less
$
Fixed
Interest
maturing
over 1 to 5
years
$
Non-
interest
bearing
2008
Total
$
$
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Financial assets
Weighted average
Interest rate
Financial Liabilities
Trade and other
payables
Weighted average
interest rate
(b) Net Fair Values
25,078
2,047,145
-
495
2,072,718
-
-
25,078
-
2,047,145
1.25%
7.55%
56,605
-
56,605
2,927,741
4,844,744
7,772,980
2,984,346
4,844,744
9,901,808
-
-
-
-
-
-
-
-
-
1,307,767
1,307,767
1,307,767
1,307,767
-
The carrying value and net fair values of financial assets and liabilities at balance date are:
2009
Carrying
Amount
$
Net fair
Value
$
2008
Carrying
Amount
$
Net fair
Value
$
On-balance sheet financial instruments
Financial assets
Cash and deposits
Receivables
Investments
Financial liabilities
Payables
3,816,351
197,742
788,767
3,816,351
197,742
788,767
2,072,718
2,984,346
4,844,744
2,072,718
2,984,346
4,844,744
4,802,860
4,802,860
9,901,808
9,901,808
616,860
616,860
1,307,767
1,307,767
616,860
616,860
1,307,767
1,307,767
43
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
18. EARNINGS PER SHARE
Economic
Entity
2009
$
2008
$
(a)
Earnings / (Loss) used in the calculation of basic EPS
(5,290,295)
1,534,436
(b) Weighted average number of ordinary shares outstanding during the period used
in the calculation of basic earnings per share:
62,431,184
59,722,250
Number of
Shares
Number of
Shares
19. CASH FLOW INFORMATION
(i) Reconciliation of cash flows from
operating activities with profit/(loss) after
income tax
- Profit / (Loss) after income tax
Non operating cash flows in loss for the year
- Depreciation
- (Profit)/Loss on sale of shares
- Employee equity settled transactions
- Share based payments
- Fair value adjustment to investments
- Provision for diminution of loans
- Profit on sale of tenements
- Exploration write-off
- Management fees received
Economic Entity
2008
2009
$
$
Parent Entity
2009
$
2008
$
(5,290,295)
1,534,436
(6,141,941)
(2,832,503)
25,508
1,178,943
-
-
3,055,420
-
(890,429)
1,347,773
(62,193)
28,079
(54,696)
525,000
131,597
1,457,244
-
(4,482,483)
168,813
(408,371)
25,508
986,360
-
-
2,484,368
2,537,906
(70,000)
515,210
(41,784)
28,079
3,318
525,000
131,597
833,595
3,425,314
(2,493,575)
48,477
(400,113)
Changes in assets and liabilities
- Decrease/(Increase) in receivables &
prepayments
- Increase/(Decrease) in trade and other
creditors, accruals and employee
entitlements
- Movement in provisions
- Decrease/(Increase) in exploration
- Decrease/(Increase) in deferred tax assets
- Decrease/(Increase) in deferred tax liabilities
Net cash inflows (outflows) from
operating Activities
1,100,073
(100,802)
355,471
(65,774)
(535,198)
(8,244)
(2,755,391)
(1,871,672)
203,507
498,102
27,285
(2,825,464)
343,016
(32,360)
(285,167)
(8,244)
(629,644)
(916,038)
(147,213)
261,460
27,285
(1,083,166)
455,360
(262,633)
(4,502,198)
(3,190,604)
(1,335,208)
(1,398,279)
(ii) Non-cash financing and investing activities
Share based payments (note 26)
-
656,597
-
656,597
44
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
20.
COMMITMENTS
On 10 November 2003 the economic entity entered into a lease agreement with Giorgio Longo and
Clotilda Aurora Longo for the premises known as entire First Floor, 22 Oxford Close, Leederville,
Western Australia. The initial term, is for two (2) years expiring on 30 September 2006 in
consideration for a rental fee of $30,000 per annum. The economic entity has negotiated an
extension of the lease agreement with Giorgio Longo until 30 September 2010 for a rental fee of
$60,000 per annum
In order to maintain rights of tenure to mining tenements, the economic entity would have the
following discretionary exploration expenditure 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:
Not longer than one year
Longer than one year, but not longer than
five years
Longer than five years
Economic Entity
2008
2009
$
2009
Patent Entity
2008
$
5,335,168
597,676
-
5,932,844
2,741,354 3,038,275
171,528
988,718
-
-
3,730,072 3,209,803
823,327
584,974
-
1,408,301
At the moment the economic entity has commitments in excess of cash, however the Board
believes it will be able to raise the additional funds to satisfy the commitments for the future.
If the economic entity decides to relinquish certain leases and/or does not meet these obligations,
assets recognised in the balance sheet may require review to determine the appropriateness of
carrying values. The sale, transfer or farm-out of exploration rights to third parties will reduce or
extinguish these obligations.
21.
CONTROLLED ENTITIES
Parent Entity
Country of Incorporation
Consolidated Entity Interest
2009
2008
Cazaly Resources Limited
Australia
Controlled Entities
Hayes Mining Pty Ltd
Cazaly Iron Pty Ltd
Sammy Resources Pty Ltd
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
On 1 July 2005 the parent entity acquired 100% of Cazaly Iron Pty Ltd, with Cazaly
Resources Ltd entitled to all profits earned from 1 July 2005, for purchase consideration of
$1.00
22.
SEGMENT INFORMATION
The economic entity operates predominantly in one geographical segment, being Western
Australia, and in one industry, mineral mining and exploration.
45
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
23.
EVENTS SUBSEQUENT TO REPORTING DATE
On 3 July, the Company issued 1,577,940 Shares and 788,971 Options exercisable at 20 cents on
or before 28 February 2011 as part of the shortfall from its Non-Renounceable Entitlement Issue
offered pursuant to the Prospectus dated 11 May 2009.
On 15 July, the Company issued 860,758 Shares and 430,380 Options exercisable at 20 cents on
or before 28 February 2011 as part of the shortfall from its Non-Renounceable Entitlement Issue
offered pursuant to the Prospectus dated 11 May 2009.
On 28 July, the Company issued 544,538 Shares and 272,269 Options exercisable at 20 cents on
or before 28 February 2011 being the balance of the shortfall from its Non-Renounceable
Entitlement Issue offered pursuant to the Prospectus dated 11 May 2009.
Between the 15 July and 1 September, 8,501 Shares on exercise of 8,501 Options exercisable at
20 cents on or before 28 February 2011.
On 7 September 2009, the Company issued 2,377,040 to Gondwana Resources Limited as part
consideration for their acquisition of the remaining interest in the Parker Range Iron project.
On 8 September 2009, the Company issued 680,450 to William Robert Richmond as part
consideration for the acquisition of the remaining interest in the Parker Range Iron project to take
the Company’s ownership to 100%.
Apart from the above, no other matters or circumstances have arisen since the end of the financial
period which significantly affected or may significantly affect the operations of the Company, the
results of those operations, or the state of affairs of the Company in future financial years.
46
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
24.
RELATED PARTY INFORMATION
Transactions between related parties are on commercial terms and conditions, no more
favourable than those available to other parties unless otherwise stated.
Transactions with related entities:
(i)
Director related Entities
Remuneration (excluding the reimbursement of costs) received or receivable by the directors of
the Economic entity and aggregate amounts paid to superannuation plans in connection with the
retirement of directors are disclosed in Note 4 to the accounts.
Mr McMahon is a director and shareholder of Catalyst Metals Limited (“Catalyst”) and Hodges
Resources Limited (“Hodges”). Catalyst and Hodges have an agreement based on normal
commercial terms and conditions to reimburse Cazaly for office rental and administration and
overheads.
Mr Jones is a director and shareholder of Cortona Resources Limited (“Cortona”). Cortona has
an agreement based on normal commercial terms and conditions to reimburse Cazaly for office
rental and administration and overheads.
Mr McMahon and Mr Jones are directors and shareholders of Bannerman Resources Limited
(“Bannerman”). Bannerman has an agreement based on normal commercial terms and conditions
to reimburse Cazaly for office rental and administration and overheads.
Aggregate amounts of each of the above types of other transaction with key management
personnel of Cazaly Resources Limited:
Sales
Rent, administrative and office overheads:
Catalyst Metals Limited
Hodges Resources Limited
Bannerman Resources Limited
Cortona Resources Limited
2009
$
2008
$
30,966
42,584
66,557
23,445
25,559
43,144
30,102
38,501
47
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
26.
SHARE BASED PAYMENTS
Options are issued to vendors as part of purchase consideration and also to directors and employees
as part of their remuneration as disclosed in Note 4. The options issued may be subject to
performance criteria, and are issued to directors and employees of Cazaly Resources Limited to
increase goal congruence between executives, directors and shareholders.
The following table illustrates the number and weighted average exercise prices of and movements
in share options issued under Share Based Payment Scheme during the year:
2009
2008
At beginning of reporting period
Granted during the period
- Employee & consultants options
- Director remuneration
- Exercised
- Expired
Balance the end of reporting period
Weighted
Average
Exercise Price
$
0.94
-
-
-
0.29
1.20
Number of
Options
8,575,000
-
-
-
(2,900,000)
5,675,000
Exercisable at end of reporting period
5,675,000
Weighted
Average
Exercise Price
$
0.88
0.40
0.75
0.30
0.94
0.94
Number of
Options
13,025,000
400,000
2,500,000
(2,350,000)
(5,000,000)
8,575,000
8,575,000
(i)
(ii)
(iii)
The compensation options outstanding at 30 June 2009 had a weighted average exercise price between
$0.19 and $0.86 and a weighted average remaining life between 0.16 years and 5 years.
The respective weighted average fair values of options granted during 2009 were $0.2251.
Included under employee benefits expense in the income statement is Nil (2008: $656,597), and relates
to equity-settled payment transactions.
48
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
27.
CHANGE IN ACCOUNTING POLICY
The AASB has issued new, revised and amended standards and interpretations that have mandatory application
dates for future reporting periods. The Group has decided against early adoption of these standards. A
discussion of those future requirements and their impact on the Group follows:
• AASB 3: Business Combinations, AASB 127: Consolidated and Separate Financial Statements, AASB 2008-
3: Amendments to Australian Accounting Standards arising from AASB 3 and AASB 127 [AASBs
1,2,4,5,7,101,107, 112, 114, 116, 121, 128, 131, 132, 133, 134, 136, 137, 138 & 139 and Interpretations 9 &
107] (applicable for annual reporting periods commencing from 1 July 2009) and AASB 2008-7:
Amendments to Australian Accounting Standards – Cost of an Investment in a Subsidiary, Jointly Controlled
Entity or Associate [AASB 1, AASB 118, AASB 121, AASB 127 & AASB 136] (applicable for annual
reporting periods commencing from 1 January 2009). These standards are applicable prospectively and so
will only affect relevant transactions and consolidations occurring from the date of application. In this regard,
its impact on the Group will be unable to be determined. The following changes to accounting requirements
are included:
— acquisition costs incurred in a business combination will no longer be recognised in goodwill but will be
expensed unless the cost relates to issuing debt or equity securities;
— contingent consideration will be measured at fair value at the acquisition date and may only be
provisionally accounted for during a period of 12 months after acquisition;
— a gain or loss of control will require the previous ownership interests to be remeasured to their fair value;
— there shall be no gain or loss from transactions affecting a parent’s ownership interest of a subsidiary with
all transactions required to be accounted for through equity (this will not represent a change to the
Group’s policy);
— dividends declared out of pre-acquisition profits will not be deducted from the cost of an investment but
will be recognised as income;
— impairment of investments in subsidiaries, joint ventures and associates shall be considered when a
dividend is paid by the respective investee; and
— where there is, in substance, no change to Group interests, parent entities inserted above existing groups
shall measure the cost of its investments at the carrying amount of its share of the equity items shown in
the balance sheet of the original parent at the date of reorganisation.
The Group will need to determine whether to maintain its present accounting policy of calculating goodwill
acquired based on the parent entity’s share of net assets acquired or change its policy so goodwill recognised
also reflects that of the non-controlling interest.
• AASB 8: Operating Segments and AASB 2007-3: Amendments to Australian Accounting Standards arising
from AASB 8 [AASB 5, AASB 6, AASB 102, AASB 107, AASB 119, AASB 127, AASB 134, AASB 136,
AASB 1023 & AASB 1038] (applicable for annual reporting periods commencing from 1 January 2009).
AASB 8 replaces AASB 114 and requires identification of operating segments on the basis of internal reports
that are regularly reviewed by the Group’s Board for the purposes of decision making. While the impact of
this standard cannot be assessed at this stage, there is the potential for more segments to be identified. Given
the lower economic levels at which segments may be defined, and the fact that cash generating units cannot
be bigger than operating segments, impairment calculations may be affected. Management does not presently
believe impairment will result however.
• AASB 101: Presentation of Financial Statements, AASB 2007-8: Amendments to Australian Accounting
Standards arising from AASB 101, and AASB 2007-10: Further Amendments to Australian Accounting
Standards arising from AASB 101 (all applicable to annual reporting periods commencing from 1 January
2009). The revised AASB 101 and amendments supersede the previous AASB 101 and redefines the
composition of financial statements including the inclusion of a statement of comprehensive income. There
will be no measurement or recognition impact on the Group. If an entity has made a prior period adjustment
or reclassification, a third balance sheet as at the beginning of the comparative period will be required.
49
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2009
• AASB 123: Borrowing Costs and AASB 2007-6: Amendments to Australian Accounting Standards arising
from AASB 123 [AASB 1, AASB 101, AASB 107, AASB 111, AASB 116 & AASB 138 and Interpretations
1 & 12] (applicable for annual reporting periods commencing from 1 January 2009). The revised AASB 123
has removed the option to expense all borrowing costs and will therefore require the capitalisation of all
borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset.
Management has determined that there will be no effect on the Group as a policy of capitalising qualifying
borrowing costs has been maintained by the Group.
• AASB 2008-1: Amendments to Australian Accounting Standard – Share-based Payments: Vesting Conditions
and Cancellations [AASB 2] (applicable for annual reporting periods commencing from 1 January 2009).
This amendment to AASB 2 clarifies that vesting conditions consist of service and performance conditions
only. Other elements of a share-based payment transaction should therefore be considered for the purposes of
determining fair value. Cancellations are also required to be treated in the same manner whether cancelled by
the entity or by another party.
• AASB 2008-5: Amendments to Australian Accounting Standards arising from the Annual Improvements
Project (July 2008) (AASB 2008-5) and AASB 2008-6: Further Amendments to Australian Accounting
Standards arising from the Annual Improvements Project (July 2008) (AASB 2008-6) detail numerous non-
urgent but necessary changes to accounting standards arising from the IASB’s annual improvements project.
No changes are expected to materially affect the Group.
• AASB 2008-13: Amendments to Australian Accounting Standards arising from AASB Interpretation 17 –
Distributions of Non-cash Assets to Owners [AASB 5 & AASB 110] (applicable for annual reporting periods
commencing from 1 July 2009). This amendment requires that non-current assets held for distribution to
owners to be measured at the lower of carrying value and fair value less costs to distribute.
• AASB Interpretation 17: Distributions of Non-cash Assets to Owners (applicable for annual reporting periods
commencing from 1 July 2009). This guidance applies prospectively only and clarifies that non-cash
dividends payable should be measured at the fair value of the net assets to be distributed where the difference
between the fair value and carrying value of the assets is recognised in profit or loss.
50
Independent Auditor’s Report
To the Members of Cazaly Resources Limited
We have audited the accompanying financial report of Cazaly Resources Limited (the company) and
Cazaly Resources Limited and Controlled Entities (the consolidated entity), which comprises the balance
sheet as at 30 June 2009, and the income statement, statement of changes in equity and cash flow
statement for the year ended on that date, a summary of significant accounting policies and other
explanatory notes 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 and fair presentation of the financial
report in accordance with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining
internal control relevant to the preparation and fair presentation of the financial report that is free from
material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances. In Note 1, the
directors also state, in accordance with Accounting Standards AASB 101: Presentation of Financial
Statements, that compliance with the Australian equivalents to International Financial Reporting
Standards (IFRS) ensures that the financial report, comprising the financial statements and notes,
complies with IFRS.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. These Auditing Standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit
to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In
making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
and fair presentation of the financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by the directors, as well as evaluating the overall
presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit, we followed applicable independence requirements of Australian professional
ethical pronouncements and the Corporations Act 2001.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
Auditor's Opinion
In our opinion:
a. The financial report of Cazaly Resources Limited and Cazaly Resources Limited and Controlled Entities (the consolidated
entity), is in accordance with the Corporations Act 2001, including:
i.
ii.
giving a true and fair view of the company’s and consolidated entity's financial position as at 30 June 2009 and of its
performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) 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 within the report of the directors for the year ended 30 June 2009. 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.
Auditor’s Opinion
In our opinion the Remuneration Report of Cazaly Resources Limited for the year ended 30 June 2009, complies with
section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
RANKO MATIC
Director
DATED at PERTH this 22nd day of September 2009
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
ADDITIONAL SHAREHOLDER INFORMATION
Shareholding
The distribution of members and their holdings of equity securities in the company as at 18 September
2009 was as follows:
Class of Equity Securities
Number Held as at 18 September 2009
Fully Paid Ordinary
Shares
Listed Options
($0.20 expiring 28
February 2011)
1-1,000
1,001 - 5,000
5,001 – 10,000
10,001 - 100,000
100,001 and over
TOTALS
292
976
490
778
140
2,676
275
221
51
113
27
687
Substantial Shareholders
Substantial shareholders in the Company are set out below
Shareholder
Clive Jones
Nathan McMahon
Unquoted Securities
Class of Equity Security
24 January 2010 Options - $0.5236
5 October 2011 Options - $0.8036
30 November 2009 Options - $1.9436
19 June 2012 Options - $0.86
14 September 2012 Options - $0.39
26 October 2012 Options - $0.45
30 November 2009 Options - $0.75
22 May 2013 Options - $0.30
Number
75,000
100,000
2,200,000
250,000
75,000
225,000
2,500,000
100,000
Number
7,453,338
8,500,358
Number of Security
Holders
1
2
3
2
1
2
3
1
54
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
ADDITIONAL SHAREHOLDER INFORMATION (Cont.)
Voting Rights
The voting rights attached to each class of equity security are as follows:
Ordinary Shares
- Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a
meeting or by proxy has one vote on a show of hands.
Quoted and Unquoted Options
- These options have no voting rights.
Twenty Largest Shareholders
The names of the twenty largest ordinary fully paid shareholders as at 18 September 2009 are as follows:
Name
Number of Ordinary
Fully Paid Shares Held
% Held of Issued
Ordinary Capital
Mr Clive Bruce Jones
Nathan Bruce McMahon
Kingsreef Pty Ltd
Gondwana Resources Limited
Citicorp Nominees Pty Ltd
BT Portfolio Services Limited
Mr Clive Bruce Jones
Mrs Karen Cameron Murie
Mr Kent Michael Hunter
Apollinax Inc
Fusion Resources Ltd
UBS Wealth Management Australia
Nominees Pty Ltd
Mr Mervyn Ian Leo Bassett & Mrs Shirley
Ethel Bassett
Jeff Towler Building Pty Ltd
Merrill Lynch (Australia) Nominees Pty Ltd
Newton2 Pty Ltd
William Robert Richmond
Cleland Projects Pty Ltd
Widerange Corporation Pty Ltd
Red Emperor Resources NL
5,453,336
3,600,002
3,540,355
2,377,040
2,190,098
2,108,082
1,333,334
1,190,000
1,165,646
1,000,000
1,000,000
838,000
800,000
701,478
699,666
698,167
680,450
650,000
600,000
586,667
6.058
3.999
3.933
2.640
2.433
2.342
1.481
1.322
1.295
1.111
1.111
0.931
0.889
0.779
0.777
0.776
0.756
0.722
0.666
0.652
TOTAL
31,212,321
34.670
55
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
ADDITIONAL SHAREHOLDER INFORMATION (Cont.)
Twenty Largest Shareholders
The names of the twenty largest listed option shareholders as at 18 September 2009are as follows:
Name
Slade Technologies Pty Ltd
Queensway Investments Pty Ltd
BT Portfolio Services Ltd
Mr Clive Bruce Jones
Mr Nathan Bruce McMahon
Cangu Pty Limited
Bellset Nominess Pty Ltd
BT Portfolio Services Limited
UBS Wealth Management Australia
Nominees Pty Ltd
Mr Brendon Chevely Deshon
Jeff Towler Building Pty Ltd
Mr Justin Anthony Virgin
Citicorp Nominees Pty Limited
Kingsreef Pty Ltd
Dr Alastair Rowland Brown
Mr Phil Miolin
Mr Clive Bruce Jones
Pylara Pty Ltd
Mervyn Ian Bassett & Shirley Ethel Bassett
A22 Pty Ltd
Number of Ordinary
Fully Paid Shares Held
% Held of Issued
Ordinary Capital
896,711
775,000
751,011
681,668
450,001
342,975
303,030
303,029
300,000
295,000
250,000
242,424
193,142
183,801
176,515
173,863
166,667
155,000
150,000
150,000
6.907
5.969
5.785
5.251
3.466
2.642
2.334
2.334
2.311
2.272
1.926
1.867
1.488
1.416
1.360
1.339
1.284
1.194
1.155
1.155
TOTAL
6,939,837
53.454
56
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
CORPORATE GOVERNANCE
The Company is committed to implementing the highest standards of corporate governance. In determining what those
high standards should involve the Company has turned to the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations, 2nd Edition. The Company is pleased to advise that the Company’s
practices are largely consistent with those ASX guidelines. As consistency with the guidelines has been a gradual
process, where the Company did not have certain policies or committees recommended by the ASX Corporate
Governance Council (the Council) in place during the reporting period, we have identified such policies or committees.
The Board of Directors of Resources Limited is responsible for corporate governance of the Company. The Board
guides and monitors the business and affairs of Cazaly Resources Limited on behalf of the shareholders by whom they
are elected and to whom they are accountable.
Where the Company’s corporate governance practices do not correlate with the practices recommended by the Council,
the Company is working towards compliance however it does not consider that all the practices are appropriate for the
Company due to the size and scale of Company operations.
For further information on corporate governance policies adopted by Cazaly Resources Limited, refer to our website:
www.cazalyresources.com.au.
Board Objectives
The Board will develop strategies for the Company, review strategic objectives, and monitor the performance against
those objectives. The overall goals of the corporate governance process are to:
•
•
•
drive shareholders value;
assure a prudential and ethical base to the Company’s conduct and activities; and
ensure compliance with the Company’s legal and regulatory obligations.
Principle 1: Lay solid foundations for management and oversight
The board has adopted a Charter that sets out the roles and responsibilities of the board. This may be viewed at the
Corporate Governance page of the Company’s website. The Charter includes, amongst other things that the Board will:
•
•
•
•
•
•
•
developing initiatives for profit and assets growth;
reviewing the corporate, commercial and financial performance of the Company on a regular basis;
acting on behalf of, and being accountable to, the Shareholders;
identifying business risks and implementing actions to manage those risks; and
developing and effecting management and corporate systems to assure quality
reviewing the Company’s systems of risk management and internal compliance and control, codes of
conduct and legal compliance
ensuring that policies and procedures are in place consistent with the Company’s objectives, and ensuring the
Company and its officers act legally, ethically and responsibly in all matters
The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate
Directors’ participation in Board discussions on a fully informed basis.
Senior Executives evaluation
The Board consists of three (3) members, two of which hold executive roles as Joint Managing Directors. The board
therefore undertakes ongoing self-assessment and review of performance of the Board, and individual directors
annually. The Chairman of the Board is responsible for determining the process for evaluating Board performance.
To facilitate optimal performance, the Executives participate in professional development programs.
57
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
CORPORATE GOVERNANCE
Principle 2: Structure the board to add value
Composition
The board currently consists of three directors, two executives and one non-executive. Details of their experience,
qualifications and committee memberships are set in the directors report. All directors were in office at the date of this
report:
Clive Jones – Managing Director
Executive Director since August 2003
Term in office – 73 months
Nathan McMahon – Managing Director
Executive Director since June 2003
Term in office - 75 months
Kent Hunter
Independent Non-executive director since August 2003
Term in office – 73 months
Appointment
Election of Board members is substantially the province of the Shareholders in general meeting. However, the
Company commits to the following principles:
•
•
the Board to comprise of Directors with a blend of skills, experience and attributes appropriate for the Company
and its business;
the principal criterion for the appointment of new Directors being their ability to add value to the Company and
its business.
Board Independence
The Board has accepted the ASX Corporate Governance Councils definition of an Independent Director contained in
their report titled “Corporate Governance Principles and Recommendations, 2nd Edition.”.
Mr Hunter is a Non-Executive Director and is considered to be Independent. In reaching that determination, the Board
has taken into account:
• The specific disclosures made in accordance with the Corporations Act, but each such director in respect of
any material contract or relationship
• That no such director is, or is associated directly with, a substantial shareholder of the company
• Where applicable, the related party dealings referable to each such Director, noting that those dealings are not
material under accounting standards. Full details of related party dealings are set out in the notes to the
financial statements
• That no such non-executive Director has within the last three years been employed in an executive capacity by
the company
• That no such non-executive Director is , or is associate with a supplier or customer of the company which is
material under accounting standards
• That such non-executive Director’s are free from any interest and any business or other relationship which
could, or could reasonable be perceived to, materially interfere with the director’s ability to act in the best
interests of the Company.
Under the accounting standards, a matter is considered to be material if it is equal to or greater than 10% of the
appropriate base amount.
58
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
CORPORATE GOVERNANCE
Mr McMahon is an Executive Director of the Company and does not meet the Company’s criteria for independence.
Mr McMahon’s experience and knowledge of the Company make his contribution to the Board such that it is
appropriate for him to remain on the Board.
Mr Jones is an Executive Director of the Company and does not meet the Company’s criteria for independence.
Mr Jones experience and knowledge of the Company make his contribution to the Board such that it is appropriate for
him to remain on the Board.
Given the size of the company and the industry in which is operates, the current Board structure is considered to best
serve the Company in meeting its objectives, given its small capitalisation, limited resources and existing operations.
The composition of the Board is reviewed on an annual basis to ensure that the Board has the appropriate mix of
expertise and experience.
Independent professional advice
There are procedures in place, as agreed by the board, to enable directors to seek independent professional advice on
issues arising in the course of their duties at the company’s expense.
Remuneration and Nomination Committee
As the entire board consist of three (3) members, the Company does not have a Remuneration and Nomination
Committee. The Directors believe given the size and scope of the operations of the Company, it is sufficient for the full
board to assume those responsibilities that are ordinarily assigned to a remuneration and nomination committee.
Where appropriate, independent consultants are engaged to identify possible new candidates for the Board.
Nomination Arrangements
Where a vacancy is considered to exist, the Board will select an appropriate candidate through consultation with
external parties and consideration of the needs of shareholders and the Company. Such appointments will be referred to
shareholders for re-election at the next annual general meeting. All Directors, except the Managing Director, are
subject to re-election by shareholders at least every three years.
When a vacancy exists, through whatever cause, or where it is considered that the Board would benefit from the
services of a new director with particular skills, the Board will determine the selection criteria for the position based on
the skills deemed necessary for the Board to best carry out its responsibilities. The Board will then appoint the most
suitable candidate (assuming one is available) who must stand for election at the next annual general meeting.
Performance
During the reporting year the Company did not conduct a formal evaluation of Directors and Executives. The Board
undertakes an annual review of its own performance with external advice as appropriate. To facilitate optimal
performance, the Board participates in professional development programs.
Principle 3: Promote ethical and responsible decision making
Code of Conduct
The Directors, officers and employees of the Company are required to conduct themselves in accordance with the
Company’s Code of Conduct which can be viewed on the Governance Page of the Company’s website.
Share Trading Policy
The Company also has policies concerning trading in the Company’s securities by directors, officers and employees.
This policy can be viewed on the Governance Page of the Company’s website.
Principle 4: Safeguard integrity of financial reporting
Audit Committee
Given the size and scope of the operations of the Company, the full board has assumed those responsibilities that are
ordinarily assigned to a audit committee.
59
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
CORPORATE GOVERNANCE
It is the Board’s responsibility to ensure that an effective internal control framework exists within the Company. This
includes both internal controls to deal with both the effectiveness and efficiency of significant business processes, the
safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial and non
information.
Appointment of auditor
The shareholders in a general meeting are responsible for the appointment of the external auditors of the Company, and
the Board from time to time will review the scope, performance and fees of those external auditors.
Principle 5: Make timely and balanced disclosure
The Board has designated the Managing Directors as the persons responsible for overseeing and coordinating disclosure
of information to the ASX as well as communicating with the ASX. The Company has a Continuous Disclosure Policy
available for viewing on the Governance page of the Company’s website.
Principle 6: Respect the rights of shareholders
The Board of Cazaly is committed to open and effective communication, ensuring all shareholders is informed of all
significant development concerning the Company. The Company has in place an effective Shareholder
Communications Policy. This policy can be viewed on the Governance page of the Company’s website.
Principle 7: Recognise and manage risk
Identification and Management of Risk
The Board’s Charter clearly establishes that it is responsible for ensuring there is a good sound system for overseeing
and managing risk. Due to the size and scale of operations, risk management issues are considered by the Board as a
whole.
The Board’s collective experience will enable accurate identification of the principal risks which may affect the
Company’s business. Management of these risks will be discussed by the Board at periodic (at least annual) strategic
planning meetings. In addition, key operational risks and their management, will be recurring items for deliberation at
Board meetings.
A copy of the Company’s risk management policy can be viewed on the Governance page of the Company’s website.
The Board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that
the group’s objectives and activities are aligned with those risks and opportunities.
The Board has a number of mechanisms in place to ensure that management’s objectives and activities are aligned
with the risks identified by the Board. These include:
• Board receives regular updates on key risks associated with the development of the Company’s Parker
Range Project and has commissioned a Pre-Feasibility on the Parker Range Project, which will also
report on material risk for the project;
•
Implementation of Board-approved annual operating budgets and plans, then monitoring the actual
progress against those; and
The Board will seek to develop a more extensive Risk Management Policy over the coming year, which can then
be used as a guide to be used throughout the company in identifying and communicating business risks.
The Board has received assurance from the Financial Controller and Managing Director that the declarations made in
accordance with section 295A of the Corporation Act 2001 are:
1. founded on a sound system of risk management and internal compliance and control which implements the
policies adopted by the board
2. the Company’s risk management and internal compliance and control system is operating efficiently and
effectively in all material respects.
60
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
CORPORATE GOVERNANCE
Principle 8: Remunerate fairly and responsibly
Remuneration Arrangements
As the entire board consist of three (3) members, the Company does not have a Remuneration and Nomination
Committee. The Directors believe given the size and scope of the operations of the Company, it is sufficient for the full
board to assume those responsibilities that are ordinarily assigned to a remuneration and nomination committee.
Where appropriate, independent consultants are engaged to appropriate levels of remuneration
.
It is the company’s objective to provide maximum stakeholder benefit from the retention of a high quality board by
remunerating directors fairly and appropriately with reference to relevant employment market conditions. To assist in
achieving the objective the Board links the nature and amount of executive directors’ emoluments to the company’s
financial and operational performance. The expected outcomes of this remuneration structure are:
•
•
Retention and motivation of Directors
Performance rewards to allow Directors to share the rewards of the success of Cazaly Resources Limited
The remuneration of an executive director will be decided by the Remuneration and Nomination Committee. In
determining competitive remuneration rates the Committee reviews local and international trends among comparative
companies and the industry generally. It also examines terms and conditions for the employee share option plan.
•
Where applicable, 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, under
the Senior Executive Remuneration Policy the remuneration of senior executive may be comprised of the following:
fixed salary that is determined from a review of the market and reflects core performance requirements and
expectations;
a performance bonus designed to reward actual achievement by the individual of performance objectives and
for materially improved Company performance;
participation in any share/option scheme with thresholds approved by shareholders;
statutory superannuation.
•
•
•
By remunerating senior executives through performance and long-term incentive plans in addition to their fixed
remuneration the Company aims to align the interests of senior executives with those of shareholders and increase
Company performance. During the year there were no Non-Director Executives.
The value of shares and options were they to be granted to senior executives would be calculated using the Black and
Scholes method.
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.
The maximum remuneration of non-executive Directors is the subject of shareholder resolution in accordance with the
Company’s Constitution, and the Corporations Act 2001 as applicable. The appointment of non-executive Director
remuneration within that maximum will be made by the Board having regard to the inputs and value of the Company of
the respective contributions by each non-executive Director. Usually Non-Executive Directors do not receive
performance based bonuses and but may participate in equity schemes of the Company.
The Board may award additional remuneration to non-executive Directors called upon to perform extra services or make
special exertions on behalf of the Company.
There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive directors.
All remuneration paid to directors and executives is valued at the cost to the company and expensed. Options are
valued using the Black-Scholes methodology.
Full details regarding the remuneration of Directors, is included in the Directors’ Report.
61
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
CORPORATE GOVERNANCE
Explanation of departure from the ASX Corporate Governance Principles and Recommendations 2nd Edition
During the financial year Cazaly strived to comply with the 8 Essential Corporate Governance Principles and
Recommendations where appropriate for the size and nature of the Company and Industry in which it operates. A
summary of departure form the ASX Corporate Governance Principles and Recommendations is outlined below:
Best Practice
Recommendation
Notification of
Departure
Explanation of Departure
2.1-2.3 - Structure of
the Board
The majority of
the board are not
independent
directors, the
Chair is does not
meet the criteria
for Independence
and the role of the
Chair and CEO are
exercised by the
same individual
2.4 The board should
establish a
nomination
committee
The Company has
not established a
formal nomination
committee
4.1-4.3 Safeguard
integrity in financial
reporting
The Company has
not established a
formal audit
committee
7.2 Risk Management
System.
The board has not
requested that
management
design and
implement a risk
management and
internal control
system and report
to the board on
whether those
risks are being
managed
effectively.
The Board continues to strive to meet the ASX Corporate Governance
Principles and Recommendations or other such principles and
guidance as the Board may consider appropriate form time to time,
however the Board also recognises that complying the ASX Corporate
Governance Principles and Recommendations 2.1, 2.2 and 2.3 is
impractical given the size of the company and the industry in which it
operates. The Board instead aims to assess the independence of the
Company’s non-executive Director on an ongoing basis requiring full
disclosure where conflicts of interest arise. The Board (subject to
members’ voting rights in general meeting) is responsible for selection
of new board members and succession planning, and has regard to a
candidate’s experience and competence in areas such as exploration,
financial and administration. The wide commercial and technical
experience of Messrs McMahon and Jones assists Cazaly in meeting
its corporate objectives and plans.
The Board continues to strive to meet the ASX Corporate Governance
Principles and Recommendations or other such principles and
guidance as the Board may consider appropriate form time to time,
however the Board also recognises that complying the ASX Corporate
Governance Principles and Recommendation 2.4.is impractical given
the size of the company and the industry in which it operates. The
board consists of three (3) members and therefore the Directors
believe, it is sufficient for the full board to assume those
responsibilities that are ordinarily assigned to a remuneration and
nomination committee
The Board continues to strive to meet the ASX Corporate Governance
Principles and Recommendations or other such principles and
guidance as the Board may consider appropriate form time to time,
however the Board also recognises that complying the ASX Corporate
Governance Principles and Recommendations 4.1-4.3 is impractical
given the size of the company and the industry in which it operates.
The board consists of three (3) members and therefore the Directors
believe, it is sufficient for the full board to assume those
responsibilities that are ordinarily assigned to an audit committee.
The Board continues to strive to meet the ASX Corporate Governance
Principles and Recommendations or other such principles and
guidance as the Board may consider appropriate form time to time,
however the Board also recognises that complying the ASX Corporate
Governance Council Recommendation 7.2.is impractical given the size
of the company and the industry in which it operates. The board
consists of three (3) members, two of which are joint executive
managing directors and therefore the Directors believe, it is sufficient
for the full board to assume the responsibilities of ensuring that risks
and opportunities are identified on a timely basis and that the
Company’s objectives and activities are aligned with those risks and
opportunities.
62
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
8.1 The board should
establish a
remuneration
committee
The Company has
not established a
formal
remuneration
committee
Non-executive
directors received
options
8.2 Clearly
distinguish the
structure of non-
executive directors’
remuneration from
that of executives
The Board continues to strive to meet the ASX Corporate Governance
Principles and Recommendations or other such principles and
guidance as the Board may consider appropriate form time to time,
however the Board also recognises that complying the ASX Corporate
Governance Council Recommendation 8.1is impractical given the size
of the company and the industry in which it operates. The board
consists of three (3) members and therefore the Directors believe, it is
sufficient for the full board to assume those responsibilities that are
ordinarily assigned to a remuneration and nomination committee
The Board continues to strive to meet the ASX Corporate Governance
Principles and Recommendations or other such principles and
guidance as the Board may consider appropriate from time to time,
however during previous reporting periods, the Company has issued
options to Non-Executive Directors. Non-Executive Directors
typically do not participate in equity or option schemes, however the
Board has determined that, consistent with the size of the Company
and the activities focused nature of business and shareholding
structure, the Company will seek shareholder approval for the issue of
share options to Non-Executive Directors from time to time. The
Board believes the options issued to Non-Executive Directors provide
them with a mechanism to participate in the future development of the
Company and act as an incentive for their future involvement with and
commitment to the Company. The Directors believe that the success
of the Company in the future will depend in large part upon the skills
of the people engaged to manage the Company's operations.
Accordingly, it is important that the Company is able to attract and
retain people of the highest calibre. The Directors consider that the
most appropriate means of achieving this is to provide Directors with
an opportunity to participate in the Company's future growth and an
incentive to contribute to that growth and thus to enhance overall
shareholder wealth creation.
63
Annual Financial Report 2009
Cazaly Resources Limited and Controlled Entities
SCHEDULE OF MINERAL TENEMENTS AS AT 18 SEPTEMBER 2009
1 ELA
2 EL's
2 ELA's
1 ELA
1 ELA
1 ELA
1 EL
1 EL
1 ELA
1 ELA
1 ELA
1 ELA
2 ELA's
13 PL's
6 PL's
1 EL
1 EL
PROJECTS
ALICE HILL
AU-7 MILE HILL
TENEMENTS
PROJECTS
TENEMENTS
1 ELA
1 ELA
FE-MININER
FE-MT CECIL RHODES
AU-ALBION DOWNS
4 EL's, 1 PL
FE-MT EVELYN
AU-BULONG
AU-BURBANKS
AU-CARASUE
AU-CARDINIA BORE
AU-CAROSUE
AU-CHADWIN
AU-COOLGARDIE
AU-GOONGARRIE
1 ELA
4 PL's
2 PLA's
9 PL's
2 ELA's
3 PLA's
1 ELA
10 PL's
AU-HIGGINSVILLE
1 EL, 1 ELA
AU-LAKE LEFROY
AU-MT CLIFFORD
AU-MT WELD
AU-RUBY WELL
BIG BEN
BLAIR
1 EL
2 PL's
1 EL
2 ELA's
1 ELA
FE-MT SAMSON
FE-MT WILKINS
FE-MT. STUART
FE-PEEDAMULLA
FE-PILBARA
FE-RED HILL
FE-ROCKLEA
FE-STRAWBERRY
ROCKS
FE-YALLEEN
GRANTS PATCH
HAKE
AU-JILLEWARRA
2 EL's, 1 ELA, 1 PL
FE-WALLAREENYA
FE-RHODES RIDGE
4 ELA's, 29 PLA's
FORRESTANIA
2 EL's, 1 ELA
GOLDEN RIDGE
3 PLA's
BRUMBY WELL
1 ELA
HINKLER WELL
3 EL's, 2 PL's
HILLSIDE (BCI)
BURBIDGE
1 MLA
IOCG-LAKE MACKAY
2 ELA's
CANE GRASS
CARASUE
CARBINE
COSMO NEWBERRY
ETHEL CREEK
EXCLUSION ZONE
4 PL's
2 ELA's
2 PL's
2 EL's
1 ELA
2 ML's
IOCG-POLLOCK HILL
IOCG-WEBB
JUTSON ROCKS
1 ELA
1 EL
2 EL's
KANOWNA LIGHTS
3 ML's, 1 MLA, 2 PL's
KINTORE
5 PLA's
KUNANALLING
FE-BONNEY (BCI)
2 ELA's
KUN-CASTLE HILL
FE-BONNEY DOWNS
2 ELA's
KUN-CUTTERS RIDGE
FE-COONGAN
1 ELA
KUN-KUN - PDAP
FE-GARDEN WELL
1 EL
KUNKUN 100%
14 PL's, 1 PLA
10 ML's, 2 MLA's, 7
PL's
1 ML, 1MLA, 5 PL's, 1
PLA
1 GL, 5 LL's, 16 ML's, 1
MLA, 3 PL's, 2 PLA's
1 EL, 1 LLA, 2 ML's, 1
MLA, 9 PL's, 9 PLA's
FE-HAMERSLEY
1 EL, 2 ELA's, 2 PL's KUN-NORTHLANDER 1 ML, 16 PL's, 4 PLA's
PROJECTS
LYNAS FIND
MAGELLEN
MENZIES
MICK ADAMS
MT GIBSON
MT STUART
MT VETTERS
MT WELD
MURDERERS POOL
NEBO
NT-ACACIA BORE
NT-GENTLE ANNIE
NT-MT ISABEL
NT-QUARTZ HILL
ORA BANDA
PARKER RANGE
QUARTZ CIRCLE
TEN MILE HILL
UR-JAILOR BORE
UR-LAKEWAY
UR-LEOPOLD
DOWNS
UR-MAROON
RANGE
UR-PELLS RANGE
UR-QUARTZ HILL
NT
UR-RAWLINSON
RANGE
UR-YEELERIE STH
VETTERSBURG
WALLBROOK WEST
WEK - 100%
WEK-CARBINE
WEK-GRANTS
PATCH
WEK-ORA BANDA
YILGANGI
TENEMENTS
10 PL's
2 EL's, 3 PL's
6 PL's
1 LLA
2 ELA's
1 ELA
1 EL, 6 PL's
3 ELA's
1 EL
2 EL's
1 EL
3 PL's
1 EL
1 EL
5 PLA's, 32 PL'S
3 EL's, 1 ML, 4MLA's,
12PL's, 8PLA's
2 EL's, 1 MLA, 2 PL's, 7
PLA's
5 PL's
1 EL
4 EL's
2 ELA's
1 EL
1 EL
1 EL
1 EL, 1 ELA
1 EL, 1 ELA
2 ML's, 3 PL's
1 ELA
7 PL's
1 LL, 4 ML's, 1 PL
17 ML's, 9 MLA's, 10
PL's, 2 PLA's
3 ML's, 8 MLA's, 9 PL's
FE-MARILLANA
1 ELA
LOONGANA
1 ELA
1 EL, 1 ML, 1 PL
Notes: EL = Granted Elexploration Licence MLA = Mining Lease Application M = Granted Mining Lease
ELA= Exploration Licence Application P = Granted Prospecting Licence PLA =
The information that relates to exploration targets, exploration results and drilling data of Cazaly operated projects is based on
information compiled by Mr Clive Jones and Mr Gregory Miles who are Members of The Australasian Institute of Mining and
Metallurgy and The Australian Institute of Geoscientists respectively and are employees of the Company. The information that relates
to the Mt Caudan Mineral Resource Estimate has been authorized by Mr Paul Payne who is a member of the Australasian Institute of
Mining and Metallurgy and an employee of Runge Limited. The information that relates to the West Kalgoorlie Project Mineral
Resources has been authorized by Mr Jones and Mr Miles. Both Mr Jones, Mr Miles and Mr Payne have sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify
as a Competent Persons as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr Jones, Mr Miles and Mr Payne consent to the inclusion in their names in the matters based on their
information in the form and context in which it appears.
64