Cazaly Resources Limited
ABN: 23 101 049 334
and
Controlled Entities
Annual Report
For the Year Ended
30 June 2013
CONTENTS
Cazaly Resources Limited Annual Report 2013
Corporate Directory
Directors’ Report
Auditor’s Independence Declaration
Consolidated Statement of Profit or Loss and Other 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
Corporate Governance
1
2
25
26
27
28
29
30
59
60
62
65
CORPORATE DIRECTORY
Cazaly Resources Limited Annual Report 2013
MANAGING DIRECTOR
Nathan McMahon
MANAGING DIRECTOR
Clive Jones
NON-EXECUTIVE DIRECTOR
Kent Hunter
COMPANY SECRETARY
Mike Robbins
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 2013
Your directors present their report, together with the financial statements of Cazaly Resources
Limited (the Company) and its controlled entities (“Consolidated Group”) for the financial
year ended 30 June 2013.
1.
DIRECTORS AND COMPANY SECRETARY
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
Julie Hill held the position of company secretary until her resignation on 26 July 2013.
Mike Robbins was appointed Company Secretary on 26 July 2013 and holds that position at
the date of this report. Mr Robbins has over 20 years resource industry experience gathered
at both operational and corporate levels, both within Australia and overseas. During that
time, he has held numerous project level management positions as well as CFO and
Company Secretarial roles with Hodges Resources Ltd, Bannerman Resources Ltd, Moto Gold
Mines Ltd and Asian Mineral Resources Limited.
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 & FINANCIAL POSITION
The loss after tax for the year was $1,262,416 (2012:$1,875,229). The Company’s net assets at
the end of the year are $23,596,905 (2012: $23,772,151).
Cash and cash equivalents as at year end were $598,083 (2012 - $2,847,346).
At year end the Company had trade receivables of $1,051,899 (2012 - $666,012). Included in
trade receivables is the Phoenix Gold Limited royalty for the March and June 2013 quarters of
$531,732. These were subsequently both paid on 28 August 2013.
Exploration expenditure for the year was $3,284,321 (2012 - $3,027,119). The majority of this
expenditure was on the Halls Creek and Parker Range projects. Exploration expenditure
written off for the year was $781,956 compared to $1,411,634 in the previous financial year.
Net administration expenses and employee benefits for the year totalled $1,179,601 (2012 -
$1,341,615).
During the next financial year the Company intends to continue to develop its core projects
(Parker Range and Halls Creek) and explore new mining opportunities both in Australia and
overseas. These opportunities are being explored by the Board and corporate consultants
who operate on a success fee basis only.
2
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
4.
RISKS
There are specific risks associated with the activities of the Company and general risks which
are largely beyond the control of the Company and the Directors. The risks identified below,
or other risk factors, may have a material impact on the future financial performance of the
Company and the market price of the Company’s shares.
All mining ventures are exposed to risks and the Board continues to monitor risks associated
with current projects whilst also analysing the risks associated with any new mining
opportunities. These risks may cover such areas as:
Title Risk
This may specifically cover mining tenure whereby country specific mining laws
and legislation apply.
Any opportunity in Australia and overseas will be subject to particular risks
associated with operating in Australia or the respective foreign country. These risks
may include economic, social or political instability or change, hyperinflation,
currency non-convertibility or instability and changes of law affecting foreign
ownership, exchange control, exploration licensing, export duties, investment into
a foreign country and repatriation of income or return of capital, environmental
protection, land access and environmental regulation, mine safety, labour
relations as well as government control over mineral properties or government
regulations that require the employment of local staff or contractors or require
other benefits be provided to local residents.
Exploration Risk
The Board realises that mineral exploration and development are high risk
undertakings due to the high level of inherent uncertainty. There can be no
assurance that exploration of the Group’s tenements, or of any other tenements
that may be acquired by the Group in the future, will result in the discovery of
economic mineralisation. Even if economic mineralisation is discovered there is no
guarantee that it can be commercially exploited.
Any future exploration activities of the Group may be affected by a range of
factors including geological conditions, limitations on activities due to seasonal
weather patterns, unanticipated operational and technical difficulties, industrial
and environmental accidents, native title process, changing government
regulations and many other factors beyond the control of the Group.
Resource Estimates
The Company’s main projects contain JORC Code compliant resources. There is
no guarantee that a JORC Code compliant resource will be discovered on any of
the Company’s other tenements. Resource estimates are expressions of
judgement based on knowledge, experience and industry practice. Estimates
which were valid when originally calculated may alter significantly when new
information or techniques become available. In addition, by their very nature,
resource estimates are imprecise and depend to some extent on interpretations
which may prove to be inaccurate. As further information becomes available
through additional fieldwork and analysis the estimates are likely to change. This
may result in alterations to development and mining plans which may, in turn,
adversely affect the Company’s operations and the value of the Company’s
Listed Shares.
3
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Access Risks – Cultural Heritage and Native Title
The Group must comply with various country specific cultural heritage and native
title legislation including access agreements which require various commitments,
such as base studies and compliant survey work, to be undertaken ahead of the
commencement of mining operations.
It is possible that some areas of those tenements may not be available for
exploration due to cultural heritage and native title legislation or invalid access
agreements. The Group may need to obtain the consent of the holders of such
interests before commencing activities on affected areas of the tenements. These
consents may be delayed or may be given on conditions which are not
satisfactory to the Group.
JV and Contractual Risk
The Group has and may have additional options where it can increase its holding
in the selective assets by achieving or undertaking selected milestones. The
Group’s ability to achieve its objectives and earn or maintain an interest in these
projects is dependent upon it and the registered holders of those tenements
complying with their respective contractual obligations under joint venture
agreements in respect of those tenements, and the registered holders complying
with the terms and conditions of the tenements and any other relevant legislation.
Economic
General economic conditions, introduction of tax reform, new legislation, the
general level of activity within the resources industry, movements in interest and
inflation rates and currency exchange rates may have an adverse effect on the
Company’s exploration, development and possible production activities, as well
as on its ability to fund those activities.
Market conditions
Share market conditions may affect the value of the Company’s quoted
securities regardless of the Company’s operating performance. Share market
conditions are affected by many factors such as:
introduction of tax reform or other new legislation;
interest rates and inflation rates;
- general economic outlook;
-
-
- changes in investor sentiment toward particular market sectors;
-
-
the demand for, and supply of, capital; and
terrorism or other hostilities.
The market price of securities can fall as well as rise and may be subject to varied
and unpredictable influences on the market for equities in general and resource
exploration stocks in particular. Neither the Company nor the Directors warrant
the future performance of the Company or any return on an investment in the
Company.
4
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Volatility in Global Credit and Investment Markets
Global credit, commodity and investment markets have recently experienced a
high degree of uncertainty and volatility. The factors which have led to this
situation have been outside the control of the Company and may continue for
some time resulting in continued volatility and uncertainty in world stock markets
(including the ASX). This may impact the price at which the Listed Options and
Shares trade regardless of operating performance and affect the Company’s
ability to raise additional equity and/or debt to achieve its objectives, if required.
Commodity Price Volatility and Exchange Rates Risks
If the Company achieves success leading to mineral production, the revenue it
will derive through the sale of coal or any other minerals it may discover exposes
the potential income of the Company to commodity price and exchange rate
risks. Commodity prices fluctuate and are affected by many factors beyond the
control of the Company. Such factors include supply and demand fluctuations
for commodities and metals, technological advancements, forward selling
activities and other macro-economic factors such as inflation expectations,
interest rates and general global economic conditions.
Furthermore, international prices of various commodities are denominated in
United States dollars whereas the income and expenditure of the Company are
and will be taken into account in Australian currency. This exposes the Company
to the fluctuations and volatility of the rate of exchange between the United
States dollar and the Australian dollar as determined in international markets.
If the price of commodities declines this could have an adverse effect on the
Company’s exploration, development and possible production activities, and its
ability to fund these activities, which may no longer be profitable.
Environmental Risks
The operations and proposed activities of the Company are subject to each
project’s jurisdiction, laws and regulations concerning the environment. As with
most exploration projects and mining operations, the Company’s activities are
expected to have an impact on the environment, particularly if advanced
exploration or mine development proceeds. Future legislation and regulations
governing exploration, development and possible production may impose
significant environmental obligations on the Company.
The cost and complexity of complying with the applicable environmental laws
and regulations may prevent the Company from being able to develop potential
economically viable mineral deposits. The Company may require approval from
the relevant authorities before it can undertake activities that are likely to impact
the environment. Failure to obtain such approvals or to obtain them on terms
acceptable to the Company may prevent the Company from undertaking its
desired activities. The Company is unable to predict the effect of additional
environmental laws and regulations, which may be adopted in the future,
including whether any such laws or regulations would materially increase the
Company’s cost of doing business or affect its operations in any area.
There can be no assurances that new environmental laws, regulations or stricter
enforcement policies, once implemented, will not oblige the Company to incur
significant expenses and undertake significant investments in such respect which
could have a material adverse effect on the Company’s business, financial
condition and results of operations.
5
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
The above risks are not exhaustive but are the minimum exposure areas observed by the
Group. Outside of the above, the Group is continually assessing Industry type risk (covering
resources, commercial, commodity prices & volatility, insurance and environmental) and
general type risk (economic, share markets, government & legal and global volatility).
5.
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.
6.
REVIEW OF OPERATIONS
Corporate
Under a sale agreement, the Company is entitled to receive quarterly payments of $250,000
from Phoenix Gold Limited (‘Phoenix’) for a total of eight (8) quarters (totalling $2,000,000)
from the start of the March quarter. These payments are a part of the deferred consideration
resulting from the sale of tenements to Phoenix.
In addition, a further gold production royalty stream from the Catherwood gold project is due
from Phoenix commencing in the March 2014 quarter.
The royalty is $40/ounce to the Company and is capped at $3,000,000.
Projects
Halls Creek Copper Project (CAZ earning 75%)
Mount Angelo North
The Company is in agreement with 3D Resources Limited to earn up to a 75% interest in the
Halls Creek Copper Project, located in the Kimberley region of Western Australia.
The Halls Creek Project comprises a large package of six tenements covering an area of
approximately 298 km², near the township of Halls Creek covering part of the Halls Creek
Mobile Zone which is highly prospective for a range of commodities including base metals,
gold, diamonds and nickel. Initial work will concentrate on mineralisation previously
discovered at the Mt Angelo North Cu-Ag-Zn and the Mt Angelo Porphyry prospects.
The two prospects occur in association with the Angelo Microdiorite, a 5km by 1km long
elongate intrusive occurring along the boundary, and the Koongie Park and Olympio
Formations. The Koongie Park Formation is widely considered to have potential regionally for
the development of stratabound base metals.
In an ASX announcement on 26 August 2013, Cazaly announced results from their pre-collar
RC drilling completed at the Mt Angelo North copper deposit.
Since taking on the project the Company has conducted four drilling programmes for a total
of 48 RC and 14 diamond core holes totalling 4,423m RC and 1,021m diamond core. The
majority of this drilling has occurred at the Mount Angelo North copper deposit and has
delineated a significant, shallow body of volcanogenic massive sulphide (VMS) hosted
copper-zinc-silver mineralisation. Furthermore the company discovered a linking ‘Feeder’
zone below the deposit which has the potential to positively impact upon the future
economics of the deposit.
6
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Figure 1 – Halls Creek Copper Project, Mt Angelo North Drill Hole Plan
Better intercepts from the drilling are summarised below in table 1.
Table 1 - Significant Drill Intercepts from RC Holes at Mt Angelo North
East
North
Hole
Depth
GDA
Az m
Dip
From
To
Length
Cu
(%)
Pb
(%)
Zn
(%)
Ag
(ppm)
Au
(ppm)
Cu
Eq
(%)
Intercept
Prospect
Mt Angelo
Nth
Hole ID
HCRC0
001
Mt Angelo
Nth
HCRC0
002
340,454
7,960,585
90
106
-60
Includes
340,473
7,960,658
110
90
-60
Includes
Includes
Mt Angelo
Nth
HCRC0
003
340,495
7,960,636
90
0
-90
46
48
12
14
27
45
53
63
17
15
55
53
20
19
60
49
56
69
27
19
9
5
8
5
4.59
0.14
1.11
28.45
0.12
5.33
6.80
0.16
1.51
37.76
0.10
7.74
3.40
0.59
0.40
16.36
0.07
3.91
4.72
0.41
0.21
22.36
0.06
5.20
33
1.45
0.11
1.23
9.50
0.06
1.94
4
3
6
10
4
0.72
0.12
3.75
9.17
<0.01
1.79
3.46
0.02
0.56
17.07
0.19
3.94
4.20
0.02
0.39
20.89
0.25
4.72
0.67
0.96
0.20
71.49
0.94
2.49
0.65
0.34
0.96
9.60
0.12
1.18
7
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Includes
Mt Angelo
Nth
HCRC0
005
340,433
7,960,590
100
94
-60
Includes
Mt Angelo
Nth
HCRC0
006
340,445
7,960,564
114
0
-90
Includes
Mt Angelo
Nth
HCRC0
007
Mt Angelo
Nth
HCRC0
010
340,424
7,960,527
144
0
-90
340,485
7,960,621
66
0
-90
Includes
Includes
Mt Angelo
Nth
HCRC0
011
340,498
7,960,670
84
116
-75
Includes
26
26
28
38
24
25
53
61
77
28
28
46
45
56
8
14
39
42
8
23
48
28
36
44
74
32
56
76
86
66
41
56
49
61
32
16
52
49
30
26
38
41
47
52
55
57
Mt Angelo
Nth
HCRC0
012
340,397
7,960,569
120
227
-60
47
49
91
93
22
1.85
0.04
0.97
9.41
0.05
2.25
2
8
6
3.43
0.06
0.56
10.11
0.05
3.74
0.76
0.04
1.85
5.21
0.03
1.31
3.23
0.05
0.76
17.49
0.05
3.68
50
2.49
0.12
2.73
17.63
0.04
3.44
7
3
15
9
38
13
10
4
5
24
2
13
7
22
3
3
5
2
2
2
6.30
0.25
1.73
48.50
0.09
7.44
1.32
0.18
5.06
13.60
<0.01
2.78
1.71
0.17
6.00
16.78
0.03
3.46
2.68
0.03
1.92
10.68
0.08
3.35
2.65
0.36
3.62
17.38
0.03
3.87
1.16
0.69
6.74
15.55
0.00
3.20
6.00
0.33
2.62
31.65
0.01
7.13
0.28
0.40
3.02
6.63
<0.01
1.22
1.51
0.05
0.98
7.51
0.05
1.89
0.77
2.60
2.01
47.88
0.59
2.97
2.26
4.06
6.20
54.72
0.18
5.71
2.19
0.19
1.24
22.31
0.27
3.00
3.35
0.28
1.73
33.96
0.39
4.53
1.64
0.14
0.55
9.81
0.11
2.01
5.43
0.60
0.38
9.74
0.11
5.88
6.32
0.20
2.17
43.50
0.65
7.88
2.58
0.84
0.55
20.61
0.38
3.46
0.92
0.05
0.13
7.70
0.15
1.16
0.56
0.63
3.88
22.03
<0.01
1.96
0.87
<0.1
0.05
9.89
<0.01
1.00
340,455
7,960,550
102
0
-90
72
86
14
1.21
0.16
1.28
8.89
0.13
1.77
Mt Angelo
Nth
HCRC0
013
Mt Angelo
Nth
HCRC0
014
Mt Angelo
Nth
HCRC0
015
Includes
340,428
7,960,577
78
0
-90
340,498
7,960,684
102
200
-50
Includes
Includes
Mt Angelo
Nth
HCRC0
016
340,424
7,960,547
100
0
-90
Includes
77
84
31
38
14
20
30
38
46
55
55
67
24
36
36
79
85
35
42
52
24
35
42
48
77
58
74
31
52
51
2
1
4
4
2.93
0.15
3.07
18.68
0.22
4.10
2.71
0.02
0.15
11.08
0.28
3.08
0.25
0.10
3.00
1.82
<0.01
1.04
1.14
0.02
2.14
4.80
0.08
1.79
38
3.42
0.08
1.10
13.97
0.23
4.04
4
5
4
2
6.27
0.08
1.91
23.79
0.14
7.15
6.78
0.04
0.54
25.12
0.72
7.72
7.91
0.01
0.11
15.18
0.34
8.36
1.31
0.30
4.45
11.71
0.08
2.69
22
1.80
0.05
1.34
10.64
0.16
2.38
3
7
7
16
15
0.80
0.15
4.27
11.71
0.08
2.09
3.27
0.05
1.02
18.07
0.23
3.91
1.29
0.07
2.32
7.48
0.02
1.99
1.73
0.24
2.29
14.5
0.09
2.60
1.79
0.26
2.4
15.22
0.09
2.70
8
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
21
1.15
0.23
2.97
11.02
0.04
2.11
0.94
<0.1
0.24
3.33
0.02
1.05
0.97
0.02
0.21
4.79
0.03
1.11
0.34
0.45
2.87
16.43
<0.01
1.37
0.41
0.62
3.99
21.61
<0.1
1.83
Includes
Mt Angelo
Nth
Mt Angelo
Nth
HCRC0
017
HCRC0
018
340,389
7,960,520
120
340,406
7,960,535
100
0
0
-90
-90
Mt Angelo
Nth
HCRC0
019
340,441
7,960,537
90
0
-90
Includes
Mt Angelo
Nth
HCRC0
020
Mt Angelo
Nth
HCRC0
024
Mt Angelo
Nth
HCRC0
025
Mt Angelo
Nth
HCRC0
029
Mt Angelo
Nth
HCRC0
030
Mt Angelo
Nth
Mt Angelo
Nth
HCRC0
031
HCRC0
032
Mt Angelo
Nth
HCRC0
033
Mt Angelo
Nth
HCRC0
034
Mt Angelo
Nth
Mt Angelo
Nth
HCRC0
035
HCRC0
036
Includes
Includes
340,451
7,960,532
120
0
-90
340,489
7,960,672
66
0
-90
Includes
340,378
7,960,480
90
0
-90
340,492
7,960,615
66
0
-90
Includes
Includes
340,502
7,960,610
60
0
-90
340,469
7,960,668
340,471
7,960,646
54
60
0
0
-90
-90
Includes
340,450
7,960,623
66
0
-90
340,440
7,960,600
60
0
-90
Includes
340,427
7,960,607
340,467
7,960,588
50
96
0
0
-90
-90
Includes
Mt Angelo
Nth
HCRC0
037
340,434
7,960,556
84
0
-90
Includes
Includes
24
20
32
71
71
51
53
69
72
72
79
8
9
15
9
26
6
8
31
37
17
32
10
11
23
23
37
11
24
18
24
34
25
39
65
72
22
23
31
43
61
61
45
29
38
74
73
58
57
76
74
74
92
28
11
18
14
28
26
10
44
42
29
34
18
17
43
26
43
17
51
53
39
40
60
60
67
87
57
26
37
48
64
63
9
6
3
2
7
4
7
2
2
13
20
2
3
5
2
20
2
13
5
12
2
8
6
0.77
0.20
4.47
1.05
0.30
4.81
1.65
0.01
0.78
3.28
0.03
2.09
0.16
0.18
2.45
1.03
0.02
0.28
2.46
0.09
0.86
4.52
0.20
1.67
8.53
0.06
1.10
1.11
0.00
0.08
1.14
0.01
0.18
0.28
1.40
1.13
0.25
6.86
0.92
0.61
0.51
3.36
1.04
0.57
4.60
0.53
0.36
2.04
0.08
0.84
4.42
0.82
0.18
1.82
0.25
0.99
0.71
20
1.63
0.09
2.52
3
6
6
27
35
15
6
35
21
2
15
35
3
6
5
3
2
3.09
0.07
1.15
3.32
0.05
3.16
0.37
0.86
0.95
0.60
0.19
2.08
2.84
0.32
0.87
4.77
0.06
0.86
0.52
0.05
1.58
1.41
0.26
4.14
2.18
0.24
5.12
0.97
0.08
0.18
3.17
0.02
0.50
1.37
0.31
2.23
2.47
0.73
4.62
2.02
0.57
3.42
3.09
0.37
2.77
2.85
0.00
0.29
3.83
0.00
0.35
5
8
7
15
22
6
8
24
17
3
4
27
34
17
29
22
22
8
30
9
3
20
85
10
27
33
7
16
23
12
18
12
25
23
21
6
8
0.00
1.99
0.00
2.41
0.04
1.93
0.00
3.98
0.01
1.08
0.06
1.17
0.14
2.80
0.00
5.27
0.00
9.03
0.06
1.16
0.02
1.24
0.11
1.27
0.00
2.80
0.02
1.78
0.00
2.69
0.08
1.39
0.01
1.66
0.07
1.41
0.87
1.06
0.01
2.38
0.00
3.43
0.00
4.36
0.57
1.86
0.02
1.28
0.09
3.47
0.00
5.40
0.03
1.00
0.02
2.70
0.00
3.78
0.39
1.18
0.16
3.52
0.01
2.15
0.00
4.11
0.00
3.30
0.00
4.13
0.00
2.99
0.00
4.01
9
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Table2 - Significant Drill Intercepts from Diamond Core Holes at Mt Angelo North
Hole ID
East
North
Dip/Azi
Intercept
From
Length
Cu
Pb
Zn
Ag
Au
Cu Eq
Depth(m)
(m)
(m)
HCDD0001
340,486
7,960,661
-60/120
60
Includes
Includes
HCDD0002
340,436
7,960,602
-90/0
55
Includes
Includes
Includes
Includes
Includes
Includes
Includes
Includes
HCDD0003
340,444
7,960,566
-90/0
75.5
HCDD0004
340,464
7,960,594
-90/0
90
Includes
Includes
Includes
Includes
Includes
Includes
HCDD0005
340,484
7,960,621
-90/0
60
Includes
Includes
Includes
Includes
HCRD0043
340,518
7,960,555
-60/300
101.5
HCRC0045
340,516
7,960,605
-90
50
Includes
Includes
HCRD0044
340,488
7,960,540
-70/300
114.1
Includes
Includes
HCRD0047
340,471
7,960,631
-80/120
54.6
Includes
Includes
HCRD0048
340,475
7,960,496
-75/300
150.1
HCRD0050
340,530
7,960,536
-65/300
120
Includes
Includes
HCRD0051
340,504
7,960,529
-75/300
137.6
Includes
Includes
5
6
32
32
20
24
32
40
46
48
25
26
22
36
83
84
11
41
52
50
65
20
36
74
76
85
13
19
26
93
104
63
66
76
79
18
13
16
4
32
4
2
3
6
2
37
30.8
36
21
5.7
5.0
47.0
8.0
5.0
23.0
2.0
4.0
13.0
21.0
3.0
8.0
9.0
2.0
27.0
5.0
2.0
18.0
2.0
9.0
3.0
(%)
2.53
3.27
5.91
9.75
1.25
3.13
2.41
2.12
0.97
1.44
2.63
3.02
1.22
1.87
3.22
3.48
1.11
1.43
4.76
0.60
1.31
0.98
0.52
1.11
0.77
1.71
0.30
0.15
2.60
0.57
1.12
0.88
0.49
1.12
1.88
(%)
(%)
(ppm)
(ppm)
(%)
0.23 1.16
0.18 1.24
0.12 1.61
0.34 2.62
0.31 0.92
0.04 0.95
0.01 1.58
0.02 0.17
0.01 2.39
0.00 3.09
0.52 6.05
0.62 7.11
0.15 3.91
0.12 4.47
0.06 0.43
0.07 0.45
0.87 2.00
1.45 5.10
0.07 2.42
0.17 1.97
0.39 5.98
0.11 1.21
2.03
3.29
5.27
0.14 3.43
2.38 2.23
22
29
24
19
44
35
12
12
5
5
21
25
10
13
23
26
24
28
21
9
21
16
7
11
5
20
87
4.92 7.17
170
0.94
0.21 2.11
0.18 1.63
0.19 2.69
7.72
0.25 2.42
0.30 3.29
15
18
14
16
9
17
23
0.22
0.25
0.38
2.89
3.63
6.35
0.24
10.49
0.64
0.84
0.10
0.11
0.03
0.05
0.28
0.33
0.18
0.24
0.31
0.34
0.17
0.05
0.12
0.13
0.18
0.13
0.11
0.11
0.17
0.58
0.56
0.30
0.14
0.09
0.20
0.36
0.25
0.35
1.58
3.38
2.80
2.17
1.56
2.20
4.28
4.96
2.22
3.01
3.35
3.61
1.85
3.10
5.38
1.13
2.90
1.31
1.03
1.95
2.09
2.59
1.53
3.31
2.86
1.15
1.58
1.60
2.42
1.79
2.78
Note:
Cu, Pb, Zn and Ag analysed by 4 acid digest and ICP-MS finish. Au analysed by Fire Assay and AAS finish.
CuEq intercepts calculated using a 0.5% lower cut, minimum 2 metres interval with two internal waste intervals of 3 metres allowable. All holes
located on a GDA94-Zone52
*Copper Equivalent Calculation
Copper Equivalent (CuEq) represents the total metal value for each metal, multiplied by the conversion factor, summed and expressed as
equivalent copper percentage. These results are exploration results and no allowance is made for recovery losses should mining eventually occur.
However, the company is of the opinion that the elements considered here have reasonable potential to be recovered based upon preliminary
metallurgical test work.
Copper Equivalent Formula (CuEq):
(7,500(Cu ppm/10,000)) + (1,850(Zn ppm/10,000)) + (2,100(Pb ppm/10,000)) + (25(Ag ppm/31.1024)) + (1,500(Au ppm/31.1024)) = Ore Value
Ore Value/7,500 = CuEq (%).
Price Assumptions Cu (US$7,500/t), Zn (US$1,850/t), Pb (US$2,100/t), Ag (US$25/oz), Au (US$1,500/oz)
10
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
The massive sulphide mineralisation in the upper blanket zone has been extended by up to
50m to the east for 100m of strike and remains open. The results have confirmed the
geological model and show that the massive sulphide blanket extends further than historic
drilling on the eastern flank. In this area, results indicate copper/zinc ratios grade into more
distal zinc-copper ore.
The discovery of the feeder zone is highly encouraging for the discovery of further high grade
mineralisation at Mount Angelo North. The zone is characterised by chalcopyrite bearing
breccia/stringer zone in a sub-vertical system linking into the more massive overlying
chalcocite/chalcopyrite ore body above (figure 2).
Figure 2 – Halls Creek Copper Project, Mt Angelo North (Cross Section 8580N)
Multi-element data and structural information collected from recent drilling will assist Cazaly
targeting other massive sulphide lenses as well as extensions to the blanket and feeder
mineralisation defined to date at the Mt Angelo North copper deposit.
11
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Gossan
Gossan
Oxide Zone
Massive
Sulphide Zone
FEEDER Zone
Hole Data, current programme
Sulphides (assayed: mass/diss.)
Sulphides (assays pending)
Figure 3- Schematic section showing drilling & predicted extent of Feeder Zone relative to overlying VMS
& oxide mineralisation, Mt Angelo North deposit
The Company will collate all data and await final assays ahead of planning further drilling
targeting the extensions of the Feeder and Blanket mineralisation. This work will lead into a
maiden resource for the deposit aimed for release later in 2013.
Mount Angelo Porphyry
The company completed first pass drilling at the Mt Angelo Porphyry located 2.5km to the
south west of the Mt Angelo North copper deposit (Figure 4). A total of 5 reverse circulation
(RC) holes for 862 metres were drilled within the quartz porphyry intrusive. Previous RC and
Diamond core drilling returned intercepts up to 117m @ 0.32% Cu and 150m @ 0.30% Cu. The
porphyry system is large with extensive intercepts of disseminated and occasional semi-
massive sulphides and it appears that the entire intrusive is mineralised.
The higher grade intercepts of mineralisation included 23m @ 1.00% Cu and 7m @ 1.26% Cu,
indicating potential for the delineation of higher grade zones in the system (Table 3).
12
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Table 3 - Significant Drill Intercepts, Mount Angelo Porphyry Prospect
Hole ID
East
North
GDA Grid
Hole
Depth
GDA
Azm
Dip
Intercept
From
To
Length Cu (%)
HCRC0038
338347
7958367 MGA94_52
180
290
-60
HCRC0039
HCRC0040
HCRC0041
338313
337955
338315
7958423 MGA94_52
7958775 MGA94_52
7958581 MGA94_52
200
182
150
290
290
290
-65
-65
-60
includes
includes
338535
HCRC0042
Note:
Significant Intersections RC Drilling, > 0.2% Cu, high-grade > 0.5% Cu.
All elements analysed by aqua regia digest and ICPMS finish
7958669 MGA94_52
150
290
-60
0
141
6
0
45
112
142
0
170
164
184
92
52
116
146
136
170
23
178
NSA
92
7
4
4
136
0.4
1
0.3
0.36
1.26
0.32
0.58
0.31
Figure 4 - Drillhole plan showing extent of mineralised quartz porphyry, Mt Angelo Porphyry prospect
Helitem Results
Processing and Interpretation of a helicopter borne electromagnetic (EM) survey flown by the
company in February this year was completed. The survey covered 1,049 line kilometres over
140 square kilometres of the Halls Creek Copper Project. A total of 36 EM conductor targets
have been identified that may represent undiscovered sulphide mineralisation of a similar
nature as the Mount Angelo North VHMS deposit. These anomalies are currently being
prioritised and plans for follow-up work in the field are underway.
13
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Webb Project - (CAZ 100%)
Site works were recently completed over the main Iron Oxide Copper Gold (‘IOCG’) target at
the Webb Project located within the West Arunta region of WA and is ready for drilling.
Proposed drilling is aimed at identifying the source of a pronounced 3 km × 3 km magnetic
anomaly (amplitude 1100 nT) which is coincident with a 4 mgal gravity anomaly (Figure 5).
This anomaly compares favourably with other known IOCG mineral deposits with coincident
or near-coincident magnetic and gravity anomalies resulting from magnetite and hematite
alteration. The amplitudes lie within the Carrapateena – Olympic Dam range, with the
Carrapateena Deposits having coincident 200 nT magnetic and 2mgal gravity anomalies
and Olympic Dam having a 1600 nT anomaly and an anomalous gravity response of 17 mgal
associated with the hematitie mineralisation/alteration.
Figure 5 – Coincident magnetic and gravity anomaly at Webb Project
Parker Range Iron Ore Project (CAZ 100%)
The Parker Range Iron Ore Project (“PRIOP”) is effectively a ‘mine ready’ development
project. The project has a Definitive Feasibility Study fully completed and has all key
regulatory approvals in place. Access to a reliable export port facility however has stalled
development of the project. Significant progress however has been made
in the
development of a new iron ore export facility at the Port of Esperance as the State
Government continues to advance the interests of the planned producers in the Yilgarn iron
ore province. It is expected that the expansion will commence in 2014 with a view towards
the export facilities being ready for operation in 2015.
The Company has a signed Capacity Reservation Deed in place with the port for 5Mtpa.
The Company continues to engage with potential partners, including potential third party
port constructors and operators for the project.
Hamersley Iron Ore Project
(Cazaly 49% interest and Winmar Resources Ltd 51% interest)
In November 2012, the Company’s joint venture partner, Winmar Resources Limited (ASX:
WFE) completed its earn-in requirements (expenditure of $6 million) under the Farm-in and
Joint Venture Agreement and earned its 51% participating interest.
14
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
During May 2013 Winmar announced a maiden Indicated Mineral Resource at the Hamersley
Iron Joint Venture Project which is located 50km north-northeast of Tom Price in the Pilbara
region of Western Australia.
The total current Resource is 343.2Mt @ 54.5% Fe (57.9% Ca Fe) which comprises an Indicated
Resource of 42.6 Mt @ 55.2% Fe (57.3% Ca Fe) and an Inferred Resource of 300.6 Mt @ 54.5%
Fe (57.9% Ca Fe) and remains open in several areas.
The upgrade of the Mineral Resource to Indicated category provides the Joint Venture with
the opportunity to commence a range of studies including scoping studies, mine economic
studies, environmental studies and Native Title negotiations as part of prefeasibility studies.
These studies will examine the potential for the early development of Direct Shipping Ore
(DSO) from the Channel iron Deposit (CID) material to the southwest of the project area.
Joint Venture Projects
Musgrave JV (Cazaly diluting to 10% - Traka Resources Ltd (ASX: TKLK) acquiring 90%)
Cazaly notes the recent publicity regarding the exploration success of BHP Billiton on the
adjacent tenement. Forthcoming work planned comprises; a systematic MLEM survey,
particularly within the area north and south of BHP Billiton’s Prospects called Gilboa, Succoth,
Salem, Esagila and Goshem. Aeromagnetic, gravity and geological mapping indicates that
the whole of this area, both within BHP Billiton’s tenements and also the JV areas, is underlain
by one or more of the prospective mafic and ultramafic intrusives that comprise part of the
Giles Intrusive Complex. Massive, stringer and disseminated copper and nickel sulphide
mineralisation within feeder zones or in structures peripheral to or within the intrusive rocks
constitute the target style. Recent reports (April 11th 2013) have indicated that recent drilling
by BHP Billiton at its Succoth prospect had “returned broad intersections of copper
mineralisation at relatively high grades…including a return of about 200m of mineralisation at
a grade of about 1.3% copper”. As is the case for the Babel Nebo resource, the massive
and/or stringer sulphide zones are often directly associated with peripheral disseminated
sulphide zones. A systematic MLEM survey in the priority area could lead to follow up drilling
fairly quickly on any of the targets that may be highlighted.
For further detailed
(www.trakaresources.com.au).
information please consult the Traka Resources Limited website
Huckitta JV (Cazaly 20% - Mithril Resources Ltd (ASX: MTH) 80%)
The East Arunta Project Area is highly prospective for the discovery of economic copper
mineralisation within both the Iron Oxide Copper Gold (IOCG). The Illogwa IOCG JV Area lies
within the Huckitta Project and is located on two tenements (ELs 25643 and 25653) subject to
a joint venture between MTH (80%) and a wholly owned subsidiary of the Company, Sammy
Resources Pty Ltd (20%). The parties are now funding the project pro-rata and MTH is the
operator of the joint venture.
Targets have been advanced to “drill-ready” stage (in the Mini Me West and El Gordo areas)
with drilling anticipated to commence in September 2013. Prospectivity of the targets has
been further reinforced by the identification of further surface copper mineralisation at Mini
Me West and EM geophysical anomalies at El Gordo.
Additional targets have been prioritised for further geophysical surveying and geological
mapping in order to also advance them to a “drill ready” stage
15
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Mini Me West (Cazaly 20% - MTH 80%)
Mini Me West is located within the eastern half of Illogwa and comprises an 800 - metre long
coincident EM and IP geophysical anomaly. Portions of this anomaly lie beneath outcropping
disseminated copper mineralisation (2012 rock chip results up to 1.9% copper) and modeling
suggests that the geophysical anomalies are two parallel steeply north east – dipping bodies
which may be attributable to sulphide mineralisation.
The target’s prospectivity was further reinforced with the identification of more outcropping
quartz – haematite alteration and copper mineralisation directly above the IP anomaly. All
statutory approvals have now been received for Mini Me West and the target is being drilled
in the September 2013 quarter.
El Gordo (Cazaly 20% - MTH 80%)
El Gordo is located immediately south of Mini Me West, and comprises a zone of sporadically
outcropping copper (malachite – azurite) mineralisation and associated quartz – haematite
alteration which has been mapped over 800 metres strike length with widths ranging from 2
to 10 metres. 2012 rock chip sampling of the mineralisation returned values ranging from 0.7%
to 12.6% copper, 0.1g/t to 1.0g/t gold and 1.6g/t to 12.5g/t silver.
Three shallow reconnaissance drill holes completed by Mithril in late 2012 at the eastern end
of El Gordo, successfully intersected copper mineralisation, with one hole (MIRC-008)
returning 14m @ 0.34% copper, 0.04g/t gold from 18 metres including 2m @ 1.15% copper,
0.23g/t gold. The intersection remains open in all directions and will be tested by further
tested by drilling in the upcoming program.
A review of MTH’s 2012 VTEM survey data over the area has also identified three weak EM
geophysical anomalies at El Gordo. The features have not been drill tested and their
significance is currently being assessed given that they coincide with, and lie directly along
strike from, known copper mineralisation. All statutory approvals have now been received for
the target.
Earaheedy JV (Anglo American earning 75%, CAZ/VEC 25%)
Cazaly and Vector Resources Limited (ASX:VEC) (collectively the Earaheedy Joint Venture,
“EJV”) have a farm-in agreement with Anglo American (“Anglo”), the global diversified
mining house, covering a large part of the Earaheedy East Iron project in the Wiluna region of
Western Australia (Figure 6). Anglo can earn a 75% interest via staged payments of up to
$51m and the completion of a BFS.
Initial work undertaken by Anglo appears to confirm extensive outcropping iron formations. A
5,000m RC drilling campaign is expected to commence in the last quarter of 2013.
16
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
WESTERN EARAHEEDY JV
EASTERN EARAHEEDY ANGLO JV
Figure 6: Location map of Earaheedy JV’s
The Cazaly-Vector JV covers the Earaheedy West iron Project where manganese potential
has been confirmed at the Blue Cliffs and Blue Nugget prospects.
6.
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.
identifying new mineral exploration
The Consolidated Group will also continue to
opportunities within Australia and the rest of the world for further potential acquisitions which
may offer value enhancing opportunities for shareholders.
7.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
The following significant changes in the state of affairs of the Consolidated Group occurred
during the financial period:
On 22 August 2012 the Consolidated Group acquired 80% of the issued capital in
Discovery Minerals Pty Ltd (“Discovery”). Discovery, via its fully owned European
subsidiary, has several tenement applications in Europe targeting potential
uranium mineralisation. During the December quarter, Cazaly received 2,500,000
shares in Zeus Resources Ltd (ASX: ZEU) as consideration for the vending in of the
Discovery uranium tenements.
During The December quarter, the Company received 2,058,824 shares in
McPherson’s Reward Ltd (ASX: MRP) as the full payment for the Boorara project.
The Company retains a 1% net smelter royalty capped at $2,000,000.
On 8 November 2012, the Company issued 1,250,000 ordinary shares to 3D
Resources as part consideration for the farm-in agreement to earn up to 75% in
the Halls Creek Copper Project.
On 29 January 2013, the Company issued 600,000 ordinary shares to Sulphide
Resources Pty Ltd as consideration for a 1.5% net smelter royalty for M80/247
(tenement included within Mount Angelo North copper deposit area).
17
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
From the start of the June quarter, the first of eight quarterly payments of $250,000
were received from Phoenix Gold Limited. The payments commenced after first
production from royalty tenements with production now commenced by Phoenix
Gold Limited. In addition, a royalty stream commenced with the first payment
received in the June quarter (for production in the March quarter) from Phoenix
Gold Limited who have commenced processing gold from the Catherwood gold
project. The royalty is initially worth $40/ounce.
On 16 April 2013, a placement was successfully completed of 5,000,000 ordinary
shares at an issue price of $0.16 to raise $800,000.
8.
AFTER BALANCE DATE EVENTS
The 1:12 non-renounceable entitlement issue (as outlined above) closed on 5 July 2013.
1,037,996 new ordinary shares were issued on 12 July 2013 to the participants in the
entitlement issue which raised $166,079 (before costs).
9.
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.
10.
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.
Interest in Shares
Fully Paid Ordinary Shares
17,190,939
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 Unity Mining Ltd, joint Managing
Director of Cazaly Resources Ltd, Chairman of Corazon Mining Ltd
and a Director of Bannerman Resources Ltd.
18
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Interest in Shares
Fully Paid Ordinary Shares
10,075,114
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
Fully Paid Ordinary Shares
2,052,103
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
Company
Period of directorship
Nathan McMahon
Hodges Resources Limited
Whitestar Resources Limited
Winmar Resources Limited
Dempsey Minerals Limited
Since May 2008
From December 2009 to April 2012
From October 2010 to May 2011
Since February 2011
Clive Jones
Kent Hunter
Corazon Mining Limited
Cortona Resources Limited
Bannerman Resources
Limited
Unity Mining Limited
Since February 2005
From January 2006 to January 2013
Since January 2007
Since January 2013
Red Emperor Resources NL
Cauldron Energy Limited
Krakatoa Resources Limited
Stratum Metals Limited
Western Manganese Limited
Carbon Conscious Limited
From April 2007 to August 2010
From November 2002 to March 2011
From January 2012
Since December 2010
Since June 2010
Since November 2010
11. 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.
19
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
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. 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.
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 determine payments to the non-executive directors and review
their remuneration annually, based on market practice, duties and accountability. The
maximum aggregate amount of fees that can be paid to non-executive directors is subject
to approval by shareholders at the Annual General Meeting. Fees for non-executive directors
are not linked to the performance of the 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.
20
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Details of Remuneration for Year Ended 30 June 2013
The remuneration for key management personnel of the company during the year was as
follows:
Short-term Benefits
Cash,
salary &
commiss
-ions
Cash
profit
share
Non-cash
Other
benefit
Post-
Employ-
ment
Benefits
Super-
annuation
Other
Long-term
Benefits
Share based
Payment
Total
Performance
Related
Other
Equity Options
$
$
$
$
$
$
$
Nathan McMahon – Managing Director (ii)
2013
180,000
2012
180,000
-
-
Clive Jones – Managing Director (iii)
2013
180,000
2012
180,000
-
-
-
-
-
-
Kent Hunter – Non Executive Director
2013
2012
27,250
27,250
-
-
-
-
Lisa Wynne – Company Secretary (iv)
2013
2012
-
-
-
-
Julie Hill – Company Secretary (v)
2013
2012
-
-
Total Remuneration
2013
387,250
2012
387,250
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
37,409
50,000
41,667
50,000
79,076
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(i)
$
-
-
-
-
-
-
-
-
$
%
180,000
180,000
180,000
180,000
27,250
27,250
-
37,409
50,000
-
-
-
-
-
-
-
-
-
11,396
53,063
21%
- 437,250
11,396 477,722
-
2%
The fair value of the Options is calculated at the date of grant using a Black-Scholes model.
i)
ii) An aggregate amount of $180,000 (2012:$ 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 $180,000 (2012:$ 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) In 2012 fees of $2,409 were paid to Sila Consulting Pty Ltd for the provision of company secretarial services. Ms
Wynne is a Director of Sila Consulting Pty Ltd. Fees of $35,000 were paid to Blue Horse Corporate Pty Ltd for the
provision of company secretarial services to the Company. Ms Wynne is a director and shareholder of Blue Horse
Corporate Pty Ltd. Ms Wynne resigned as Company Secretary on 7 September 2011.
v) Fees of $50,000 (2012: $41,667) were paid the DZB Pty Ltd, a company controlled by Ms Hill, for the provision of
company secretarial services to the company. Ms Hill was appointed Company Secretary on 7 September 2011.
Options issued as part of remuneration for the year ended 30 June 2013
No Options were issued to directors or executives as part of their remuneration for the year
ended 30 June 2013.
The following Options were issued to executives as part of their remuneration for the year
ended 30 June 2012. No cash consideration was paid by the recipients.
21
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
Number
Granted
Number
Vested
Grant
Date
Expiry
Date
Exercise
Price
$
Fair Value
at Grant
Date
$
J Hill
100,000
100,000 14.09.2011 14.09.2013
$0.40
0.114
Employment Contracts of Directors and Senior Executives
The employment conditions of the joint Managing Directors, Nathan McMahon and Clive
Jones, are each formalised in contracts of employment. These contracts commenced on 31
October 2011 and have terms of 3 years. The contracts provide Messrs.’ McMahon and Jones
with annual salaries of $180,000 each. The company may terminate these agreements at any
time and without prior notice if serious misconduct has occurred. In this event only the fixed
proportion of the remuneration is payable and only up until the date of the termination.
There is no formal contract finalized at the completion of the 30 June 2013 financial year for
the non-executive director. The non-executive director was paid under terms agreed to by a
directors’ resolution at $27,250 per year.
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.
12. MEETINGS OF DIRECTORS
The number of directors' meetings and/or circular resolutions held and/or conducted during
the financial year, each director held office during the financial year and the number of
meetings and/or circular resolutions attended and/or signed off by each director is:
Director
N McMahon
C Jones
K Hunter
Directors Meetings/Resolutions
Number Eligible to Attend
10
10
10
Meetings Attended
10
10
10
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.
13.
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.
22
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
14. 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 Under
Option
15/12/2013
18/03/2014
18/03/2014
11/01/2015
04/02/2015
31/07/2015
31/07/2016
$0.280
$0.520
$0.520
$0.330
$0.490
$0.100
$0.107
250,000
300,000
200,000
925,000
100,000
100,000
100,000
Grant Date
15/12/2011
18/03/2011
15/04/2011
12/01/2010
05/02/2010
01/08/2013
01/08/2013
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 2013, no ordinary shares of Cazaly Resources Ltd were issued
on the exercise of options granted.
15.
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.
16. AUDITORS INDEPENDENCE DECLARATION
The lead auditor’s independence declaration for the year ended 30 June 2013 has been
received and can be found on page 25 of the directors’ report.
17. 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 2013.
23
DIRECTORS’ REPORT
Cazaly Resources Limited Annual Report 2013
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
24 September 2013
Competent Persons Statement
The relevant information contained in the report that relates to Exploration Results, Mineral Resources or
Ore Reserves is based on information compiled or reviewed by Mr Clive Jones and Mr Don Horn, who
are employees of the Company. Mr Jones is a Member of the Australian Institute of Mining and
Metallurgy and Mr Horn is a Member of the Australian Institute of Geoscientists. Mr Jones and Mr Horn
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 Person as
defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr Jones and Mr Horn consent to the inclusion of their names in the
matters based on the information in the form and context in which it appears.
24
To The Board of Directors
As lead audit director for the audit of the financial statements of Cazaly Resource Limited
and its controlled entities for the financial year ended 30 June 2013, I declare that to the
best of my knowledge and belief, there have been no contraventions of:
the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
any applicable code of professional conduct in relation to the audit.
Yours faithfully
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
DATED at PERTH this 24th day of September 2013
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For Year Ended 30 June 2013
Cazaly Resources Limited Annual Report 2013
Note
2013
$
2012
$
2
2
3
6
Revenue from continuing operations
Other Income
Employee benefits
Depreciation
Administrative expenses
Compliance and regulatory expenses
Occupancy expenses
Written-off exploration expenditure
Loss on disposal of shares
Impairment of financial assets
Loss before income tax
Income tax (expense)/ benefit
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Loss for the year attributable to:
Members of the parent entity
Non-controlling interest
Total comprehensive income attributable to:
Members of the parent entity
Non-controlling interest
665,445
730,459
2,448,156
1,738,608
(446,950)
(53,649)
(690,503)
(288,701)
(299,305)
(1,027,153)
-
(1,331,026)
(474,445)
(68,379)
(867,170)
(393,478)
(292,304)
(1,411,634)
(57,274)
(996,190)
(1,023,686)
(238,730)
(1,262,416)
-
(1,262,416)
(2,091,807)
216,578
(1,875,229)
-
(1,875,229)
(1,255,476)
(6,940)
(1,262,416)
(1,875,229)
-
(1,875,229)
(1,255,476)
(6,940)
(1,262,416)
(1,875,229)
-
(1,875,229)
Earnings/(loss) per share from continuing
and discontinued operations
Basic earnings/ (loss) per share
Diluted earnings per share
18
18
Cents
(1.01)
(1.01)
Cents
(1.53)
(1.53)
The accompanying notes form part of these financial statements.
26
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2013
Cazaly Resources Limited Annual Report 2013
Note
2013
$
2012
$
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
7
8
598,083
1,051,899
16,438
2,847,346
666,012
18,466
TOTAL CURRENT ASSETS
1,666,420
3,531,824
NON CURRENT ASSETS
Trade and other receivables
Financial assets
Property, plant and equipment
Exploration and evaluation assets
Deferred tax assets
Other assets
8
9
10
11
6
165,800
975,640
114,080
21,860,178
5,758,330
-
164,650
1,852,157
146,403
19,072,479
5,274,863
36,719
TOTAL NON CURRENT ASSETS
28,874,028
26,547,271
TOTAL ASSETS
30,540,448
30,079,095
CURRENT LIABILITIES
Trade and other payables
Provisions
12
13
392,528
66,409
468,764
82,432
TOTAL CURRENT LIABILITIES
458,937
551,196
NON CURRENT LIABILITIES
Deferred tax liabilities
6
6,484,606
5,755,748
TOTAL NON CURRENT LIABILITIES
6,484,606
5,755,748
TOTAL LIABILITIES
6,943,543
6,306,944
NET ASSETS
EQUITY
Issued capital
Reserves
Accumulated losses
Controlling entity interest
Non-controlling interest
23,596,905
23,772,151
14
15
16
24,800,080
358,325
(1,553,497)
23,604,908
(8,003)
23,711,847
861,913
(801,609)
23,772,151
-
TOTAL EQUITY
23,596,905
23,772,151
The accompanying notes form part of these financial statements.
27
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 June 2013
Cazaly Resources Limited Annual Report 2013
Balance at 1 July 2011
23,145,290
867,585
1,210,019
Issued Capital (Accumulated
Losses)
And
Retained
Earnings
$
$
Option
Reserve
Non-
Controlling
Interest
Total
$
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,875,229)
-
(1,875,229)
425,000
-
-
172,611
-
-
206,035
-
-
(348,106)
-
(31,054)
23,711,847
-
(801,609)
-
861,913
-
-
-
(1,255,476)
-
(1,255,476)
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
$
25,222,894
(1,875,229)
-
(1,875,229)
425,000
-
-
30,540
-
(31,054)
23,772,151
(6,940)
(1,262,416)
-
-
(6,940)
(1,262,416)
1,142,000
25,279
-
-
(72,384)
-
503,588
-
-
(503,588)
-
(1,063)
-
-
1,142,000
25,279
(1,063)
-
(72,384)
(6,662)
24,800,080
-
(1,553,497)
-
358,325
-
(8,003)
(6,662)
23,596,905
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
Shares to be issued
Non-controlling interest on
acquisition
Option reserve
Transaction costs
Tax effect of equity raising
cost
Balance at 30 June 2012
Loss for the year
Other comprehensive
income for the year
Total comprehensive
income/(loss) for the year
Transactions with owners, in
their capacity as owners, and
other transfers:
Shares issued during the year
Shares to be issued
Non-controlling interest on
acquisition
Option reserve
Transaction costs
Tax effect of equity raising
cost
Balance at 30 June 2013
The accompanying notes form part of these financial statements.
28
CONSOLIDATED CASH FLOW
STATEMENT
For the year ended 30 June 2013
Cazaly Resources Limited Annual Report 2013
Note
2013
2012
$
$
Cash Flows from Operating Activities
Payments to suppliers and employees
Interest received
Other revenue
Proceeds from gold sale
Payments for exploration and evaluation
(1,435,873)
99,130
677,655
233,392
(3,355,980)
(1,491,499)
157,614
525,201
-
(3,146,196)
Net cash used in operating activities
19
(3,781,676)
(3,949,880)
Cash Flows From Investing Activities
Proceeds from sale of exploration assets
Proceeds from sale of equity investments
Purchase of plant and equipment
Purchase of equity investments
Recoupment of exploration expenditure
from Joint Venture operations
Purchase of tenement
Proceeds for Joint Venture Management
504,670
918,322
(21,348)
(146,398)
11,078
(496,411)
8,089
994,956
1,723,909
(83,902)
(668,068)
456,016
-
645
Net cash provided by investing activities
778,002
2,423,556
Cash Flows from Financing Activities
Proceeds from issue of securities
Payment for costs of issue of securities
814,411
(60,000)
425,000
-
Net cash provided by financing activities
754,411
425,000
Net increase/(decrease) in cash held
(2,249,263)
(1,101,324)
Cash and cash equivalents at beginning
of the financial year
2,847,346
3,948,670
Cash and cash equivalents at end of the
financial year
7
598,083
2,847,346
The accompanying notes form part of these financial statements.
29
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
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 financial statements were authorised for issue on 24 September 2013 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. The Group is a for-profit entity for financial reporting purposes
under Australian Accounting Standards.
result
in financial statements containing
Australian Accounting Standards set out in accounting policies that the AASB has
concluded would
reliable
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 are based on
historical costs, modified, where applicable, by the measurement at fair value of selected
non-current assets, financial assets and financial liabilities.
Going Concern
The financial report has been prepared on a going concern basis, which contemplates
the continuity of normal business activity and the realisation of assets and the settlement of
liabilities in the ordinary course of business.
The Group incurred a loss after tax for the year of $1,262,416 (2012: Loss of $1,875,229) and
net cash outflows from operating activities of $3,781,676 (2012: $3,949,880). Working
capital has decreased by $1,773,145 from $2,980,628 at 30 June 2012 to $1,207,483 at 30
June 2013.
A 1:12 non-renounceable entitlement issue closed on 5 July 2013 and raised $166,079
(before costs). Subsequent to year end, the Group received $531,732 of the contingent
payments from previous sale of tenements and related royalty payments.
Pending the outcome of various applications, the Group could have lease and
exploration commitments of $ 6,397,199 (2012: $2,634,676) due within the next twelve
months.
The directors have prepared a cash flow forecast, which indicates that the Group will
have sufficient cash flows to meet all commitments and working capital requirements for
the 12 month period from the date of signing this financial report. Based on the cash flow
forecasts and other factors referred to above, the directors are satisfied that the going
concern basis of preparation is appropriate because:
30
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
- the Directors have an appropriate plan to raise additional funds as and when it is
required. In light of the Group’s current exploration projects, the Directors believe that the
additional capital required can be raised in the market; and
- the Directors have an appropriate plan to contain certain operating and exploration
expenditure if appropriate funding is unavailable; and
- the Directors expect to received contingent payments from the previous sale of
tenements and related royalty payments from these tenements as set out in note 28.
Should the Group not achieve the matters set out above, there is material uncertainty
whether the Group will continue as a going concern and therefore whether it will realise its
assets and extinguish its liabilities in the normal course of business and at the amounts
stated in the financial report.
The financial report does not contain any adjustments relating to the recoverability and
classification of recorded assets or to the amounts or classification of recorded assets or
liabilities that might be necessary should the Group not be able to continue as going
concern.
(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 21 to the financial statements.
In preparing the consolidated financial statements, all
inter-group balances and
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 Profit or Loss and other Comprehensive
Income. The non-controlling interest in the net assets comprises their interests at the date
of the original business combination and their share of changes in equity since that date.
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.
31
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
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
Profit or Loss and other 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
Profit or Loss and other 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 Profit or Loss and other 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.
(c) 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.
32
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Gains and losses on disposals are determined by comparing proceeds with the carrying
amount. These gains and losses are included in the Statement of Profit or Loss and other
Comprehensive Income. When revalued assets are sold, amounts included in the
revaluation reserve relating to that asset are transferred to retained earnings.
(d)
Exploration, Evaluation and Development Expenditure
Costs incurred during exploration and evaluations 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.
(e)
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.
(f)
Financial Instruments
Initial Recognition and Measurement
Financial instruments, incorporating financial assets and financial liabilities, are recognised
when the entity becomes a party to the contractual provisions of the instrument. Trade
date accounting is adopted for financial assets that are delivered within timeframes
established by marketplace convention.
Financial instruments are initially measured at fair value plus transactions costs, 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.
33
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
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.
(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).
34
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(iv) Available-for-sale investments
Available-for-sale
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.
those non-derivative
investments are
financial assets
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 impairment has arisen. Impairment losses are recognised in profit or
loss. Also, any cumulative decline
in other
fair value previously
comprehensive income is reclassified to profit or loss at this point.
recognised
in
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.
Financial liabilities are de-recognised where the related obligations are 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.
(g) 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.
(h)
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.
35
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(i)
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).
(j)
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.
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.
(k) 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.
(l) 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.
36
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
Deferred tax assets and liabilities are ascertained based on temporary differences arising
between the tax bases of assets and liabilities and their carrying amounts in the financial
statements. Deferred tax assets also result where amounts have been fully expensed but
future tax deductions are available. No deferred income tax will be recognised from the
initial recognition of an asset or liability, excluding a business combination, where there is
no effect on accounting or taxable profit or loss.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to
apply to the period when the asset is realised or the liability is settled, based on tax rates
enacted or substantively enacted at reporting date. Their measurement also reflects the
manner in which management expects to recover or settle the carrying amount of the
related asset or liability.
Deferred tax assets relating to temporary differences and unused tax losses are recognised
only to the extent that it is probable that future taxable profit will be available against
which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches,
associates, and joint ventures, deferred tax assets and liabilities are not recognised where
the timing of the reversal of the temporary difference can be controlled and it is not
probable that the reversal will occur in the foreseeable future.
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.
(m)
Trade and Other Payables
Trade payables and other payables are carried at amortised costs and represent liabilities
for goods and services provided to the company prior to the end of the financial year that
are unpaid and arise when the company becomes obliged to make future payments in
respect of the purchase of these goods and services.
(n)
Provisions
Provisions are recognised when the 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.
37
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
The amount recognised as a provision is the best estimate of the consideration required to
settle the present obligation at reporting date, taking into account the risks and
uncertainties surrounding the obligation. Where a provision is measured using the cash
flows estimated to settle the present obligation, its carrying amount is the present value of
those cash flows.
(o)
Share Based Payments
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.
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.
(p)
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.
(q)
Earnings Per Share
Basic earnings per share is calculated as net earnings attributable to members, adjusted
to exclude costs of servicing equity (other than dividends) and preference share
dividends, divided by the weighted average number of ordinary shares, adjusted for an
bonus element.
Diluted 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.
(r)
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.
38
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)
(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(d).
Key Judgements Share based payment transactions
The Company measures the cost of equity-settled transactions with employees by
reference to the fair value of the equity instruments at the date at which they are granted.
The fair value is determined by an internal valuation using a Black-Scholes option pricing
model, using the assumptions detailed in note 26.
Key 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.
39
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
2.
2.
REVENUE & OTHER INCOME
interest received
Revenue
-
- option fees
- management fees
-
- profit on sale of shares
- other revenue
recoupment of office costs on-charged
Other Income
- proceeds on sale of tenement
-
- contingent payment received on sale of
royalty received
subsidiary in prior year
research & development tax refund
-
3.
PROFIT (LOSS) FOR THE YEAR
Profit (loss) before income tax from continuing operations
Includes the following specific expenses:
Expenses
Administrative expenses
Consulting
advertising, printing and stationery
travel and accommodation
Insurance
Memberships
Other
Compliance and regulatory expenses
ASX, ASIC, registry and secretarial
Legal
Employee Benefits
Superannuation
Employee equity settled benefits
4.
KEY MANAGEMENT PERSONNEL
2013
$
2012
$
68,478
4,670
21,935
384,284
26,433
159,645
665,445
1,200,000
466,786
500,000
281,370
2,448,156
183,972
137,501
645
408,341
-
-
730,459
457,455
-
400,000
881,153
1,738,608
318,478
73,298
58,846
37,340
25,725
176,816
690,503
221,090
67,611
288,701
22,149
-
311,491
118,817
91,480
35,108
25,084
271,952
867,194
242,194
151,284
393,478
19,345
30,527
a)
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 2013.
The totals of remuneration paid to key management personnel of the Company during
the year are as follows:
40
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
4.
KEY MANAGEMENT PERSONNEL (Cont’d)
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Share based payments
2013
$
437,250
-
-
-
437,250
2012
$
466,326
-
-
11,396
477,722
No compensation was paid in respect to termination benefits
b)
KMP Shareholdings
The number of ordinary shares in Cazaly Limited held by each KMP of the Group during the
financial year is as follows:
30 June 2013
Balance
1 July 2012
Granted as
Remuneration
Options
Exercised
Net Change
Other
Balance
30 June
2013
N McMahon
C Jones
K Hunter
J Hill
16,212,939
9,563,862
2,052,103
-
27,828,904
-
-
-
-
-
-
-
-
-
-
978,000
511,252
-
-
1,489,252
17,190,939
10,075,114
2,052,103
-
29,318,156
30 June 2012
Balance
1 July 2011
Granted as
Remuneration
Options
Exercised
Net Change
Other
N McMahon
C Jones
K Hunter
L Wynne (i)
J Hill
14,463,530
8,563,862
2,052,103
-
-
25,079,495
-
-
-
-
-
-
-
1,000,000
-
-
-
1,000,000
1,749,409
-
-
-
-
1,749,409
(i)
Ms Wynne resigned as Company Secretary on 7 September 2011.
c)
KMP Option and Rights Holdings
Balance
30 June
2012
16,212,939
9,563,862
2,052,103
-
-
27,828,904
The number of options over ordinary shares held by each KMP of the Group during the
financial year is as follows.
Number Options held by Directors and Executives:
N McMahon
C Jones
K Hunter
J Hill
Balance
01-07-12
700,000
100,000
-
100,000
900,000
Issued
Exercised
Lapsed
Balance
30-06-13
Vested
during
the year
Vested
and
exercisable
-
-
-
-
-
-
-
-
-
-
(700,000)
(100,000)
-
-
(800,000)
-
-
-
100,000
100,000
-
-
-
-
-
-
-
-
100,000
100,000
41
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
4.
KEY MANAGEMENT PERSONNEL (Cont’d)
N McMahon
C Jones
K Hunter
L Wynne (i)
J Hill
Balance
01-07-11
700,000
1,100,00
0
250,000
325,000
-
2,375,00
0
Issued
Exercised
Lapsed
Balance
30-06-12
Vested
during
the year
Vested
and
exercisable
-
-
-
-
100,000
100,000
-
-
(1,000,000
-
)
- (250,000)
-
-
-
-
(1,000,000
)
700,000
100,000
-
325,000
100,000
(250,000) 1,225,000
-
-
-
-
100,000
100,000
700,000
100,000
-
325,000
100,000
1,225,000
(i)
Ms Wynne resigned as Company Secretary on 7 September 2011.
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
2013
$
2012
$
58,245
58,245
65,965
65,965
-
238,730
238,730
-
(216,578)
(216,578)
(a)Numerical reconciliation of income tax expense
to prima facie tax payable:
Profit from continuing operations
(1,023,686)
(2,091,807)
Prima facie tax benefit on
activities before income tax at 30% (2012: 30%)
loss from ordinary
(307,106)
(627,542)
Add:
Tax effect of:
Current year capital losses not recognised
Movement in unrecognised temporary
differences
Current year capital losses not recognised
Under provision in prior year
Other non-allowable items
105
-
391,273
-
147,325
123,082
355,090
-
284,398
65,809
Less:
Tax effect of:
Tax benefit of deductible equity raising costs
Non-assessable income
Income (tax benefit)/loss attributable to entity
(28,377)
(87,572)
238,730
(31,054)
(263,279)
(216,578)
42
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
6.
INCOME TAX EXPENSE (Cont’d)
(b) Deferred tax assets at 30% (2012: 30%)
comprise the following
2013
$
2012
$
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% (2012: 30%)
comprise the following
Exploration expenditure
Investments
Other
(c) Deferred tax recognised directly in equity:
Relating to equity raising costs
Other
(d) Unrecognised deferred tax assets at 30%
(2012: 30%) comprise the following:
Deferred tax assets have not been
recognized in respect to the following as
they are not considered to have met the
recognition criteria:
Investments
Capital losses
7.
CASH AND CASH EQUIVALENTS
Cash at bank
Petty cash
Deposits at call (i)
5,151,218
-
-
44,093
485,604
77,415
5,758,330
4,824,131
-
-
104,937
265,701
80,094
5,274,863
6,483,865
-
741
6,484,606
5,746,113
-
9,635
5,755,748
(6,662)
-
(6,662)
(31,054)
-
(31,054)
746,363
105
746,468
355,090
-
355,090
597,588
495
-
598,083
313,432
495
2,533,419
2,847,346
(i) The effective interest rate on short-term bank deposits was 4.26% (2012:5.67%).
8.
TRADE AND OTHER RECEIVABLES
Current
Trade receivables (i)
Other debtors
Non-Current
Bonds (ii)
(i) Trade receivables have 30 to 90 day terms.
(ii) Bonds are term deposits, held by way of bank guarantee.
673,862
378,037
1,051,899
67,082
598,930
666,012
165,800
165,800
164,650
164,650
43
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
9.
FINANCIAL ASSETS
Current
Financial assets, at fair value through profit or loss:
Held-for-trading Australian listed shares
10.
PROPERTY, PLANT AND EQUIPMENT
2013
$
2012
$
975,640
975,640
1,852,157
1,852,157
Land & Property at Cost
5,000
5,000
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
315,122
(251,444)
63,678
293,796
(212,626)
81,170
42,703
(28,853)
13,850
68,287
(36,736)
31,551
5,344
(5,344)
-
114,080
42,703
(23,149)
19,554
68,287
(27,608)
40,679
5,344
(5,344)
-
146,403
Movement in the carrying amounts for each class of plant and equipment between the
beginning and end of the current financial year.
Land &
Property
$
Plant and
Equipment
$
2013
Office
Furniture
$
Motor
Vehicles
$
Total
$
Balance at the beginning of the year
5,000
Additions
Disposals
Depreciation expense
Carrying amount at the end of the year
-
-
-
5,000
81,170
21,326
-
(38,817)
63,679
19,554
-
-
(5,704)
13,850
40,679
-
-
(9,128)
146,403
21,326
-
(53,649)
31,551
114,080
Land &
Property
$
Plant and
Equipment
$
2012
Office
Furniture
$
Motor
Vehicles
$
Total
$
Balance at the beginning of the year
Additions
Disposals
Depreciation expense
Carrying amount at the end of the year
-
5,000
-
-
5,000
62,085
71,786
(7,065)
(45,636)
81,170
16,306
7,117
-
(3,869)
19,554
52,489
-
-
(11,810
130,880
83,903
(7,065)
(61,315)
40,679
146,403
44
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
11.
EXPLORATION AND EVALUATION ASSETS
Non-Current
Costs carried forward in respect of areas of
interest in:
Exploration and evaluation phases at cost
Movement – exploration and evaluation
Brought forward
Exploration expenditure capitalised during the
year
Acquisitions
Recoupment of exploration expenditure from joint
venture partners
Exploration expenditure written off
2013
$
2012
$
21,860,178
19,072,479
19,072,479
17,477,365
3,284,321
541,608
3,027,119
-
(11,077)
(1,027,153)
(20,371)
(1,411,634)
21,860,178
19,072,479
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.
12.
TRADE AND OTHER PAYABLES
Current
Trade creditors
Other creditors and accrued expenses
Creditors are non-interest bearing and settled at 30 day terms.
324,464
68,064
344,460
124,304
392,528
468,764
45
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
13. PROVISIONS
Current
Provision for annual leave
Provision for long service leave
14.
ISSUED CAPITAL
2013
$
2012
$
45,761
20,648
66,409
48,571
33,861
82,432
129,597,118 fully paid ordinary shares (2012:
122,589,125) with no par value
24,800,080
23,711,847
a.
Movements in Ordinary Shares
Number of
shares
Issue
price
$
Opening balance at 1 July 2012
Notes
122,589,125
23,711,847
Issue of shares – 3D Resources
Issue of shares – Sulphide Resources
Issue of shares
Tax effect of equity raising costs
Transaction costs
Shares to be issued
Sub Total
(i)
(ii)
(iii)
(iv)
(v)
1,250,000
600,000
5,000,000
$0.19
$0.17
$0.16
129,439,125
157,993
$0.16
240,000
102,000
800,000
(6,662)
(72,384)
24,774,801
25,279
Closing balance 30 June 2013
129,597,118
24,800,080
(i)
(ii)
(iii)
(iv)
(v)
On 8 November 2012, the Company issued 1,250,000 ordinary shares to 3D Resources as part
consideration for the farm-in agreement to earn up to 75% in the Halls Creek Copper Project.
On 29 January 2013, the Company issued 600,000 ordinary shares to Sulphide Resources Pty
Ltd as consideration for a 1.5% net smelter royalty which covers M80/247, which includes the
Mount Angelo North copper deposit.
On 16 April 2013, a placement was successfully completed of 5,000,000 ordinary shares at an
issue price of $0.16 to raise $800,000 (before costs).
Deferred tax recognised directly in equity relating to equity raising costs.
Funds of $25,279 were received by the Company during May 2013. These funds represented
proceeds for 157,993 shares that were issued on 12 July 2013 as per the terms and conditions
of the Company Non-Renounceable Entitlement Issue which closed on 5 July 2013. The
entitlement was based on the issue of 1 new share for every 12 shares held, at an issue price
of $0.16 per new share. A total of 1,037,996 shares were issued under the entitlement issue.
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.
46
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
14.
ISSUED CAPITAL (Cont’d)
b.
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 2013 and 30 June 2012 are as
follows:
Pare
Cash and cash equivalents
Trade and other receivables
Financial assets
Trade and other payables
Working capital position
15. OPTION RESERVE
Opening balance
Transfers to accumulated losses
Closing balance
2013
$
598,083
1,051,899
975,640
(392,528)
2,233,094
2012
$
2,847,346
666,012
1,852,157
(468,764)
4,896,751
861,913
(503,588)
358,325
1,210,019
(348,106)
861,913
This reserve is used to record the value of equity benefits provided to the employees and
directors as part of their remuneration.
16. ACCUMULATED LOSSES
Opening balance
Net loss attributable to members
Transfers from option reserve
Closing balance
17.
FINANCIAL RISK MANAGEMENT
(801,609)
(1,255,476)
503,588
(1,553,497)
867,585
(1,875,229)
206,035
(801,609)
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.
47
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
17. FINANCIAL RISK MANAGEMENT (Cont’d)
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 is 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 $598,083 (2012: $2,847,346).
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.
Maturity profile of financial instruments
The following table details the Group’s exposure to interest rate risk as at 30 June 2013:
2013
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
597,588
-
-
-
165,800
-
597,588
165,800
-
-
3.06%
-
-
-
-
-
-
-
Non-
interest
bearing
2013
Total
$
$
495
598,083
1,051,899
1,217,699
975,640
975,640
2,028,034
2,791,422
392,528
392,528
392,528
392,528
48
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
17. FINANCIAL RISK MANAGEMENT (Cont’d)
The following table details the Group’s exposure to interest rate risk as at 30 June 2012:
2012
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
313,432
2,533,419
-
-
164,650
-
313,432
2,698,069
-
-
5.57%
-
-
-
-
-
-
-
Non-
interest
bearing
2012
Total
$
$
495
2,847,346
666,012
830,662
1,852,157
1,852,157
2,518,664
5,530,165
468,764
468,764
468,764
468,764
Net Fair Values
The carrying value and net fair values of financial assets and liabilities at balance date are:
Financial assets
Cash and deposits
Receivables
Investment held for trading
Financial liabilities
Payables
2013
2012
Carrying
Amount
$
598,083
1,217,699
975,640
2,791,422
392,528
392,528
Net fair
Value
$
598,083
1,217,699
975,640
2,791,422
392,528
392,528
Carrying
Amount
$
2,847,346
830,662
1,852,157
5,530,165
468,764
468,764
Net fair
Value
$
2,847,346
830,662
1,852,157
5,530,165
468,764
468,764
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.
Sensitivity Analysis
Interest Rate Risk
The Company has performed sensitivity analysis relating to its exposure to interest rate risk at
balance date. This sensitivity analysis demonstrates the effect on the current year results and
equity which could result from a change in these risks.
49
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
17. FINANCIAL RISK MANAGEMENT (Cont’d)
Interest Rate Sensitivity Analysis
At 30 June 2013, the effect on loss as a result of changes in the interest rate, with all other
variables remaining constant would be as follows:
Change in loss
Increase in interest rate by 100 basis points
—
— Decrease in interest rate by 100 basis points
Change in equity
—
Increase in interest rate by 100 basis points
— Decrease in interest rate by 100 basis points
218.
EARNINGS PER SHARE
a)
Reconciliation of earnings to profit or loss:
2013
$
5,963
(5,963)
5,963
(5,963)
2012
$
28,474
(28,474)
28,474
(28,474)
Loss for the year
Loss used to calculate basic and diluted EPS
(1,262,416)
(1,262,416)
(1,875,229)
(1,875,229)
b) Weighted average number of ordinary shares
outstanding during the period used in the
calculation of basic EPS
No. of Shares
No. of Shares
124,667,756
122,402,825
Weighted average number of dilutive options
outstanding
-
8,621
Weighted average number of ordinary shares
outstanding during the year used in calculating
dilutive EPS
124,667,756
122,411,446
50
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
19. CASH FLOW INFORMATION
(i)
Reconciliation of cash flows from operating
activities with profit/(loss) after income tax
Profit/(Loss) after income tax
Non-operating cash flows in loss for the year:
Depreciation
Net Loss on sale of shares
Net Profit on sale of exploration assets
Employee & Consultant equity settled
transactions
Fair value adjustment to investments
Exploration write-off
Management fees received
Income tax expense recognised in profit or
loss
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
2013
$
2012
$
(1,262,416)
(1,875,229)
53,649
(26,433)
(2,171,431)
-
1,331,026
1,017,612
(21,935)
68,379
57,274
(994,956)
30,527
996,190
1,411,634
(645)
238,730
(216,577)
(481,812)
101,525
386,853
(2,845,519)
(464,174)
-
(3,063,838)
Cash outflow from operations
(3,781,676)
(3,949,890)
(ii) Non-cash financing and investing activities
-
-
Share based payments (note 28)
20. 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,
was for a three (3) years expiring on 1 April 2013, this has been extended for a further term which
expires on 31 May 2016 in consideration for a rental fee of $225,350 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
2013
$
6,397,199
10,455,527
-
16,852,727
2012
$
2,417,872
5,443,424
-
7,861,296
At the moment the Group has commitments in excess of cash, however the Board believes it will
be able to raise the additional funds to satisfy the commitments for the future.
51
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
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.
21. CONTROLLED ENTITIES
Parent Entity
Country of Incorporation Percentage Owned
2013
2012
Cazaly Resources Limited
Australia
Controlled Entities
Cazaly Iron Pty Ltd
Sammy Resources Pty Ltd
Cazroy Pty Ltd
Baker Fe Pty Ltd
Baldock Fe Pty Ltd
Lockett Fe Pty Ltd
Hase Fe Pty Ltd
Caz Yilgarn Pty Ltd
Discovery Minerals Pty Ltd
22. OPERATING SEGMENTS
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
100%
100%
100%
-
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.
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.
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.
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;
deferred tax assets and liabilities.
52
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
22. OPERATING SEGMENTS (Cont’d)
2013
Revenue
Interest received
Other
Total segment revenue
Segment net operating profit
(loss) before tax
Depreciation
Impairment of exploration
assets
Share based payments
Segment assets
Exploration expenditure
Capital expenditure
Other assets
Segment liabilities
2012
Revenue
Interest received
Other
Total segment revenue
Segment net operating profit
(loss) before tax
Depreciation
Impairment of exploration
assets
Share based payments
Segment assets
Exploration expenditure
Capital expenditure
Other assets
Segment liabilities
Exploration
$
Unallocated
$
Total
$
-
2,448,156
2,448,156
(781,956)
-
781,956
-
21,860,178
-
-
-
68,478
596,967
665,445
68,478
3,045,123
3,113,601
(241,730)
53,649
(1,023,686)
53,649
-
-
781,956
-
-
114,080
-
6,943,543
21,860,178
114,080
-
6,943,543
Exploration
$
Unallocated
$
Total
$
-
1,738,608
1,738,608
183,792
546,667
730,459
183,792
2,285,275
2,469,067
(1,411,634)
-
(680,173)
68,379
(2,091,807)
68,379
1,411,634
-
19,072,479
-
36,719
-
-
30,527
1,411,634
30,527
-
146,403
-
6,306,944
19,072,479
146,403
36,719
6,306,944
23.
EVENTS SUBSEQUENT TO REPORTING DATE
On 17 April 2013, a Prospectus was lodged with ASIC and ASX for a 1 for 12 non-renounceable
entitlement issue of up to 10,786,594 ordinary shares at an issue price of $0.16 to raise $1,725,855
(before costs). The closing date of the entitlement issue was 5 July 2013. On 12 July 2013, the
Company issued 1,037,996 new ordinary shares to the participants in the entitlement issue which
raised $166,079 (before costs).
53
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
24.
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 Profit or Loss and Other
Comprehensive Income
2013
$
2012
$
1,633,823
9,048,571
3,345,207
7,092,567
10,682,394
10,437,774
458,935
560,090
551,197
140,115
1,019,025
691,312
24,800,080
23,711,848
358,325
(15,495,036)
861,938
(14,827,324)
9,663,369
9,746,462
Total profit/ (loss)
(1,171,325)
(3,261,045)
Total comprehensive income
(1,171,325)
(3,261,045)
Loans to Controlled Entities
Loans are provided by the Parent Entity to its controlled entities for their respective
operating activities. Amounts receivable from controlled entities are non-interest bearing
with no fixed term of repayment. The eventual recovery of the loan will be dependent
upon the successful commercial application of these projects or the sale to third parties.
25. RELATED PARTY INFORMATION
Transactions between related parties are on commercial terms and conditions, no more
favourable than those available to other parties unless otherwise stated.
Transactions with related entities:
(i)
Director related Entities
Remuneration (excluding the reimbursement of costs) received or receivable by the directors of
the Group and aggregate amounts paid to superannuation plans in connection with the
retirement of directors are disclosed in Note 4 to the accounts.
Mr McMahon was at any time during the financial years ended 30 June 2013 and 30 June 2012,
a director and shareholder of Hodges Resources Limited (“Hodges”), Dempsey Minerals Limited
(“Dempsey”). Hodges and Dempsey have an agreement based on normal commercial terms
and conditions to reimburse Cazaly for office rental and administration and overheads.
Aggregate amounts of each of the above types of other transaction with related parties of
Cazaly Resources Limited:
54
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
Sales
Rent, administrative and office overheads:
Hodges Resources Limited
Dempsey Minerals Limited
26.
SHARE BASED PAYMENTS
2013
$
2012
$
132,768
49,395
182,163
119,719
80,767
200,486
Options are issued to vendors as part of purchase consideration and also to directors and
employees as part of their remuneration as disclosed in Note 4. The options issued may be
subject to performance criteria, and are issued to directors and employees of Cazaly Resources
Limited to increase goal congruence between executives, directors and shareholders.
The following table illustrates the number and weighted average exercise prices of and
movements in share options issued under the Employee Incentive Plan during the year:
2013
2012
Number of
Options
Weighted
Average
Exercise
Price
$
Number of
Options
Weighted
Average
Exercise
Price
$
5,075,000
0.47
9,775,000
0.43
-
-
350,000
-
-
(3,200,000)
1,875,000
-
-
0.51
0.39
-
(1,500,000)
(4,550,000)
5,075,000
0.31
-
0.28
0.42
0.47
1,875,000
5,075,000
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)
The compensation options outstanding at 30 June 2013 had a weighted average
remaining life of 1.105 years (2012 – 0.98 years).
The weighted average fair value of the options outstanding at 30 June 2013 was $0.1597
(2012 - $0.0872).
No share options were granted or exercised during the year ended 30 June 2013.
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 2012:
Allottees
Consultant
Employee
Fair Value
at Grant
Date
$0.1140
$0.0765
Estimated
Volatility
73%
73%
Life of
Option
(yrs)
2.00
2.00
Exercise
Price
Share
Price
Risk Free
Interest
Rate
$0.40
$0.28
$0.32
$0.22
4.75%
4.25%
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.
55
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
26.
SHARE BASED PAYMENTS (Cont’d)
The following share-based payment arrangements were in existence during the current and prior
reporting periods:
Options series
Number
Grant date Expiry date
Employee
Employees
Employee
Employees
Employee
Bridging Facility
Bridging Facility
Bridging Facility
Employees & Consultants
Employees & Consultants
Consultant
Consultant
Consultant
Employee
75,000
225,000
100,000
925,000
100,000
1,600,000
100,000
850,000
250,000
300,000
200,000
1,000,000
100,000
250,000
14/6/2007
26/10/2007
22/5/2008
12/1/2010
5/2/2010
18/10/2010
4/11/2010
6/12/2010
14/12/2010
18/3/2011
15/4/2011
15/4/2011
14/9/2011
15/12/2011
14/9/2012
26/10/2012
22/5/2013
11/1/2015
4/2/2015
18/10/2012
18/10/2012
18/10/2012
18/10/2012
18/3/2014
18/3/2014
30/6/2012
14/9/2013
15/12/2013
Exercise
price
$0.39
$0.45
$0.36
$0.33
$0.49
$0.53
$0.53
$0.53
$0.53
$0.52
$0.52
$0.55
$0.40
$0.28
Fair value
at grant
date
$0.2666
$0.3812
$0.3812
$0.1928
$0.175
$0.1755
$0.1435
$0.1331
$0.1258
$0.1345
$0.1641
$0.0834
$0.1140
$0.0765
27. CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Except as referred below, there are no other contingent liabilities or contingent assets
outstanding at the end of the year:
Contingent Asset
As per the binding West Kalgoorlie Tenements sale to Phoenix Gold Pty Ltd (‘Phoenix’), the
Company is due $2,000,000 in cash, to be paid in eight equal instalments of $250,000 each, with
the first instalment due to be paid three months after the first gold produced by Phoenix from
the West Kalgoorlie tenements. The remaining instalments are to be paid at three monthly
intervals thereafter.
The Company also has a production royalty of A$40 per ounce of gold recovered by Phoenix
from the West Kalgoorlie Tenements up to 75,000 ounces and a once off payment of
A$3,000,000 on Phoenix having recovered 140,000 ounces from the royalty tenements.
The contingent assets disclosed above are dependent upon the liquidity of Phoenix Gold Pty Ltd
and the production profile from the West Kalgoorlie Tenements.
Contingent Liability
As announced to the ASX on 30 October 2012, the Company signed an agreement with 3D
Resources Ltd to earn up to a 75% interest in the Halls Creek Copper Project, located in the
Kimberley region of Western Australia.
In order to earn up to 75% in the project, under the terms of the Tenement Sale, Farm-In and
Joint Venture Agreement, the Company is required to:
Make a payment of a further $100,000 cash, issue 1,250,000 fully paid Cazaly shares and
incur expenditures of $500,000 within 24 months to earn a total of 51%
Complete a pre-feasibility study within 36 months to earn a 75% interest
If the pre-feasibility is positive, or Cazaly transacts on the project, then a further payment of
$500,000 in shares is payable to 3D Resources Ltd.
56
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
28. NEW ACCOUNTING STANDARDS FOR APPLICATION IN FUTURE YEARS
New Accounting Standards Affecting Amounts Reported in the Current Period
The following new and revised Standards and Interpretations have been adopted in the current
year and have affected the amounts reported in these financial statements.
Standards affecting presentation and disclosure
Amendments to AASB 101
‘Presentation of Financial
Statements’
in
for
into
Income’
The amendment (part of AASB 2011-9 ‘Amendments to
Australian Accounting Standards - Presentation of Items
of Other Comprehensive
introduce new
terminology
the Statement of Comprehensive
Income and income statement. Under the amendments
to AASB 101, the Statement of Comprehensive Income
is renamed as a Statement of Profit or Loss and other
Comprehensive Income. The amendments to AASB 101
require items of other comprehensive income to be
the other
two categories
grouped
comprehensive income section: (a) items that will not
be reclassified subsequently to profit or loss and (b)
items that may be reclassified subsequently to profit or
loss when specific conditions are met. Income tax on
items of other comprehensive income is required to be
allocated on the same basis – the amendments do not
change
items of other
comprehensive income either before tax or net of tax.
The amendments have been applied retrospectively,
and hence
items of other
comprehensive income has been modified to reflect
the above mentioned
the changes. Other
presentation changes,
the
amendments to AASB 101 does not result in any impact
on profit or loss, other comprehensive income and total
comprehensive income.
the application of
the presentation of
the option
to present
than
Standards and Interpretations affecting the reported results or financial position
Amendments to AASB 112
‘Income Taxes’
The Company is not affected by the adoption of this
standard as the Company does not hold investment
property.
New Accounting Standards for Application in Future Periods
At the date of authorisation of the financial statements, the Standards and Interpretations listed
below were in issue but not yet effective.
Standard/Interpretation
AASB 9 ‘Financial Instruments’, and
the relevant amending standards
Effective for
annual
reporting
periods
beginning on
or after
1 January 2015 30 June
Expected to
be initially
applied in
the financial
year ending
2016
AASB 10 ‘Consolidated Financial
Statements’ and AASB 2011-7
‘Amendments to Australian
Accounting Standards arising from
1 January 2013 30 June
2014
Directors’ assessment of
potential effect of
adoption
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
57
NOTES TO THE FINANCIAL STATEMENTS
Cazaly Resources Limited Annual Report 2013
the consolidation and Joint
Arrangements standards’
AASB 11 ‘Joint Arrangements’ and
AASB 2011-7 ‘Amendments to
Australian Accounting Standards
arising from the consolidation and
Joint Arrangements standards’
AASB 12 ‘Disclosure of Interests in
Other Entities’ and AASB 2011-7
‘Amendments to Australian
Accounting Standards arising from
the consolidation and Joint
Arrangements standards’
AASB 127 ‘Separate Financial
Statements’(2011) and AASB 2011-7
‘Amendments to Australian
Accounting Standards arising from
the consolidation and Joint
Arrangements standards’
AASB 128 ‘Investments in Associates
and Joint Ventures’ (2011) and
AASB 2011-7 ‘Amendments to
Australian Accounting Standards
arising from the consolidation and
Joint Arrangements standards’
AASB 13 ‘Fair Value Measurement’
and AASB 2011-8 ‘Amendments to
Australian Accounting
Standards arising from AASB 13’
AASB 119 ‘Employee Benefits’
(2011) and AASB 2011-10
‘Amendments to Australian
Accounting Standards arising from
AASB 119 (2011)’
AASB 2011-4 ‘Amendments to
Australian Accounting Standards to
Remove Individual Key
Management Personnel Disclosure
Requirements’
AASB 2012-2 ‘Amendments to
Australian Accounting Standards –
Disclosures – Offsetting
Financial Assets and Financial
Liabilities’
AASB 2012-3 ‘Amendments to
Australian
Accounting Standards – Offsetting
Financial Assets and Financial
Liabilities’
AASB 2012-5 ‘Amendments to
Australian Accounting Standards
arising from Annual
Improvements 2009–2011 Cycle’
AASB 2012-10 ‘Amendments to
Australian Accounting Standards –
Transition Guidance
and Other Amendments’
1 January 2013 30 June
2014
1 January 2013 30 June
2014
1 January 2013 30 June
2014
1 January 2013 30 June
2014
1 January 2013 30 June
2014
1 January 2013 30 June
2014
1 July 2013
30 June
2014
1 January 2013 30 June
2014
1 January 2014 30 June
2015
1 January 2013 30 June
2014
1 January 2013 30 June
2014
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
The Company does not
anticipate a material
effect from the adoption
of this Australian
Accounting Standard.
58
DIRECTORS’ DECLARATION
Cazaly Resources Limited Annual Report 2013
In accordance with a resolution of the directors of Cazaly Resources Limited, the directors of the
company declare that:
1.
the financial statements and notes, as set out, are in accordance with the Corporations
Act 2001 and:
a.
b.
comply with Australian Accounting Standards, which, as stated in accounting
policy Note 1 to the
financial statements, constitutes compliance with
International Financial Reporting Standards (IFRS); and
give a true and fair view of the financial position as at 30 June 2013 and of the
performance for the year ended on that date of the consolidated group;
2.
3.
in the directors’ opinion there are reasonable grounds to believe that the company will
be able to pay its debts as and when they become due and payable; and
the directors have been given the declarations required by s 295A of the Corporations
Act 2001 from the Chief Executive Officer and Chief Financial Officer.
On behalf of the Directors
Nathan McMahon
Managing Director
Perth,
24 September 2013
59
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 2013, and the consolidated
statement of profit or loss and other comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended,
notes comprising a summary of significant accounting policies and other explanatory
information, and the directors’ declaration of the Consolidated Entity, comprising the
Company and the entities it controlled at the year’s end or from time to time during the
financial year.
The directors of the Company are responsible for the preparation and fair presentation of
the financial report in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such internal control as the directors determine is
necessary to enable the preparation of the financial report that is free from material
misstatement, whether due to fraud or error. In Note 1, the directors also state, in
accordance with Accounting Standards AASB 101: Presentation of Financial Statements,
that the financial statements comply with International Financial Reporting Standards.
Our responsibility is to express an opinion on the financial report based on our audit. We
conducted our audit in accordance with Australian Auditing Standards. These Auditing
Standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether
the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial report. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial report in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.
Independent Auditor’s Report
To the Members of Cazaly Resources Limited (Continued)
Independence
In conducting our audit, we followed applicable independence requirements of Australian professional ethical
pronouncements and the Corporations Act 2001.
Auditor's Opinion
In our opinion:
a. The financial report of Cazaly Resources Limited and Controlled Entities is in accordance with the
Corporations Act 2001, including:
i.
giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2013 and of its
performance for the year ended on that date; and
ii.
complying with Australian Accounting Standards and the Corporations Regulations 2001;
b. The financial report also complies with International Financial Reporting Standards as disclosed in Note 1.
Emphasis of Matter – Going Concern
Without qualifying our opinion, we draw attention to Note 1 in the financial report which indicates that the
Consolidated Entity incurred a loss of $1,262,416 during the year ended 30 June 2013. This condition, along
with other matters as set forth in Note 1, indicate the existence of a material uncertainty which may cast
significant doubt about the ability of the Consolidated Entity to continue as a going concern and whether it will
realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the
financial report.
Report on the Remuneration Report
We have audited the Remuneration Report included in directors’ report of the year ended 30 June 2013. The
directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion, the Remuneration Report of Cazaly Resources Limited for the year ended 30 June 2013,
complies with section 300A of the Corporations Act 2001.
BENTLEYS
Chartered Accountants
MARK DELAURENTIS CA
Director
DATED at PERTH this 24th day of September 2013
ADDITIONAL SHAREHOLDER INFORMATION Cazaly Resources Limited Annual Report 2013
_______________________________________________________________________________________________________________
Additional information required by Australian Securities Exchange Limited and not shown
elsewhere in this Annual Report is as follows. The information is made up to 17 September 2013.
DETAILS OF HOLDERS OF EQUITY SECURITIES
ORDINARY SHAREHOLDERS
There are 130,477,122 fully paid ordinary shares on issue, held by 2,626 individual shareholders.
Each member entitled to vote may vote in person or by proxy or by attorney and on a show of
hands every person who is a member or a representative or a proxy of a member shall have
one vote and on a poll every member present in person or by proxy or attorney or other
authorised representative shall have one vote for each share held.
TWENTY LARGEST SHAREHOLDERS (AS AT 17 SEPTEMBER 2013)
Ordinary Shareholders
NATHAN MCMAHON, KINGSREEF PTY LTD & KINGSREEF PTY LTD
(GROUPED)
NEW PAGE INVESTMENTS LIMITED
CLIVE BRUCE JONES
CLIVE BRUCE JONES (THE ALYSE INVESTMENT A/C)
GGDT DEVELOPMENTS PTY LTD
CITICORP NOMINEES PTY LTD
MRS DEBRA LEE MCMAHON
HSBC CUSTODY NOMINEEES (AUSTRALIA) LTD
MR PETER ANASTASIOU & MRS KRISTINE ANASTASIOU
MR KENT MICHAEL HUNTER
MR GERALD WELLS
FUSION RESPURCES PTY LTD
PERIZIA INVESTMENTS PTY LTD
APOLLINAX INC
MR MICHAEL JOHN HAMILL
WIDERANGE CORPORATION PTY LTD
UBS WEALTH MANAGEMENT
MR ANTHONY ROBERT RAMAGE
SAINTER NOMINEES PTY LTD (GROUPED)
KOUTA BAY PTY LTD
Fully Paid Ordinary
Number
Percentage
16,191,690
8,000,000
6,646,256
2,500,001
2,500,000
1,643,870
1,552,595
1,525,781
1,509,770
1,311,352
1,100,000
1,000,000
1,000,000
1,000,000
1,000,000
913,856
875,000
800,000
766,846
703,250
12.41%
6.13%
5.09%
1.92%
1.92%
1.26%
1.19%
1.17%
1.16%
1.00%
0.84%
0.77%
0.77%
0.77%
0.77%
0.70%
0.67%
0.61%
0.59%
0.54%
52,540,267
40.27%
VOTING RIGHTS
Subject to any rights or restrictions for the time being attached to any class or classes (at
present there are none) at general meetings of shareholders or classes of shareholders:
(a) each shareholder entitled to vote, may vote in person or by proxy, attorney or
representative;
(b) on a show of hands, every person present who is a shareholder or a proxy, attorney or
representative of a shareholder has one vote; and
62
ADDITIONAL SHAREHOLDER INFORMATION Cazaly Resources Limited Annual Report 2013
_______________________________________________________________________________________________________________
(c) on a poll, every person present who is a shareholder or a proxy, attorney or representative
of a shareholder shall, in respect of each fully paid share held, or in respect of which
he/she has appointed a proxy, attorney or representative, have one vote for the share, but
in respect of partly paid shares shall have a fraction of a vote equivalent to the proportion
which the amount paid up bears to the total issue price for the share.
HOLDERS OF NON-MARKETABLE PARCELS
There are 936 shareholders who hold less than a marketable parcel of shares.
STOCK EXCHANGE INFORMATION
DISTRIBUTION OF SHARE HOLDERS (AS AT 17 SEPTEMBER 2013)
1 to
1,001 to
5,001 to
1,000
5,000
10,000
10,001 to 100,000
100,001 and over
SUBSTANTIAL SHAREHOLDERS
Ordinary
Shares
303
832
463
823
205
2,626
As at report date, the shareholders are recorded in the Register as Substantial Shareholders:
Substantial Shareholder
Ordinary Shares held
% Held
Nathan McMahon
Clive Jones
New Page Investments Ltd
SHARE BUY-BACKS
17,190,939
10,075,114
8,000,000
13.18%
7.72%
6.13%
There is no current on-market buy-back scheme.
OTHER INFORMATION
Cazaly Resources Limited, incorporated and domiciled in Australia, is a public listed
Company limited by Shares.
63
ADDITIONAL SHAREHOLDER INFORMATION Cazaly Resources Limited Annual Report 2013
_______________________________________________________________________________________________________________
INTEREST IN MINING TENEMENTS AS AT 17 SEPTEMBER 2013
Tenement Interest
1 EL, 1 ELA's
1 EL
Project Name
ALICE DOWNS
AU-7 MILE HILL
Tenement Interest
1 EL
1 EL, 1 ELA's
14 PL's
11 EL's, 1 ELA, 1 PL's
3 EL's, 1 PL
3 EL's, 1 ELA
5 EL's
1 ELA
10 PL's
1 EL's
1 ELA
1 EL
3 ELA's
10 EL's, 1 ELA's, 1 PL
1 EL, 1 ELA
1 EL, 1 ELA
1 ELA
1 EL
2 PL's, 1 MLA
1 EL
1 EL
1 ELA
1 EL
2 EL's
9 EL's, 3 L's, 5 ML's, 7
PL's
AU-BALAGUNDI
AU-CAROSUE
AU-JILLEWARRA
AU-MT WELD
AU-RANDALS
AU-RUBY WELL
BARDOC
BIG BEN-ALICE HILL
BOOLALOO
COSMO NEWBERRY
EDJUDINA
FE-EARAHEEDY
FE-ETHEL CREEK
FE-HAMERSLEY
FE-HIGH RANGE
FE-HILLSIDE
FE-KANGEENARINA
FE-MARILLANA
FE-MOORINE ROCKS
FE-MT GOULD
FE-MT WALKINS
FE-MT. STUART
FE-PARKER RANGE
1 EL
1 EL
1 ELA
1 PL
1 EL, 1 ELA
1 ELA
9 PL's
1 EL
1 EL, 1 ELA
2 EL's
1 EL
1 EL
1 MLA, 7 PL's
1 ELA
3 PL’s
1 EL
1 EL
2 EL's
2 PL’s
1 ELA
1 EL
Project Name
FE-PINARRA WELL
FE-ROCKLEA
FE-STRAWBERRY
ROCKS
FE-TOODYAY
FE-YALLEEN
GOLDEN RIDGE
IOCG-WEBB
JUNCTION
KALGOORLIE
KOOLYANOBBING
MAGELLEN
NEBO
NT-ACACIA BORE
NT-MT ISABEL
QUARTZ CIRCLE
SOUTHERN CROSS
TEN MILE WELL
UR-HINKLER WELL
UR-JAILOR BORE
U-YEELIRRIE
VETTERSBURG
YAMARNA
FE-TOODYAY
Notes: EL = Granted Exploration Licence MLA = Mining Lease Application M = Granted Mining Lease
ELA = Exploration Licence Application P = Granted Prospecting Licence PLA = Prospecting Licence
Application
64
CORPORATE GOVERNANCE
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2013
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 Cazaly 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.
The Company reports below on how it has followed (or otherwise departed from) each of the Principles
& Recommendations during the 2012/2013 financial year (Reporting Period).
Board
Roles and responsibilities of the Board and Senior Executives
(Recommendations: 1.1, 1.3)
The Company has established the functions reserved to the Board, and those delegated to senior
executives and has set out these functions in its Board Charter.
The Board is collectively responsible for promoting the success of the Company through its key functions
of overseeing the management of the Company, providing overall corporate governance of the
Company, monitoring
the Company, engaging appropriate
management commensurate with the Company's structure and objectives, involvement in the
development of corporate strategy and performance objectives, and reviewing, ratifying and
monitoring systems of risk management and internal control, codes of conduct and legal compliance.
financial performance of
the
Senior executives are responsible for supporting the two Managing Directors and assisting the Managing
Directors in implementing the running of the general operations and financial business of the Company
in accordance with the delegated authority of the Board. Senior executives are responsible for
reporting all matters which fall within the Company's materiality thresholds at first instance to the
Managing Directors or, if the matter concerns one of the Managing Director, directly to other Managing
Director or the lead independent director, as appropriate.
The Company's Board Charter is available on the Company's website.
Skills, experience, expertise and period of office of each Director
(Recommendation: 2.6)
A profile of each Director setting out their skills, experience, expertise and period of office is set out in
the Directors' Report.
Director independence
(Recommendations: 2.1, 2.2, 2.3, 2.6)
The Board does not have a majority of Directors who are independent.
65
CORPORATE GOVERNANCE
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2013
Mr Hunter is a Non-Executive Director and is considered to be Independent. Mr Hunter is independent
as he is a non-executive director who is not a member of management and is free of any business or
other relationship that could materially interfere with, or could reasonably be perceived to materially
interfere with, the independent exercise of his judgement. The Board considers the independence of
directors having regard to the relationships listed in Box 2.1 of the Principles & Recommendations and
the Company's materiality thresholds.
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.
The Board has agreed on the following guidelines, as set out in the Company's Board Charter, for
assessing the materiality of matters:
Balance sheet items are material if they have a value of more than 10% of pro-forma net asset.
Profit and loss items are material if they will have an impact on the current year operating result of
10% or more.
Items are also material if they impact on the reputation of the Company, involve a breach of
legislation, are outside the ordinary course of business, could affect the Company’s rights to its
assets, if accumulated would trigger the quantitative tests, involve a contingent liability that would
have a probable effect of 10% or more on balance sheet or profit and loss items, or will have an
effect on operations which is likely to result in an increase or decrease in net income or dividend
distribution of more than 10%.
Contracts will be considered material if they are outside the ordinary course of business, contain
exceptionally onerous provisions in the opinion of the Board, impact on income or distribution in
excess of the quantitative tests, there is a likelihood that either party will default and the default
may trigger any of the quantitative or qualitative tests, are essential to the activities of the
Company and cannot be replaced or cannot be replaced without an increase in cost which
triggers any of the quantitative tests, contain or trigger change of control provisions, are between
or for the benefit of related parties, or otherwise trigger the quantitative tests.
Independent professional advice
(Recommendation: 2.6)
To assist directors with independent judgement, it is the Board's policy that if a director considers it
necessary to obtain independent professional advice to properly discharge the responsibility of their
office as a director then, provided the director first obtains approval from the Chair for incurring such
expense, the Company will pay the reasonable expenses associated with obtaining such advice.
Selection and (Re)appointment of Directors
(Recommendation: 2.6)
In determining candidates for the Board, the Nomination Committee (or equivalent) follows a
prescribed process whereby it evaluates the mix of skills, experience and expertise of the existing Board.
In particular, the Nomination Committee (or equivalent) is to identify the particular skills that will best
increase the Board's effectiveness. Consideration is also given to the balance of independent directors.
Potential candidates are identified and, if relevant, the Nomination Committee (or equivalent)
recommends an appropriate candidate for appointment to the Board. Any appointment made by the
Board is subject to ratification by shareholders at the next general meeting.
66
CORPORATE GOVERNANCE
_______________________________________________________________________________________________________________
Cazaly Resources Limited Annual Report 2013
The Board recognises that Board renewal is critical to performance and the impact of Board tenure on
succession planning. Each director other than the Managing Director, must not hold office (without re-
election) past the third annual general meeting of the Company following the director's appointment or
three years following that director's last election or appointment (whichever is the longer). However, a
director appointed to fill a casual vacancy or as an addition to the Board must not hold office (without
re-election) past the next annual general meeting of the Company. At each annual general meeting a
minimum of one director or one third of the total number of directors must resign. A director who retires
at an annual general meeting is eligible for re-election at that meeting and re-appointment of directors
is not automatic.
Board committees
Nomination Committee
(Recommendations: 2.4, 2.6)
The Board has not established a separate Nomination Committee. Given the current size and
composition of the Board, the Board believes that there would be no efficiencies gained by establishing
a separate Nomination Committee. Accordingly, the Board performs the role of the Nomination
Committee. Items that are usually required to be discussed by a nomination committee are marked as
separate agenda items at Board meetings when required. When the Board convenes as the
Nomination Committee it carries out those functions which are delegated to it in the Company’s
Nomination Committee Charter. The Board deals with any conflicts of interest that may occur when
convening in the capacity of the Nomination Committee by ensuring that the director with conflicting
interests is not party to the relevant discussions.
To assist the Board to fulfil its function as the Nomination Committee, it has adopted a Nomination
Committee Charter which describes the role, composition, functions and responsibilities of the
Nomination Committee.
Audit Committee
(Recommendations: 4.1, 4.2, 4.3, 4.4)
The Board has not established a separate Audit Committee, and therefore it is not structured in
accordance with Recommendation 4.2. Given the current size and composition of the Board, the
Board believes that there would be no efficiencies gained by establishing a separate Audit Committee.
Accordingly, the Board performs the role of Audit Committee. Items that are usually required to be
discussed by an Audit Committee are marked as separate agenda items at Board meetings when
required. When the Board convenes as the Audit Committee it carries out those functions which are
delegated to it in the Company’s Audit Committee Charter. The Board deals with any conflicts of
interest that may occur when convening in the capacity of the Audit Committee by ensuring that the
director with conflicting interests is not party to the relevant discussions.
The full Board, in its capacity as the Audit Committee, held one meeting during the Reporting Period. To
assist the Board to fulfil its function as the Audit Committee, the Company has adopted an Audit
Committee Charter which describes the role, composition, functions and responsibilities of the Audit
Committee.
All of the directors consider themselves to be financially literate and possess relevant industry
experience. Details of each of the director's qualifications are set out in the Directors' Report.
The Company has established procedures for the selection, appointment and rotation of its external
auditor. The Board is responsible for the initial appointment of the external auditor and the appointment
of a new external auditor when any vacancy arises, as recommended by the Audit Committee (or its
equivalent). Candidates for the position of external auditor must demonstrate complete independence
from the Company through the engagement period. The Board may otherwise select an external
auditor based on criteria relevant to the Company's business and circumstances. The performance of
the external auditor is reviewed on an annual basis by the Audit Committee (or its equivalent) and any
recommendations are made to the Board.
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Remuneration Committee
(Recommendations: 8.1, 8.2, 8.3)
The Board has not established a separate Remuneration Committee. Given the current size and
composition of the Company, the Board believes that there would be no efficiencies gained by
establishing a separate Remuneration Committee. Accordingly, the Board performs the role of
Remuneration Committee. Items that are usually required to be discussed by a Remuneration
Committee are marked as separate agenda items at Board meetings when required. When the Board
convenes as the Remuneration Committee it carries out those functions which are delegated to it in the
Company’s Remuneration Committee Charter. The Board deals with any conflicts of interest that may
occur when convening in the capacity of the Remuneration Committee by ensuring that the director
with conflicting interests is not party to the relevant discussions.
To assist the Board to fulfil its function as the Remuneration Committee, it has adopted a Remuneration
Committee Charter which describes the role, composition, functions and responsibilities of the
Remuneration Committee.
Details of remuneration, including the Company’s policy on remuneration, are contained in the
“Remuneration Report” which forms of part of the Directors’ Report. The remuneration of non-executive
directors is set by reference to payments made by other companies of similar size and industry, and by
reference to the director’s skills and experience. Given the Company is at its early stage of
development and the financial restrictions placed on it, the Company may consider it appropriate to
issue unlisted options to non-executive directors, subject to obtaining the relevant approvals. The
Remuneration Policy is subject to annual review. All of the directors’ option holdings are fully disclosed.
Executive Pay and rewards consists of a base salary and performance incentives. Long term
performance incentives may include options granted at the discretion of the Board and subject to
obtaining the relevant approvals. The grant of options is designed to recognise and reward efforts as
well as to provide additional incentive and may be subject to the successful completion of
performance hurdles. Executives are offered a competitive level of base pay at market rates (for
comparable companies) and are reviewed annually to ensure market competitiveness. Executives are
prohibited from entering into transactions or arrangements which limit the economic risk of participating
in unvested entitlements.
Performance evaluation
Senior executives
(Recommendations: 1.2, 1.3)
The Managing Directors are responsible for evaluating the performance of senior executives. The
evaluation of senior executives is undertaken via an informal interview process which occurs annually or
more frequently as required and otherwise takes place as part of the annual salary review under the
senior executives’ employment contract.
During the Reporting Period an evaluation of senior executives took place in accordance with the
process disclosed above.
Board, its committees and individual directors
(Recommendations: 2.5, 2.6)
The Chair is responsible for evaluating the performance of the Board and, when appropriate, Board
committees and individual directors deemed. The Board is responsible for evaluating the Managing
Directors. The evaluations of the Board, and any applicable Board committees and individual directors
are undertaken via informal discussions on an on-going basis with the Chair.
The evaluation of the Managing Directors is undertaken via an informal interview process which occurs
annually or more frequently, at the Board’s discretion.
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Cazaly Resources Limited Annual Report 2013
Ethical and responsible decision making
Code of Conduct
(Recommendations: 3.1, 3.3)
The Company has established a Code of Conduct as to the practices necessary to maintain
confidence in the Company's integrity, the practices necessary to take into account its legal obligations
and the reasonable expectations of its stakeholders, and the responsibility and accountability of
individuals for reporting and investigating reports of unethical practices.
Diversity Policy
(Recommendations: 3.2, 3.3, 3.4 & 3.5)
Diversity includes, but is not limited to, gender, age, ethnicity and cultural background. The company is
committed to diversity and recognises the benefits arising from employee and board diversity and the
importance of benefiting from all available talent. The Company has established a Diversity Policy,
which includes requirements for the Board to establish measurable objectives for achieving gender
diversity and for the Board to assess annually both the objectives and progress in achieving them.
During the Reporting Period the Company developed and the Board adopted a Diversity Strategy
which details the Company’s measurable objectives for achieving gender diversity in accordance with
the Diversity Policy. In doing this, and assigning the responsibility for the Diversity Policy and its
administration, monitoring and review, the Company has achieved its structural and procedural
measurable objectives set for [2012/13]. The Diversity Strategy includes a number of concepts including
contribution to enhance local workforce and provision of opportunities for career development.
Initiation of programs and schemes to achieve these goals were achieved during the Reporting Period.
The Board has also adopted a policy to address harassment and discrimination in the Company, which
it believes will facilitate an environment that encourages a diverse workforce.
A summary of the Company’s Diversity Policy is available on the Company’s website.
The proportions of, women in senior executive positions and women on Board as at 30 June 2013 are set
out below:
Women on the Board
Women in senior management roles
Continuous Disclosure
(Recommendations: 5.1, 5.2)
2013
No.
0
1
%
0
25
The Company has established written policies and procedures designed to ensure compliance with ASX
Listing Rule disclosure requirements and accountability at a senior executive level for that compliance.
A summary of the Company's Policy on Continuous Disclosure is available on the Company's website.
Shareholder Communication
(Recommendations: 6.1, 6.2)
The Company has designed a communications policy for promoting effective communication with
shareholders and encouraging shareholder participation at general meetings.
A copy of the Company's Shareholder Communication Policy is available on the Company's website.
Risk Management
Recommendations: 7.1, 7.2, 7.3, 7.4)
The Board has adopted a Risk Management Policy, which sets out the Company's risk profile. Under the
policy, the Board is responsible for approving the Company's policies on risk oversight and management
and satisfying itself that management has developed and implemented a sound system of risk
management and internal control.
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Cazaly Resources Limited Annual Report 2013
Under the policy, the Board delegates day-to-day management of risk to the Managing Directors, who
are responsible for identifying, assessing, monitoring and managing risks. The Managing Directors are
also responsible for updating the Company's material business risks to reflect any material changes, with
the approval of the Board.
In fulfilling the duties of risk management, the Managing Directors may have unrestricted access to
Company employees, contractors and records and may obtain independent expert advice on any
matter they believe appropriate, with the prior approval of the Board.
In addition, the following risk management measures have been adopted by the Board to manage the
Company's material business risks:
the Board has established authority limits for management, which, if proposed to be
exceeded, requires prior Board approval;
the Board has adopted a compliance procedure for the purpose of ensuring compliance with
the Company's continuous disclosure obligations; and
the Board has adopted a corporate governance manual which contains other policies to assist
the Company to establish and maintain its governance practices.
During the Reporting Period, management regularly reported to the Board on the following categories
of risks affecting the Company as part of the Company’s systems and processes for managing material
business risks: operational, financial reporting, sovereignty and market-related risks.
The Managing Director and the Chief Financial Officer have provided a declaration to the Board in
accordance with section 295A of the Corporations Act and have assured the Board that such
declaration is founded on a sound system of risk management and internal control and that the system
is operating effectively in all material respects in relation to financial reporting risks.
A summary of the Company's Risk Management Policy is available on the Company's website
(www.cazalyresources.com.au).
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