Cazaly Resources Limited
ABN: 23 101 049 334
and
Controlled Entities
Annual Report
For the Year Ended
30 June 2011
CONTENTS
Cazaly Resources Limited Annual Report 2011
Corporate Directory
Directors’ Report
Auditors’ Independence Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Shareholder Information
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66
CORPORATE DIRECTORY
Cazaly Resources Limited Annual Report 2011
MANAGING DIRECTOR
Nathan McMahon
MANAGING DIRECTOR
Clive Jones
NON-EXECUTIVE DIRECTOR
Kent Hunter
COMPANY SECRETARY
Julie Hill
PRINCIPAL & REGISTERED OFFICE
Level 2, 38 Richardson Street
WEST PERTH WA 6005
Telephone: (08) 9322 6283
Facsimile: (08) 9322 6398
AUDITORS
Bentleys
Level 1,
12 Kings Park Road
WEST PERTH WA 6005
SHARE REGISTRAR
Advanced Share Registry Services
150 Stirling Highway
NEDLANDS WA 6009
Telephone: (08) 9389 8033
Facsimile: (08) 9389 7871
STOCK EXCHANGE LISTING
Australian Securities Exchange
(Home Exchange: Perth, Western Australia)
Code: CAZ
BANKERS
National Australia Bank
50 St Georges Terrace
PERTH WA 6000
1
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
Your directors present their report, together with the financial statements of the company
and its controlled entities (“Consolidated Group”) for the financial year ended 30 June 2011.
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
Lisa Wynne held the position of company secretary until her resignation on 7 September
2011. The following person held the position of company secretary at the date of this
report:
Julie Hill
Ms Hill is a Chartered Accountant and Chartered Secretary and has extensive
experience in corporate financial management; administration and finance of ASX
listed companies and corporate governance.
2.
PRINCIPAL ACTIVITIES
The principal activity of the Consolidated Group during the financial period was mineral
exploration.
There were no significant changes in the nature of the Consolidated Group’s principal
activities during the financial period.
3.
OPERATING RESULTS
The profit of the Consolidated Group after providing for income tax amounted to
$1,281,825 (2010: Loss $1,370,163).
4.
DIVIDENDS PAID OR RECOMMENDED
The directors do not recommend the payment of a dividend and no amount has been
paid or declared by way of a dividend to the date of this report.
2
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
5.
REVIEW OF OPERATIONS
Parker Range Iron Ore Project
(CAZ 100%)
On 4 August 2011, the Company announced a conditional sale and an alliance arrangement
over the Parker Range Iron Ore Project.
During the period the Company was advised by the Fremantle Port Authority that it had not
been successful in being allocated any export capacity at the Kwinana Bulk Terminal for its
Parker Range Iron Ore Project. Fremantle Ports has determined that the available export
capacity be allocated to a competing iron ore developer and to, the now foreign owned,
Griffin Coal.
The Company has, however been working on a number of alternate options which are well
advanced. The preferred options from these were incorporated into the Feasibility Study the
results of which show that the project retains very robust project economics.
The project greatly benefits from its close location to existing and accessible infrastructure
including road, rail, port, power and township. This access allows for the relatively rapid
development and ramp up to full production.
The Company preferred option is to export through the port of Esperance at a rate of 4.6
Mtpa.
The study has shown that the Company is on track to become a major iron ore producer in
the Yilgarn region of Western Australia behind Koolyanobbing Operations who have
successfully operated in the region for many years.
SUMMARY OF THE STUDY
The study evaluated several options for development based on the production of single fines
product at varying throughput rates and port scenarios. A summary of the financial
evaluation for the preferred development options is as follows:
Summary Business Cases
Option
Capex
Sales
Cost
NPV9
IRR
Payback
(A$m )
( Mt)
(A$/t)
(A$m)
(%)
(Years )
4.2Mtpa via Esperance
159.8
31.4
59*
384
129
0.92
* includes marketing but excludes royalties
3
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
5.
REVIEW OF OPERATIONS (Cont’d)
The study highlighted Esperance as a sustainable export port option and noted the
advantage of using Cape Sized vessels at the port. Discussions with the relevant
governmental authorities including the Esperance Port have indicated that there is a strong
commitment to further expanding export capacity. Currently the facility is not capable of
handling the 4-5Mt of iron ore that the Company plans to export. However we note recent
announcements outlining $120M of State government funding to upgrade the Esperance Port
Access Corridor and the development of plans to expand the export capacity of the port
including the construction of a new Multi User Iron Ore Export Facility. Discussions with the
Esperance Port Authority have commenced and are ongoing.
Project Management
The study was led by Cazaly Resources and involved a number of experienced sub-
consultants as follows;
Component
Consultant
Tennant Metals / Euromin-Vitol
Runge Ltd
Runge Ltd
Runge Ltd
Marketing and Shipping
Resource Estimation
Mine Design and Schedules
Geotechnical Assessment
Hydrological Assessment and Modelling Rockwater Pty Ltd
Metallurgical Test Work
Engineering and Logistics
Engineering Cost Estimates
Operations
Environmental Surveys
IMO Pty Ltd / Ammtec Laboratories
HWE Mining / Longrun Transport
Intech Engineers Pty Ltd
HWE Mining / Cazaly Resources
Keith Lindbeck & Associates / Botanica
Consulting
Western Heritage Research Pty Ltd
Keith Lindbeck & Associates / Cazaly Resources
Ltd
Suppliers and Contractors
Heritage Surveys
Approvals
Commercial Proposals
Study components of risk management and financial evaluation were undertaken by Cazaly
Resources.
Marketing
The targeted fines only product has several highly favourable chemical properties sought by
Asian steel mills including an ultra-low phosphorous content. Strong expressions of interest
have been received for the product following marketing in Asia and negotiations are greatly
advanced for the sale of iron ore fines from the project.
Parker Range Target Product Specification
Ore Type
Fe CaFe* SiO2 AI2O3
P Mn
LOI
%
%
%
%
%
%
%
Typical
56.4
61.9
6.00
2.50
0.020 1.1 9.10
* CaFe: calcined Fe% grade (ex Loss On Ignition)
4
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
5.
REVIEW OF OPERATIONS (Cont’d)
Technical marketing studies indicate that price realisation for Parker Range Iron Ore Project
(PRIOP) fines is expected to be aligned with Hamersley fines benchmark price (58% Fe grade
adjusted on a FOB basis). The PRIOP fines product is ultra-low in phosphorous with acceptable
level of chemical impurities. The ore has a manganese content to supplement addition
during steel making and has a high LOI with many properties similar to some existing
established Pilbara ore products (eg. Yandicoogina fines). The product will be -12mm in size
with an expected ultra-fines content of 10% representing a high quality sinter feed.
Mineral Resources and Mine Reserves
The Feasibility Study was based upon the independently modelled mineral resource by Runge
Limited using a nominal 50% Fe wireframe for BIF (oxide) and Detrital material with a 51.5%
lower Fe cut-off grade. The resulting Measured, Indicated and Inferred Resource is 35.1 mt @
55.9% Fe as follows;
Mount Caudan Deposit Mineral Resource Estimate (51.5%Fe Cut-off Grade)
Type
Detrital
Oxide
Total
Type
Detrital
Oxide
Total
Type
Detrital
Oxide
Total
Type
Detrital
Oxide
Total
Tonnes
t
3.4
21.0
24.4
Tonnes
t
0.3
7.3
7.7
Tonnes
t
0.3
2.8
3.1
Tonnes
t
4.1
31.1
35.1
nb; figures rounded
Fe
%
54.9
56.2
56.0
Fe
%
52.9
56.8
56.6
Fe
%
54.4
53.9
54.0
Fe
%
54.7
56.1
55.9
SiO2
%
7.2
6.0
6.2
Measured Mineral Resource
P
Al2O3
%
%
0.013
6.4
0.020
2.0
0.019
2.6
Indicated Mineral Resource
SiO2
P
Al2O3
%
%
%
7.7
0.011
7.7
5.9
0.024
2.7
3.0
6.0
0.024
Inferred Mineral Resource
SiO2
P
Al2O3
%
%
%
6.5
0.022
5.2
9.3
0.016
3.4
3.6
9.0
0.017
Total Mineral Resource
P
%
0.014
0.021
0.020
Al2O3
%
6.4
2.3
2.8
SiO2
%
7.2
6.3
6.4
LOI
%
6.4
9.3
8.9
LOI
%
7.0
9.1
9.0
LOI
%
9.7
8.6
8.7
LOI
%
6.8
9.2
8.9
Mn
%
0.6
1.4
1.3
Mn
%
0.8
0.5
0.5
Mn
%
0.1
0.5
0.4
Mn
%
0.6
1.1
1.0
S
%
0.07
0.07
0.07
S
%
0.07
0.09
0.09
S
%
0.10
0.15
0.14
S
%
0.07
0.08
0.08
5
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
5.
REVIEW OF OPERATIONS (Cont’d)
Based on the current Measured and Indicated Resources, Runge Limited completed mine
optimisation, pit designs and planning to provide a mine ore reserve estimate of 31.4 mt @
55.3% Fe (60.7% CaFe) as follows;
Mount Caudan Deposit Ore Reserve Estimate (51.5%Fe Cut-off Grade)
Ore Reserves
Tonnage (mt)
Fe (%) Al2O3 (%)
P (%)
SiO2 (%)
LOI (%)
Proved
Probable
TOTAL
24.1
7.3
31.4
55.3
55.3
55.3
2.9
2.7
2.9
0.02
0.02
0.02
6.9
6.9
6.9
8.9
9.0
8.9
Mn
(%)
1.2
1.2
1.2
S (%)
0.08
0.08
0.08
Contract mining is assumed via conventional open pit mining method, with the Company
managing the mine design, medium and long term planning, grade control, sampling and
ore quality control.
Given the continuity of mineralisation and the close proximity of inferred to indicated material
the Company firmly expects that further planned drilling will readily convert a reasonable
proportion of the inferred resource material, which represents less than 10% of the resource, to
indicated status which can then be considered for conversion to an ore reserve in the future.
Mineral resources based on the limited amount of Inferred Resources are considered too
speculative to be considered for ore reserve estimation. The Measured and Indicated Mineral
Resources are inclusive of those Mineral Resources modified to produce the Ore Reserves.
Metallurgy
Ore characterisation studies for the Feasibility Study have been aimed at further laboratory
scale test work and subsequent pilot scale test work to prove the selected beneficiation flow
sheet for ores with greater than 50% Fe grade. Pilot scale test work has demonstrated a
favourable average performance of: +1.35% Fe, -1.04% SiO2, -0.75% Al2O3 at a 96.0% metal
recovery (with 93.7% mass recovery) to product from total flow sheet feed.
Ore characterisation test work included determination of parameter ranges for density,
crushing work index, abrasion index, ultimate compressive strength and materials handling
characteristics as key inputs for engineering. Based on physical attributes the ore is classified
as soft-moderate in comparison to Pilbara hematite ores and will be amenable to
conventional crushing and screening process technology.
Processing and Infrastructure
The Feasibility Study was based upon a mobile crushing plant producing a single fines
product with a permanent fixed plant inclusive of beneficiation (Stage 2). Road trains will
transport bulk ore 57 km from mine to a new rail head facility located at Moorine Rock. The
transport route development includes the upgrade of existing roads and a new private road
in conjunction with the Shire of Yilgarn and local rural landholders.
It is planned to construct a rail siding interconnecting with the Eastern Goldfields Railway
(EGR) at Moorine Rock. The terminal will include a new stockpile area and automated train
load out facility for loading ore trains.
6
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
5.
REVIEW OF OPERATIONS (Cont’d)
Mine infrastructure includes the progressive development of a powerline from Marvel Loch,
microwave communications, mine workshops, administration, fuel storage, dewatering
borefield, water
supported by a new worker
accommodation village based at the nearby township of Marvel Loch. Rail terminal
infrastructure includes the establishment of a road haulage truck service depot, power
connection and water supply from the nearby mains pipeline.
storage, desalination plant and
Infrastructure and transport operations have been developed in consultation with the Shire of
Yilgarn, Western Power, Water Corporation and contracting community. Rail infrastructure
and above rail freight operations have been developed in consultation with WestNet Rail
and Pacific National respectively.
Operations
The Company and its Operate and Maintain (OM) contractor anticipate employing up to 236
persons is required with up to 147 persons on-site at any one time. Furthermore, during
construction a workforce of up to 250 people will be required to complete the project over a
2 year ongoing construction period.
It is the intention of Cazaly to provide opportunities wherever possible to the local community
in the area. Cazaly will continue to work closely with the Yilgarn Shire Council and community
to provide these opportunities.
Environmental, Heritage, Community and External Approvals
The Mount Caudan deposit and proposed project area is already covered by existing
granted mining leases. Cazaly holds the necessary iron ore mining rights to the project and no
native title claims exist in the area. All environmental baseline studies have been completed
for project assessment.
Consultation has been undertaken with key stakeholders to ensure all impacts can be
adequately identified and managed throughout the approvals process. There exists strong
community support within the Yilgarn region for the project and Cazaly will continue to
consult with the community.
Comment
The Feasibility Study into the Parker Range Iron Ore Project shows it to be a technically and
financially robust project with the ability to produce a highly marketable iron ore fines
product for many years. The project is ideally located, has good local community support
and can be quickly brought into production.
7
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
5.
REVIEW OF OPERATIONS (Cont’d)
Regional Exploration Programme
Further drilling and resource upgrades for the Mt Caudan deposit has confirmed the
robustness of the iron ore deposit and provides confidence to continue exploring the project
for additional iron ore deposits. The Mount Caudan deposit covers 4km of strike of a total
16km within the project boundaries and the Company believes there are good prospects for
finding additional satellite ore deposits to support a mining operation at Mount Caudan.
Based on the size and grade of Mount Caudan the Company considers the Parker Range
Project to have a global exploration target of 60–100Mt of Iron Ore at a grade of 56-58% Fe.
The exploration target is based upon results to date and the geometric extent of the target.
The exploration target includes potential quantity and grade and is conceptual in nature and
it is uncertain if further exploration will result in the determination of further Mineral Resources.
Exploration outside and along strike of the Mount Caudan deposit is a priority particularly at
the Wrathchild Prospect where substantial intersections, including 27m @ 54.2% Fe, have
been previously announced.
Given that most of the 16km long BIF unit has yet to be explored much potential remains in
further expanding resources for the project.
PILBARA IRON PROJECTS
Hamersley Iron Ore Project
(Cazaly reducing to 49% - Winmar Resources Ltd earning an initial 51% interest)
Winmar Resources Limited (ASX:WFE) in conjunction with Cazaly Resources announced a new
Inferred Resource Estimate for the Winmar Deposit at the Hamersley Iron Ore Project following
completion of a 93 hole / 12,805m drill programme. The estimate is based on results received
to date from the RC drilling extension and infill program completed in May 2011. The project
lies approximately 50km NE of the Tom Price township in the Pilbara Region of Western
Australia, is well placed amongst existing infrastructure and lies immediately south of FMG’s
Solomon project.
Winmar Iron Ore Deposit
July 2011 Resource Estimate (COG: 40%Fe Detrital, 52%Fe Channel & Bedded)
Type
Detrital
Channel
Bedded
Total
Tonnes
Mt
29.1
169.3
43.2
241.6
Inferred Mineral Resource
Fe
%
47.1
55.6
54.0
54.3
Al2O3
%
5.6
4.1
4.5
4.3
P
%
0.03
0.04
0.05
0.04
SiO2
%
23.9
10.1
10.0
11.8
LOI
%
2.6
5.7
7.4
5.6
CaFe
%
48.3
59.0
58.3
57.6
CaFe calculated by: (Fe%/(100-LOI%))*100
Mineralisation occurs as three types; an Upper Detrital Zone, a Mid Level CID and a
basement Bedded Iron zone. Of these the CID mineralisation is the most pervasive and
important. The zone contains the bulk of the resource and has favourable chemical
properties.
8
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
5.
REVIEW OF OPERATIONS (Cont’d)
The estimate has been completed with results from just over half of the RC drill program.
Some of those pending results fall outside the current model and may provide further
increases in the near-term. The remainder of the results are from infill holes designed to
improve confidence in the resource model.
The deposit remains open in several areas warranting further exploration. The Detrital
mineralisation has not been a focus of exploration so far and there remains good prospects
of defining further resources as drilling moves away from the valley floor towards the
bounding ranges. Similarly, Bedded mineralisation has not been a focus of this program, but
has been found to extend the full strike of the deposit with many holes terminated in
mineralisation.
Of note is that CID mineralisation has been found to extend beyond the coincident gravity
anomaly which has guided most of the exploration to date. This provides scope not only for
further resource increases at Winmar, but for additional discoveries elsewhere within the
project area.
As a result of the highly successful exploration to date and the revised exploration paradigm,
the Exploration Target for the Project has been upgraded to 350-400mt @ 54-56% Fe (57-60%
CaFe) (see note below) based on the potential for extensions to the known resource. The
Winmar Exploration Target refers to the conceptual extended resource of the Winmar Deposit
and surrounding prospects including detrital, channel and bedded mineralisation, based on
drilling to date; interpreted geological model and complementary geophysics. At the
present time there is insufficient drilling to determine the extended mineral resource estimate
and it is uncertain if further exploration will result in the determination of such a resource.
9
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
5.
REVIEW OF OPERATIONS (Cont’d)
An Order of Magnitude Study utilizing the expertise of Engenium Consultants, has
commenced to investigate the development options of the Winmar Deposit. This new
resource estimate and exploration target will be used in the study.
A programme of PQ Diamond Core drilling has commenced at Winmar to obtain samples to
commence metallurgical testwork.
During the period the Company granted Winmar an option to purchase 100% interest in the
Hamersley iron ore project for an exercise price of $35 million and the grant of a royalty.
Winmar paid an option fee of $100,000 for the one month option which subsequently lapsed.
Earaheedy Iron Ore Project
(Cazaly Resources 50% / Vector Resources 50%)
Significant drill results were returned from a maiden drilling programme at the Earaheedy
Project, northeast of Wiluna, WA. The Earaheedy Project is a 50:50 Joint Venture with Vector
Resources Limited (ASX:VEC). The drilling programme comprised 21 holes for 1,916m, testing a
number of targets at the Project with highly encouraging results coming from the Cecil
Rhodes Prospect. Significant results from the prospect include 34m @ 54.4% Fe (including 22m
@ 58.1% Fe), 22m @ 57.8% Fe and 26m @ 55.1% Fe, all with low levels of contaminants.
Whilst very early days, the Company is encouraged by the results to date which highlight the
potential of the Joint Venture’s portfolio to host large-scale iron ore deposits. Numerous
targets elsewhere in the Project remain to be drill tested. The Joint Venture partners are
currently planning programmes for 2011 including further mapping of the mineralised horizon
at Cecil Rhodes and developing follow-up drill programmes.
Cecil Rhodes Drilling over Aerial Magnetics
10
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
5.
REVIEW OF OPERATIONS (Cont’d)
CORPORATE AND PROJECT DIVESTMENTS
West Kalgoorlie Project
During the period Cazaly sold its interest in the West Kalgoorlie project and its wholly owned
subsidiary, Hayes Mining Pty Ltd to Phoenix Gold Ltd who listed on the ASX on 22nd
December 2010. As consideration for the sale, Cazaly received $1.7m in cash, and shares to
the value of $1.8m in Phoenix. In addition, Cazaly will receive $2.5m in cash upon completion
of drilling and gold production milestones.
Peripheral Projects
During the period, the Company divested a number of projects for cash and share
consideration, including:
Sunrise Dam Project
• Carosue Project
•
• Quart z Hill Project
• McPhersons Reward Project
• Huckitta Project
• Cardinia Bore Project
The Company retains several free-carried interests in joint ventures managed by third parties.
The Company retains expenditure free exposure to exploration success.
Corporate
During the period, the Company entered into a Bridging Facility with a range of Institutions,
Sophisticated Investors and Directors to provide a loan amount of A$2.55 million. Lenders
were issued with 100,000 Cazaly Options for every $100,000 drawn down. The $2.55 million plus
interest was repaid in full during the period.
The Company has further strengthened its exposure to further potential exploration success
through divesting other non-core projects during the period. The Company believes that a
portfolio approach to its suite of iron ore will ultimately provide long term benefits to all
stakeholders.
The Company remains in a strong position with net cash and investments of ~$8M.
Notes:
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 Rob Williams who is a member of the
Australasian Institute of Mining and Metallurgy and an employee of Runge Limited. The information in
this report that relates to the Winmar Deposit Resource Estimate is based on information compiled by
Mr Craig Allison who is a Member of the AusIMM and a full-time employee of Runge Limited, an
independent resource consultancy group. Both Mr Jones, Mr Miles, Mr Williams and Mr Allison 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, Mr Williams and Mr Allison consent to the inclusion in
their names in the matters based on their information in the form and context in which it appears.
11
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
6.
FINANCIAL POSITION
The net assets of the Group have increased by $4.67 million from 30 June 2011 to $25.22 million
in 2011. This increase is largely due to the following factors:
• Proceeds from share issues totalling $2.9m
•
Increased profit for the period through income derived from divesting of non-core
assets
Increased exploration expenditure
Increase holding and appreciation of financial assets held at fair value through profit
and loss.
•
•
The Group has $3.95 million in cash assets as at 30 June 2011.
7.
FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Consolidated Group will continue its mineral exploration activity at and around its
exploration projects with the object of identifying commercial resources.
The Consolidated Group 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.
8.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The following significant changes in the state of affairs of the Consolidated Group occurred
during the financial period:
During the period, the Company issued 12,646,421 ordinary shares following the exercise of
12,646,421 20 cent listed Options expiring 28 February 2011.
On 25 August 2010 the Company issued 1,000,000 ordinary shares to Director Nathan
McMahon following the exercise of 1,000,000 30 cent listed Options expiring 1 July 2011.
On 14 December 2010, the Company issued 250,000 unlisted options exercisable at 53 cents
expiring 18 October 2012 to consultants.
During the period, the Company issued 2,550,000 unlisted options exercisable at 53 cents
expiring 18 October 2012 to Sophisticated Investors and Directors who were party to a
Bridging Facility within the Company.
On 18 March 2011, the Company issued 300,000 unlisted options exercisable at 52 cents
expiring 18 March 2014 pursuant to the Cazaly Employment Incentive Plan.
On 15 April 2011, the Company issued 1,000,000 unlisted options exercisable at 55 cents
expiring 30 June 2012 pursuant to consultant services provided.
On 15 April 2011, the Company issued 200,000 unlisted options exercisable at 52 cents expiring
18 March 2014 pursuant to consultant services provided.
Changes in controlled entities:
During the period, the Company finalised the sale of consolidated group’s subsidiary Hayes
Mining Pty Ltd.
12
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
9.
AFTER BALANCE DATE EVENTS
On 18 July 2011, the Company issued 1,000,000 ordinary shares to Director, Clive Jones
following the exercise of 1,000,000 30 cent Options expiring 30 June 2011.
In July 2011, the Company registered five wholly owned subsidiaries, Caz Yilgarn Pty Ltd; Baker
Fe Pty Ltd; Baldock Fe Pty Ltd; Hase Fe Pty Ltd and Lockett Fe Pty Ltd.
On 4 August 2011, the Company announced a conditional sale and an alliance arrangement
with an Investment Group over the Parker Range Iron Ore Project. The arrangement allowed
for an initial 45 day due diligence and exclusivity period. Subject to being satisfied with its
due diligence and the transaction proceeding, the Investment Group is entitled to be issued
with a convertible note in the principal amount of $5 million. The arrangement allows for the
payment of an initial $40 million within 6 months of the execution of a formal Sale and
Purchase Agreement (“SPA”) and a further payment of $55 million upon the earlier of first iron
ore being explored or 24 months from signing the SPA. On 26 September 2011, the Company
announced it had reached mutual agreement with the Investment Group to extend the due
diligence and exclusivity period for the sale of the Parker Range Project by 45 days.
On 7 September 2011, the Company appointed Ms Julie Hill to the role of Company Secretary
following the resignation of Ms Lisa Wynne.
On 26 September 2011, the Company announced that Cazaly Resources Limited and Vector
Resources Limited (ASX:VEC) (collectively the Earaheedy Joint Venture (EJV) signed a farm-in
agreement with ANGLO AMERICAN, the global diversified mining house, covering part of
EJV’s Earaheedy Iron project in the Wiluna region of Western Australia. The Farm-In
Agreement relates to an area of approximately 890 km2 and allows for Anglo American to
complete an initial “proof of concept” program with a minimum of 7,500m of RC or diamond
drilling to be completed as due diligence within 18 months. Following this, ANGLO AMERICAN
may earn an initial 51% interest in the project by payment of an initial $1M in cash to the EJV
and the expenditure of $20M within 4 years. ANGLO AMERICAN may then earn a total 75%
interest in the project by the completion of a Bankable Feasibility Study (BFS) and payment of
a further $5M to the EJV. In addition, following delivery of a positive BFS, a success payment
of $45M would become payable by ANGLO AMERICAN to the EJV. The EJV may then elect to
contribute to project expenditure or dilute to a royalty of 1.25% FOB. Normal industry standard
terms also apply.
Since 30 June, the Australian stock market has been volatile resulting in the Company’s
financial assets undergoing a change in value. Subsequently the fair value of the Company’s
financial assets held for trading as at the date of this report has reduced by approximately
$300,000.
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
Economic Entity, the results of those operations, or the state of affairs of the Consolidated
Group in future financial years.
10.
ENVIRONMENTAL ISSUES
The Consolidated Group 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 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 Group for the current, or subsequent financial year. The directors will reassess
this position as and when the need arises.
13
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
11.
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 16 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; Director of Hodges
Resources Ltd and Dempsey Minerals Limited.
Interest in Shares and
Options
Fully Paid Ordinary Shares
$0.53 Options expiring on 18 October 2010 700,000
14,953,530
Clive Jones
Managing Director (Technical)
Qualifications
B.App.Sc(Geol), M.AusIMM.
Experience
Mr Jones has been involved in mineral exploration for over 25
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 Chairman of
Corazon Mining Ltd and a Director of Bannerman Resources Ltd.
Interest in Shares and
Options
Fully Paid Ordinary Shares
$0.53 Options expiring on 18 October 2012
9,563,862
100,000
Kent Hunter
Non-Executive Director
Qualifications
B.Bus, CA.
Experience
Mr Hunter is a Chartered Accountant with over 16 years’
corporate and company secretarial experience. He has been
involved in the listing of over 20 exploration companies on ASX in
the past 9 years. He has experience in capital raisings, ASX
compliance and regulatory requirements and is currently a
director of Cazaly Resources Limited and is company secretary of
two other ASX Listed entities.
Interest in Shares and
Options
Fully Paid Ordinary Shares
Nil
2,052,103
14
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
11.
INFORMATION ON DIRECTORS (Cont’d)
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 Hodges Resources Limited
Company
Clive Jones
Kent Hunter
Whinnen Resources Limited
Winmar Resources Limited
Catalyst Metals Limited
Universal Coal PLC
Bannerman Resources
Limited
Corazon Mining Limited
Cortona Resources Limited
Bannerman Resources
Limited
Elixir Petroleum Limited
Cauldron Energy Limited
Venture Minerals Limited
Gryphon Minerals Limited
Red Emperor Resources NL
Period of directorship
Since May 2008
Since December 2009
From October 2010 to May 2011
From July 2008 to September 2009
From May 2005 to December 2009
From June 2007 to December 2008
Since February 2005
Since January 2006
Since January 2007
From March 2004 to November 2008
Since November 2002 to 31 March 2011
From May 2006 to July 2009
From January 2004 to February 2009
From 2 April 2007 to 1 August 2010
15
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
12.
REMUNERATION REPORT (audited)
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 set out below.
The remuneration policy, setting the terms and conditions for the executive directors and
other senior staff members, was developed by the managing directors 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 Consolidated Group 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 acquired and were issued shares as part of the terms of the Initial Public Offer in
2003. 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.
12.
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.
REMUNERATION REPORT (Cont’d)
All remuneration paid to directors is valued at the cost to the Company and expensed or
carried forward on the balance sheet for time that is attributable to exploration and
evaluation. 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.
16
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
12.
REMUNERATION REPORT (Cont’d) (audited)
The board policy is to remunerate non-executive directors at market rates for comparable
companies for time, commitment and responsibilities. The managing directors 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, all 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 2011
The remuneration for each key management person and a company executive of the
company during the year was as follows:
Short-term Benefits
Post-
Employ-
ment
Benefits
Other
Long-term
Benefits
Share based
Payment
Total
Performance
Related
Cash,
salary &
commiss
-ions
Cash
profit
share
Non-cash
Other
benefit
Super-
annuation
Other
Equity
Options
$
$
$
$
$
$
$
Nathan McMahon – Managing Director (ii)
2011
2010
180,000
180,000
-
-
Clive Jones – Managing Director (iii)
2011
2010
180,000
180,000
-
-
-
-
-
-
Kent Hunter – Non Executive Director
2011
2010
27,250
27,250
-
-
-
-
Lisa Wynne – Company Secretary (iv)
-
-
-
-
-
-
2011
2010
-
-
Total Remuneration
2011
2010
387,250
387,250
-
-
-
-
-
-
-
-
59,983
54,772
59,983
54,772
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i)
$
-
$
180,000
%
-
108,267
288,267
38%
-
180,000
-
108,267
288,267
38%
-
27,067
20,173
19,128
27,250
54,317
80,156
73,900
20,173
467,406
-
50%
25%
26%
4%
37%
- 262,729
704,751
-
-
-
-
-
-
-
-
-
The fair value of the Options is calculated at the date of grant using a Black-Scholes model.
i)
ii) An aggregate amount of $180,000 (2010:$ 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 $180,000 (2010:$ 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 $59,983 (2010: $54,772) 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.
17
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
12.
REMUNERATION REPORT (Cont’d) (audited)
Options issued as part of remuneration for the year ended 30 June 2011
No Options were issued to directors as part of their remuneration for the year ended 30 June
2011.
The following Options were issued to executives as part of their remuneration for the year
ended 30 June 2011. No cash consideration was paid by the recipients.
Number
Granted (i)
Number
Vested
Grant Date
Expiry
Date
Exercise
Price
L Wynne
150,000
150,000 18.03.2011
18.03.2014
$
$0.52
Fair Value
at Grant
Date
$
0.134
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
Consolidated Group 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.
Termination payments are not payable on resignation or under the circumstances of
unsatisfactory performance.
End of remuneration report.
13. MEETINGS OF DIRECTORS
The number of directors' meetings and resolutions held during the financial year each director
held office during the financial year and the number of meetings attended by each director
are:
Director
N McMahon
C Jones
K Hunter
Directors Meetings
Number Eligible to Attend
3
3
3
Meetings Attended
3
3
3
The Consolidated Group 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.
14.
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. The
premium paid on this policy was $15,540.
18
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
15. OPTIONS
Unissued Shares Under Option
At the date of this report unissued ordinary shares of the Company under option are:
Expiry Date
Exercise Price
Number
Grant Date
5 October 2011
19 June 2012
14 September 2012
26 October 2012
22 May 2013
6 October 2011
6 July 2013
6 July 2016
11 January 2015
4 February 2015
11 February 2012
18 October 2012
18 March 2014
30 June 2012
$0.8036
$0.8600
$0.39
$0.45
$0.30
$0.25
$0.30
$0.40
$0.33
$0.49
$0.40
$0.53
$0.52
$0.55
Under
Option
50,000
250,000
75,000
225,000
100,000
500,000
750,000
750,000
925,000
100,000
500,000
2,800,000
500,000
1,000,000
5 October 2006
19 June 2007
14 September 2012
26 October 2007
22 May 2008
13 November 2009
13 November 2009
13 November 2009
12 January 2010
5 February 2010
11 February 2010
18 Oct-14 December
2010
18 March – 15 April 2011
15 April 2011
Option holders do not have any rights to participate in any issue of shares or other interests in
the Company or any other entity.
There have been no unissued shares or interest under option of any controlled entity within
the Consolidated Group during or since the reporting date.
For details of options issued to directors and executives as remuneration, refer to the
Remuneration Report.
During the year ended 30 June 2011, the following ordinary shares of Cazaly Resources Ltd
were issued on the exercise of options granted. No amounts are unpaid on any of the shares.
Grant Date
Exercise Price Number of Shares
Listed Options
Unlisted Options
17 June to 16 July 2009
13 November 2009
$0.20
$0.30
Issued
12,646,421
1,000,000
No person entitled to exercise the option had or has any right by virtue of the option to
participate in any share issue of any other body corporate.
16.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of Court to bring proceedings on behalf of the Company or
intervene in any proceedings to which the company is a party for the purpose of taking
responsibility on behalf of the company for all or any part of those proceedings.
The Consolidated Group was not a party to any such proceedings during the year.
19
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2011
17. AUDITORS INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2011 has been
received and can be found on page 21 of the directors’ report.
18. NON AUDIT SERVICES
The board of directors is satisfied that the provision of non-audit services performed during the
year by the Group’s auditors is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001.
No other fees were paid or payable to the auditors for non-audit services performed during
the year ended 30 June 2011.
This report of the Directors, incorporating the Remuneration Report, is signed in accordance
with a resolution of the Board of Directors.
Nathan McMahon
Managing Director
29 September 2011
20
To The Board of Directors
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 2011 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
RICHARD JOUGHIN CA
Director
DATED at PERTH this 29th day of September 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For Year Ended 30 June 2011
Cazaly Resources Limited
Annual Report 2011
Note
2011
$
2010
$
2
2
1,495,020
597,053
5,924,380
2,205,971
Revenue from continuing operations
Other Income
Employee benefits expense
Depreciation expense
Finance costs
Administrative expense
Legal Fees
Advertising and promotional expenses
Consultancy expenses
Compliance and Regulatory expenses
Occupancy expenses
Written-off exploration expenditure
Loss on disposal of shares
Loss on sale of tenements
Other expenses
Profit/(Loss) before income tax
Income tax (expense)/ benefit
Profit /(Loss) from continuing operations
Loss from discontinued operations after tax
Profit /(Loss) for the period
Other comprehensive income
Total comprehensive income attributable to
members of the parent entity
3
6
25
Earnings/(loss) per share from continuing
and discontinued operations
Basic earnings/ (loss) per share
Diluted earnings per share
Earnings/(loss) per share from continuing
operations:
Basic earnings/ (loss) per share
Diluted earnings per share
Earnings/(loss) per share from discontinued
operations:
Basic earnings/ (loss) per share
Diluted earnings per share
19
19
19
19
19
19
(488,517)
(44,537)
(540,040)
(564,643)
(85,069)
(72,015)
(450,871)
(140,911)
(356,274)
(185,195)
(80,846)
(238,500)
(9,296)
4,162,686
(1,501,305)
2,661,381
(1,379,554)
1,281,825
-
(673,980)
(36,559)
(7,656)
(550,007)
(31,253)
(100,805)
(250,213)
(151,595)
(271,193)
(370,000)
(1,777,006)
-
(25,800)
(1,443,043)
72,880
(1,370,163)
-
(1,370,163)
-
1,281,825
(1,370,163)
Cents
1.13
1.13
Cents
(1.53)
N/A
2.34
2.34
(1.53)
N/A
(1.22)
N/A
N/A
N/A
The accompanying notes form part of these financial statements
22
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2011
Cazaly Resources Limited
Annual Report 2011
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
Non-current assets held for sale
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Trade and other receivables
Financial assets
Property, plant and equipment
Exploration and evaluation assets
Deferred tax assets
Note
2011
$
2010
$
7
8
9
8
10
11
12
6
3,948,670
1,215,134
7,509
5,171,313
-
3,390,602
335,352
30,015
3,755,969
5,066,305
5,171,313
8,822,274
163,655
3,961,462
130,880
17,477,365
4,645,192
142,839
323,722
122,890
12,083,805
5,085,658
TOTAL NON CURRENT ASSETS
26,378,554
17,758,914
TOTAL ASSETS
31,549,867
26,581,188
CURRENT LIABILITIES
Trade and other payables
Provisions
13
14
934,274
81,099
876,454
70,869
TOTAL CURRENT LIABILITIES
1,015,373
947,323
NON CURRENT LIABILITIES
Deferred tax liabilities
6
5,311,600
5,085,658
TOTAL NON CURRENT LIABILITIES
5,311,600
5,085,658
TOTAL LIABILITIES
6,326,973
6,032,981
NET ASSETS
EQUITY
25,222,894
20,548,207
Issued capital
Reserves
Retained earnings/ (Accumulated
losses)
15
16
17
23,145,290
1,210,019
20,348,703
613,744
867,585
(414,240)
TOTAL EQUITY
25,222,894
20,548,207
The accompanying notes form part of these financial statements.
23
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2011
Cazaly Resources Limited
Annual Report 2011
Issued Capital (Accumulated
Losses)
And
Retained
Earnings
$
$
Option
Reserve
Total
$
$
Balance at 1 July 2009
12,783,160
(6,276,400)
7,421,043
13,927,803
Comprehensive income:
Loss for the year
Other comprehensive
income for the year
Total comprehensive income
for the year
Transactions with owners, in
their capacity as owners, and
other transfers:
Shares issued during the year
Transaction costs
Option reserve
Transfers to retained earnings
Deferred tax liability
component
-
-
-
(1,370,163)
-
(1,370,163)
-
-
-
(1,370,163)
-
(1,370,163)
8,004,139
(365,716)
-
-
(72,880)
-
-
-
7,232,323
-
-
-
425,024
(7,232,323)
-
8,004,139
(365,716)
425,024
-
(72,880)
Balance at 30 June 2010
20,348,703
(414,240)
613,744
20,548,207
Comprehensive income:
Profit for the year
Other comprehensive
income for the year
Total comprehensive income
for the year
Transactions with owners, in
their capacity as owners, and
other transfers:
Shares issued during the year
Transaction costs
Option reserve
Deferred tax liability
component
-
-
-
1,281,825
-
1,281,825
-
-
-
1,281,825
-
1,281,825
2,829,284
(2,348)
-
(30,349)
-
-
-
-
-
-
596,275
-
2,829,284
(2,348)
596,275
(30,349)
Balance at 30 June 2011
23,145,290
867,585
1,210,019
25,222,894
The accompanying notes form part of these financial statements
24
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 June 2011
Cazaly Resources Limited
Annual Report 2011
Note
2011
$
2010
$
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
Other revenue
Payments for exploration and evaluation
(1,250,564)
181,166
568,270
(9,269,114)
(1,667,251)
103,317
413,670
(6,449,860)
Net cash used in operating activities
20
(9,770,242)
(7,600,124)
Cash Flows From Investing Activities
Proceeds from sale of exploration assets
Proceeds from sale of equity investments
Purchase of plant and equipment
Proceeds from sale of plant and
equipment
Purchase of equity investments
Purchase of exploration assets
Proceeds from disposal of subsidiary
Recoupment of exploration expenditure
from Joint Venture operations
Proceeds for Joint Venture Management
25
4,162,402
162,469
(57,100)
4,573
(49,000)
-
1,380,000
1,923,055
709,320
609,596
(101,955)
-
(84,214)
(297,980)
-
13,558
97,121
-
Net cash provided by investing activities
7,623,520
848,325
Cash Flows from Financing Activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from issue of securities
Payment for costs of issue of securities
2,550,000
(2,672,145)
2,829,284
(2,349)
-
-
6,691,766
(365,716)
Net cash provided by financing activities
2,704,790
6,326,050
Net increase/(decrease) in cash held
558,068
(425,749)
Cash and cash equivalents at beginning
of the financial year
3,390,602
3,816,351
Cash and cash equivalents at end of the
financial year
7
3,948,670
3,390,602
The accompanying notes form part of these financial statements
25
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
These consolidated financial statements and notes represent those of Cazaly Resources
Limited and Controlled Entities (the “consolidated group” or “group”). Cazaly Resources
Limited is a listed public company, incorporated and domiciled in Australia.
The separate financial statements of the parent entity, Cazaly Resources Limited, have not
been presented within this financial report as permitted by the Corporations Act 2001.
The financial statements were authorised for issue on 29 September 2011 by the directors
of the company.
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 Board and
the Corporations Act 2001.
result
in financial statements containing
Australian Accounting Standards set out in accounting policies that the AASB has
reliable
concluded would
information about transactions, events and conditions. Compliance with Australian
Accounting Standards ensures that the financial statements and notes also comply with
International Financial Reporting Standards as issued by the IASB. Material accounting
policies adopted in the preparation of these financial statements are presented below
and have been consistently applied unless otherwise stated.
relevant and
These financial statements have 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
The consolidated financial statements incorporate the assets, liabilities and results of
entities controlled by the Company at the end of the reporting period. A controlled entity
is any entity over which the Company has the power to govern the financial and
operating policies so as to obtain benefits from the entity’s activities. Control will generally
exist when the parent owns, directly or indirectly through subsidiaries, more than half of the
voting power of an entity. In assessing the power to govern, the existence and effect of
holdings of actual and potential voting rights are also considered.
Where controlled entities have entered or left the Group during the year, the financial
performance of those entities are included only for the period of the year that they were
controlled. A list of controlled entities is contained in Note 22 to the financial statements.
inter-group balances and
In preparing the consolidated financial statements, all
transactions between entities in the Group have been eliminated on consolidation.
Accounting policies of subsidiaries have been changed where necessary to ensure
consistency with those adopted by the Company.
Non-controlling interests, being the equity in a subsidiary not attributable, directly or
indirectly, to a parent, are shown separately within the Equity section of the consolidated
statement of financial position and statement of comprehensive income. The non-
controlling interest in the net assets comprise their interests at the date of the original
business combination and their share of changes in equity since that date.
26
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Business Combinations
Business combinations occur where an acquirer obtains control over one or more
businesses and results in the consolidation of its assets and liabilities.
A business combination is accounted for by applying the acquisition method, unless it is a
combination involving entities or businesses under common control. The acquisition
method requires that for each business combination on of the combining entities must be
identified as the acquirer i.e. parent entity). The business combination will be accounted
for as at the acquisition date, which is the date that control over the acquiree is obtained
by the parent entity. At this date, the parent shall recognise, in the consolidated
accounts, and subject to certain limited exceptions, the fair value of the identifiable assets
acquired and liabilities assumed. In addition, contingent liabilities of the acquiree will be
recognised where a present obligation has been incurred and its fair value can be reliably
measured.
The acquisition may result in the recognition of goodwill or a gain from a bargain
purchase. The method adopted for the measurement of goodwill will impact on the
measurement of a non-controlling interest to be recognised in the acquiree where less
than 100% ownership inters is held in the acquiree.
The acquisition date fair value of the consideration transferred for a business combination
plus the acquisition date fair value of any previously held equity interest shall form the cost
of the investment in the separate financial statements. Consideration may comprise the
sum of the assets transferred by the acquirer, liabilities incurred by the acquirer to the
former owners of the acquiree and the equity interests issued by the acquirer.
Fair value uplifts in the value of pre-existing equity holdings are taken to the statement of
comprehensive income. Where changes in the value of such equity holdings had
previously been recognised in other comprehensive income, such amounts are recycled
to profit or loss.
Included in the measurement of consideration transferred is any asset or liability resulting
from a contingent consideration arrangement. Any obligation incurred relating to
contingent consideration is classified as either a financial liability or equity instrument,
depending upon the nature of the arrangement. Rights to refunds of consideration
previously paid are recognised as a receivable. Subsequent to initial recognition,
contingent consideration classified as equity is not remeasured and its subsequent
settlement is accounted for within equity. Contingent consideration classified as an asset
or a liability is remeasured each reporting period to fair value through the statement of
comprehensive income unless the change in value can be identified as existing at
acquisition date.
All transaction costs incurred in relation to the business combination are expensed to the
statement of comprehensive income.
(b) Plant and Equipment
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.
27
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Depreciation
Depreciation is provided on plant and equipment. 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 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
the end of each reporting period.
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 statement of comprehensive income.
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 relating to an area of interest are
accumulated. Costs are carried forward to the extent they are expected to be
recouped through successful development, or by sale, or where exploration and
evaluation activities have not yet 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.
Accumulated costs carried forward in respect of an area of interest that is abandoned
are written off in full against profit in the year in which the decision to abandon the area
is made.
When production commences, the accumulated costs for the relevant area of interest
will be amortised over the life of the area according to the rate of depletion of the
economically recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness
of continuing to capitalise costs in relation to that area of interest.
Costs of site restoration are provided over the life of the project from when exploration
commences and are included in the costs of that stage. Site restoration costs include the
dismantling and removal of mining plant, equipment and building structures, waste
removal, and rehabilitation of the site in accordance with clauses of the mining permits.
Such costs have been estimated of future costs, current legal requirements and
technology on an undiscounted basis.
28
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(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
consolidated group are classified as finance leases. Finance leases are capitalised by
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 straight-line basis over the shorter of their estimated useful lives or the lease term.
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
instruments,
Initial Recognition and Measurement
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 assets and
incorporating
financial
Financial instruments are initially measured at fair value plus transactions costs, except
where the instrument is classified as “at fair value through profit or loss”, in which case
transaction costs are expensed to profit or loss immediately.
Classification and Subsequent Measurement
Finance instruments are subsequently measured at either of fair value, amortised cost
using the effective interest rate method, or cost.
Fair value is determined based on current bid prices for all quoted investments. Valuation
techniques are applied to determine the fair value for all unlisted securities, including
recent arm’s length transactions, reference to similar instruments and option pricing
models.
Amortised cost is the amount at which the financial asset or financial liability is measured
at initial recognition less principal repayments and any reduction for impairment, and
adjusted for any cumulative amortisation of the difference between that initial amounts
calculated using the effective interest method.
The effective interest method is used to allocate interest income or interest expense over
the relevant period and is equivalent to the rate that exactly discounts estimated future
cash payments or receipts (including fees, transaction costs and other premiums or
discounts) through the expected life (or when this cannot be reliably predicted, the
contractual term) of the financial instrument to the net carrying amount of the financial
asset or financial liability. Revisions to expected future net cash flows will necessitate an
adjustment to the carrying value with a consequential recognition of an income or
expense in profit or loss.
The Group does not designate any interests in subsidiaries, associates or joint venture
entities as being subject to the requirements of accounting standards specifically
applicable to financial instruments.
29
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(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.
(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 that are intended to be held-to-maturity, such as bonds,
are subsequently measured at amortised cost.
Held-to-maturity investments are included in non-current assets, except for those which
are expected to mature within 12 months after the end of the reporting period. (All other
investments are classified as current assets.)
(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.
Loans and receivables are included in current assets, except for those which are not
expected to mature within 12 months after the end of the reporting period. (All other
loans and receivables are classified as non-current assets).
(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. They comprise investments in the equity of other entities where there is
neither a fixed maturity nor fixed or determinable payments.
They are subsequently measured at fair value with gains or losses being recognised in
other comprehensive income (except for impairment losses). When the financial asset is
derecognised, the cumulative gain or loss pertaining to that asset previously recognised
in other comprehensive income is reclassified into profit or loss.
Available-for-sale financial assets are included in non-current assets where they are
expected to be sold within 12 months after the end of the reporting period. All other
financial assets are classified as current assets.
(v) Financial liabilities
Non-derivative financial liabilities (excluding financial guarantees) are subsequently
measured at amortised cost.
Impairment
At the end of each reporting period, the Group assesses whether there is objective
evidence that a financial instrument has been impaired. In the case of available-for-sale
financial instruments, a prolonged decline in the value of the instrument is considered to
determine whether an impairment has arisen. Impairment losses are recognised in profit
or loss. Also, any cumulative decline in fair value previously recognised in other
comprehensive income is reclassified to profit or loss at this point.
30
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Financial guarantees
Where material, financial guarantees issued, which require the issuer to make specified
payments to reimburse the holder for a loss it incurs because a specified debtor fails to
make payment when due, are recognised as a financial liability at fair value on initial
recognition. The Group has no such financial guarantees.
De-recognition
Financial assets are de-recognised where the contractual rights to receipt of cash flows
expires or the asset is transferred to another party whereby the entity no longer has any
significant continuing involvement in the risks and benefits associated with the asset.
related obligations are either
Financial
discharged, cancelled or expired. 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.
liabilities are de-recognised where the
(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-term borrowings in current
liabilities on the statement of financial position.
(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.
(h) Revenue and Other Income
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 the end of each reporting period, the Group assesses whether there is any indication
that an asset may be impaired. The assessment will include the consideration of external
and internal sources of information including dividends received from subsidiaries,
associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such
an indication exists, an impairment test is carried out on the asset by comparing the
recoverable amount of the asset, being the higher of the asset’s fair value less costs to
sell and value in use, to the asset’s carrying value. Any excess of the asset’s carrying
value over its recoverable amount is recognised immediately in profit or loss, unless the
asset is carried at a revalued amount in accordance with another standard (eg in
accordance with the revaluation model in AASB 116). Any impairment loss of a revalued
asset is treated as a revaluation decrease in accordance with that other standard.
31
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
1.
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Where it is not possible to estimate the recoverable amount of an individual asset, the
Group estimates the recoverable amount of the cash-generating unit to which the asset
belongs. Impairment testing is performed annually for goodwill and intangible assets with
indefinite lives.
(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 statement of
financial position are shown inclusive of GST. The net amount of GST recoverable from, or
payable to, the ATO is included as a current asset or liability in the statement of financial
position.
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.
32
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Where temporary differences exist in relation to investments in subsidiaries, branches,
associates, and joint ventures, deferred tax assets and liabilities are not recognised where
the timing of the reversal of the temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off
exists and it is intended that net settlement or simultaneous realisation and settlement of
the respective asset and liability will occur. Deferred tax assets and liabilities are offset
where a legally enforceable right of set-off exists, the deferred tax assets and liabilities
relate to income taxes levied by the same taxation authority on either the same taxable
entity or different taxable entities where it is intended that net settlement or simultaneous
realisation and settlement of the respective asset and liability will occur in future periods
in which significant amounts of deferred tax assets or liabilities are expected to be
recovered or settled.
Tax Consolidation
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) 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.
(m) Provisions
Provisions are recognised when the Group has a legal or constructive obligation, as a
result of past events, for which it is probable that an outflow of economic benefits will
result and that outflow 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.
(n) Share Based Payments
The Group operates equity-settled share-based payment employee share and option
schemes. The fair value of the equity to which employees become entitled is measured
at grant date and recognised as an expense over the vesting period, with a
corresponding increase to an equity account. Share-based payments to non-
employees are measured at the fair value of goods or services received or the fair value
of the equity instruments issued, if it is determined the fair value of the good or services
cannot be reliably measured, and are recorded at the date the goods or services are
received. The corresponding amount is shown in the option reserve.
33
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
The fair value of shares is ascertained as the market bid price. The fair value of options is
ascertained using a Black–Scholes pricing model which incorporates all market vesting
conditions. The number of shares and options expected to vest is reviewed and adjusted
at the end of each reporting period such that the amount recognised for services
received as consideration for the equity instruments granted shall be based on the
number of equity instruments that eventually vest.
(o) Issued Capital
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.
(p) 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 earnings per share 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.
(q) Employee Benefits
Provision is made for the company’s liability for employee benefits arising from services
rendered by employees to the end of the reporting period. 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.
(r) 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.
34
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
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.
(s) 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.
(t) Critical Accounting Estimates and Judgements
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 –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 28.
Key Judgments – 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.
35
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
2. REVENUE & OTHER INCOME
interest received
option fees
Revenue
-
-
- management fees
-
-
recoupment of office costs on-charged
other revenue
Other Income
- profit on sale of tenement
- profit on sale of fixed asset
-
net gain on financial assets at fair value
through profit or loss
- held for trading
3. PROFIT (LOSS) FOR THE YEAR
Profit (loss) before income tax from continuing
operations
Includes the following specific expenses:
Expenses
other persons
Borrowing costs
-
- director related entities
-
share based payment
Depreciation of non-current assets
- plant and equipment
- motor vehicle
Rental expense on operating leases
- minimum lease payments
Loss on sale of tenements
Net loss on financial assets held for trading
Exploration expense written off
Employee benefits:
-
-
Superannuation benefits
Employee equity settled benefits
2011
$
2010
$
179,093
650,545
97,121
338,261
230,000
1,495,020
109,063
50,000
-
413,670
24,320
597,053
5,393,636
-
419,930
1,758
530,744
5,924,380
1,784,283
2,205,971
90,958
40,817
408,265
540,040
29,353
15,184
44,537
7,656
-
-
7,656
34,478
2,081
36,559
21,520
26,798
238,500
80,846
185,195
16,290
156,549
-
-
370,000
12,415
425,024
36
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
4.
INTERESTS OF KEY MANAGEMENT PERSONNEL (“KMP”)
Refer to the remuneration report contained in the directors’ report for details of the
remuneration paid or payable to each member of the Group’s key management
personnel for the year ended 30 June 2011.
The totals of remuneration paid to key management personnel of the Company during the
year are as follows:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share based payments
No compensation was paid in respect to termination benefits
b) KMP Shareholdings
2011
$
447,233
-
-
20,173
467,406
2010
$
442,022
-
-
262,729
704,751
The number of ordinary shares in Cazaly Limited held by each KMP of the Group during
the financial year is as follows:
30 June 2011
N McMahon
C Jones
K Hunter
30 June 2010
N McMahon
C Jones
K Hunter
Balance
1 July 2010
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
30 June 2011
9,526,554
7,566,802
1,830,757
18,924,113
-
-
-
-
1,678,803
850,002
221,346
2,750,151
3,258,173
147,058
-
3,405,231
14,463,530
8,563,862
2,052,103
25,079,495
Balance
1 July 2009
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
30 June 2010
6,430,398
6,853,338
1,770,757
15,054,493
-
-
-
-
-
-
-
-
3,096,156
713,464
60,000
3,869,620
9,526,554
7,566,802
1,830,757
18,924,113
37
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
4.
INTERESTS OF KEY MANAGEMENT PERSONNEL (KMP) (cont’d)
c) KMP Option and Rights Holdings
The number of options over ordinary shares held by each KMP of the Group during the
financial year is as follows.
Number of $0.20 Options expiring 28 February 2011, held by Directors and Executives:
Nathan
McMahon
Clive Jones
Kent Hunter
Balance
1 July 2010
678,803
856,669
221,346
1,756,818
Issued
Exercised
Lapsed
Balance
30 June
2011
Vested
during
the year
Vested
and
exercisable
Vested and
unexercis-
able
-
-
-
-
(678,803)
-
(850,002)
(6,667)
(221,346)
-
(1,750,151)
(6,667)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Number of $0.30 Options expiring 1 July 2011, held by Directors and Executives:
Nathan
McMahon
Clive Jones
Kent Hunter
Balance
1 July 2010
1,000,000
1,000,000
250,000
2,250,000
Issued
Exercised
Lapsed
Balance
30 June
2011
Vested
during
the year
Vested
and
exercisable
Vested and
unexercis-
able
-
-
-
(1,000,000)
-
-
(1,000,000)
-
-
-
-
-
1,000,00
250,000
1,250,00
-
-
-
-
-
1,000,000
250,000
1,250,000
-
-
-
-
Number of $0.53 Options expiring 18 October 2012, held by Directors and Executives:
Balance
1 July 2010
Issued
Exercised
Lapsed
Balance
30 June
2011
Vested
during the
year
Vested
and
exercisabl
e
Vested and
unexercis-
able
Nathan
McMahon
Clive Jones
Kent Hunter
-
-
-
-
700,000
100,000
-
800,000
-
-
-
-
-
-
-
-
700,000
700,000
700,000
100,000
100,000
100,000
-
-
-
800,000
800,000
800,000
-
-
-
-
d) Compensation Options
2011
No compensation options were issued to key management personnel during the period.
2010
Number
Granted
Number
Vested
Grant
Date
Expiry
Date
Exercise
Price
N B McMahon
C B Jones
K M Hunter
1,000,000
1,000,000
250,000
2,250,000
1,000,000 13.11.2009 01.07.2011
1,000,000 13.11.2009 01.07.2011
250,000 13.11.2009 01.07.2011
2,250,000
$
$0.30
$0.30
$0.30
Fair Value
at Grant
Date
$
0.108
0.108
0.108
38
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
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
N McMahon
C Jones
K Hunter
2011
25 August 2010
-
-
2010
2011
1,000,000
-
-
-
-
-
2010
-
-
-
f) Other KMP transactions
During the year directors N McMahon and C Jones provided a bridging facility, in
conjunction with other sophisticated investors. The terms of the facility included an interest
(cash paid) component and an equity component. For details of interest paid, refer to Note
3, for details of the equity based payment refer to Note 28. All loans were on the same arms
length transactions as those made to other sophisticated investors.
5.
AUDITORS’ REMUNERATION
Remuneration of the auditor for:
- Auditing or reviewing the financial report
6.
INCOME TAX EXPENSE
The components of the tax expense/(income) comprise:
Current tax
Deferred tax
(a) Numerical reconciliation of income tax expense to prima
facie tax payable:
Profit from continuing operations
Loss from discontinuing operations
Prima facie tax benefit on loss from ordinary activities
before income tax at 30% (2010: 30%)
2011
$
2010
$
64,142
64,142
45,115
45,115
-
(1,501,305)
(1,501,305)
-
(72,880)
(72,880)
4,162,686
(1,379,554)
(1,443,044)
-
834,940
(432,913)
Add:
Tax effect of:
Derecognition of losses on sale of subsidiary
Other non-allowable items
865,399
384,399
1,567
Less:
Tax effect of:
Tax benefit of deductible equity raising costs
Effect of tax losses derecognised
Over provision of prior year
Recognition of previously unrecognised prior year
tax losses
Other
Income tax benefit attributable to entity
(31,054)
-
-
(552,379)
-
1,501,305
(35,132)
534,312
(145,760)
-
5,046
(72,880)
39
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
6.
INCOME TAX EXPENSE (Cont’d)
(b) Deferred tax assets at 30% (2010: 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% (2010: 30%) comprise
the following
Exploration expenditure
Investments
Other
(c) Deferred tax recognised directly in equity:
Relating to equity raising costs
Other
7.
CASH AND CASH EQUIVALENTS
Cash at bank
Petty cash
Deposits at call (i)
2011
$
2010
$
4,042,781
-
141,416
194,397
40,836
225,762
4,645,192
3,559,123
910,854
215,730
267,293
48,658
84,000
5,085,658
5,224,653
85,089
1,858
5,311,600
5,085,470
-
188
5,085,658
(30,349)
(72,881)
-
-
(30,349)
(72,881)
819,854
495
3,128,321
3,948,670
182,109
495
3,207,998
3,390,602
(i) The effective interest rate on short-term bank deposits was 5.31% (2010:5.06%); these deposits
have an average maturity of 38 days.
8.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables
Other debtors
Non-Current
Bonds (i)
(i) Bonds are term deposits, held by way of bank guarantee.
Trade receivables have 30 to 90 day terms
380,976
834,158
1,215,134
51,323
284,029
335,352
163,655
163,655
142,839
142,839
40
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
9.
NON CURRENT ASSETS HELD FOR SALE
Current
Hayes Mining Pty Ltd assets held for sale(i):
Receivables
Exploration and evaluation assets (ii)
2011
$
-
-
-
2010
$
151,500
4,914,805
5,066,305
(i) On 18 June 2010, the Company announced that it had signed an agreement with
Phoenix Gold Ltd to sell its West Kalgoorlie Gold assets. The sale of the assets included
the disposal of 100% owned subsidiary Hayes Mining Pty Ltd, and other related
tenements held directly by Cazaly Resources. The sale occurred on 31 December 2010
and as consideration for the sale, Cazaly received a total of $1.7m in cash, and shares
to the value of $1.8m in Phoenix. The sale of Hayes Mining Pty Ltd, per note 25, was for
proceeds of $2.82m. The sale of tenements from Cazaly resources was for proceeds of
0.68m.
The exploration and evaluation assets relate to costs to acquire tenements and
capitalised exploration costs and are included in the segment assets of the Group’s
exploration operating segment as disclosed in Note 24.
(ii)
10. FINANCIAL ASSETS
Current
Financial assets, at fair value through profit or loss:
Held-for-trading Australian listed shares
11. 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
3,961,462
3,961,462
323,722
323,722
229,076
(166,991)
62,085
173,225
(141,327)
31,898
32,803
(16,497)
16,306
68,287
(15,798)
52,489
5,344
(5,344)
-
45,511
(22,193)
23,318
68,288
(614)
67,674
5,344
(5,344)
-
130,880
122,890
Movement in the carrying amounts for each class of plant and equipment between the
beginning and end of the current financial year.
41
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
11. PROPERTY, PLANT AND EQUIPMENT (Cont’d)
Balance at the beginning of the year
• Additions
• Disposals
• Depreciation expense
Carrying amount at the end of the
year
Balance at the beginning of the year
• Additions
• Disposals
• Depreciation expense
Carrying amount at the end of the
year
2011
$
Plant and
Equipment
Office
Furniture
Motor
Vehicles
31,898
57,100
(1,249)
(25,664)
23,318
-
(3,324)
(3,688)
67,674
-
-
(15,185)
Total
122,890
57,100
(4,573)
(44,537)
62,085
16,306
52,489
130,880
2010
$
Plant and
Equipment
Office
Furniture
Motor
Vehicles
Total
37,308
23,554
-
(28,964)
11,765
17,067
-
(5,514)
6,664
68,287
(5,196)
(2,081)
55,737
108,908
(5,196)
(36,559)
31,898
23,318
67,674
122,890
12. EXPLORATION, EVALUATION AND
DEVELOPMENT COSTS
2011
$
2010
$
Non-Current
Costs carried forward in respect of areas of
interest in:
Exploration and evaluation phases at cost
Royalty assets
Movement – exploration and evaluation
Brought forward
Exploration expenditure capitalised during the
year
Disposals
Recoupment of exploration expenditure from
joint venture partners
Assets classified as non-current assets held for
sale
Exploration expenditure written off
17,477,365
-
12,036,805
47,000
17,477,365
12,083,805
12,036,805
9,678,338
8,594,268
(557,494)
7,846,718
(236,888)
(2,411,019)
(13,558)
-
(185,195)
(4,867,805)
(370,000)
17,477,365
12,036,805
The value of the Consolidated Group interest in exploration expenditure is dependent
upon:
•
•
•
the continuance of the Consolidated group rights to tenure of the areas of interest;
the results of future exploration; and
the recoupment of costs through successful development and exploitation of the
areas of interest, or alternatively, by their sale.
The Consolidated group 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.
42
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
13. TRADE AND OTHER PAYABLES
Current
Trade creditors
Other creditors and accrued expenses
2011
$
2010
$
860,551
73,723
934,274
780,059
96,395
876,454
(i) Creditors are non-interest bearing and settled at 30 day terms.
14. PROVISIONS
Current
Provision for annual leave
Provision for long service leave
15.
ISSUED CAPITAL
52,631
28,468
81,099
70,869
-
70,869
121,089,125 fully paid ordinary shares (2010:
107,442,705) with no par value
23,145,290
20,348,703
a. Movements in Ordinary Shares
Number of
shares
Issue
price
$
Opening balance at 1 July 2010
Notes
107,442,705
20,348,703
Listed options exercised
Unlisted options exercised
Transaction costs relating to share issues
Deferred tax liability component
(i)
(ii)
(iii)
12,646,420
1,000,000
-
-
0.20
0.30
-
-
2,529,284
300,000
(2,348)
(30,349)
Closing balance at 30 June 2011
121,089,125
23,145,290
(i)
(ii)
(iii)
During the period, the Company issued 12,646,420 ordinary shares at a price of 20
cents pursuant to the exercise of 12,646,420 listed options exercisable at 20 cents
each expiring 28 February 2011.
On 25 August 2011, the Company issued 1,000,000 ordinary shares to Director,
Nathan McMahon following the exercise of 1,000,000 unlisted options exercisable at
30 cents each expiring 1 July 2011
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.
43
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
15.
ISSUED CAPITAL
b. Movements in Listed Options
Notes
Number of
Options
Issue
price
$
Opening balance at 1 July 2010
Exercise of Listed Options
Expiry of Listed Options
12,844,294
(12,646,420)
(197,874)
(i)
(ii)
Closing balance at 30 June 2011
-
(i)
(ii)
During the financial period, a total of 12,646,420 Options were exercised
On 28 February 2011, 197,874 Options expired unexercised.
-
-
-
-
-
-
-
-
c. Capital risk management
Management controls the capital of the Group when managing capital their intentions 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
Group’s activities, being mineral exploration, the Group does not have ready access to
credit facilities, with the primary source of funding being equity raisings. Therefore, the focus
of the Group’s capital risk management is the current working capital position against the
requirements of the Group to meet exploration programmes and corporate overheads.
Management’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 Group at 30 June 2011 and 30 June 2010 are as follows:
Pare
Cash and cash equivalents
Trade and other receivables
Trade and other payables
Working capital position
16. OPTION RESERVE
2011
$
3,948,670
1,215,134
(934,274)
4,229,530
2010
$
3,390,602
335,352
(876,454)
2,849,500
2011
$
1,210,019
2010
$
613,744
This reserve is used to record the value of equity benefits provided to the employees and
directors as part of their remuneration.
17. RETAINED EARNINGS/ (ACCUMULATED
LOSSES)
Opening balance
Net profit/(loss) attributable to members
Transfers from option reserve
Closing balance
2011
$
2010
$
(414,240)
1,281,825
-
867,585
(6,276,400)
(1,370,163)
7,232,323
(414,240)
44
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
18. FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments comprise receivables, payables, held-for-trading
investments, cash and short-term deposits.
The Board of Directors has overall responsibility for the oversight and management of the
Group’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 Group’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
Group.
Interest rate risks
The Group’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 Statement of Financial Position and notes
to the financial statements. The Consolidated group 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 Group’s exposure and the credit
ratings of its counterparties are continuously monitored and the aggregate value of
transactions concluded are spread amongst approved counterparties.
Credit risk related to balances with banks and other financial institutions is managed by the
board. The board’s policy requires that surplus funds are only invested with counterparties
with a Standard & Poor’s rating of at least A+. All of the Group’s surplus funds are invested
with AA and A+ Rated financial institutions, the amount is $3,948,670.
Liquidity risk
The responsibility for liquidity risk management rests with the Board of Directors. The
Consolidated group 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 Group’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.
(i)
Sensitivity Analysis
The company did no encounter interest rate risk, foreign currency risk and market price risk of
a material nature.
45
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
18. FINANCIAL RISK MANAGEMENT (Cont’d)
Maturity profile of financial instruments
The following table details the Group’s exposure to interest rate risk as at 30 June 2011:
2011
Floating
Interest
Rate
$
Fixed
Interest
maturing
in 1 year
or less
$
Fixed
Interest
maturing
over 1 to 5
years
$
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Financial assets –
held for trading
Weighted average
Interest rate
Financial Liabilities
Trade and other
payables
Weighted average
interest rate
819,854
3,128,321
-
163,655
-
819.854
-
3,291,976
-
-
5.31%
-
-
-
-
-
-
Non-
interest
bearing
2011
Total
$
$
495
3,948,670
1,215,134
1,378,789
3,961,462
5,177,091
3,961,462
9,288,921
934,274
934,274
934,274
934,274
The following table details the Group’s exposure to interest rate risk as at 30 June 2010:
2010
Floating
Interest
Rate
$
Fixed
Interest
maturing
in 1 year
or less
$
Fixed
Interest
maturing
over 1 to 5
years
$
Financial assets
Cash and cash
equivalents
Trade and other
receivables
Financial assets –
held for trading
Weighted average
Interest rate
Financial Liabilities
Trade and other
payables
Weighted average
interest rate
182,109
3,207,998
-
294,339
-
182,109
-
3,502,337
-
-
-
-
5.03%
-
-
-
-
-
-
-
-
-
-
-
Non-
interest
bearing
2010
Total
$
$
495
3,390,602
335,352
629,691
323,722
659,569
323,722
4,344,015
876,454
876,454
-
876,454
876,454
46
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
18. FINANCIAL INSTRUMENTS (Cont’d)
Net Fair Values
The carrying value and net fair values of financial assets and liabilities at balance date
are:
2011
2010
Carrying
Amount
$
Net fair
Value
$
Carrying
Amount
$
Net fair
Value
$
On-balance sheet financial instruments
Financial assets
Cash and deposits
Receivables
Investment held for trading
Financial liabilities
Payables
3,948,670
1,378,789
3,961,462
9,288,921
934,274
934,274
3,948,670
1,378,789
3,961,462
9,288,921
934,274
934,274
3,390,602
629,691
323,722
4,344,015
3,390,602
629,691
323,722
4,344,015
876,454
876,454
876,454
876,454
The financial instruments recognised at fair value in the statement of financial position
have been analysed and classified using a fair value hierarchy reflecting the significance
of the inputs used in making the measurements. All financial instruments measured at fair
value are level one, meaning fair value is determined from quoted prices in active markets
for identical assets.
19.
EARNINGS PER SHARE
a) Reconciliation of earnings to profit or loss:
2011
$
2010
$
Profit/(loss)
Earnings used to calculate basic and diluted EPS
1,281,825
1,281,825
(1,443,043)
(1,443,043)
b) Reconciliation of earnings to profit or loss from continuing
operations:
Profit/(loss) from continuing operations
Earnings used to calculated basic and diluted EPS from
continuing operations
2,661,380
(1,443,043)
2,661,380
(1,443,043)
c) Reconciliation of earnings to profit of loss from discontinued
operations:
Profit/(loss) from discontinued operations
Earnings used to calculated basic and diluted EPS from
discontinued operations
(1,379,554)
(1,379,554)
-
-
d) Weighted average number of ordinary shares outstanding
during the period used in the calculation of basic EPS
112,950,184
94,462,769
No. of Shares
No. of Shares
Weighted average number of dilutive options outstanding
946,341
Weighted average number of ordinary shares outstanding
during the year used in calculating dilutive EPS
113,896,525
e) Diluted earnings per share is not reflected for discontinued
operations as the result is anti-dilutive in nature.
f) Anti-dilutive options on issue not used in dilutive EPS
-
calculation
-
-
-
47
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
20. CASH FLOW INFORMATION
(i)
Reconciliation of cash flows from operating
activities with profit/(loss) after income tax
Profit/(Loss) after income tax
1,281,825
(1,370,163)
2011
$
2010
$
Non-operating cash flows in loss for the year:
Depreciation
Finance costs on loans
Net Loss on sale of shares
Net Profit on sale of exploration assets
Net loss on disposal of controlled entity
Employee & Consultant equity settled
transactions
Fair value adjustment to investments
Exploration write-off
Management fees received
Changes in assets and liabilities:
Decrease/(increase) in trade receivables
and prepayments
Increase/(decrease) in trade payables,
accruals and employee entitlements
Increase/(decrease) in provisions
Decrease/(increase) in exploration
Decrease/(increase) in deferred tax assets
(Decrease)/increase in deferred tax
liabilities
44,537
530,410
80,846
(5,805,683)
1,379,554
188,011
(530,744)
185,195
(97,121)
36,559
-
1,777,006
(496,008)
-
425,024
1,784,283
370,000
-
(345,645)
(483,137)
57,818
10,230
(8,250,780)
289,514
529,471
24,705
(6,556,418)
(2,181,974)
1,211,791
2,181,974
Cash outflow from operations
(9,770,242)
(7,600,124)
(ii)
Non-cash financing and investing activities
Share based payments (note 27)
596,275
425,024
(iii) Disposal of Entities
During the year the controlled entity of Hayes Mining Pty
Ltd was sold. Aggregate details of this transaction are:
Disposal price
Cash consideration
Assets and liabilities held at disposal date:
Receivables
Royalty assets
Capitalised exploration
Deferred tax asset
Deferred tax liability
Net (loss) on disposal
Net cash received
2,820,000
1,380,000
151,500
47,000
119,100
4,867,804
(985,850)
4,199,554
(1,379,554)
1,380,000
-
-
-
-
-
-
-
-
-
-
48
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
21.
COMMITMENTS
On 25 February 2010, the Group entered into a lease agreement with CB Richard Ellis (C)
Pty Ltd for the premises at Level 2, 38 Richardson Street, West Perth, Western Australia. The
initial term, is for three (3) years expiring on 1 April 2013 in consideration for a rental fee of
$216,804 per annum.
In order to maintain rights of tenure to mining tenements, the Group 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:
No longer than one year
Longer than one year, but not longer than five years
Longer than five years
2011
$
703,623
3,232,591
-
3,936,215
2010
$
1,179,604
3,124,023
-
4,303,627
If the Group decides to relinquish certain leases and/or does not meet these obligations,
assets recognised in the statement of financial position 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.
22.
CONTROLLED ENTITIES
Parent Entity
Country of Incorporation Percentage Owned
2011
2010
Cazaly Resources Limited
Australia
Controlled Entities
Hayes Mining Pty Ltd
Cazaly Iron Pty Ltd
Sammy Resources Pty Ltd
Cazroy Pty Ltd
Australia
Australia
Australia
Australia
-
100%
100%
100%
100%
100%
100%
100%
49
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
23.
JOINT VENTURE
A wholly owned subsidiary has entered into an unincorporated joint venture called the
Earaheedy Iron Province Joint Venture for the purpose of conducting exploration work and
activities related to tenements. Cazaly Iron has a 50% participating interest in this joint venture.
The group’s interests in the assets employed in the joint venture are included in the statement of
financial position, in accordance with the accounting policy described in note 1(r), under the
following classifications:
NON CURRENT ASSETS
Exploration and evaluation assets
TOTAL NON CURRENT ASSETS
TOTAL ASSETS
SHARE OF TOTAL ASSETS OF JOINT VENTURE
2011
$
2010
$
279,527
279,527
279,527
279,527
-
-
-
-
50
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
24. OPERATING SEGMENTS
The Group operates predominantly in one geographical segment, being Western Australia,
and in one business segment, mineral mining and exploration and substantially all of the
entity’s resources are deployed for this purpose.
Segment Information
Identification of reportable segments
The Group has identified its operating segments based on the internal reports that are
reviewed and used by the Board of Directors in assessing performance and determining
the allocation of resources.
The Group is managed primarily on the basis of its exploration and corporate activities.
Operating segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the
segments are considered to have similar economic characteristics
Types of reportable segments
Exploration
Segment assets, including acquisition cost of exploration licenses, all expenses related to
the tenements and profit on sale of tenements are reported on in this segment.
Corporate
Corporate, including treasury, corporate and regulatory expenses arising from operating
an ASX listed entity. Segment assets, including cash and cash equivalents, and investments
in financial assets are reported in this segment.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as the chief
decision maker with respect to operating segments are determined in accordance with
accounting policies that are consistent to those adopted in the annual financial
statements of the Company.
Segment assets
Where an asset is used across multiple segments, the asset is allocated to the segment
that receives the majority of economic value from the asset. In the majority of instances,
segment assets are clearly identifiable on the basis of their nature and physical location.
Unless indicated otherwise in the segment assets note, deferred tax assets and
intangible assets have not been allocated to operating segments.
Segment liabilities
Liabilities are allocated to segments where there is direct nexus between the incurrence
of the liability and the operations of the segment. Borrowings and tax liabilities are
generally considered to relate to the Group as a whole and are not allocated. Segment
liabilities include trade and other payables.
51
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
24. OPERATING SEGMENTS (Cont’d)
Unallocated items
The following items of revenue, expense, assets and liabilities are not allocated to
operating segments as they are not considered part of the core operations of any
segment:
• non-recurring items of revenue or expense;
•
income tax expense;
• deferred tax assets and liabilities;
(i) Segment performance
30 June 2011:
Total segment revenue
Reconciliation of segment revenue to total
revenue:
Inter-segment elimination
Unallocated revenue
Revenue from discontinued operations
Total group revenue
Exploration
$
Corporate
$
Total
$
1,315,936
179,084
1,495,020
-
-
-
1,495,020
Segment net profit/(loss) before tax
6,409,509
(139,929)
6,269,581
Reconciliation of segment result to group net
(loss) before tax:
Amounts not included in segment result but
reviewed by the Board:
Un-allocated items:
Employee benefits
Occupancy costs
Consultants
Other
Net gain before tax from continuing operations
30 June 2010:
Total segment revenue
Reconciliation of segment revenue to total
revenue:
Inter-segment elimination
Unallocated revenue
Total group revenue
(488,517)
(356,274)
(336,004)
(926,101)
4,162,685
494,250
102,803
597,053
-
-
597,053
Segment net profit/(loss) before tax
124,250
(1,982,722)
(1,858,472)
Reconciliation of segment result to group net
(loss) before tax:
Amounts not included in segment result but
reviewed by the Board:
Unallocated items:
Other
Net loss before tax from continuing operations
415,429
(1,443,043)
52
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
24. OPERATING SEGMENTS (Cont’d)
Exploration
Corporate
Total
$
$
$
(ii) Segment assets
30 June 2011:
Segment assets
Segment asset increases for the period:
Capital expenditure
Acquisitions
Interest received
Capital raising
Reconciliation of segment assets to total assets:
Inter-segment eliminations
Unallocated assets:
Deferred tax assets
Other assets
Total assets from continuing operations
30 June 2010:
Segment assets
Segment asset increases for the period:
Capital expenditure
Acquisitions
Interest received
Capital raising
Reconciliation of segment assets to total assets:
Inter-segment eliminations
Unallocated assets:
Deferred tax assets
Other assets
Total assets from continuing operations
(iii) Segment liabilities
30 June 2011:
Segment liabilities
Reconciliation of segment liabilities to liabilities:
Inter-segment eliminations
Unallocated liabilities:
Deferred tax liabilities
Other liabilities
Total liabilities from continuing operations
17,477,364
9,427,311
26,904,6750
9,269,114
-
9,269,114
49,000
-
179,093
179,093
2,829,284
2,829,284
-
-
9,269,114
3,057,377
12,326,491
-
4,645,192
-
31,549,867
17,150,110
4,345,420
21,495,530
7,880,160
-
7,880,160
-
-
84,214
84,214
109,063
109,063
8,004,139
8,004,139
7,880,160
8,197,416
16,077,576
-
-
-
5,085,658
-
26,581,188
-
-
5,311,600
1.015,373
6,326,973
53
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
24.
OPERATING SEGMENTS (Cont’d)
Exploration
Corporate
Total
30 June 2010:
Segment liabilities
Reconciliation of segment liabilities to liabilities:
$
-
$
-
Inter-segment eliminations
Unallocated liabilities:
Deferred tax liabilities
Other liabilities
Total liabilities from continuing operations
$
-
-
5,085,658
947,323
6,032,981
25. DISCONTINUED OPERATIONS
(a) On 17 June 2010, the Company announced that it had signed an agreement with Phoenix
Gold Pty Ltd (“Phoenix”) to sell its West Kalgoorlie Gold assets, including the 100% owned
subsidiary Hayes Mining Pty Ltd. The sale was conditional on Phoenix receiving approval
from the ASX for admission of its securities to the official list and obtaining ministerial
consents for tenement transfers to Phoenix.
Hayes Mining Pty Ltd was sold on 22 December 2010.
Financial information relating to the discontinued operation to the date of disposal is set
out below.
The financial performance of the discontinued operation to the date of sale which is
included in profit/ (loss) from discontinued operations per the statement of comprehensive
income is nil.
2011
$
2010
$
Net loss on disposal of Hayes Mining Pty Ltd
1,379,554
-
Loss on disposal of the subsidiary included in loss from discontinued operations per the
statement of comprehensive income.
The net cash flows of the discontinuing division which have been incorporated into the
cash flow statement are as follows:
Cash consideration for sale of Hayes Mining Pty
Ltd
1,380,000
-
(b) Discontinued Operations - Income Tax Expense of $865,246
The income tax expense recognised in the current period is due to the deferred tax liability
that was building up within Hayes. The tax losses were transferred to Cazaly on sale, as
Cazaly did not have income to offset them against these losses the group derecognised
these assets and booked a tax loss.
54
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
26.
EVENTS SUBSEQUENT TO REPORTING DATE
On 18 July 2011, the Company issued 1,000,000 ordinary shares to Director, Clive Jones
following the exercise of 1,000,000 30 cent Options expiring 30 June 2011.
In July 2011, the Company registered five wholly owned subsidiaries, Caz Yilgarn Pty Ltd;
Baker Fe Pty Ltd; Baldock Fe Pty Ltd; Hase Fe Pty Ltd and Lockett Fe Pty Ltd.
On 4 August 2011, the Company announced a conditional sale and an alliance
arrangement with an Investment Group over the Parker Range Iron Ore Project. The
arrangement allowed for an initial 45 day due diligence and exclusivity period. Subject to
being satisfied with its due diligence and the transaction proceeding, the Investment
Group is entitled to be issued with a convertible note in the principal amount of $5 million.
The arrangement allows for the payment of an initial $40 million within 6 months of the
execution of a formal Sale and Purchase Agreement (“SPA”) and a further payment of $55
million upon the earlier of first iron ore being explored or 24 months from signing the SPA.
On 7 September 2011, the Company appointed Ms Julie Hill to the role of Company
Secretary following the resignation of Ms Lisa Wynne.
On 26 September 2011, the Company announced it had reached mutual agreement with
the Investment Group to extend the due diligence and exclusivity period for the sale of
the Parker Range Project by 45 days.
On 26 September 2011, the Company announced that Cazaly Resources Limited and
Vector Resources Limited (ASX:VEC) (collectively the Earaheedy Joint Venture (EJV) signed
a farm-in agreement with ANGLO AMERICAN, the global diversified mining house,
covering part of EJV’s Earaheedy Iron project in the Wiluna region of Western Australia.
The Farm-In Agreement relates to an area of approximately 890 km2 and allows for Anglo
American to complete an initial “proof of concept” program with a minimum of 7,500m of
RC or diamond drilling to be completed as due diligence within 18 months. Following this,
ANGLO AMERICAN may earn an initial 51% interest in the project by payment of an initial
$1M in cash to the EJV and the expenditure of $20M within 4 years. ANGLO AMERICAN
may then earn a total 75% interest in the project by the completion of a Bankable
Feasibility Study (BFS) and payment of a further $5M to the EJV. In addition, following
delivery of a positive BFS, a success payment of $45M would become payable by ANGLO
AMERICAN to the EJV. The EJV may then elect to contribute to project expenditure or
dilute to a royalty of 1.25% FOB. Normal industry standard terms also apply.
Since 30 June, the Australian stock market has been volatile resulting in the Company’s
financial assets undergoing a change in value. Subsequently the fair value of the
Company’s financial assets held for trading as at the date of this report has reduced by
approximately $300,000.
55
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
27.
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
in
directors of the Group and aggregate amounts paid to superannuation plans
connection with the retirement of directors are disclosed
the
in Note 4
accounts.
to
Mr McMahon was at any time during the financial year a director and shareholder of
Hodges Resources Limited (“Hodges”), Winmar Resources Limited (“Winmar”) and
Whinnen Resources Limited (“Whinnen”). Hodges and Whinnen have an agreement
based on normal commercial terms and conditions to reimburse Cazaly for office rental
and administration and overheads. Winmar and Cazaly Iron Pty Ltd have entered into a
farm-in agreement whereby Winmar has the right to earn-in to an initial 51% interest in
the Hamersley Iron Ore project. Winmar paid a non-refundable option fee of $400,000
and $3.1million in cash and 2.5 million Winmar shares in consideration for the right to
earn-in under the agreement. Under the terms of the agreement the Cazaly group is
managing the exploration activities at the Hamersley Iron Ore project and re-coups all
exploration expenditure from Winmar plus a management fee.
Mr Jones is a director and shareholder of Cortona Resources Limited (“Cortona”) and
Corazon Mining Limited (“Corazon”) Cortona and Corazon have agreements 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 related parties
of Cazaly Resources Limited:
Sales
Rent, administrative and office overheads:
• Catalyst Metals Limited
• Hodges Resources Limited
• Corazon Mining Limited
• Cortona Resources Limited
• Whinnen Resources Limited
2011
$
2010
$
-
81,781
-
11,349
47,098
14,342
62,489
7,054
37,660
34,108
Consideration received from Winmar Resources Limited
under farm-in agreement
• Cash consideration and option fees
• Value of equity securities received
On-charge of exploration under joint venture
arrangements:
• Winmar Resources Limited
3,500,000
500,000
4,000,000
2,218,324
-
-
-
-
56
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
28.
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.
On 29 September 2010, the Company announced that it had entered into a bridging
facility with a range of Institutions, Sophisticated Investors and Directors to provide a loan
amount of a minimum of A$2 million and maximum of A$4 million. Kingsreef Pty Ltd
provided $700,000 and Widerange Corporation Limited provided $100,000 to the
Company by way of short-term finance under the facility. Kingsreef Pty Ltd is an entity
controlled by Mr Nathan McMahon and Widerange Corporation Pty Ltd is an entity
controlled by Mr Clive Jones, both of whom are Directors and therefore a related parties
of the Company. The finance provided by Messers McMahon and Jones was based on
the same arm’s length terms as the other lenders.
The bridging facility was arranged as a short-term finance for the purpose of allowing for
completion of the Parker Range Bankable Feasibility Study, Parker Range environmental,
mining and other permitting activities and for general working capital requirements. The
Company has drawn down A$2,550,000 under the facility.
In accordance with the terms of the bridging facility, the Company issued 2,550,000
Options exercisable at 53 cents, expiring 18 October 2012. The Options were issued on the
basis of 100,000 Options for every $100,000 drawn down.
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:
2011
2010
Number of
Options
Weighted
Average
Exercise
Price
$
Number of
Options
Weighted
Average
Exercise
Price
$
6,475,000
0.35
5,675,000
1.20
4,300,000
-
(1,000,000)
-
9,775,000
0.53
-
0.30
-
0.44
3,525,000
2,250,000
-
(4,975,000)
6,475,000
0.34
0.30
-
1.26
0.35
9,775,000
6,475,000
At beginning of reporting
period
Granted during the period
Employee & consultants
options
Director remuneration
Exercised during the period
Expired during the period
Balance the end of
reporting period
Exercisable at end of
reporting period
(i)
(ii)
(iii)
The compensation options outstanding at 30 June 2011 had a weighted average exercise
price between $0.25 and $0.86 and a weighted average remaining life between 1 year
and 5 years.
The respective weighted average fair values of options granted during 2011 were $0.1387.
Included under employee benefits expense and consultancy expenses in the Statement of
Comprehensive Income is $188,011 (2010: $425,024), and relates to equity-settled
payment transactions.
57
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
28.
SHARE BASED PAYMENTS (Cont’d)
The fair value of the options granted is determined by using the Black-Scholes methodology. The
following table lists the inputs to the models used for period ended 30 June 2011:
Allottees
Lenders – Bridging Facility
Lenders – Bridging Facility
Lenders – Bridging Facility
Employees & Consultants
Consultants
Consultants
Consultants
Fair Value
at Grant
Date
Estimated
Volatility
$0.1755
$0.1435
$0.1331
$0.1345
$0.1641
$0.0834
$0.1258
70%
70%
70%
70%
70%
70%
70%
Life of
Option
(yrs)
2.00
1.96
1.87
3.00
2.93
1.21
1.85
Exercise
Price
Share
Price
$0.53
$0.53
$0.53
$0.53
$0.52
$0.55
$0.53
$0.470
$0.425
$0.415
$0.35
$0.395
$0.395
$0.405
Risk Free
Interest
Rate
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
The expected volatility is based on the historical volatility (based on remaining life of the
options), adjusted for any expected changes to future volatility based on publicly available
information.
29.
CONTINGENT LIABILITIES AND CONTINGENT ASSETS
There are currently no other contingent liabilities or contingent assets outstanding at the end of
the year.
58
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
30.
PARENT ENTITY DISCLOSURES
(a) Statement of financial position
Assets
Current assets
Non-current assets
Total assets
Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Equity
Issued capital
Reserves:
Equity settled employee benefits
Retained profits
Total Equity
(b) Statement of comprehensive income
Total profit/ (loss)
Total comprehensive income
(c) Guarantees Entered into by the Parent Entity in
Relation to the Debts of its Subsidiaries
(d) Contingent Liabilities of the Parent Entity
(e) Commitments for the Acquisition of Property,
Plant and Equipment by the Parent Entity
2011
$
2010
$
5,073,936
9,075,259
3,755,968
4,208,085
14,149,195
7,964,053
1,015,370
550,829
947,324
3,258,802
1,566,199
4,206,126
23,145,288
20,348,703
1,210,019
(11,772,311)
613,744
(17,204,520)
12,582,996
3,757,927
5,432,207
(12,340,535)
5,432,207
(12,340,535)
-
-
-
-
-
-
59
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS
31.
The AASB has issued new and amended Accounting Standards and Interpretations that have
mandatory application dates for future reporting periods and which the Group has decided not to
early adopt. A discussion of those future requirements and their impact on the Group is as follows:
– AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods
commencing on or after 1 January 2013).
This Standard is applicable retrospectively and includes revised requirements for the classification
and measurement of financial instruments, as well as recognition and derecognition requirements
for financial instruments. The Group has not yet determined any potential impact on the financial
statements.
The key changes made to accounting requirements include:
-
simplifying the classifications of financial assets into those carried at amortised cost and those
carried at fair value;
-
simplifying the requirements for embedded derivatives;
-
removing the tainting rules associated with held-to-maturity assets;
-
removing the requirements to separate and fair value embedded derivatives for financial assets
carried at amortised cost;
- allowing an irrevocable election on initial recognition to present gains and losses on investments
in equity instruments that are not held for trading in other comprehensive income. Dividends in
respect of these investments that are a return on investment can be recognised in profit or loss
and there is no impairment or recycling on disposal of the instrument;
-
requiring financial assets to be reclassified where there is a change in an entity’s business model
as they are initially classified based on: (a) the objective of the entity’s business model for
managing the financial assets; and (b) the characteristics of the contractual cash flows; and
- requiring an entity that chooses to measure a financial liability at fair value to present the portion
of the change in its fair value due to changes in the entity’s own credit risk in other
comprehensive income, except when that would create an accounting mismatch. If such a
mismatch would be created or enlarged, the entity is required to present all changes in fair
value (including the effects of changes in the credit risk of the liability) in profit or loss.
– AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2: Amendments
to Australian Accounting Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7,
8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121, 123, 124, 127, 128, 131, 133, 134, 136, 137, 138,
140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052] (applicable for annual
reporting periods commencing on or after 1 July 2013).
AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of
financial reporting requirements for those entities preparing general purpose financial statements:
- Tier 1: Australian Accounting Standards; and
- Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.
Tier 2 of the framework comprises the recognition, measurement and presentation requirements of
Tier 1, but contains significantly fewer disclosure requirements.
The following entities are required to apply Tier 1 reporting requirements (ie full IFRS):
- for-profit private sector entities that have public accountability; and
- the Australian Government and state, territory and local governments.
Since the Group is a for-profit private sector entity that has public accountability, it does not qualify
for the reduced disclosure requirements for Tier 2 entities.
AASB 2010–2 makes amendments to Australian Accounting Standards and Interpretations to give
effect to the reduced disclosure requirements for Tier 2 entities. It achieves this by specifying the
disclosure paragraphs that a Tier 2 entity need not comply with as well as adding specific “RDR”
disclosures.
60
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS
31.
– AASB 2009–12: Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133,
137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052] (applicable for annual reporting
periods commencing on or after 1 January 2011).
This Standard makes a number of editorial amendments to a range of Australian Accounting
Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs
by the IASB. The Standard also amends AASB 8 to require entities to exercise judgment in assessing
whether a government and entities known to be under the control of that government are
considered a single customer for the purposes of certain operating segment disclosures. The
amendments are not expected to impact the Group.
– AASB 2010–4: Further Amendments to Australian Accounting Standards arising from the Annual
Improvements Project [AASB 1, AASB 7, AASB 101 & AASB 134 and Interpretation 13] (applicable for
annual reporting periods commencing on or after 1 January 2011).
This Standard details numerous non-urgent but necessary changes to Accounting Standards arising
from the IASB’s annual improvements project. Key changes include:
- clarifying the application of AASB 108 prior to an entity’s first Australian-Accounting-Standards
financial statements;
- adding an explicit statement to AASB 7 that qualitative disclosures should be made in the context
of the quantitative disclosures to better enable users to evaluate an entity’s exposure to risks
arising from financial instruments;
- amending AASB 101 to the effect that disaggregation of changes in each component of equity
arising from transactions recognised in other comprehensive income is required to be presented,
but is permitted to be presented in the statement of changes in equity or in the notes;
- adding a number of examples to the list of events or transactions that require disclosure under
AASB 134; and
- making sundry editorial amendments to various Standards and Interpretations.
This Standard is not expected to impact the Group.
– AASB 2010–5: Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118,
119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042]
(applicable for annual reporting periods beginning on or after 1 January 2011).
This Standard makes numerous editorial amendments to a range of Australian Accounting
Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs
by the IASB. However, these editorial amendments have no major impact on the requirements of
the respective amended pronouncements.
– AASB 2010–6: Amendments to Australian Accounting Standards – Disclosures on Transfers of
Financial Assets [AASB 1 & AASB 7] (applicable for annual reporting periods beginning on or after 1
July 2011).
This Standard adds and amends disclosure requirements about transfers of financial assets,
especially those in respect of the nature of the financial assets involved and the risks associated
with them. Accordingly, this Standard makes amendments to AASB 1: First-time Adoption of
Australian Accounting Standards, and AASB 7: Financial Instruments: Disclosures, establishing
additional disclosure requirements in relation to transfers of financial assets.
This Standard is not expected to impact the Group.
– AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December
2010) [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038
and Interpretations 2, 5, 10, 12, 19 & 127] (applies to periods beginning on or after 1 January 2013).
This Standard makes amendments to a range of Australian Accounting Standards and
Interpretations as a consequence of the issuance of AASB 9: Financial Instruments in December
2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.
As noted above, the Group has not yet determined any potential impact on the financial
statements from adopting AASB 9.
61
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2011
NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE PERIODS
31.
– AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of
Underlying Assets [AASB 112] (applies to periods beginning on or after 1 January 2012).
This Standard makes amendments to AASB 112: Income Taxes.
The amendments brought in by this Standard introduce a more practical approach for measuring
deferred tax liabilities and deferred tax assets when investment property is measured using the fair
value model under AASB 140: Investment Property.
Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets
depends on whether an entity expects to recover an asset by using it or by selling it. The
amendments introduce a presumption that an investment property is recovered entirely through
sale. This presumption is rebutted if the investment property is held within a business model whose
objective is to consume substantially all of the economic benefits embodied in the investment
property over time, rather than through sale.
The amendments brought in by this Standard also incorporate Interpretation 121 into AASB 112.
The amendments are not expected to impact the Group.
62
DIRECTORS’ DECLARATION
Cazaly Resources Limited Annual Report 2011
The directors of the company declare that:
1.
the financial statements and notes, as set out on pages 22 to 62, are in accordance with
the Corporations Act 2001:
(a)
(b)
(c)
comply with Accounting Standards and the Corporations Regulations 2001; and
are in accordance with International Financial Reporting Standards, as stated in
note 1 to the financial statements; and
give a true and fair view of the financial position as at 30 June 2011 and of the
performance for the year ended on that date of the company and Consolidated
group; and
2.
the Chief Executive Officer and Chief Financial Officer have each declared that:
(a)
(b)
the financial records of the company for the financial year have been properly
maintained in accordance with section 286 of the Corporations Act 2001;
the financial statements and notes for the financial year comply with the
Accounting Standards; and
(c)
the financial statements and notes for the financial year give a true and fair view.
3.
in the directors’ opinion there are reasonable grounds to believe that the Consolidated
group will be able to pay its debts as and when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors.
Nathan McMahon
Managing Director
Perth,
29 September 2011
63
We have audited the accompanying financial report of Cazaly Resources Limited (“the
Company”) and Controlled Entities (“the Consolidated Entity”), which comprises the
consolidated statement of financial position as at 30 June 2011, and the consolidated
statement of comprehensive income, consolidated statement of changes in equity and
consolidated statement of cash flows for the year then ended, notes comprising a summary
of significant accounting policies and other explanatory information, and the directors’
declaration of the Company and the Consolidated Entity, comprising the Company and the
entities it controlled at the year’s end or from time to time during the financial year.
The directors of the Company are responsible for the preparation and fair presentation of
the financial report in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that is free from material misstatement,
whether due to fraud or error. In Note 1, the directors also state, in accordance with
Accounting Standards AASB 101: Presentation of Financial Statements, that the financial
statements comply with International Financial Reporting Standards.
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the
financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
In conducting our audit, we followed applicable independence requirements of Australian professional ethical
pronouncements and the Corporations Act 2001.
In our opinion:
a. The financial report of Cazaly Resources Limited is in accordance with the Corporations Act 2001,
including:
i.
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2011 and of its
performance for the year ended on that date; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001;
b. The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
We have audited the Remuneration Report included in directors’ report of the year ended 30 June 2011. The
directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
In our opinion, the Remuneration Report of Cazaly Resources Limited for the year ended 30 June 2011,
complies with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
RICHARD JOUGHIN CA
Director
DATED at PERTH this 29th day of September 2011
ADDITIONAL SHAREHOLDER INFORMATION
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2011
Shareholding
The distribution of members and their holdings of equity securities in the company as at 23
September 2011 were as follows:
Class of Equity Securities
Number Held as at 23 September Fully Paid Ordinary Shares
1-1,000
1,001 - 5,000
5,001 – 10,000
10,001 - 100,000
100,001 and over
TOTALS
179,536
2,743,711
4,856,993
31,525,434
82,783,452
122,089,126
Substantial Shareholders
Substantial shareholders in the Company are set out below
Shareholder
Nathan McMahon
Clive Jones
Unquoted Securities
Class of Equity
Security
5 October 2011
19 June 2012
14 September 2012
26 October 2012
22 May 2013
6 October 2011
6 July 2013
6 July 2016
11 January 2015
4 February 2015
11 February 2012
18 October 2012
18 March 2014
30 June 2012
Exercise Price
Number
Under
Option
50,000
250,000
75,000
225,000
100,000
500,000
750,000
750,000
925,000
100,000
500,000
2,800,000
500,000
1,000,000
$0.8036
$0.8600
$0.39
$0.45
$0.30
$0.25
$0.30
$0.40
$0.33
$0.49
$0.40
$0.53
$0.52
$0.55
Number
14,463,530
7,566,802
Number of Security
Holders
1
2
1
2
1
1
1
1
5
1
1
15
3
1
66
ADDITIONAL SHAREHOLDER INFORMATION
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2011
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 23 September 2011 are as
follows:
Name
Kingsreef Pty Ltd
New Page Investments Limited
Clive Bruce Jones
Nathan McMahon
Clive Jones
JP Morgan Nominees Australia
Limited
Mr Peter Anastasiou & Mrs Kiristine
Anastasiou
HSBC Custody Nominees (Australia)
Limited
BT Portfolio Services Limited
Citicorp Nominees Pty Limited
Kent Michael Hunter
UBS Wealth Management Australia
Nominees Pty Ltd
Fusion Resources Pty Ltd
Appolinax Inc
Anthony Robert Ramage
Texas Woods Pty ltd
Kouta Bay Pty Ltd
Fifty-Fifth Leprechaun Pty Ltd
Merrill Lynch (Australia) Nominees Pty
Limited
Kakulas Legal Pty Ltd
Number of Ordinary
Fully Paid Shares Held
8,583,523
8,000,000
6,135,004
4,425,004
2,500,001
2,124,800
2,066,922
1,621,872
1,500,000
1,427,499
1,311,352
1,266,725
1,000,000
1,000,000
875,000
744,000
703,250
676,000
670,290
624,623
% Held of Issued
Ordinary Capital
7.031
6.553
5.025
3.624
2.048
1.740
1.644
1.328
1.229
1.169
1.074
1.038
0.819
0.819
0.717
0.609
0.576
0.554
0.549
0.512
TOTAL
47,195,865
38.657
67
ADDITIONAL SHAREHOLDER INFORMATION
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2011
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 the Company and its officers act legally, ethically and responsibly in all matters
ensuring that policies and procedures are in place consistent with the Company’s objectives, and
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 on-going 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.
68
ADDITIONAL SHAREHOLDER INFORMATION
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Cazaly Resources Limited Annual Report 2011
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 – 83 months
Nathan McMahon – Managing Director
Executive Director since June 2003
Term in office - 85 months
Kent Hunter
Independent Non-executive director since August 2003
Term in office – 83 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 Directors 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.
69
ADDITIONAL SHAREHOLDER INFORMATION
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2011
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 it 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.
Diversity Policy
The Company does not have a Diversity policy in place at this stage. The Board will seek to develop a Diversity
Policy in the future, which can then be sued as a guide to be used by the Company to identify new directors,
senior executives and employees.
Gender proportions:
46% of the Company’s employees are women and one of these women holds a senior executive position.
70
ADDITIONAL SHAREHOLDER INFORMATION
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2011
CORPORATE GOVERNANCE
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 an audit committee.
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.
71
ADDITIONAL SHAREHOLDER INFORMATION
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2011
CORPORATE GOVERNANCE
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.
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.
72
ADDITIONAL SHAREHOLDER INFORMATION
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Cazaly Resources Limited Annual Report 2011
CORPORATE GOVERNANCE
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.
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 from 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
The Company
does not have a
Diversity Policy
3.2 Companies
should establish a
policy concerning
diversity and
disclose the policy
or a summary of the
policy.
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 on-going 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
Recommendation 3.2 was revised recently and the Company
has not finalised its Diversity Policy at the time of this report. The
Board will seek to develop a Diversity Policy over the coming
year, which can then be sued as a guide to be sued throughout
the Company in identifying new directors, senior executives and
employees.
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ADDITIONAL SHAREHOLDER INFORMATION
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Cazaly Resources Limited Annual Report 2011
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.
8.1 The board
should establish a
remuneration
committee and
8.2 The
remuneration
committee structure
The Company
has not
established a
formal
remuneration
committee
Non-executive
directors
received options
8.3 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 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.
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.
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Cazaly Resources Limited Annual Report 2011
SCHEDULE OF MINERAL TENEMENTS AS AT 23 SEPTEMBER 2011
#NO
PROJECT
1EL
19 PL'S
9 PL'S
1ML, 1PL
3 PL'S
3 EL'S, 1PL
2 PL'S
5 EL'S
1 EL
1 EL
4 PL'S
2 EL'S
1 EL
11EL'S, 13ELA'S
1EL, 1ELA
1EL, 1MLA
4EL'S, 5 ELA'S
1 EL
1 EL
1 EL
1EL, 1ELA
1 EL
1 EL
1 EL
1 EL
1 ELA
4EL'S, 3ELA'S, 3L'S,
3MLS, 8PL'S, 2 PLA'S
1 EL
1EL, 2 ELA'S
1 ELA
1 EL
1 EL
AU-7 MILE HILL
AU-BALAGUNDI
AU-CARDINIA BORE
AU-CAROSUE
AU-CHADWIN
AU-JILLEWARRA
AU-MT CLIFFORD
AU-RANDALS
AU-RUBY WELL
AU-TEUTONIC BORE
BARDOC
BIG BEN
COSMO NEWBERRY
FE-EARAHEEDY
FE-ETHEL CREEK
FE-HAMERSLEY (WINMAR)
FE-HAMERSLEY
FE-HIGH RANGE
FE-HILLSIDE
FE-KARRATHA
FE-MARILLANA
FE-MOORINE ROCKS
FE-MT GOULD
FE-MT WILKINS
FE-MT. STUART
FE-MULGA DOWNS
FE-PARKER RANGE
FE-PILBARA
FE-ROCKLEA
FE-ROY HILL
FE-STRAWBERRY ROCKS
FE-TOODYAY
#NO
1 ELA
1 EL
1 EL
3 EL'S
1 PL
1 EL
1 EL
2 EL'S
1 ELA
1 EL
2 EL'S, 2 PL'S
1 EL
2 EL'S
2 ELA'S
1 EL
1 ELA
1 EL
2 EL'S
1 ELA
1 MLA, 7 PL'S
1 EL
3 PL'S
1 ELA
1 EL
1 EL
1 ELA
1 EL
1 ELA
2 EL'S
2ML'S, 3 PL'S
1 EL
PROJECT
FE-TURNER RIVER
FE-WALLAREENYA
FE-YALLEEN
FORRESTANIA
GOLDEN RIDGE
IOCG-POLLOCK HILL
IOCG-WEBB
JUTSON ROCKS
KOOLYANOBBING
LIME-LOONGANA
MAGELLEN
MT VETTERS
NEBO
NEWMAN NTH
NT-ACACIA BORE
NT-DAVENPORT
NT-MT ISABEL
NT-QUARTZ HILL
NT-WAUCHOPE
QUARTZ CIRCLE
SCADDAN
TEN MILE HILL
UR-BIDGEMIA
UR-HINKLER WELL
UR-JAILOR BORE
UR-LEOPOLD DOWNS
UR-PELLS RANGE
UR-RAWLINSON RANGE
U-YEELIRRIE
VETTERSBURG
YAMARNA
Notes: EL = Granted Exploration Licence MLA = Mining Lease Application M = Granted Mining Lease
ELA= Exploration Licence Application P = Granted Prospecting Licence PLA =
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