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The Bold Explorer
Annual Report 2012
CORPORATE INFORMATION
ABN 65 094 206 292
Directors
Peter Batten (Executive Chairman)
Darren Townsend (Non-Executive Director)
Gary Brabham (Non-Executive Director)
Jason Brewer (Non-Executive Director)
Company Secretary
Dennis Wilkins
Registered Office
Suite 4, 100 Hay Street
SUBIACO WA 6008
Telephone: +61 8 9285 7500
Facsimile: +61 8 9285 7599
Postal Address
PO Box 8289
SUBIACO EAST WA 6008
Solicitors
William & Hughes
25 Richardson Street
WEST PERTH WA 6005
Bankers
National Australia Bank Limited
1232 Hay Street
WEST PERTH WA 6005
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
APPLECROSS WA 6153
Telephone: +61 8 9315 2333
Facsimile: +61 8 9315 2233
Auditors
Butler Settineri (Audit) Pty Ltd
Unit 16, First Floor Spectrum Offices
100 Railway Road
SUBIACO WA 6008
Internet Address
www.degreymining.com.au
Email Address
frontdesk@degreymining.com.au
Stock Exchange Listing
De Grey Mining Limited shares are listed on the Australian Securities Exchange (ASX code DEG).
De Grey Mining Limited
The Bold Explorer
Annual Report 2012
Contents
Highlights
Executive Chairman’s Report
Operations Report
Financial Report
Directors’ Report
Audit Independence Declaration
Corporate Governance Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Audit Report
ASX Additional Information
A03
A04
A06
A23
B03
B09
B10
B15
B16
B17
B18
B19
B42
B43
B45
A01
A1
Pachi Project, argentina
A2
HigHligHts
Santa cruz Province, argentina
(gold-silver)
Paterson Project, W.a.
(uranium, base metals)
• Discovery of four prospects by grass roots exploration
• Discussions on heritage and access agreement
and basic principles geology (SM6, Vein Breccia Zone,
progressed with Martu titleholders.
Boleadora and Pachi).
• Discussions with potential farm-in parties to fund
• Outcropping gold-silver mineralization at the SM6
exploration.
Prospect, drilling planned for October 2012.
• Defined drill target at Pachi Prospect, drilling planned for
October 2012.
• Completion of De Grey’s first drilling program in Argentina
at the Vein Breccia Zone Prospect.
turner river Project, W.a.
(gold, base metals)
• Vein Breccia Zone drilling results confirming target is low
• Upgraded gold and base metal resources.
sulphidation epithermal mineralization, gold and silver
• Exploration continuing by joint venture partner identifies
results encouraging and two sets of veining may be
base metal targets from IP Resistivity Survey at Tabba
mineralized.
Tabba.
• Advanced other properties through systematic surface
sampling and remote sensing.
rio negro cruz Province, argentina
(gold-silver)
Pilbara iron assets, W.a.
(iron ore)
• Early payment of Mt Dove royalty.
• De Grey retains 20 percent carried interest to decision to
• Secured 1,420 sq km of tenure over emerging epithermal
mine in +500Mt Beyondie magnetite iron resource.
gold-silver district.
• Commenced exploration over highly prospective region.
A03
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executive cHairman’s report
I only joined De Grey Mining in July 2012 so the progress and
exploration success of the past twelve months Company is due
to the current staff and previous management.
I was attracted to the Company by the large holdings and
project potential the Company has in the Deseado and
Somoncura Massifs in Southern Argentina. Both these Massifs
host in excess of 20Moz Au eq each in what is considered
largely under explored territory.
The Deseado and Somoncura are two locations that offer
the opportunity of discovering significant mineralization in
low sulphidation epithermal systems that are noted for their
comparably high grades. In the search for potential company
making high grade low cost operations there are few better
addresses to have.
In 2012 De Grey completed its second field season of
exploration in the Santa Cruz province of Argentina targeting
low sulphidation epithermal gold and silver mineralization in the
Deseado Massif.
In two years the De Grey exploration team, led by Glenn
Martin and Gustavo Fernandez, has visited 60 percent of the
Company’s tenements and systematically completed first and
second pass exploration over 40 percent of the 3,750 sq km
of ground held in the Deseado Massif. This work has resulted
in 501 rock chip/float samples, 791 LAG samples and 1,330
stream sediment samples taken.
Two projects, Sierra Morena (SM6 and VBZ Prospects), and
Boleadora have stood out as a result of this work and have
become the focus for the next phase of exploration. Numerous
other anomalies have been identified from the sampling and
further work is expected to identify other prospects within the
areas of interest highlighted from the grass roots exploration
completed in these first two seasons.
Two diamond holes were completed at VBZ before the early
onset of winter and drilling is planned at SM6 in October 2012.
Veining at Boleadora is to be further tested to define the best
site for first pass drilling.
The drilling at VBZ was successful if not spectacular, answering
a number of issues regarding the prospect and defining the
need for greater work over what appears to be a large system.
De Grey is planning to trench the site to expose the relationship
of the variously oriented vein sets at VBZ.
The surface signature of the veining and the returned results
from sampling of the veining at SM6 show exceptional grades
along two vein orientations over a combined vein strike of two
kilometres. The surface expression of the veins is poor but
what subcrop can be seen and sampled is very encouraging.
SM6 is an obvious drilling target and at the conclusion of land
access negotiations we hope to commence drilling at this site
in October 2012.
Despite identifying two outstanding projects from within
held assets De Grey is still assessing potential opportunities
elsewhere in Argentina. As a result of this De Grey has
A04
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De Grey Mining Limited Annual Report 2012
The Bold Explorer
I look forward to the next twelve months of operations with great
enthusiasm and excitement and I take this opportunity to thank
our administration and support staff and my fellow directors for
their efforts during the year.
Peter Batten
Executive Chairman
negotiated an option over the Pachi project to the east of the
Sierra Morena project.
The anomalous zone at Pachi extends over 800m and is up
to 80m wide at surface. Texturally the crackle breccias that
host high grade silver (to 134g/t Ag) at Pachi are reminiscent
of mineralization observed at Patagonia Gold’s Cap Oeste
project. Drill testing of the mineralized zone at Pachi is planned
in the same program as SM6, October 2012.
Having already established the Company’s presence in Santa
Cruz Province, Argentina, De Grey has also added substantially
to our landholdings in Argentina pegging some 1,420 sq km
of mineral tenement applications in the Rio Negro province
to the north. These tenement applications are located in
the Somoncura Massif, the other hot epithermal address in
Argentina.
Being north of Santa Cruz the Rio Negro projects can be
accessed during the short Argentinian winter and first pass
exploration commenced on the Rio Negro ground in August
2012.
In parallel with the above activities we have also maintained
the Company’s interests in its other Australian projects at near
zero cost.
At the Turner River gold and base metals Lansdowne Resources
is actively managing the Turner River projects with good results
from recent IP Resistivity surveys.
Atlas Iron pre-paid royalties up to 2Mt and continues to develop
the Mt Dove iron ore project.
Emergent Resources continues to maintain the Beyondie
magnetite iron JV and De Grey maintains a 20 percent free
carried interest to decision to mine in this resource.
De Grey has made adjustments to its applications in the
Paterson region following changes made by the DMP and after
considering the cost of operating in the area. The area being
located entirely with Martu determined native title requires us
to negotiate access for exploration. We have made progress
toward an agreement with the Martu People and we hope to
conclude an agreement soon.
We continue to regularly assess new opportunities both within
Australia and overseas locations.
Thanks are extended to the traditional owners and claimants of
the areas in which we work, namely the Kariyarra, Njamal, Martu,
and Kalkadoon peoples, and the staff of their representative
bodies.
I also thank De Grey shareholders for their continuing support
of the Company.
A05
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operations report
Figure 1: Locations of De Grey’s projects, Santa Cruz, Argentina
argentina ProjectS
Santa cruz Province overview
De Grey Mining has secured mineral rights over approximately
3,751 sq km of ground in the Deseado Massif (Figure 1),
making the company one of the largest tenement holders in this
under-explored but rapidly emerging gold-silver province that
has seen a prolific number of new and high-grade discoveries
in recent years.
In Argentina mineral exploration tenements are of two types.
A cateo gives exclusive prospecting rights for the requested
area for a set period of time, with area reduction requirements
depending upon
the cateo area. A manifestación de
descubrimiento (manifestation of discovery, MD) can be filed as
either a vein or disseminated discovery and grants the holder
exclusive rights for an indefinite period.
The Deseado Massif hosts numerous, remarkably well
preserved low-sulphidation epithermal gold-silver deposits
within Jurassic age volcanic rocks. Resources and reserves
totalling 17.5Moz gold and 525Moz silver have been discovered
in the region since 1990, making it one of the world’s premier
exploration regions for this attractive style of mineralization.
Despite this record of discovery, exploration in the region is still
in its infancy with almost all deposits discovered to date found
by prospecting. All of De Grey’s project areas have seen little
or no previous exploration and represent early stage exploration
opportunities.
basalts or gravel cover. Very little exploration of covered
areas has been attempted to date in the Deseado and De
Grey considers that application of geophysics and advanced
geochemical sampling techniques, in conjunction with low-
level detection assay methods, have potential to yield new
discoveries in the region.
Sierra Morena Project
The Sierra Morena Project (Figure 2) comprises one granted
M.D, and one M.D. application covering an area of 140.4 sq
km in the western Deseado Massif. The project is located
approximately 25km east of Patagonia Gold’s El Tranquilo
Project (combined resources of 567,000 oz Au and 19.5Moz
Ag). The tenements were optioned from Minera Sudamericana
S.A. (MSA) in 20101.
Jurassic age volcanic rocks outcrop or are overlain by a thin
layer of ash over about 98% of the project area, the remaining
2% covers areas where thin post-mineral basalt flows, generally
less than 10m thick, overlie the Jurassic rocks.
During 2011-2012 De Grey completed follow up prospecting
over the 11 high priority target areas outlined from a project-
wide stream sediment sampling program2. At the SM-6 anomaly
De Grey has discovered high grade Au-Ag mineralization
associated with outcropping quartz veining and silicification3.
Work also continued on the Vein Breccia Zone Prospect during
the year, and a short drill program was completed at this
prospect4.
De Grey has targeted areas where the prospective Jurassic
volcanic rocks are outcropping on surface, as well as areas
where these rocks are covered by thin veneers of younger
1 Refer to De Grey Mining ASX release 15 July 2010 for details.
2 Refer to De Grey Mining ASX release 9 June 2011 for details.
3 Refer to De Grey Mining ASX release 21 May 2012 for details.
4 Refer to De Grey Mining ASX release 25 July 2012 for details.
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De Grey Mining Limited Annual Report 2012
The Bold Explorer
Figure 2: Sierra Morena Project – Drainage anomalies
SM6 Prospect
The SM6 Prospect (Figures 2 & 3) is located mostly in the
southern M.D. of the Sierra Morena Project.
The Eastern Vein is a north-west trending zone of intermittently
exposed quartz veining and silicification along a strike length
of approximately 300m, with strike extents both to the NW and
SE covered by soil and scree. Soil sampling has outlined a
co-incident Au-Ag-As-Hg-Sb anomaly over a strike distance
of approximately 725m, associated with the veining and
silicification, and rock chip sampling of outcrop has returned
up to 23.3g/t Au and 3,240g/t Ag.
The Western Vein is a north-south trending zone of intermittently
exposed quartz veining and silicification along a strike length
of approximately 450m, with strike extensions both to the
north, and south covered by soil and scree. Soil sampling has
outlined a co-incident Au-Ag-As-Hg-Sb anomaly over a strike
distance of approximately 1.2km associated with the veining
and silicification, and rock chip sampling of outcrop has
returned up to 7.2g/t Au and 755g/t Ag.
Vein textures, alteration mineralogy, the presence of high
precious metal grades, and low base metal values indicate that
the veins discovered so far represent the upper portions of a
typical low sulphidation epithermal system.
In addition, geological mapping and soil sampling at SM6 has
outlined further areas of alteration and anomalous geochemistry
over a north-south distance of more than 6km, indicating a
hydrothermal system of significant extent. The presence of
a rhyolite dome mapped in the north of the SM6 area is also
significant, as gold-silver veins in the Deseado are genetically
related to buried, late stage rhyolitic to dacitic intrusives which
promoted hydrothermal activity.
Furthermore, large areas of post-mineral soil and scree cover
throughout the SM6 area which gives further scope for blind
epithermal veins being discovered by continued exploration.
De Grey’s work has progressed the Eastern and Western Veins
at SM6 to drill ready status. During August 2012, land access
agreements are planned to be executed with holders of surface
land rights. Pending these agreements, a drilling contractor
will be sourced and construction of access roads and drill
pads will commence in mid-September. Drilling is expected
to commence in October 2012, with an initial program of 2,000
metres of RC drilling planned.
A07
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operations report continued
Figure 3: Sierra Morena SM6 target, rock and soil sampling results
Vein Breccia Zone Prospect
The Vein Breccia Prospect (Figures 2 & 4) is located in the east of
the Sierra Morena Project area. Rock chip sampling has located
numerous vein and vein float occurrences with rock samples
returning up to 11.75g/t au and 96.2g/t ag5 accompanied
by significant arsenic, lead and zinc values over an area of
approximately 750 metres by 800 metres. Soil sampling has
indicated potential for multiple mineralized structures although
a significant portion of the area is overlain by scree and soil that
possibly obscures other veins.
Detailed geological mapping indicates that mineralized veins
may be hosted by a northwest trending duplex fault system with
high metal grades associated with both the northwest striking
boundary structures and north-south striking extensional
faults.
Multi-element geochemistry and quartz vein types indicate
that the Vein Breccia Zone represents the upper portion of a
preserved epithermal system, with more crystalline quartz
types, and associated higher precious metals grades, being
expected at depth.
De Grey’s work during the year progressed the Vein Breccia Zone
to drill ready status. During the year, land access agreements
were executed with holders of surface land rights, access roads
and drill pads constructed and a drilling contractor sourced.
Drilling commenced late in May 2012, however the program
was prematurely completed in early June, with a total of 366m
drilled in two drill-holes prior to the program being abandoned
due to an early onset of winter6.
Significant results from SM-12-01 included 0.45m @ 0.53%
Zn and 95ppb Au from 118.5m, and 1m @ 105ppb Au from
118.95m.
Significant results from SM-12-02 included 1m @ 2.16% Zn
from 82.8m, 1m @ 329ppb Au and 14g/t Ag from 186.8m and
1m @ 59g/t Ag from 219.8m.
Both drillholes intersected highly anomalous geochemical
associations typical of the upper levels of a low sulphidation
epithermal system. The upper portions of these systems
are typically barren, but due to strong vertical zonation and
lithological controls in the localisation of Au-Ag mineralization,
the presence of anomalous Au-Ag and typical pathfinder
elements (As-Ba-Cu-Hg-Mo-Sb-Pb-Zn) in the drilling is highly
encouraging at this early stage.
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De Grey Mining Limited Annual Report 2012
The Bold Explorer
Figure 4: Sierra Morena Vein Breccia Zone Prospect showing drillhole location, rock and soil sampling results
Quartz veining and alteration in the drillholes was dominantly
chalcedonic also typical of the upper zones of a low sulphidation
system.
The project is strategically located between Goldcorp’s Cerro
Negro project (ex-Andean Resources), just 30km to the north,
and Mirasol Resources’ recent grass roots Virginia silver vein
field discovery, approximately 25km to the south.
With the encouraging results from a limited drilling program,
the company plans to continue exploration at the Vein Breccia
Zone in the 2012-2013 field season. Initially the company will
complete trenching and further geological mapping in the area to
better understand structural controls on mineralization, and then
proposes a Gradient array IP program prior to further drilling.
This next stage of drilling will aim to test the deeper parts of the
epithermal system (100-400m below surface) which typically
contain the Au-Ag rich zones.
5 Refer to De Grey’s ASX release dated 8 December 2011 for details.
6 Refer to De Grey ASX release dated 25 July 2012 for details.
Boleadora Project
The Boleadora Project (Figure 5) comprises seven cateo
(exploration licence) applications covering an area of 561.9 sq
km in the north western Deseado Massif.
De Grey may earn up to 80% in six tenements under the terms
of a farm-in with Minera Kingsgate Argentina S.A., a wholly
owned subsidiary of Kingsgate Consolidated Ltd. The seventh
tenement (Boleadora Este) is held 100% by De Grey and is not
part of the farm-in agreement with Minera Kingsgate Argentina
S.A.
Prospective Jurassic volcanic rocks underlie about 95% of
the project area and prior to De Grey’s entry no systematic
exploration had previously been completed.
De Grey completed a project-wide stream sediment sampling
program in 2010-2011 that outlined 15 high priority target areas
of elevated gold and/or multi-element signatures predominantly
associated with northwest to northeast trending faults. The
clustered anomalies in the central-western and south-western
parts of the project area are of particular interest given their
highly anomalous spot Au and Ag values.
Most of the target areas were followed up early in the 2011-
2012 field season, but land access issues in the large stream
sediment anomaly in the SW of the project stopped follow up.
De Grey is aiming to resolve this access issue and complete
follow up over the area in the 2012-2013 field season.
An Aster based study was also completed over the Boleadora
Project, and this work has outlined a total of 21 targets which
warrant follow up in the 2012-2013 field season.
De Grey is aiming to progress at least one target area to “drill
ready” status before the end of 2013.
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operations report continued
Figure 5: Boleadora Project – Drainage anomalies and areas of interest
Pachi Project
The Pachi Project comprises a single cateo covering an area of
100 sq km in the central-western Deseado Massif. In July 2011
De Grey entered into an option-to-purchase agreement with the
Argentine individual who holds the tenement.
The property lies less than 15km SE of Hunt Mining Corporation’s
La Josefina deposits and just 5km south of Hunt’s El Gateado
prospect.
During 2011-2012 De Grey completed geological mapping,
rock chip sampling and prospecting over the project and
outlined an ENE striking, steeply dipping mineralized fault
outcropping over approximately 400m strike, where rock chip
sampling has returned up to 134g/t Ag in previous sampling
(Figure 6). The mineralized structure is located on the northern
flank of a rhyolite dome, which is a significant feature in the
context of Au-Ag mineralization in the Deseado Massif.
The Pachi target has been defined to drill-ready status7, and
pending landowner approvals which the company is aiming to
finalise by September 2012, a drilling program is planned in
October 2012 to test the mineralized structure.
7 Refer to De Grey’s ASX release dated 11 January 2012 for details.
De grey Mining 100%
oWneD ProPertieS
aguada grande
Aguada Grande comprises a single cateo application covering
an area of 34.3 sq km in the north-eastern Deseado Massif.
The project is located immediately north of Argentex Mining’s
La Leona Au-Ag project and outcropping Jurassic aged
volcanic rocks with evidence of WNW-NE faulting occur over
approximately 70% of the project area.
No work was completed on the project during 2011-2012, but
first pass prospecting and sampling is planned for the 2012-
2013 period.
aguada Del cuero
The Aguada Del Cuero Project comprises a single cateo
application covering an area of 93 sq km in the central-northern
Deseado.
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De Grey Mining Limited Annual Report 2012
The Bold Explorer
Figure 6: Pachi target – Rock chip results and geology
The project area is dominantly covered by post-mineral basalts
with small erosional windows revealing outcrops of Jurassic
volcanic rocks. Exploration in 2010-2011 located evidence of
quartz veining and alteration in these windows, indicating that
potentially mineralized structures exist beneath the thin basalt
cover.
Exploration will re-commence early in the 2012-2013 field
season, with further stream sediment sampling and prospecting
over target areas highlighted in the Aster based study.
De Grey is aiming to progress at least one target area to “drill
ready” status before the end of 2013.
No work was completed on the project during the reporting
period.
cerro La taba
halcon
The Halcon Project comprises two cateo applications covering
an area of 178.9 sq km in the north-western Deseado. Jurassic
volcanic rocks outcrop or sub-crop over approximately 85% of
the project area.
is
Halcon
located approximately 30km east of Mirasol
Resources’ Virginia Project where recent drilling indicates a
substantial new Ag project has been discovered. Nearby fossil
hot springs deposits provide evidence of hydrothermal systems
active nearby during the Jurassic.
During 2011-2012 De Grey completed a stream sediment
sampling program which outlined 15 high priority target areas
with elevated Au and/or multi-element signatures.
The target areas were followed up in the second half of the
2011-2012 field season, and an Aster based study was also
completed over the project.
The Cerro La Taba Project comprises eight cateo applications
covering an area of 626.7 sq km in the central western Deseado
Massif.
The northern and southern-most tenements partially cover
exposed Jurassic volcanic rocks, whilst the central portion
covers an area where the prospective Jurassic rocks are
covered by a veneer of post-mineral basalt flows interpreted in
most places to be less than 10m thick.
The El Gateado prospect (Hunt Mining) is located immediately
south of Cerro La Taba, whilst the La Josefina Project (Hunt
Mining) is located 15km to the southwest. Structures controlling
mineralization at each of those prospects are interpreted to trend
beneath the basalt cover into the Cerro La Taba tenements.
No work was completed on the project during the reporting
period. During 2012-2013 De Grey plans to complete first pass
prospecting and sampling over areas of exposed Jurassic
volcanics.
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operations report continued
cerro tres Picos
Cerro Tres Picos Project comprises one cateo application
covering an area of 71.3 sq km contiguous with the La Evelina
Project (under option from MSA).
Cerros properties that are optioned from MSA. The project
is located approximately 50km NE of the Cerro Vanguardia
mine (AngloGold Ashanti-Fomicruz JV), and is immediately
east and contiguous with ground being explored by the Cerro
Vanguardia JV.
No work was completed on the project during the reporting
period.
The majority of the project area is covered by a thin veneer of
Patagonian gravels interpreted to be less than 25m thick and
immediately overlying prospective Jurassic rocks.
estaciones
The Estaciones Project comprises three cateo applications
covering an area of 269.8 sq km and is contiguous with the La
Evelina Project (MSA option).
The northern part of the project covers exposed Jurassic
volcanic rocks, including extensions of ESE trending structures
that have returned low level gold-silver anomalism at La Evelina.
In the south the prospective Jurassic rocks are covered by a
thin veneer of post-mineral basalts. Numerous small erosional
windows in the basalt indicate it is dominantly less than 10m
thick.
First pass prospecting and sampling was completed during
2011-2012 over areas of exposed Jurassic volcanics. De Grey
plans to complete surface geochemical sampling over the
project in the 2012-2013 period.
Boleadora este
Boleadora Este comprises one cateo application covering
an area of 35 sq km and is contiguous with the Boleadora
Project. First-pass reconnaissance and sampling of the area
was completed in 2011-2012 and further work is planned in
conjunction with further exploration at Boleadora.
La rosita norte
The La Rosita Norte Project comprises one cateo application
covering 24.8 sq km. The property is located approximately
21km NNW of the Martha Mine (Coeur Argentina S.R.L) and
38km NW of the Manantial Espejo mine (Pan American Silver
Corporation), in the south-western Deseado Massif.
Jurassic volcanic rocks outcrop over approximately 50% of
the tenement, the remaining area being covered by thin post-
mineral basalt flows.
No work was completed over the area during the reporting
period, but first pass prospecting is planned during the 2012-
2013 field season.
tres cerros Sur
The Tres Cerros Sur Project comprises five cateo applications
covering an area of 366.3 sq km immediately south of the Tres
No work was completed over the area during 2011-2012, but
during the 2012-2013 field season orientation geochemical
sampling will be completed to determine the sampling medium
most likely to “see” through the gravel cover. Results from this
work will then determine if systematic surface sampling of the
entire project area will be completed to aid in the generation of
drill targets.
other ProPertieS unDer
oPtion froM MSa
La evelina
The La Evelina Project comprises one M.D. application covering
an area of 69.2 sq km and is contiguous with the De Grey’s
100% owned Estaciones and Cerro Tres Picos properties, in the
south-western Deseado Massif.
Previous work has outlined three areas of veining and
mineralization associated with a major NW trending fault in
the NE portion of the property, with anomalous Au+As+Sb
returned from rock chip sampling.
Further surface sampling and prospecting will be completed in
the 2012-2013 field season.
Bajo grande
The Bajo Grande Projects comprises two cateo applications
covering an area of 151 sq km in the central Deseado.
Previous work returned anomalous Hg-As-Sb values in rock
chip sampling along a quartz-carbonate vein zone associated
with a major NW trending fault.
No work was completed over the area during 2011-2012 and
the company plans to review the project early in the 2012-2013
financial year to determine future involvement.
canadon Langostura
The Canadon Langostura Project comprises one M.D.
application covering an area of 63.4 sq km in the south-western
Deseado Massif.
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De Grey Mining Limited Annual Report 2012
The Bold Explorer
The project is located on a strongly developed WNW fault zone
that is considered to be an important control on mineralization on
properties such as Mariana Resource’s Sierra Blanca (La Chala
vein) and Argentex’s El Pinguino property.
Within the project area, the WNW fault zone transects the upper
part of the (Jurassic age) Chon Aike stratigraphy and also forms
the northern boundary of a Cretaceous basin. This structural
situation is considered highly favourable because there may
be a possibility of having a completely preserved epithermal
vein system where less of the Chon Aike stratigraphy has
been eroded than at La Chala or El Pinguino. Furthermore,
the fault structure appears to bound the Cretaceous basin
which indicates a long history of movement extending from
at least the Jurassic into the lower Cretaceous and opens
the possibility of mineralization having formed in a pull-apart
basin that could be wholly or partially concealed beneath the
Cretaceous sediments.
In much of the project area the prospective Jurassic volcanic
rocks are covered by a veneer of Patagonian gravels, outcrops of
Jurassic rocks being restricted to erosional windows through
this cover. Field investigation of these windows, to prioritize
anomalies seen in images derived from processing of Aster
data, led to the discovery of several sets of low temperature
epithermal quartz veins. Samples from the veins have not
returned significant precious metal mineralization at surface
but their textures, the presence of strong clay alteration in the
wall rock and elevated Hg-As values are indications that the
hydrothermal system is potentially mineralized at depth.
In conjunction with programs proposed for the Querencia/
Kaiken and Tres Cerros Sur projects, exploration planned
for the area comprises orientation geochemical sampling to
determine the sampling medium most likely to “see” through
the transported cover followed by systematic surface sampling
of the entire project area.
Prospecting and sampling was completed over the project
during 2011-2012 and further work is planned during 2012-
2013.
el Salado
Querencia/Kaiken
The Querencia/Kaiken properties comprise
two cateo
applications covering an area of 159 sq km in the eastern
Deseado.
Approximately 60% of the area is covered by a veneer of
Patagonian gravels, interpreted on the basis of regional magnetic
data to be only tens of metres in thickness. The magnetic data
shows that the area is located on the intersection of an ENE
striking structure and WNW to NW trending structures. Aster
multispectral satellite data indicate some linear zones with
kaolinite +/- iron oxides in the outcropping Jurassic volcanic
rocks exposed outside the zone of gravel cover.
An initial visit to establish access and meet with landowners
was completed during the 2010-2011 field season. Short
traverses over the Aster anomalies were completed and rock
chip sampling of banded chalcedonic quartz veins indicated
elevated As-Ba, which suggests the veining may represent the
upper levels of an epithermal system.
Similar to the nearby Tres Cerros and Tres Cerros Sur projects,
exploration requires orientation geochemical sampling to
determine the sampling medium most likely to “see” through
the gravel cover followed by systematic surface sampling of the
entire project area.
tres cerros
The Tres Cerros Project comprises three cateo applications
covering an area of 224.1 sq km located immediately north of
the Tres Cerros settlement in the eastern Deseado.
The El Salado Project comprises three M.D. applications
covering an area of 195.6 sq km in the south-eastern Deseado
Massif where present day drainage has incised a thick valley fill
of Patagonian gravels.
The properties were selected by MSA geologists on the basis
that signatures in the regional magnetic data are similar to those
at the Cerro Vanguardia vein field, located approximately 40km
to the northwest. No outcropping Jurassic volcanic units have
been located on the properties; however, the intensity of the
magnetic features on the eastern and south-western margins
of the properties suggests that the Patagonian gravel cover
sequence is less than 25m thick.
Lago hermoso
The Lago Hermoso Project comprises one M.D. application over
an area of 66 sq km in the south-western Deseado Massif.
The tenement covers a window incised into Tertiary aged
volcanic cover on the western extrapolation of the “Manantial
Espejo - Marta” trend. In one of the more deeply eroded parts
of this window, Aster satellite data indicate a zone of clay
alteration located on the intersection of NW and ENE striking
structures inferred from regional magnetic data.
No work was completed over the area during the reporting
period, but first pass prospecting is planned during the 2012-
2013 field season.
Bagual
The Bagual Project comprises three cateo applications covering
an area of 292.1 sq km near the town of Gobernador Gregores
in the south-western Deseado.
A13
operations report continued
Figure 7: Mines, significant prospects and De Grey’s tenements in the Deseado and Somuncura Massifs
The project area includes a narrow belt of exposed Jurassic
age volcanic rocks along the north eastern boundary of the
property block. The remainder of the project area is covered
by Tertiary to Recent aged alluvial gravels, terrace gravels and
minor basalts. Initial reconnaissance in 2010-2011 indicated
that the gravel cover is prohibitively thick but the properties are
retained under the MSA option agreement at no additional cost
because of their proximity to the Manantial Espejo Ag-Au vein
field, located only 5km to the north.
No work was completed over the area during 2011-2012 and
the company plans to review the project early in the 2012-2013
financial year to determine future involvement.
rio negro Province overview
Similar to the Deseado Massif (located to the south), the
Somuncura Massif in Rio Negro (Figure 7) represents a giant
felsic igneous province that resulted from large-scale crustal
thinning related to the initial of the opening of the South Atlantic
Ocean in the Triassic and Jurassic periods, approximately 200
million years ago. The Somuncura Massif underlies large parts
of Chubut and Rio Negro provinces in southern Argentina.
Also similar to the Deseado, the Somuncura Massif hosts a large
number of epithermal to mesothermal gold-silver deposits and
prospects. Significant base metals and indium accompany the
precious metals in some deposits in the Somuncura. Noteworthy
A14
De Grey Mining Limited Annual Report 2012
The Bold Explorer
Figure 8: De Grey’s Rio Negro tenement applications over Jurassic Volcanics of the Somuncura Massif
deposits include the Calcatreu Au-Ag deposit (900koz Au
and 8.4Moz Ag) and the Navidad Ag-Pb deposit (900Moz Ag
equivalent), one of the largest undeveloped silver resources in
the world. A number of significant Au-Ag prospects also occur
in the Los Menucos district in central Rio Negro.
The Arroyo Verde epithermal Au-Ag vein system, previously
drilled by Portal Resources, is located immediately south of De
Grey’s tenements, in Chubut Province. In the same area, Portal
discovered disseminated and stockwork Mo-Cu mineralization,
with subordinate Au and Ag, over a 7km x 4km area at the
Refugio-Porvenir prospect.
The abandoned Gonzalito mine, located north of De Grey’s
tenements, exploited Pb-Zn-Ag mineralization of an unknown
style until closure in 1982.
About 80km north of Sierra Grande, the San Roque project
features Au-Ag-In (indium) mineralization hosted by several
mesothermal vein and stockwork systems associated with a
rhyolitic volcanic centre.
De Grey commenced follow up of targets generated in the study
in June 2012 and is aiming to progress at least one prospect to a
drill ready status by the end of 2013.
targeting rationale
In mid-2011 De Grey commissioned an Aster based project
generation study to investigate the potential for gold-silver
mineralization in the south-eastern part of the Somuncura
Massif, in the district surrounding the town of Sierra Grande,
site of an operating iron ore mine. The district was targeted
on the basis of its prospective geology, known nearby mineral
occurrences and competitor activity, and ground availability. A
total of 171 targets were outlined for first pass evaluation by
prospecting and surface geochemistry.
De Grey’s
tenement applications comprise 17, mainly
contiguous, cateos (exploration licences) covering a total
area of 1,420 sq km (Figure 8). The tenement areas were
selected on the basis of a remote sensing and structural study,
mineral occurrences and nearby prospects. The Company
knows of no previous modern mineral exploration within the
staked areas but numerous fluorite vein occurrences testify
to hydrothermal activity in the area. The district is an area of
moderate topographic relief with ephemeral drainage systems
that also ideally suits stream sediment geochemical sampling as
a first-pass screening tool.
A15
operations report continued
auStraLian ProjectS
turner riVer goLD anD BaSe MetaLS
ProjectS
overview
The Turner River gold and base metals projects are located
60km south of Port Hedland in the Pilbara Region of Western
Australia, covering a combined area of 1,000 sq km (Figure
9). Tenements in the western portion of the project area are
primarily prospective for gold mineralization and include the
Wingina Well gold deposit discovered in 2003. The eastern
portion of the project covers the VMS-style polymetallic
mineralization discovered in 2006.
In May 2011 De Grey entered into agreements with Lansdowne
Resources Pty Ltd under which Lansdowne may earn up to 75%
interest in each project. Lansdowne is an unlisted Australian
company that intends to apply for admission to listing on the
Australian Securities Exchange.
The Base Metals farm-out and joint venture agreement covers
tenements in the eastern part of the Turner River project, site of
high-grade Pb-Zn-Ag VMS-style mineralization discovered by De
Grey. Lansdowne may earn a 75% interest in the project by sole
funding exploration expenditure of $1.5 million over three years.
The Gold farm-out and joint venture agreement covers
tenements in the west of the Turner River project, containing the
Wingina Well gold resource and the T1, Mt Berghaus, Brierly,
Amanda and Edkins targets. Lansdowne may earn a 75%
interest in the project by paying $99,000 at commencement
and sole funding $2 million exploration expenditure over three
years.
De Grey has also granted Lansdowne an option to purchase
a 75% interest in the Wingina Well gold resource in return for
$1,000 payable upon signing and the issue of two million 20
cent shares in Lansdowne upon its listing on ASX. The option
period commences upon Lansdowne earning its interest in the
Gold joint venture and is exercisable by payment of $4.1 million.
The exercise price escalates by $15 for each $100 by which the
gold price exceeds A$1,500 per ounce at the exercise date,
the escalation payment being calculated based on ore reserve
ounces.
Lansdowne is to manage work at both projects during the sole
funding periods.
The farm-out and joint venture agreements specifically recognize
Atlas Iron’s rights to iron ore over portions of both project areas,
arising out of previous De Grey - Atlas agreements. De Grey’s
residual rights under those agreements are excluded from the
farm-outs, remaining entirely for De Grey’s benefit.
Figure 9: De Grey’s Turner River Project
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De Grey Mining Limited Annual Report 2012
The Bold Explorer
turner river gold exploration
Together with Lansdowne, the Company’s gold exploration
strategy at Turner River remains focused on locating additional
resources that would, in conjunction with the Wingina Well
deposit, be sufficient to develop a profitable gold mining
operation.
The current Wingina Well gold resource stands at 221,000oz
(above 0.5g/t Au cut-off grade), 83% of which is in the Measured
and Indicated JORC categories (Table 1).
cut-off
au g/t
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
1.5
Measured
indicated
Meas. +ind.
inferred
total
Mt
1.70
1.50
1.32
1.17
1.05
0.94
0.84
0.76
0.69
0.62
0.57
au g/t
1.54
1.68
1.81
1.95
2.08
2.21
2.34
2.47
2.60
2.73
2.86
Mt
2.45
2.10
1.81
1.56
1.34
1.16
1.01
0.88
0.77
0.67
0.59
au g/t
1.28
1.40
1.53
1.65
1.78
1.91
2.04
2.17
2.31
2.44
2.58
Mt
4.15
3.60
3.13
2.73
2.39
2.10
1.85
1.64
1.46
1.30
1.16
au g/t
1.39
1.52
1.65
1.78
1.91
2.05
2.18
2.31
2.45
2.58
2.71
Mt
1.0
0.8
0.7
0.6
0.5
0.4
0.3
0.3
0.3
0.2
0.2
au g/t
1.3
1.5
1.6
1.7
1.9
2.0
2.1
2.3
2.4
2.5
2.7
Mt
5.11
4.40
3.80
3.29
2.86
2.50
2.20
1.93
1.71
1.52
1.35
au g/t
au k.oz
1.34
1.47
1.60
1.73
1.86
2.00
2.13
2.26
2.39
2.52
2.66
221
208
195
183
172
161
150
141
132
123
115
Table 1: Wingina Well 2009 MIK resource estimates
A 2009 preliminary economic evaluation of the resource
demonstrated that mining and treatment were viable on a
cash operating costs basis but that costs of constructing the
mine, processing plant and ancillary facilities render the project
marginal on a total costs basis at gold prices up to about
A$1,500/oz. Capital costs require amortization across an
increased resource base to reduce the total cost per ounce.
During 2011-2012 Lansdowne Resources commissioned
Ravensgate to undertake estimates of gold resources at
the Amanda and Mt Berghaus deposits8. Summaries of the
estimated inferred resources for each of the deposits at 0.5, 1.0
and 1.5 g/t Au cut-off grades are listed in Tables 2 and 3.
There has been no metallurgical test work conducted on
Amanda or Mt Berghaus mineralization. Although De Grey
believes that 0.5g/t Au is likely to approximate the break-even
cut-off grade in an open pit mining and CIL gold treatment
scenario at Turner River, other modifying factors may impact
the economic cut-off grade above which resources may be
regarded as “economic”. The presentation of resources at the
selected cut-off grades provides an indication of how estimated
tonnages and grades vary with cut-off grade.
8 Refer to De Grey’s ASX release dated 11 April 2012 for full details.
cut-off
au g/t
tonnes
au g/t
au oz
0.5
1.0
1.5
687,000
385,000
221,000
1.6
2.3
3.1
35,000
29,000
22,000
cut-off
au g/t
tonnes
au g/t
au oz
0.5
1.0
1.5
920,000
572,000
287,000
1.4
1.8
2.5
43,000
34,000
23,000
Table 2: Amanda inferred resource estimates
Table 3: Mt Berghaus inferred resource estimates
cut-off
au g/t
0.5
1.0
1.5
Measured
indicated
Meas. +ind.
inferred
total
Mt
1.70
0.94
0.57
au g/t
1.54
2.21
2.86
Mt
2.45
1.16
0.59
au g/t
1.28
1.91
2.58
Mt
4.15
2.10
1.16
au g/t
1.39
2.05
2.71
Mt
2.6
1.4
0.7
au g/t
1.4
2.0
2.7
Mt
6.72
3.46
1.86
au g/t
au k.oz
1.41
2.04
2.71
305
226
162
Table 4: Totals of resource estimates for Turner River gold project.
Rounding may cause apparent inconsistencies in the table
A17
operations report continued
Several other gold targets at a range of exploration stages have
the potential to add to the current gold resource base at Turner
River.
advanced Stage gold targets
High-grade gold intersections have been reported previously
from a series of prospects where additional infill RC drilling may
define modest gold resources and deeper drilling may discover
high-grade lodes amenable to underground mining. These
include the Mt Berghaus, Edkins, Amanda and Amanda West
Prospects (Figure 10).
Previous drilling at Mt Berghaus has identified gold mineralization
over a 6.5km strike length with intersections up to 11m at
36.4g/t gold from 4m in drill hole BGRC097 and 7m at 15.5g/t
gold from 21m in BGRC001.
Gold anomalism +1g/t has been defined by aircore drilling over
a 1,500m strike length at the Brierly Prospect, located just 3km
from the Wingina Well gold deposit. Intersections up to 5m at
7.74g/t gold from 14m on 200m spaced drill traverses remain
untested by RC drilling.
These RC drill targets have immediate potential for the discovery
of new gold resources.
early Stage gold targets
The sand-covered strike continuations of known mineralized
structures are attractive targets. Individual areas include the
4km long Brierly West target and strike extensions to the Mt
Berghaus gold mineralization (Figure 10). These areas are
completely untested by drilling and as such have the potential
to host significant gold mineralization.
intermediate Stage gold targets
forward Program
These consist of encouraging gold intersections returned
from wide spaced aircore drilling over several hundred metres
strike length in new areas yet to be tested by closer spaced
RC programs. Prospects at this stage of exploration include
the northern Mt Berghaus prospect where previously reported
shallow aircore drilling returned intersections up to 20m at
1.33g/t from 8m and 8m at 1.90g/t gold from surface to end of
hole over a 600m strike length.
Lansdowne have advised they will continue work programs
during 2012-2013 to locate additional resources that would,
in conjunction with the Wingina Well deposit, be sufficient to
develop a profitable gold mining operation.
Figure 10: Turner River Gold Project Exploration Potential
A18
turner river Base Metals exploration
The eastern portion of the Turner River Project contains the
volcanogenic massive sulphide-style (VMS-style) deposits
discovered by De Grey in 2006 (Figure 9). Intersections
previously reported illustrate the high-grade nature of the
polymetallic mineralization and include:
Discovery prospect: 17m at 4.64% Zn, 124g/t Ag, 1.84% Pb,
0.48g/t Au and 0.17% Cu from 165m in hole WARC024
orchard tank prospect: 4.9m at 12.7% Zn, 331g/t Ag, 7.31%
Pb, 2.54g/t Au and 0.35% Cu from 514.4m in hole WADH012
The steeply dipping, zinc-silver rich mineralization is hosted
within foliated, sericite-altered felsic schist that was originally
felsic volcanic rocks. The mineralization features significant
gold credits with drill intercepts commonly grading about 1.5g/t
gold. Six individual VMS prospects have been located at Turner
River to date over a strike length of 18km.
The mineralization style is an attractive exploration target,
commonly comprising high-grade, high value deposits that
often occur in clusters within a particular stratigraphic horizon.
De Grey Mining Limited Annual Report 2012
The Bold Explorer
The regional long section (Figure 12) summarizes some of the
drill intersections returned to date from a 7km section of this
strike length between the Hakea and Orchard Tank prospects
and compares the scale of mineralization and drill coverage to
date with the Golden Grove belt, regarded as a typical VMS-
style camp. At all prospects drilled to date, mineralization
remains open down dip and in many cases also along strike.
During 2011-2012 Lansdowne Resources Pty Ltd commissioned
Ravensgate to undertake estimates of resources at the
Discovery and Orchard Tank deposits9. Summaries of the
resource estimates at 0.5%, 1% and 1.5% Zn cut-off grades are
listed in Tables 5-7. With the mineralization having previously
been subjected to only preliminary metallurgical test work,
likely economic cut-off grades based upon some combination
of the recoverable metals and other modifying factors cannot
be determined at this time. The tabulation of resources at the
selected cut-off grades provides an indication of how estimated
tonnages and grades vary with cut-off grade.
9 Refer to De Grey’s ASX release dated 11 April 2012 for full details.
Deposit
category
tonnes
Zn%
Pb%
cu%
Discovery
Orchard Tank
Total
Inferred
Inferred
Inferred
1,315,000
1,791,000
3,106,000
2.3
2.4
2.4
0.9
1.0
1.0
0.1
0.1
0.1
Table 5: Estimates of inferred resources at 0.5% Zn cut-off grade.
Rounding may cause apparent inconsistencies in the table
Deposit
category
tonnes
Zn%
Pb%
cu%
Discovery
Orchard Tank
Total
Inferred
Inferred
Inferred
1,116,000
1,492,000
2,608,000
2.6
2.7
2.7
1.0
1.1
1.1
0.1
0.1
0.1
Table 6: Estimates of inferred resources at 1% Zn cut-off grade.
Rounding may cause apparent inconsistencies in the table
Deposit
category
tonnes
Zn%
Pb%
cu%
Discovery
Orchard Tank
Total
Inferred
Inferred
Inferred
820,000
1,151,000
1,971,000
3.1
3.1
3.1
1.2
1.2
1.2
0.1
0.1
0.1
Table 7: Estimates of inferred resources at 1.5% Zn cut-off grade.
Rounding may cause apparent inconsistencies in the table
ag
g/t
87
79
82
ag
g/t
94
84
89
ag
g/t
107
92
98
au
g/t
0.8
0.5
0.6
au
g/t
0.9
0.6
0.7
au
g/t
1.0
0.6
0.8
A19
operations report continued
Figure 11: Tabba Tabba VMS Prospect – IP-Resistivity targets
During 2011-2012 Landsdowne Resources also completed
an IP-Resistivity survey at the Tabba Tabba VMS Prospect.
The primary objective of the survey was to detect and map
sulphide mineralization along the north-easterly continuation
of the sequence containing the Orchard Tank VMS deposit,
located about 15km along strike to the south-west. Significant
Pb-Zn was identified at the Tabba Tabba Prospect during De
Grey’s exploration of the prospect during 2005-2008, and this
mineralization was identified by drilling base metal anomalism
(mainly Pb-Zn) detected during surface geochemical surveys.
The survey successfully outlined three untested high priority
drilling targets (Figure 11, TTIP1-TTIP3) and indicates that this
method is well suited for further exploration of the Turner River
Base Metals Project.
forward Program
Lansdowne have advised they will continue work programs
during 2012-2013 to locate additional resources that would, in
conjunction with the Discovery and Orchard Tank resources, be
sufficient to develop a profitable base metal mining operation.
PiLBara iron ProjectS
Beyondie iron ore joint Venture
De Grey maintains a 20% free carried interest in the Beyondie
Iron Ore Joint Venture, with Emergent Resources Ltd (80%). The
joint venture terms leave De Grey with 20% free carried interest
in the project to a decision to mine at which point the Company
can decide whether to contribute to mine development costs or
convert its interest to a royalty.
tonnes grading 27.5% Fe10
Emergent’s work at Beyondie has established an inferred
resource of 561 million
in
primary magnetite mineralization and demonstrated
that
the mineralization is amenable to processing to produce a
commercial grade concentrate product. The resource is
presently limited only by drill coverage and aeromagnetic
data indicate potential to considerably expand the resource
tonnage.
The Beyondie Iron Ore Joint Venture is a “split commodity”
agreement under which De Grey retains rights to all minerals
other than iron ore on the tenements that are subject to the
joint venture.
10 Emergent Resources Limited Quarterly Report for the period ending 30 June
2010.
A20
De Grey Mining Limited Annual Report 2012
The Bold Explorer
Figure 12: Orchard Well drill coverage compared to a typical VMS camp
Mt Dove royalty
De Grey has sold the rights to iron ore minerals on certain
tenement areas in the Turner River Gold and Turner River Base
Metal projects to Atlas Iron Ltd. The agreements provide for,
variously, 1-2% gross value royalties payable to De Grey from
future iron ore production by Atlas.
In 2008 a reconnaissance sampling program by De Grey
demonstrated potential for hematite iron mineralization at Mt Dove,
in the western part of the Turner River project. Subsequent work
by Atlas has outlined an inferred resource of 2Mt @ 58.5% Fe11
at Mount Dove and progressed plans to mine the deposit in
conjunction with mining of the nearby Wodgina iron resources.
In 2011-2012, by a variation to the original agreement, Atlas
agreed to purchase the royalty payable to De Grey over the first
two million tonnes of iron ore produced from Mount Dove for a
cash payment of $1 million12.
The royalty remains payable on any iron ore production in
excess of two million tonnes derived from Mount Dove.
PaterSon Project
The Paterson Province of Western Australia is well endowed
with gold, copper and uranium deposits that include the Telfer
gold mine, Nifty copper mine, Kintyre uranium deposit and
Maroochydore copper deposit (Figure 13).
Exploration efforts in the Paterson Province have been given a
fresh impetus with the overturn of the ban on uranium mining in
WA, new regional datasets in the form of a government funded
geophysical survey and new models of the genesis of base
metal and uranium mineralization proposed by Geoscience
Australia. A significant new copper discovery reported in late
May 2010 at Encounter Resources’ BM1 Prospect has also
raised the profile of this exciting frontier exploration region.
De Grey’s Paterson Project consists of seven exploration licence
applications, together with a joint venture with Raisama Ltd over
a single EL application, covering a total area of 3,213 sq km of
prospective ground.
Four applications (1,681 sq km), containing significant early
stage base metal and uranium exploration targets, lie south
of the Rudall River National Park. The tenement applications
lie entirely within determined Martu native title and De Grey
toward exploration access and heritage
is progressing
agreements with Martu to allow exploration to commence.
In addition, De Grey, through wholly owned subsidiary
Winterwhite Resources Pty Ltd, has applied for three exploration
licences and has a joint venture over a total area of 1,532 sq km
within the Rudall River National Park. The applications cover areas
of the Rudall Complex prospective for uranium, base metal and
gold mineralization, and are centred about 35km south of the
Kintyre uranium deposit. Several occurrences of uranium, gold
and base metals were identified by previous explorers in the
1990’s but were not evaluated further due to access difficulties
at the time.
11 Refer to Atlas Iron ASX release dated 1 September 2010 for details.
12 Refer to De Grey’s ASX release dated 18 April 2012 for details.
A21
operations report continued
Figure 13: De Grey tenements and major mineral deposits in the Paterson Province, WA
Project acQuiSition
actiVity
The Company continually reviews and evaluates exploration and
project acquisition opportunities, aiming to upgrade the quality
and value of the project portfolio. The preference is for early
stage exploration projects in well-endowed but under explored
geological regions or an advanced project with exploration
upside. The first selection criterion is always technical merit;
the project has to have potential to be a company maker.
Quality advanced projects are increasingly rare, competition for
them is very strong and they commonly command unrealistic
premiums. In most instances, the best value for shareholders
remains to be had from exploration in well-endowed terranes
where there is potential for company maker virgin discoveries.
The information in the report to which this statement is attached that relates to
mineralization and exploration results is based on information compiled by Mr Glenn
Martin, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr
Martin has sufficient experience which is relevant to the style of mineralization and
type of deposit under consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the 2004 JORC Code Edition of the
“Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves”. Mr Martin consents to the inclusion in the report of the matters
based on his information in the form and context in which it appears. Mr Martin is
a full time employee of De Grey Mining Ltd.
A22
De Grey Mining Limited Annual Report 2012
The Bold Explorer
De Grey Mining Limited
ABN 65 094 206 292
Annual Financial Report
for the year ended 30 June 2012
A23
A23
De Grey Mining Limited
Corporate Information
ABN 65 094 206 292
Directors
Peter Batten (Executive Chairman)
Darren Townsend (Non-Executive Director)
Gary Brabham (Non-Executive Director)
Jason Brewer(Non-Executive Director)
Company Secretary
Dennis Wilkins
Registered Office and Principal Place of Business
Suite 4, 100 Hay Street
SUBIACO WA 6008
Telephone: +61 8 9285 7500
Facsimile: +61 8 9285 7599
Postal Address
PO Box 8289
SUBIACO EAST WA 6008
Solicitors
William & Hughes
25 Richardson Street
WEST PERTH WA 6005
Bankers
National Australia Bank Limited
1232 Hay Street
WEST PERTH WA 6005
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
APPLECROSS WA 6153
Telephone: (08) 9315 2333
Facsimile: (08) 9315 2233
Auditors
Butler Settineri (Audit) Pty Ltd
Unit 16, First Floor Spectrum Offices
100 Railway Road
SUBIACO WA 6008
Internet Address
www.degreymining.com.au
Email Address
frontdesk@degreymining.com.au
Stock Exchange Listing
De Grey Mining Limited shares are listed on the Australian Securities Exchange (ASX code DEG).
B1
B01
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De Grey Mining Limited
De Grey Mining Limited
Contents
Directors' Report
Audit Independence Declaration
Corporate Governance Statement
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Audit Report
ASX Additional Information
B3
B03
B9
B09
B10
B10
B15
B15
B16
B16
B17
B17
B18
B18
B19
B19
B42
B42
B43
B43
B45
Corporate Information
ABN 65 094 206 292
Directors
Peter Batten (Executive Chairman)
Darren Townsend (Non-Executive Director)
Gary Brabham (Non-Executive Director)
Jason Brewer(Non-Executive Director)
Registered Office and Principal Place of Business
Company Secretary
Dennis Wilkins
Suite 4, 100 Hay Street
SUBIACO WA 6008
Telephone: +61 8 9285 7500
Facsimile: +61 8 9285 7599
Postal Address
PO Box 8289
SUBIACO EAST WA 6008
Solicitors
William & Hughes
25 Richardson Street
WEST PERTH WA 6005
Bankers
National Australia Bank Limited
1232 Hay Street
WEST PERTH WA 6005
Share Registry
Security Transfer Registrars Pty Ltd
770 Canning Highway
APPLECROSS WA 6153
Telephone: (08) 9315 2333
Facsimile: (08) 9315 2233
Auditors
Butler Settineri (Audit) Pty Ltd
Unit 16, First Floor Spectrum Offices
100 Railway Road
SUBIACO WA 6008
Internet Address
www.degreymining.com.au
Email Address
frontdesk@degreymining.com.au
Stock Exchange Listing
De Grey Mining Limited shares are listed on the Australian Securities Exchange (ASX code DEG).
B1
B2
B02
A25
Directors’ Report
De Grey Mining Limited
Your directors submit their report on the consolidated entity (referred to hereafter as “the Group”) consisting of De Grey Mining Limited
and the entities it controlled at the end of, or during, the year ended 30 June 2012.
DIRECTORS
The names and details of the company’s directors in office during the financial year and until the date of this report are as follows.
Where applicable, all current and former directorships held in listed public companies over the last three years have been detailed below.
Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Peter Batten, BAppSc (Geol), MAusIMM, MGSA (Executive Chairman, appointed 16 July 2012)
Peter joined De Grey Mining Limited in July 2012 and brings 29 years of experience in mineral exploration and mining in a wide variety
of commodities (including substantial gold experience), ranging from project generation, managing various mining operations, running
his own consulting firm and in more recent times a number of Managing Director roles.
Peter’s corporate experience includes time as Managing Director of Bannerman Resources, taking it from early stage exploration
company through to feasibility study and listing on the Toronto Stock Exchange. Peter listed Berkeley Resources on the ASX before
taking the company to China and in 2010 guided White Canyon Uranium through initial production in Utah, USA and completing the
company’s listing on the TSX-V.
Peter is a non-executive director of ASX listed Nimrodel Resources Ltd.
Darren Townsend, B.Eng (Mining) – Hons, EMBA (Independent Non-Executive Director since July 2012, Independent Non-Executive
Chairman from January 2011 to July 2012, director since May 2006, member of audit and remuneration committees)
Darren joined De Grey Mining Ltd in 2004 as General Manager - Operations and is well versed in the company's activities. He has a
Bachelor of Mining Engineering degree, with Honours and has completed post graduate business qualifications. Darren has extensive
operational and technical experience and was previously General Manager of Sons of Gwalia's Wodgina tantalum operation. Prior to this,
Darren worked as Superintendent of Mine Production with Rio Tinto at Mt Tom Price. Darren is currently President/CEO of TSX listed
company Pacific Wildcat Resources Corp.
Gary Brabham, BAppSc (app Geol), MSc (Geol), PGCert (Geostats), MAusIMM, MAIG (Non-Executive Director since July 2012,
Managing Director from January 2008 to July 2012, director since November 2005)
Gary Brabham was appointed to the board in November 2005. He has more than 25 years of experience in mine geology and mineral
exploration for a variety of commodities. As chief geologist for several Australian and overseas gold projects, and through consulting
roles with Hellman & Schofield, Gary has seen a number of projects through evaluation, feasibility and mine start-up phases.
Jason Brewer, M.Eng (ARSM) (Independent Non-Executive Director from 3 December 2010, Chairman of audit and remuneration
committees)
Jason has over 18 years international experience in the natural resources sector and in investment banking. He is a mining engineer with
a Master's degree in mining engineering with honours from the Royal School of Mines, London. He has experience in coal, gold and
base metal mines, having worked at British Coal's underground operations in Newcastle, the Kidd Creek Copper and Zinc mine in
Canada for Falconbridge, the Lanfranchi Nickel Mine in Western Australia for WMC and the Kinross Gold Mine in South Africa for
Gencor.
He is a qualified mining engineer with operating experience in Canada, South Africa, and Australia. Jason is also a director of
Continental Coal Limited [from 12/2009], Black Mountain Resources Limited [from 2/2012] and Kaboko Mining Limited (formerly
Uran Limited) [from 8/2011]. Jason is a former director of Altona Mining Limited within the last 3 years.
COMPANY SECRETARY
Dennis William Wilkins, B.Bus, AICD, ACIS (Member of audit committee)
Mr Dennis Wilkins is an accountant who has been a director, company secretary or acted in a corporate advisory capacity to listed
resource companies for over 20 years. Mr Wilkins previously served as the Finance Director and Company Secretary for a mid-tier gold
producer and also spent five years working for a leading merchant bank in the United Kingdom. Resource postings to Indonesia, South
Africa and New Zealand in managerial roles have broadened his international experience.
Mr Wilkins has extensive experience in capital raising specifically for the resources industry and is the principal of DWCorporate which
provides advisory, funding and administrative management services to the resource sector. Mr Wilkins is a director of Key Petroleum
Limited and Minemakers Limited.
B3
B03
A26
De Grey Mining Limited
Directors’ Report
DIRECTORS
Your directors submit their report on the consolidated entity (referred to hereafter as “the Group”) consisting of De Grey Mining Limited
and the entities it controlled at the end of, or during, the year ended 30 June 2012.
The names and details of the company’s directors in office during the financial year and until the date of this report are as follows.
Where applicable, all current and former directorships held in listed public companies over the last three years have been detailed below.
Directors were in office for this entire period unless otherwise stated.
Names, qualifications, experience and special responsibilities
Peter Batten, BAppSc (Geol), MAusIMM, MGSA (Executive Chairman, appointed 16 July 2012)
Peter joined De Grey Mining Limited in July 2012 and brings 29 years of experience in mineral exploration and mining in a wide variety
of commodities (including substantial gold experience), ranging from project generation, managing various mining operations, running
his own consulting firm and in more recent times a number of Managing Director roles.
Peter’s corporate experience includes time as Managing Director of Bannerman Resources, taking it from early stage exploration
company through to feasibility study and listing on the Toronto Stock Exchange. Peter listed Berkeley Resources on the ASX before
taking the company to China and in 2010 guided White Canyon Uranium through initial production in Utah, USA and completing the
company’s listing on the TSX-V.
Peter is a non-executive director of ASX listed Nimrodel Resources Ltd.
Darren Townsend, B.Eng (Mining) – Hons, EMBA (Independent Non-Executive Director since July 2012, Independent Non-Executive
Chairman from January 2011 to July 2012, director since May 2006, member of audit and remuneration committees)
Darren joined De Grey Mining Ltd in 2004 as General Manager - Operations and is well versed in the company's activities. He has a
Bachelor of Mining Engineering degree, with Honours and has completed post graduate business qualifications. Darren has extensive
operational and technical experience and was previously General Manager of Sons of Gwalia's Wodgina tantalum operation. Prior to this,
Darren worked as Superintendent of Mine Production with Rio Tinto at Mt Tom Price. Darren is currently President/CEO of TSX listed
company Pacific Wildcat Resources Corp.
Gary Brabham, BAppSc (app Geol), MSc (Geol), PGCert (Geostats), MAusIMM, MAIG (Non-Executive Director since July 2012,
Managing Director from January 2008 to July 2012, director since November 2005)
Gary Brabham was appointed to the board in November 2005. He has more than 25 years of experience in mine geology and mineral
exploration for a variety of commodities. As chief geologist for several Australian and overseas gold projects, and through consulting
roles with Hellman & Schofield, Gary has seen a number of projects through evaluation, feasibility and mine start-up phases.
Jason Brewer, M.Eng (ARSM) (Independent Non-Executive Director from 3 December 2010, Chairman of audit and remuneration
Jason has over 18 years international experience in the natural resources sector and in investment banking. He is a mining engineer with
a Master's degree in mining engineering with honours from the Royal School of Mines, London. He has experience in coal, gold and
base metal mines, having worked at British Coal's underground operations in Newcastle, the Kidd Creek Copper and Zinc mine in
Canada for Falconbridge, the Lanfranchi Nickel Mine in Western Australia for WMC and the Kinross Gold Mine in South Africa for
committees)
Gencor.
He is a qualified mining engineer with operating experience in Canada, South Africa, and Australia. Jason is also a director of
Continental Coal Limited [from 12/2009], Black Mountain Resources Limited [from 2/2012] and Kaboko Mining Limited (formerly
Uran Limited) [from 8/2011]. Jason is a former director of Altona Mining Limited within the last 3 years.
COMPANY SECRETARY
Dennis William Wilkins, B.Bus, AICD, ACIS (Member of audit committee)
Mr Dennis Wilkins is an accountant who has been a director, company secretary or acted in a corporate advisory capacity to listed
resource companies for over 20 years. Mr Wilkins previously served as the Finance Director and Company Secretary for a mid-tier gold
producer and also spent five years working for a leading merchant bank in the United Kingdom. Resource postings to Indonesia, South
Africa and New Zealand in managerial roles have broadened his international experience.
Mr Wilkins has extensive experience in capital raising specifically for the resources industry and is the principal of DWCorporate which
provides advisory, funding and administrative management services to the resource sector. Mr Wilkins is a director of Key Petroleum
Limited and Minemakers Limited.
Directors' Report continued
De Grey Mining Limited
Interests in the shares and options of the company and related bodies corporate
As at the date of this report, the interests of the directors in the shares and options of De Grey Mining Limited were:
Peter Batten
Darren Townsend
Gary Brabham
Jason Brewer
Ordinary
Shares
8,130,890
890,440
192,860
733,334
Options over
Ordinary
Shares
19,500,000
2,000,000
3,000,000
2,000,000
PRINCIPAL ACTIVITIES
During the year the Group carried out exploration on its tenements and applied for or acquired additional tenements with the objective of
identifying economic mineral deposits.
There was no significant change in the nature of the Group’s activities during the year.
DIVIDENDS
No dividends were paid or declared during the financial year. No recommendation for payment of dividends has been made.
OPERATING AND FINANCIAL REVIEW
Operating Results for the Year
The operating loss after income tax of the Group for the year ended 30 June 2012 was $1,580,537 (2011: $2,298,986). Included in this
loss figure is an amount of exploration expenditure of $1,765,021 (2011: $1,325,390). Refer notes to the financial statements note 1(m).
Summarised operating results are as follows:
Consolidated entity revenues and loss from ordinary activities before income tax expense
Shareholder Returns
Basic loss per share (cents)
2012
Revenues
$
Results
$
1,580,684
(1,580,537)
2012
(0.5)
2011
(0.9)
Risk Management
The board is responsible for ensuring that risks, and also opportunities, are identified on a timely basis and that activities are aligned with
the risks and opportunities identified by the board. The board has appointed a separate risk committee which meets annually to assess
risks and develop strategies to mitigate the impact of any perceived risks.
The board has a number of mechanisms in place to ensure that management's objectives and activities are aligned with the risks
identified by the board. These include the following:
Board approval of a strategic plan, which encompasses strategy statements designed to meet stakeholders needs and manage business
risk.
Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than as disclosed in this Annual Report no significant changes in the state of affairs of the Group occurred during the financial
year.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
No matters or circumstances, besides those disclosed at note 23, have arisen since the end of the financial year which significantly
affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in
future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Group expects to maintain the present status and level of operations and hence there are no likely developments in the Group's
operations.
B3
B4
B04
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Directors' Report continued
De Grey Mining Limited
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is subject to significant environmental regulation in respect to its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in
compliance with all environmental legislation. The directors of the Group are not aware of any breach of environmental legislation for
the year under review.
REMUNERATION REPORT
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
Principles used to determine the nature and amount of remuneration
Remuneration Policy
The remuneration policy of De Grey Mining Limited has been designed to align key management personnel objectives with shareholder
and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key
performance areas affecting the Group’s financial results. The board of De Grey Mining Limited believes the remuneration policy to be
appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Group.
The board’s policy for determining the nature and amount of remuneration for key management personnel of the Group is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives (if any), was developed
by the board. All executives receive a base salary (which is based on factors such as length of service, performance and experience) and
superannuation. The board reviews executive packages annually by reference to the Group’s performance, executive performance and
comparable information from industry sectors and other listed companies in similar industries.
The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and retain
the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.
Executives are also entitled to participate in the employee share and option arrangements.
The key management personnel receive a superannuation guarantee contribution required by the government, which is currently 9%.
Some individuals have chosen to sacrifice part of their salary to increase payments towards superannuation. In addition, directors receive
options in the company in accordance with the employees option incentive plan.
All remuneration paid to key management personnel is valued at the cost to the company and expensed. Shares given to key management
personnel are valued as the difference between the market price of those shares and the amount paid by the key management personnel.
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 board determines payments to the non-executive directors and reviews their remuneration annually, based on market
practice, duties and accountability. Independent external advice is sought when required. 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 (currently $250,000). Fees
for non-executive directors are not linked to the performance of the Group. However, to align directors’ interests with shareholder
interests, the directors are encouraged to hold shares in the company and are able to participate in the employee option plan.
Performance based remuneration
The company currently has no performance based remuneration component built into key management personnel remuneration packages.
Company performance, shareholder wealth and key management personnel remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment objectives and
key management personnel performance. Currently, this is facilitated through the issue of options to the majority of key management
personnel to encourage the alignment of personal and shareholder interests. The company believes this policy will be effective in
increasing shareholder wealth. At commencement of mine production, performance based bonuses based on key performance indicators
are expected to be introduced. For details of key management personnel interests in options at year end, refer to note 16 of the financial
statements.
Use of remuneration consultants
The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2012.
Voting and comments made at the Company’s 2011 Annual General Meeting
The Company received approximately 99% of “yes” votes on its remuneration report for the 2011 financial year. The Company did not
receive any specific feedback at the AGM or throughout the year on its remuneration practices.
B5
B05
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Directors' Report continued
Directors' Report continued
De Grey Mining Limited
De Grey Mining Limited
Details of remuneration
Details of the remuneration of the directors and the key management personnel of the Group are set out in the following table.
The key management personnel of the Group include the directors as per page B3 above.
The requirement to disclose remuneration for the top five remunerated Company and Group executives was removed by the
Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act 2011, effective for reporting periods
commencing on or after 1 July 2011. For comparative purposes only, the table below includes the remuneration for the 2011 financial
year for those employees who were classified as executives but who do not meet the definition of key management personnel. Hence
their remuneration for the 2012 financial year is not disclosed.
Key management personnel of the Group
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is subject to significant environmental regulation in respect to its exploration activities.
The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in
compliance with all environmental legislation. The directors of the Group are not aware of any breach of environmental legislation for
the year under review.
REMUNERATION REPORT
The information provided in this remuneration report has been audited as required by section 308(3C) of the Corporations Act 2001.
Principles used to determine the nature and amount of remuneration
Remuneration Policy
The remuneration policy of De Grey Mining Limited has been designed to align key management personnel objectives with shareholder
and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key
performance areas affecting the Group’s financial results. The board of De Grey Mining Limited believes the remuneration policy to be
appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Group.
The board’s policy for determining the nature and amount of remuneration for key management personnel of the Group is as follows:
The remuneration policy, setting the terms and conditions for the executive directors and other senior executives (if any), was developed
by the board. All executives receive a base salary (which is based on factors such as length of service, performance and experience) and
superannuation. The board reviews executive packages annually by reference to the Group’s performance, executive performance and
comparable information from industry sectors and other listed companies in similar industries.
The board may exercise discretion in relation to approving incentives, bonuses and options. The policy is designed to attract and retain
the highest calibre of executives and reward them for performance that results in long-term growth in shareholder wealth.
The key management personnel receive a superannuation guarantee contribution required by the government, which is currently 9%.
Some individuals have chosen to sacrifice part of their salary to increase payments towards superannuation. In addition, directors receive
options in the company in accordance with the employees option incentive plan.
All remuneration paid to key management personnel is valued at the cost to the company and expensed. Shares given to key management
personnel are valued as the difference between the market price of those shares and the amount paid by the key management personnel.
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 board determines payments to the non-executive directors and reviews their remuneration annually, based on market
practice, duties and accountability. Independent external advice is sought when required. 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 (currently $250,000). Fees
for non-executive directors are not linked to the performance of the Group. However, to align directors’ interests with shareholder
interests, the directors are encouraged to hold shares in the company and are able to participate in the employee option plan.
Performance based remuneration
The company currently has no performance based remuneration component built into key management personnel remuneration packages.
Company performance, shareholder wealth and key management personnel remuneration
The remuneration policy has been tailored to increase the direct positive relationship between shareholders’ investment objectives and
key management personnel performance. Currently, this is facilitated through the issue of options to the majority of key management
personnel to encourage the alignment of personal and shareholder interests. The company believes this policy will be effective in
increasing shareholder wealth. At commencement of mine production, performance based bonuses based on key performance indicators
are expected to be introduced. For details of key management personnel interests in options at year end, refer to note 16 of the financial
statements.
Use of remuneration consultants
The Group did not employ the services of any remuneration consultants during the financial year ended 30 June 2012.
Voting and comments made at the Company’s 2011 Annual General Meeting
The Company received approximately 99% of “yes” votes on its remuneration report for the 2011 financial year. The Company did not
receive any specific feedback at the AGM or throughout the year on its remuneration practices.
Executives are also entitled to participate in the employee share and option arrangements.
Jason Brewer (appointed 3 December 2010)
Directors
Darren Townsend
2012
2011
Gary Brabham
2012
2011
Salary
& Fees
$
83,385
63,765
325,932
290,473
2012
2011
40,500
23,625
Campbell Ansell (resigned 31 December 2010)
38,250
2011
Other key management personnel
Dennis Wilkins
2011
55,131
Glenn Martin (appointed 15 December 2010)
2011
117,692
David Hammond (resigned 19 October 2010)
2011
92,522
Total key management personnel compensation
2012
2011
449,817
681,458
Short-Term
Post Employment
Share-based
Payments
Non-Monetary Superannuation
$
$
Retirement
Benefits
$
Options
$
Total
$
110,614
63,765
432,735
316,616
71,374
25,751
27,229
-
81,688
-
27,229
-
-
41,692
20,625
96,381
41,250
210,784
-
100,849
136,146
61,875
614,723
793,963
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,115
26,143
3,645
2,126
3,442
-
10,592
8,327
28,760
50,630
-
-
-
-
-
-
-
-
-
-
-
-
Service agreements
The details of service agreements of the key management personnel of the Group are as follows:
Gary Brabham, Managing Director:
Term of agreement – 3 months written notice by either party (the agreement was terminated in July 2012).
Salary, inclusive of statutory superannuation, of $312,000.
Payment of termination benefit on early termination by the company, other than for gross misconduct, equal to the fee for the
remaining term of the agreement.
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Directors' Report continued
De Grey Mining Limited
Share-based compensation
Options are issued at no cost to key management personnel as part of their remuneration. The options are not issued based on
performance criteria, but are issued to the majority of key management personnel of De Grey Mining Limited to increase goal
congruence between key management personnel and shareholders. The following options over ordinary shares of the Company were
granted to or vesting with key management personnel during the year:
Grant Date
Granted
Number Vesting Date Expiry Date
Exercise
Price
(cents)
Value per
option at
grant date
(cents)
Exercised
Number
% of
Remuneration
Directors
Darren Townsend
Darren Townsend
Gary Brabham
Gary Brabham
Jason Brewer
Jason Brewer
21/10/2011
21/10/2011
21/10/2011
21/10/2011
21/10/2011
21/10/2011
1,000,000
1,000,000
3,000,000
3,000,000
1,000,000
1,000,000
21/10/2011
21/10/2012
21/10/2011
21/10/2012
21/10/2011
21/10/2012
30/04/2014
30/04/2014
30/04/2014
30/04/2014
30/04/2014
30/04/2014
6.5
6.5
6.5
6.5
6.5
6.5
1.61
1.61
1.61
1.61
1.61
1.61
N/A
N/A
N/A
N/A
N/A
N/A
14.6
10.1
11.2
7.7
22.6
15.6
DIRECTORS' MEETINGS
During the year the company held nine meetings of directors. The attendance of directors at meetings of the board were:
Darren Townsend
Gary Brabham
Jason Brewer
Meetings of Committees
Directors Meetings
Audit
A
9
9
8
B
9
9
9
A
2
*
2
B
2
*
2
Remuneration
B
A
-
-
*
*
-
-
Notes
A - Number of meetings attended.
B - Number of meetings held during the time the director held office during the year.
* Not a member of the relevant committee.
SHARES UNDER OPTION
At the date of this report there are 37,000,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Movements of share options during the year:
Issued, exercisable at 6.5 cents, on or before 30 April 2014
Expired on 4 July 2011, exercisable at 25 cents
Cancelled, exercisable at 25 cents, on or before 30 June 2012
Total number of options outstanding as at 30 June 2012
Movements subsequent to the reporting date:
Issued, exercisable at 2.2 cents, on or before 3 September 2014
Issued, exercisable at 2.3 cents, on or before 3 September 2015
Issued, exercisable at 2.6 cents, on or before 3 September 2015
Cancelled, exercisable at 6.5 cents, on or before 30 April 2014
Total number of options outstanding as at the date of this report
The balance is comprised of the following:
Expiry date
30 April 2014
30 June 2014
3 September 2014
3 September 2015
3 September 2015
Exercise price (cents)
6.5
6.5
2.2
2.3
2.6
Total number of options outstanding at the date of this report
Number of options
16,750,000
10,000,000
(3,000,000)
(3,250,000)
20,500,000
6,500,000
6,500,000
6,500,000
(3,000,000)
37,000,000
Number of options
7,000,000
10,500,000
6,500,000
6,500,000
6,500,000
37,000,000
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of
any other body corporate.
B7
B07
A30
De Grey Mining Limited
De Grey Mining Limited
Directors' Report continued
Share-based compensation
Options are issued at no cost to key management personnel as part of their remuneration. The options are not issued based on
performance criteria, but are issued to the majority of key management personnel of De Grey Mining Limited to increase goal
congruence between key management personnel and shareholders. The following options over ordinary shares of the Company were
granted to or vesting with key management personnel during the year:
Value per
option at
Exercise
Price
(cents)
grant date
Exercised
% of
(cents)
Number
Remuneration
6.5
6.5
6.5
6.5
6.5
6.5
A
2
*
2
1.61
1.61
1.61
1.61
1.61
1.61
B
2
*
2
N/A
N/A
N/A
N/A
N/A
N/A
A
-
*
-
14.6
10.1
11.2
7.7
22.6
15.6
B
-
*
-
Granted
Grant Date
Number Vesting Date Expiry Date
21/10/2011
21/10/2011
21/10/2011
21/10/2011
21/10/2011
21/10/2011
1,000,000
1,000,000
3,000,000
3,000,000
1,000,000
1,000,000
21/10/2011
21/10/2012
21/10/2011
21/10/2012
21/10/2011
21/10/2012
30/04/2014
30/04/2014
30/04/2014
30/04/2014
30/04/2014
30/04/2014
Directors
Darren Townsend
Darren Townsend
Gary Brabham
Gary Brabham
Jason Brewer
Jason Brewer
DIRECTORS' MEETINGS
During the year the company held nine meetings of directors. The attendance of directors at meetings of the board were:
Directors Meetings
Audit
Remuneration
Meetings of Committees
Darren Townsend
Gary Brabham
Jason Brewer
Notes
A
9
9
8
B
9
9
9
A - Number of meetings attended.
B - Number of meetings held during the time the director held office during the year.
* Not a member of the relevant committee.
SHARES UNDER OPTION
At the date of this report there are 37,000,000 unissued ordinary shares in respect of which options are outstanding.
Balance at the beginning of the year
Movements of share options during the year:
Issued, exercisable at 6.5 cents, on or before 30 April 2014
Expired on 4 July 2011, exercisable at 25 cents
Cancelled, exercisable at 25 cents, on or before 30 June 2012
Total number of options outstanding as at 30 June 2012
Movements subsequent to the reporting date:
Issued, exercisable at 2.2 cents, on or before 3 September 2014
Issued, exercisable at 2.3 cents, on or before 3 September 2015
Issued, exercisable at 2.6 cents, on or before 3 September 2015
Cancelled, exercisable at 6.5 cents, on or before 30 April 2014
Total number of options outstanding as at the date of this report
The balance is comprised of the following:
Expiry date
30 April 2014
30 June 2014
3 September 2014
3 September 2015
3 September 2015
Total number of options outstanding at the date of this report
No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of
any other body corporate.
Exercise price (cents)
Number of options
6.5
6.5
2.2
2.3
2.6
B7
Number of options
16,750,000
10,000,000
(3,000,000)
(3,250,000)
20,500,000
6,500,000
6,500,000
6,500,000
(3,000,000)
37,000,000
7,000,000
10,500,000
6,500,000
6,500,000
6,500,000
37,000,000
Directors' Report continued
INSURANCE OF DIRECTORS AND OFFICERS
During or since the financial year, the company has paid premiums insuring all the directors of De Grey Mining Limited against costs
incurred in defending proceedings for conduct involving:
(a) a wilful breach of duty; or
(b) a contravention of sections 182 or 183 of the Corporations Act 2001,
as permitted by section 199B of the Corporations Act 2001.
The total amount of insurance contract premiums to be paid is confidential in terms of the agreement with the underwriter.
NON-AUDIT SERVICES
The following non-audit services were provided by the Groups auditor, Butler Settineri (Audit) Pty Ltd, or associated entities (refer note
17). The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for
auditors imposed by the Corporations Act 2001. The directors are satisfied that the provision of non-audit services by the auditor, as set
out below, did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
All non-audit services have been reviewed by the audit committee to ensure they do not impact the impartiality and objectivity of the
auditor;
None of the services undermine the general standard of independence for auditors.
Butler Settineri received or are due to receive the following amounts for the provision of non-audit services:
Tax compliance services
2012
$
1,616
2011
$
-
PROCEEDINGS ON BEHALF OF THE COMPANY
As at the date of this report there are no leave applications or proceedings booked on behalf of De Grey Mining Limited under section
237 of the Corporations Act 2001.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page B9.
Signed in accordance with a resolution of the directors.
Peter Batten
Executive Chairman
Perth, 21 September 2012
B8
B08
A31
A32
Corporate Governance Statement
De Grey Mining Limited
The Board of Directors
The company's constitution provides that the number of directors shall not be less than three and not more than nine. There is no
requirement for any shareholding qualification.
As and if the company's activities increase in size, nature and scope the size of the board will be reviewed periodically, and as
circumstances demand. The optimum number of directors required to supervise adequately the company's constitution will be determined
within the limitations imposed by the constitution.
The membership of the board, its activities and composition, is subject to periodic review. The criteria for determining the identification
and appointment of a suitable candidate for the board shall include quality of the individual, background of experience and achievement,
compatibility with other board members, credibility within the company's scope of activities, intellectual ability to contribute to board's
duties and physical ability to undertake board's duties and responsibilities.
Directors are initially appointed by the full board subject to election by shareholders at the next general meeting. Under the company's
constitution the tenure of a director (other than managing director, and only one managing director where the position is jointly held) is
subject to reappointment by shareholders not later than the third anniversary following his or her last appointment. Subject to the
requirements of the Corporations Act 2001, the board does not subscribe to the principle of retirement age and there is no maximum
period of service as a director. A managing director may be appointed for any period and on any terms the directors think fit and, subject
to the terms of any agreement entered into, may revoke any appointment.
The board has established a number of committees to assist in the execution of its duties and to allow detailed consideration of complex
issues. Current committees of the board are the remuneration and audit committees. The committee structure and membership is
reviewed on an annual basis.
Each committee has its own written charter setting out its role and responsibilities, composition, structure, membership requirements and
the manner in which the committee is to operate. All of these charters are reviewed on an annual basis and are available on the company
website. All matters determined by committees are submitted to the full board as recommendations for board consideration.
Minutes of committee meetings are tabled at the subsequent board meeting. Additional requirements for specific reporting by the
committees to the board are addressed in the charter of the individual committees.
Role of the Board
The board's primary role is the protection and enhancement of long-term shareholder value.
To fulfil this role, the board is responsible for oversight of management and the overall corporate governance of the company including
its strategic direction, establishing goals for management and monitoring the achievement of these goals.
Appointments to Other Boards
Directors are required to take into consideration any potential conflicts of interest when accepting appointments to other boards.
Independent Professional Advice
The board has determined that individual directors have the right in connection with their duties and responsibilities as directors, to seek
independent professional advice at the company's expense. With the exception of expenses for legal advice in relation to directors rights
and duties, the engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unreasonably.
Continuous Review of Corporate Governance
Directors consider, on an ongoing basis, how management information is presented to them and whether such information is sufficient to
enable them to discharge their duties as directors of the company. Such information must be sufficient to enable the directors to
determine appropriate operating and financial strategies from time to time in light of changing circumstances and economic conditions.
The directors recognise that mineral exploration is an inherently risky business and that operational strategies adopted should,
notwithstanding, be directed towards improving or maintaining the net worth of the company.
ASX Principles of Good Corporate Governance
The board has reviewed its current practices in light of the revised ASX Corporate Governance Principles and Recommendations with a
view to making amendments where applicable after considering the company's size and the resources it has available.
As the company's activities develop in size, nature and scope, the size of the board and the implementation of any additional formal
corporate governance committees will be given further consideration.
The board has adopted the revised Recommendations and the following table sets out the company's present position in relation to each
of the revised Principles.
B10
B10
A33
De Grey Mining Limited
Corporate Governance Statement continued
ASX Principle
Status Reference/comment
Principle 1:
1.1
1.2
1.3
Principle 2:
2.1
2.2
2.3
2.4
2.5
2.6
Principle 3:
3.1
Lay solid foundations for
management and oversight
Companies should establish the
functions reserved to the board and
those delegated to senior executives
and disclose those functions
Companies should disclose the
process for evaluating the
performance of senior executives
Companies should provide the
information indicated in the Guide to
reporting on Principle 1
Structure the board to add value
A majority of the board should be
independent directors
The chair should be an independent
director
The roles of chair and chief executive
officer should not be exercised by the
same individual
The board should establish a
nomination committee
Companies should disclose the
process for evaluating the
performance of the board, its
committees and individual directors
Companies should provide the
information indicated in the Guide to
reporting on Principle 2
Promote ethical and responsible
decision-making
Companies should establish a code of
conduct and disclose the code or a
summary of the code as to:
the practices necessary to
maintain confidence in the
company’s integrity
the practices necessary to take
into account their legal
obligations and the reasonable
expectations of their stakeholders
the responsibility and
accountability of individuals for
reporting and investigating
reports of unethical practices
A = Adopted
N/A = Not adopted
A
Matters reserved for the Board are included on the Company’s
website.
N/A
A
A
A
N/A
A
N/A
A
A
The remuneration of executive and non-executive Directors is
reviewed by the remuneration committee with the exclusion of the
Director concerned.
The remuneration of management and
employees is reviewed by the Executive Chairman and approved by
the Board.
Acting in its ordinary capacity, the Board from time to time carries
out the process of considering and determining performance issues.
The positions of Chairman and Managing Director are both held by
Peter Batten. Sourcing alternative directors to strictly comply with
this Principle is considered expensive with costs out weighing
potential benefits.
The full Board is the nomination committee. Acting in its ordinary
capacity from time to time as required, the Board carries out the
process of determining the need for screening and appointing new
Directors. In view of the size and resources available to the Company
it is not considered that a separate nomination committee would add
any substance this process.
Given the size and nature of the Company a formal process for
evaluating performance has not been developed.
The skills and experience and the period of office of Directors are set
out in the Company’s Annual Report (Directors’ report) and on its
website.
The Company has established a Code of Conduct which can be
viewed on the Company’s website.
B11
B11
A34
De Grey Mining Limited
De Grey Mining Limited
Corporate Governance Statement continued
Corporate Governance Statement continued
ASX Principle
Status Reference/comment
ASX Principle
Status Reference/comment
1.1
1.2
1.3
2.1
2.2
2.3
2.4
2.5
2.6
A
Matters reserved for the Board are included on the Company’s
website.
N/A
The remuneration of executive and non-executive Directors is
reviewed by the remuneration committee with the exclusion of the
Director concerned.
The remuneration of management and
employees is reviewed by the Executive Chairman and approved by
the Board.
Acting in its ordinary capacity, the Board from time to time carries
out the process of considering and determining performance issues.
Principle 1:
Lay solid foundations for
management and oversight
Companies should establish the
functions reserved to the board and
those delegated to senior executives
and disclose those functions
Companies should disclose the
process for evaluating the
performance of senior executives
Companies should provide the
information indicated in the Guide to
reporting on Principle 1
Principle 2:
Structure the board to add value
A majority of the board should be
independent directors
The chair should be an independent
director
A
A
A
The roles of chair and chief executive
N/A
The positions of Chairman and Managing Director are both held by
officer should not be exercised by the
same individual
Peter Batten. Sourcing alternative directors to strictly comply with
this Principle is considered expensive with costs out weighing
potential benefits.
A
The full Board is the nomination committee. Acting in its ordinary
capacity from time to time as required, the Board carries out the
process of determining the need for screening and appointing new
Directors. In view of the size and resources available to the Company
it is not considered that a separate nomination committee would add
any substance this process.
N/A
Given the size and nature of the Company a formal process for
evaluating performance has not been developed.
A
The skills and experience and the period of office of Directors are set
out in the Company’s Annual Report (Directors’ report) and on its
website.
Principle 3:
Promote ethical and responsible
decision-making
3.1
Companies should establish a code of
A
The Company has established a Code of Conduct which can be
viewed on the Company’s website.
The board should establish a
nomination committee
Companies should disclose the
process for evaluating the
performance of the board, its
committees and individual directors
Companies should provide the
information indicated in the Guide to
reporting on Principle 2
conduct and disclose the code or a
summary of the code as to:
the practices necessary to
maintain confidence in the
company’s integrity
the practices necessary to take
into account their legal
obligations and the reasonable
expectations of their stakeholders
the responsibility and
accountability of individuals for
reporting and investigating
reports of unethical practices
3.2
3.3
3.4
3.5
Principle 4:
4.1
4.2
4.3
4.4
Companies should establish a policy
concerning diversity and disclose the
policy or a summary of that policy.
The policy should include
requirements for the board to
establish measurable objectives for
achieving gender diversity for the
board to assess annually both the
objectives and progress in achieving
them
Companies should disclose in each
annual report the measurable
objectives for achieving gender
diversity set by the board in
accordance with the diversity policy
and progress towards achieving them
Companies should disclose in each
annual report the proportion of
women employees in the whole
organisation, women in senior
executive positions and women on
the board
Companies should provide the
information indicated in the Guide to
reporting on Principle 3
Safeguard integrity in financial
reporting
The board should establish an audit
committee
The audit committee should be
structured so that it:
consists only of non-executive
directors
consists of a majority of
independent directors
is chaired by an independent
chair, who is not chair of the
board
has at least three members
The audit committee should have a
formal charter
Companies should provide the
information indicated in the Guide to
reporting on Principle 4
The Company has adopted a diversity policy which can be viewed on
its website. The Company recognises that a diverse and talented
workforce is a competitive advantage and encourages a culture that
embraces diversity. The Company does not think that it is appropriate
to state measurable objectives for achieving gender diversity due to
its size and stage of development.
the policy does not
The Company has adopted a diversity policy which can be viewed on
its website. The Company recognises that a diverse and talented
workforce is a competitive advantage and encourages a culture that
embraces diversity. However,
include
requirements for the board to establish measurable objectives for
achieving gender diversity. Given the Company’s size and stage of
development as an exploration company, the board does not think it
is yet appropriate to include measurable objectives in relation to
gender. As the Company grows and requires more employees, the
Company will review this policy and amend as appropriate.
The proportion of women employees in the whole organisation is
29%.
There are currently no women in senior executive positions.
There are currently no women on the board.
The Company has established an audit committee which comprises
two non-executive Directors. The charter for this committee is
disclosed on the Company’s website.
N/A
N/A
A
A
A
A
A
A
A
N/A
A
A
A = Adopted
N/A = Not adopted
A = Adopted
N/A = Not adopted
B11
B12
B12
A35
De Grey Mining Limited
Corporate Governance Statement continued
ASX Principle
Status Reference/comment
5.1
Principle 5: Make timely and balanced
disclosure
Companies should establish written
policies designed to ensure
compliance with ASX Listing Rule
disclosure requirements and to ensure
accountability at a senior executive
level for that compliance and disclose
those policies or a summary of those
policies
Companies should provide the
information indicated in the Guide to
reporting on Principle 5
5.2
Principle 6: Respect the rights of shareholders
6.1
Companies should design a
communications policy for
promoting effective communication
with shareholders and encouraging
their participation at general meetings
and disclose their policy or a
summary of that policy
Companies should provide the
information indicated in the Guide to
reporting on Principle 6
6.2
Principle 7: Recognise and manage risk
7.1
Companies should establish policies
for the oversight and management of
material business risks and disclose a
summary of those policies
7.2
The board should require
management to design and
implement the risk management and
internal control system to manage the
company’s material business risks
and report to it on whether those risks
are being managed effectively. The
board should disclose that
management has reported to it as to
the effectiveness of the company’s
management of its material business
risks
A
A
A
A
A
A
The Company has instigated internal procedures designed to provide
reasonable assurance as to the effectiveness and efficiency of
operations, the reliability of financial reporting and compliance with
relevant laws and regulations. The Board is actively aware of the
continuous disclosure regime and there are strong informal systems
in place to ensure compliance, underpinned by experience.
The Board receive monthly reports on the status of the Company’s
activities and any new or proposed activities. Disclosure is reviewed
as a routine agenda item at each Board meeting.
In line with adherence to continuous disclosure requirements of ASX
all shareholders are kept informed of major developments affecting
the Company. This disclosure is through regular shareholder
communications including the Annual Report, Quarterly Reports, the
Company website and the distributions of specific releases covering
major transactions or events.
The Company has formulated a Communication Policy that is
disclosed on the Company’s website.
The Company does have formalised policies on risk management and
the Board recognises its responsibility for identifying areas of
significant business risk and for ensuring that arrangements are in
place for adequately managing these risks. This issue is regularly
reviewed at Board meetings and risk management culture is
encouraged amongst employees and contractors.
Determined areas of risk which are regularly considered include:
The Company does have formalised risk management policies and
recognises its responsibility for identifying areas of significant
business risk and ensuring that arrangements are in place to
adequately manage these risks. This issue is regularly reviewed at
Board meetings and a risk management culture is encouraged
amongst employees and contractors.
performance and funding of exploration activities
budget control and asset protection
status of mineral tenements
compliance with government laws and regulations
safety and the environment
continuous disclosure obligations
A = Adopted
N/A = Not adopted
B13
B13
A36
De Grey Mining Limited
De Grey Mining Limited
Corporate Governance Statement continued
Corporate Governance Statement continued
ASX Principle
Status Reference/comment
ASX Principle
Status Reference/comment
5.1
Companies should establish written
A
The Company has instigated internal procedures designed to provide
reasonable assurance as to the effectiveness and efficiency of
operations, the reliability of financial reporting and compliance with
relevant laws and regulations. The Board is actively aware of the
continuous disclosure regime and there are strong informal systems
in place to ensure compliance, underpinned by experience.
5.2
Companies should provide the
A
The Board receive monthly reports on the status of the Company’s
information indicated in the Guide to
activities and any new or proposed activities. Disclosure is reviewed
reporting on Principle 5
as a routine agenda item at each Board meeting.
A
In line with adherence to continuous disclosure requirements of ASX
all shareholders are kept informed of major developments affecting
the Company. This disclosure is through regular shareholder
communications including the Annual Report, Quarterly Reports, the
Company website and the distributions of specific releases covering
major transactions or events.
information indicated in the Guide to
disclosed on the Company’s website.
A
The Company has formulated a Communication Policy that is
Principle 5: Make timely and balanced
disclosure
policies designed to ensure
compliance with ASX Listing Rule
disclosure requirements and to ensure
accountability at a senior executive
level for that compliance and disclose
those policies or a summary of those
policies
Principle 6: Respect the rights of shareholders
Companies should design a
communications policy for
promoting effective communication
with shareholders and encouraging
their participation at general meetings
and disclose their policy or a
summary of that policy
Companies should provide the
reporting on Principle 6
Principle 7: Recognise and manage risk
Companies should establish policies
for the oversight and management of
material business risks and disclose a
summary of those policies
A
The Company does have formalised policies on risk management and
the Board recognises its responsibility for identifying areas of
significant business risk and for ensuring that arrangements are in
place for adequately managing these risks. This issue is regularly
reviewed at Board meetings and risk management culture is
encouraged amongst employees and contractors.
Determined areas of risk which are regularly considered include:
performance and funding of exploration activities
budget control and asset protection
status of mineral tenements
compliance with government laws and regulations
safety and the environment
continuous disclosure obligations
A
The Company does have formalised risk management policies and
recognises its responsibility for identifying areas of significant
business risk and ensuring that arrangements are in place to
adequately manage these risks. This issue is regularly reviewed at
Board meetings and a risk management culture is encouraged
amongst employees and contractors.
6.1
6.2
7.1
7.2
The board should require
management to design and
implement the risk management and
internal control system to manage the
company’s material business risks
and report to it on whether those risks
are being managed effectively. The
board should disclose that
management has reported to it as to
the effectiveness of the company’s
management of its material business
risks
7.3
7.4
The board should disclose whether it
has received assurance from the chief
executive officer (or equivalent) and
the chief financial officer (or
equivalent) that the declaration
provided in accordance with section
295A of the Corporations Act is
founded on a sound system of risk
management and internal control and
that the system is operating
effectively in all material respects in
relation to financial reporting risks
Companies should provide the
information indicated in the Guide to
reporting on Principle 7
Principle 8: Remunerate fairly and responsibly
8.1
The board should establish a
remuneration committee
The remuneration committee should
be structured so that it:
consists of a majority of
independent directors
is chaired by an independent
director
has at least 3 members
Companies should clearly distinguish
the structure of non-executive
directors’ remuneration from that of
executive directors and senior
executives
Companies should provide the
information indicated in the Guide to
reporting on Principle 8
8.2
8.3
8.4
A
The Board has received the required assurance and declaration.
The Company substantially complies with the disclosures required
apart from a disclosure of the Company’s policies on risk oversight
and management of material business risks. Given its current stage of
development and size, the Company considers that non-disclosure of
this information will not materially affect investors.
The remuneration committee consists of Darren Townsend and Jason
Brewer, both of whom are independent directors.
Sourcing alternative directors to strictly comply with this Principle is
considered expensive with costs out weighing potential benefits.
N/A
A
A
A
N/A
A
A
For details on the Remuneration Committee refer to the Corporate
Governance section of the Company’s website.
The directors and executives receive a superannuation guarantee
contribution required by the government, which is currently 9%.
Some individuals have chosen to sacrifice part of their salary to
increase payments towards superannuation. In addition, directors
receive options in the company in accordance with the employees
and contractors option incentive plan.
A = Adopted
N/A = Not adopted
A = Adopted
N/A = Not adopted
B13
B14
B14
A37
De Grey Mining Limited
Consolidated Statement of Comprehensive Income
YEAR ENDED 30 JUNE 2012
Notes
Consolidated
REVENUE
EXPENDITURE
Depreciation expense
Employee benefits expense
Exploration expenditure
Corporate expenses
Occupancy expenses
Consulting expenses
Investor relations and advertising expenses
Administration expenses
Share based payments
Other expenses
LOSS BEFORE INCOME TAX
INCOME TAX BENEFIT / (EXPENSE)
LOSS FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
2011
$
212,633
(39,359)
(467,682)
(1,325,390)
(95,884)
(94,105)
(134,892)
(35,484)
(146,961)
(110,000)
(61,862)
2012
$
4
1,580,684
(30,717)
(586,688)
(1,765,021)
(175,292)
(112,628)
(136,835)
(17,172)
(87,654)
(246,146)
(3,068)
26
6
(1,580,537)
(2,298,986)
-
-
(1,580,537)
(2,298,986)
21,018
21,018
43,473
43,473
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY
HOLDERS OF DE GREY MINING LIMITED
(1,559,519)
(2,255,513)
Basic and diluted loss per share for loss attributable to the ordinary equity
holders of the company (cents per share)
25
(0.5)
(0.9)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the Consolidated Financial Statements.
B15
B15
A38
De Grey Mining Limited
De Grey Mining Limited
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
YEAR ENDED 30 JUNE 2012
Notes
Consolidated
AT 30 JUNE 2012
Notes
Consolidated
REVENUE
EXPENDITURE
Depreciation expense
Employee benefits expense
Exploration expenditure
Corporate expenses
Occupancy expenses
Consulting expenses
Administration expenses
Share based payments
Other expenses
LOSS BEFORE INCOME TAX
Investor relations and advertising expenses
INCOME TAX BENEFIT / (EXPENSE)
LOSS FOR THE YEAR
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
2011
$
212,633
(39,359)
(467,682)
(1,325,390)
(95,884)
(94,105)
(134,892)
(35,484)
(146,961)
(110,000)
(61,862)
2012
$
4
1,580,684
(30,717)
(586,688)
(1,765,021)
(175,292)
(112,628)
(136,835)
(17,172)
(87,654)
(246,146)
(3,068)
26
6
(1,580,537)
(2,298,986)
-
-
(1,580,537)
(2,298,986)
21,018
21,018
43,473
43,473
TOTAL COMPREHENSIVE LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY
HOLDERS OF DE GREY MINING LIMITED
(1,559,519)
(2,255,513)
Basic and diluted loss per share for loss attributable to the ordinary equity
holders of the company (cents per share)
25
(0.5)
(0.9)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the Notes to the Consolidated Financial Statements.
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Other assets
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Plant and equipment
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
TOTAL EQUITY
7
8
9
10
11
12
2012
$
2,418,214
25,443
40,413
2,484,070
79,487
79,487
2011
$
1,375,979
46,099
40,168
1,462,246
122,574
122,574
2,563,557
1,584,820
256,534
20,798
277,332
277,332
183,999
59,479
243,478
243,478
2,286,225
1,341,342
13
14(a)
14(b)
42,197,751
486,637
(40,398,163)
2,286,225
39,939,495
356,548
(38,954,701)
1,341,342
The above Consolidated Statement of Financial Position should be read in conjunction with the Notes to the Consolidated Financial Statements.
B15
B16
B16
A39
Consolidated Statement of Changes in Equity
De Grey Mining Limited
YEAR ENDED 30 JUNE 2012
Consolidated
Notes
14(b)
BALANCE AT 1 JULY 2010
Loss for the year
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of
foreign operations
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares issued during the year
13(b)
Share issue transaction costs
13(b)
Issue of employee and contractor options
14(a)
Transfer of reserve upon expiry of options 14(a)
14(a)
Contributed
Equity
$
38,655,744
-
Options
Reserve
$
421,895
-
Foreign
Currency
Translation
Reserve
$
Accumulated
Losses
$
Total
$
-
-
(36,940,535)
(2,298,986)
2,137,104
(2,298,986)
-
-
-
-
43,473
43,473
-
(2,298,986)
43,473
(2,255,513)
1,350,000
(66,249)
-
-
-
-
176,000
(284,820)
-
-
-
-
-
-
-
284,820
1,350,000
(66,249)
176,000
-
BALANCE AT 30 JUNE 2011
39,939,495
313,075
43,473
(38,954,701)
1,341,342
14(b)
Loss for the year
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of
foreign operations
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares issued during the year
13(b)
Share issue transaction costs
13(b)
Issue of employee and contractor options
14(a)
Transfer of reserve upon expiry of options 14(a)
14(a)
-
-
-
-
-
-
-
(1,580,537)
(1,580,537)
21,018
21,018
-
(1,580,537)
21,018
(1,559,519)
2,484,935
(226,679)
-
-
-
-
246,146
(137,075)
-
-
-
-
-
-
-
137,075
2,484,935
(226,679)
246,146
-
BALANCE AT 30 JUNE 2012
42,197,751
422,146
64,491
(40,398,163)
2,286,225
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements.
B17
B17
A40
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
De Grey Mining Limited
De Grey Mining Limited
YEAR ENDED 30 JUNE 2012
Foreign
Currency
Contributed
Notes
Equity
$
Options
Reserve
$
Translation
Accumulated
Reserve
Losses
$
$
Total
$
38,655,744
421,895
(36,940,535)
(2,298,986)
2,137,104
(2,298,986)
Issue of employee and contractor options
Transfer of reserve upon expiry of options 14(a)
176,000
(284,820)
Consolidated
BALANCE AT 1 JULY 2010
Loss for the year
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of
foreign operations
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares issued during the year
Share issue transaction costs
BALANCE AT 30 JUNE 2011
Loss for the year
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of
foreign operations
TOTAL COMPREHENSIVE LOSS
TRANSACTIONS WITH OWNERS IN THEIR
CAPACITY AS OWNERS
Shares issued during the year
Share issue transaction costs
14(b)
14(a)
13(b)
13(b)
14(a)
14(b)
14(a)
13(b)
13(b)
14(a)
-
-
-
-
-
-
-
-
-
-
1,350,000
(66,249)
2,484,935
(226,679)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
43,473
43,473
(2,298,986)
(2,255,513)
43,473
1,350,000
(66,249)
176,000
-
284,820
21,018
21,018
(1,580,537)
(1,559,519)
21,018
2,484,935
(226,679)
246,146
-
137,075
-
-
-
-
-
-
-
-
Issue of employee and contractor options
Transfer of reserve upon expiry of options 14(a)
246,146
(137,075)
BALANCE AT 30 JUNE 2012
42,197,751
422,146
64,491
(40,398,163)
2,286,225
The above Consolidated Statement of Changes in Equity should be read in conjunction with the Notes to the Consolidated Financial Statements.
39,939,495
313,075
43,473
(38,954,701)
1,341,342
(1,580,537)
(1,580,537)
YEAR ENDED 30 JUNE 2012
Notes
Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Proceeds on sale of tenements
Payments for exploration and evaluation expenditure
NET CASH OUTFLOW FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of plant and equipment
Payments for plant and equipment
NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issues of ordinary shares
Payments of share issue transaction costs
NET CASH INFLOW FROM FINANCING ACTIVITIES
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR
24
7
2012
$
-
(1,148,259)
64,301
1,500,000
(1,668,444)
(1,252,402)
22,727
(7,668)
15,059
2,484,935
(226,679)
2,258,256
1,020,913
1,375,979
21,322
2,418,214
2011
$
2,321
(1,167,656)
115,204
100,000
(1,371,227)
(2,321,358)
-
(19,071)
(19,071)
1,350,000
(66,249)
1,283,751
(1,056,678)
2,389,059
43,598
1,375,979
The above Consolidated Statement of Cash Flows should be read in conjunction with the Notes to the Consolidated Financial Statements.
B17
B18
B18
A41
Notes to the Consolidated Financial Statements
De Grey Mining Limited
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting
of De Grey Mining Limited and its subsidiaries. The financial statements are presented in the Australian currency. De Grey Mining
Limited is a company limited by shares, domiciled and incorporated in Australia. The financial statements were authorised for issue by
the directors on 21 September 2012. The directors have the power to amend and reissue the financial statements.
(a) Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board and the Corporations Act 2001. De Grey Mining Limited is a for-profit entity for
the purpose of preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the De Grey Mining Limited Group also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the Group
None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2011
affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods.
(iii) Early adoption of standards
The Group has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2011.
(iv) Historical cost convention
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale
financial assets, which have been measured at fair value.
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of De Grey Mining Limited (“company” or
“parent entity”) as at 30 June 2012 and the results of all subsidiaries for the year then ended. De Grey Mining Limited and its subsidiaries
together are referred to in this financial report as the Group or the consolidated entity.
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating
policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date
that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive
income, statement of changes in equity and statement of financial position respectively.
Investments in subsidiaries are accounted for at cost in the separate financial statements of De Grey Mining Limited.
(ii) Joint ventures
Jointly controlled assets
The proportionate interests in the assets, liabilities and expenses of joint venture activities have been incorporated in the financial
statements under the appropriate headings. Details of the joint ventures are set out in note 22.
(iii) Changes in ownership interests
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of
the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling
interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling
interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of De Grey
Mining Limited.
B19
B19
A42
Notes to the Consolidated Financial Statements
De Grey Mining Limited
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been
consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting
of De Grey Mining Limited and its subsidiaries. The financial statements are presented in the Australian currency. De Grey Mining
Limited is a company limited by shares, domiciled and incorporated in Australia. The financial statements were authorised for issue by
the directors on 21 September 2012. The directors have the power to amend and reissue the financial statements.
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations
issued by the Australian Accounting Standards Board and the Corporations Act 2001. De Grey Mining Limited is a for-profit entity for
(a) Basis of preparation
the purpose of preparing the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the De Grey Mining Limited Group also comply with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
(ii) New and amended standards adopted by the Group
None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2011
affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods.
The Group has not elected to apply any pronouncements before their operative date in the annual reporting period beginning 1 July 2011.
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale
financial assets, which have been measured at fair value.
(iii) Early adoption of standards
(iv) Historical cost convention
(b) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of De Grey Mining Limited (“company” or
“parent entity”) as at 30 June 2012 and the results of all subsidiaries for the year then ended. De Grey Mining Limited and its subsidiaries
together are referred to in this financial report as the Group or the consolidated entity.
Subsidiaries are all entities (including special purpose entities) over which the Group has the power to govern the financial and operating
policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting
rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date
that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group.
Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive
income, statement of changes in equity and statement of financial position respectively.
Investments in subsidiaries are accounted for at cost in the separate financial statements of De Grey Mining Limited.
(ii) Joint ventures
Jointly controlled assets
(iii) Changes in ownership interests
The proportionate interests in the assets, liabilities and expenses of joint venture activities have been incorporated in the financial
statements under the appropriate headings. Details of the joint ventures are set out in note 22.
The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of
the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling
interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling
interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of De Grey
Mining Limited.
De Grey Mining Limited
Notes to the Consolidated Financial Statements continued
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair
value with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts
previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of
the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to
profit or loss.
If the ownership interest in a jointly controlled entity or associate is reduced but joint control or significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where
appropriate.
(c) Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has
been identified as the full Board of Directors.
(d) Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian
dollars, which is De Grey Mining Limited's functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.
(iii) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a
functional currency different from the presentation currency are translated into the presentation currency as follows:
assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement
of financial position;
income and expenses for each statement of comprehensive income are translated at average exchange rates (unless that is not a
reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and
expenses are translated at the dates of the transactions); and
all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of any net investment in foreign entities, and of borrowings and other
financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign
operation is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to
profit or loss, as part of the gain or loss on sale.
(e) Revenue recognition
Revenue is recognised to the extent that is it probable that the economic benefits will flow to the Group and the revenue can be reliably
measured. The following specific recognition criteria must also be met before revenue is recognised:
Interest Revenue
Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial assets.
(f) Income tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable
income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to
unused tax losses.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting
period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
B19
B20
B20
A43
De Grey Mining Limited
Notes to the Consolidated Financial Statements continued
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments
in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable
that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
De Grey Mining Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the
consolidated financial statements.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
(g) Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the
present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-
term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit
or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease
term.
Leases where a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as
operating leases (note 19). Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or
loss on a straight-line basis over the period of the lease.
(h) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment,
or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of
the impairment at each reporting date.
(i) Cash and cash equivalents
For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities on the statement of financial position.
(j) Trade and other receivables
Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful
debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.
(k) Investments and other financial assets
Classification
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments
were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as
held-to-maturity, re-evaluates this designation at each reporting date.
B21
B21
A44
Notes to the Consolidated Financial Statements continued
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
De Grey Mining Limited
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction
affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted
or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments
in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable
that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
De Grey Mining Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a
consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the
consolidated financial statements.
Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive
income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.
(g) Leases
term.
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower, the
present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in other short-
term and long-term payables. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit
or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The property, plant and equipment acquired under finance leases is depreciated over the shorter of the asset’s useful life and the lease
Leases where a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as
operating leases (note 19). Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or
loss on a straight-line basis over the period of the lease.
(h) Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment,
or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of
assets (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of
the impairment at each reporting date.
(i) Cash and cash equivalents
For statement of cash flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial
institutions, other short-term highly liquid investments with original maturities of three months or less that are readily convertible to
known amounts of cash and which are subject to insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown
within borrowings in current liabilities on the statement of financial position.
(j) Trade and other receivables
Receivables are recognised and carried at original invoice amount less a provision for any uncollectible debts. An estimate for doubtful
debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.
(k) Investments and other financial assets
Classification
The Group classifies its investments in the following categories: financial assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments
were acquired. Management determines the classification of its investments at initial recognition and, in the case of assets classified as
held-to-maturity, re-evaluates this designation at each reporting date.
B21
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if
acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated
as hedges. Assets in this category are classified as current assets.
(ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for those with maturities greater than 12 months after the reporting date which are classified
as non-current assets. Loans and receivables are included in trade and other receivables in the statement of financial position.
(iii) Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the
Group’s management has the positive intention and ability to hold to maturity. If the Group were to sell other than an insignificant
amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale. Held-to-maturity
financial assets are included in non-current assets, except for those with maturities less than 12 months from the reporting date, which are
classified as current assets.
(iv) Available-for-sale financial assets
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in
this category or not classified in any of the other categories. They are included in non-current assets unless management intends to
dispose of the investment within 12 months of the reporting date. Investments are designated available-for-sale if they do not have fixed
maturities and fixed or determinable payments and management intends to hold them for the medium to long term.
Financial assets - reclassification
The Group may choose to reclassify a non-derivative trading financial asset out of the held-for-trading category if the financial asset is
no longer held for the purpose of selling it in the near term. Financial assets other than loans and receivables are permitted to be
reclassified out of the held-for-trading category only in rare circumstances arising from a single event that is unusual and highly unlikely
to recur in the near term. In addition, the Group may choose to reclassify financial assets that would meet the definition of loans and
receivables out of the held-for-trading or available-for-sale categories if the Group has the intention and ability to hold these financial
assets for the foreseeable future or until maturity at the date of reclassification.
Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable,
and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest rates for
financial assets reclassified to loans and receivables and held-to-maturity categories are determined at the reclassification date. Further
increases in estimates of cash flows adjust effective interest rates prospectively.
Recognition and derecognition
Regular purchases and sales of financial assets are recognised on trade-date – the date on which the Group commits to purchase or sell
the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through
profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are
expensed to the statement of comprehensive income. Financial assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.
When securities classified as available-for-sale are sold, the accumulated fair value adjustments recognised in equity are included in the
statement of comprehensive income as gains and losses from investment securities.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through
profit or loss, transactions costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets
carried at fair value through profit or loss are expensed in profit or loss.
Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method.
Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Gains or
losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the
statement of comprehensive income within other income or other expenses in the period in which they arise. Dividend income from
financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of revenue from
continuing operations when the Group’s right to receive payments is established.
Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analysed
between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the
security. The translation differences related to changes in the amortised cost are recognised in profit or loss, and other changes in
carrying amount are recognised in equity. Changes in the fair value of other monetary and non-monetary securities classified as
available-for-sale are recognised in equity.
Details on how the fair value of financial investments is determined are disclosed in note 2.
B22
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De Grey Mining Limited
Notes to the Consolidated Financial Statements continued
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
Impairment
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial
assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective
evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that
loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be
reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of
the security below its cost is considered an indicator that the assets are impaired.
(i) Assets carried at amortised cost
For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value
of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original
effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or
held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective
interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s
fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised
impairment loss is recognised in profit or loss.
(ii) Assets classified as available-for-sale
If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss – measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or
loss – is removed from equity and recognised in profit or loss.
Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent
period.
If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or
loss.
(l) Plant and equipment
All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The
carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance
are charged to the statement of comprehensive income during the reporting period in which they are incurred.
Depreciation of plant and equipment is calculated using the reducing balance method to allocate their cost or revalued amounts, net of
their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment,
the shorter lease term. The rates vary between 20% and 40% per annum.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount (note 1(h)).
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of
comprehensive income. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of
those assets to retained earnings.
(m) Exploration and evaluation costs
Exploration and evaluation costs are expensed as they are incurred.
(n) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid.
The amounts are unsecured and are paid on normal commercial terms.
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Notes to the Consolidated Financial Statements continued
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
De Grey Mining Limited
30 JUNE 2012
Impairment
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial
assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective
evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that
loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be
reliably estimated. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of
the security below its cost is considered an indicator that the assets are impaired.
(i) Assets carried at amortised cost
For loans and receivables, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value
of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original
effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in profit or loss. If a loan or
held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective
interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s
fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring
after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised
impairment loss is recognised in profit or loss.
(ii) Assets classified as available-for-sale
If there is objective evidence of impairment for available-for-sale financial assets, the cumulative loss – measured as the difference
between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or
loss – is removed from equity and recognised in profit or loss.
Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit or loss in a subsequent
If the fair value of a debt instrument classified as available-for-sale increases in a subsequent period and the increase can be objectively
related to an event occurring after the impairment loss was recognised in profit or loss, the impairment loss is reversed through profit or
All plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The
carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance
are charged to the statement of comprehensive income during the reporting period in which they are incurred.
Depreciation of plant and equipment is calculated using the reducing balance method to allocate their cost or revalued amounts, net of
their residual values, over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment,
the shorter lease term. The rates vary between 20% and 40% per annum.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its
estimated recoverable amount (note 1(h)).
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These are included in the statement of
comprehensive income. When revalued assets are sold, it is Group policy to transfer the amounts included in other reserves in respect of
those assets to retained earnings.
(m) Exploration and evaluation costs
Exploration and evaluation costs are expensed as they are incurred.
(n) Trade and other payables
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid.
The amounts are unsecured and are paid on normal commercial terms.
period.
loss.
(l) Plant and equipment
acquisition of the items.
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
(o) Employee benefits
Wages and salaries, annual leave and long service leave
Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12
months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual
leave and long service leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are
presented as payables.
(p) Share-based payments
The Group provides benefits to employees (including directors) of the Group in the form of share-based payment transactions, whereby
employees render services in exchange for shares or rights over shares (‘equity-settled transactions’), refer to note 26.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are
granted. The fair value is determined by an internal valuation using a Black-Scholes option pricing model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (‘vesting
date’).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which
the vesting period has expired and (ii) the number of options that, in the opinion of the directors of the Group, will ultimately vest. This
opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised
for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a
replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original
award.
Options over ordinary shares have also been issued as consideration for the acquisition of interests in tenements and other services. These
options have been treated in the same manner as employee options described above, with the expense being included as part of
exploration expenditure.
(q) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the
proceeds.
(r) Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to owners of the company, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income
tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of
shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
(s) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the
taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or
payable to, the taxation authority is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from, or payable to the taxation authority, are presented as operating cash flows.
(t) New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2012 reporting periods. The
Group has considered the impact of these new standards and interpretations, with details of those changes that are likely to impact on the
Group set out below.
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De Grey Mining Limited
Notes to the Consolidated Financial Statements continued
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2013)
This Standard is applicable retrospectively and includes revised requirements for the classification and measurement of financial
instruments, as well as recognition and derecognition requirements for financial instruments. The Group has not yet determined any
potential impact on the financial statements.
The key changes made to accounting requirements include:
simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
simplifying the requirements for embedded derivatives;
removing the tainting rules associated with held-to-maturity assets;
removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;
allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not
held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be
recognised in profit or loss and there is no impairment or recycling on disposal of the instrument;
requiring financial assets to be reclassified where there is a change in an entity’s business model as they are initially classified based
on: (a) the objective of the entity’s business model for managing the financial assets; and (b) the characteristics of the contractual
cash flows; and
requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to
changes in the entity’s own credit risk in other comprehensive income, except when that would create an accounting mismatch. If
such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of
changes in the credit risk of the liability) in profit or loss.
AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2: Amendments to Australian Accounting
Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121,
123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052]
(applicable for annual reporting periods commencing on or after 1 July 2013)
AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of financial reporting requirements for
those entities preparing general purpose financial statements:
Tier 1: Australian Accounting Standards; and
Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.
Tier 2 of the framework comprises the recognition, measurement and presentation requirements of Tier 1, but contains significantly
fewer disclosure requirements.
The following entities are required to apply Tier 1 reporting requirements (ie full IFRS):
for-profit private sector entities that have public accountability; and
the Australian Government and state, territory and local governments.
Since the Group is a for-profit private sector entity that has public accountability, it does not qualify for the reduced disclosure
requirements for Tier 2 entities.
AASB 2011–2 makes amendments to Australian Accounting Standards and Interpretations to give effect to the reduced disclosure
requirements for Tier 2 entities. It achieves this by specifying the disclosure paragraphs that a Tier 2 entity need not comply with as well
as adding specific “RDR” disclosures.
AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2011) [AASB 1, 3, 4, 5, 7, 101, 102,
108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applies to periods
beginning on or after 1 January 2013)
This Standard makes amendments to a range of Australian Accounting Standards and Interpretations as a consequence of the issuance of
AASB 9: Financial Instruments in December 2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.
As noted above, the Group has not yet determined any potential impact on the financial statements from adopting AASB 9.
AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies to
periods beginning on or after 1 January 2012)
This Standard makes amendments to AASB 112: Income Taxes.
The amendments brought in by this Standard introduce a more practical approach for measuring deferred tax liabilities and deferred tax
assets when investment property is measured using the fair value model under AASB 140: Investment Property.
Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to
recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely
through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume
substantially all of the economic benefits embodied in the investment property over time, rather than through sale.
The amendments brought in by this Standard also incorporate Interpretation 121 into AASB 112.
The amendments are not expected to impact the Group.
B25
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A48
Notes to the Consolidated Financial Statements continued
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
De Grey Mining Limited
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
AASB 9: Financial Instruments (December 2010) (applicable for annual reporting periods commencing on or after 1 January 2013)
This Standard is applicable retrospectively and includes revised requirements for the classification and measurement of financial
instruments, as well as recognition and derecognition requirements for financial instruments. The Group has not yet determined any
potential impact on the financial statements.
The key changes made to accounting requirements include:
simplifying the classifications of financial assets into those carried at amortised cost and those carried at fair value;
simplifying the requirements for embedded derivatives;
removing the tainting rules associated with held-to-maturity assets;
removing the requirements to separate and fair value embedded derivatives for financial assets carried at amortised cost;
allowing an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not
held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be
recognised in profit or loss and there is no impairment or recycling on disposal of the instrument;
requiring financial assets to be reclassified where there is a change in an entity’s business model as they are initially classified based
on: (a) the objective of the entity’s business model for managing the financial assets; and (b) the characteristics of the contractual
cash flows; and
requiring an entity that chooses to measure a financial liability at fair value to present the portion of the change in its fair value due to
changes in the entity’s own credit risk in other comprehensive income, except when that would create an accounting mismatch. If
such a mismatch would be created or enlarged, the entity is required to present all changes in fair value (including the effects of
changes in the credit risk of the liability) in profit or loss.
AASB 1053: Application of Tiers of Australian Accounting Standards and AASB 2010–2: Amendments to Australian Accounting
Standards arising from Reduced Disclosure Requirements [AASB 1, 2, 3, 5, 7, 8, 101, 102, 107, 108, 110, 111, 112, 116, 117, 119, 121,
123, 124, 127, 128, 131, 133, 134, 136, 137, 138, 140, 141, 1050 & 1052 and Interpretations 2, 4, 5, 15, 17, 127, 129 & 1052]
(applicable for annual reporting periods commencing on or after 1 July 2013)
AASB 1053 establishes a revised differential financial reporting framework consisting of two tiers of financial reporting requirements for
Tier 2 of the framework comprises the recognition, measurement and presentation requirements of Tier 1, but contains significantly
those entities preparing general purpose financial statements:
Tier 1: Australian Accounting Standards; and
Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements.
fewer disclosure requirements.
The following entities are required to apply Tier 1 reporting requirements (ie full IFRS):
for-profit private sector entities that have public accountability; and
the Australian Government and state, territory and local governments.
Since the Group is a for-profit private sector entity that has public accountability, it does not qualify for the reduced disclosure
requirements for Tier 2 entities.
as adding specific “RDR” disclosures.
AASB 2011–2 makes amendments to Australian Accounting Standards and Interpretations to give effect to the reduced disclosure
requirements for Tier 2 entities. It achieves this by specifying the disclosure paragraphs that a Tier 2 entity need not comply with as well
AASB 2010–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2011) [AASB 1, 3, 4, 5, 7, 101, 102,
108, 112, 118, 120, 121, 127, 128, 131, 132, 136, 137, 139, 1023 & 1038 and Interpretations 2, 5, 10, 12, 19 & 127] (applies to periods
beginning on or after 1 January 2013)
This Standard makes amendments to a range of Australian Accounting Standards and Interpretations as a consequence of the issuance of
AASB 9: Financial Instruments in December 2010. Accordingly, these amendments will only apply when the entity adopts AASB 9.
As noted above, the Group has not yet determined any potential impact on the financial statements from adopting AASB 9.
AASB 2010–8: Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112] (applies to
periods beginning on or after 1 January 2012)
This Standard makes amendments to AASB 112: Income Taxes.
The amendments brought in by this Standard introduce a more practical approach for measuring deferred tax liabilities and deferred tax
assets when investment property is measured using the fair value model under AASB 140: Investment Property.
Under the current AASB 112, the measurement of deferred tax liabilities and deferred tax assets depends on whether an entity expects to
recover an asset by using it or by selling it. The amendments introduce a presumption that an investment property is recovered entirely
through sale. This presumption is rebutted if the investment property is held within a business model whose objective is to consume
substantially all of the economic benefits embodied in the investment property over time, rather than through sale.
The amendments brought in by this Standard also incorporate Interpretation 121 into AASB 112.
The amendments are not expected to impact the Group.
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
AASB 2010–9: Amendments to Australian Accounting Standards – Severe Hyperinflation and Removal of Fixed Dates for First-time
Adopters [AASB 1] (applies to periods beginning on or after 1 July 2011/1 January 2013)
This Standard makes amendments to AASB 1: First-time Adoption of Australian Accounting Standards.
The amendments brought in by this Standard provide relief for first-time adopters of Australian Accounting Standards from having to
reconstruct transactions that occurred before their date of transition to Australian Accounting Standards.
Furthermore, the amendments brought in by this Standard also provide guidance for entities emerging from severe hyperinflation either
to resume presenting Australian-Accounting-Standards financial statements or to present Australian-Accounting-Standards financial
statements for the first time.
This Standard is not expected to impact the Group.
AASB 2010–10: Further Amendments to Australian Accounting Standards – Removal of Fixed Dates for First-time Adopters [AASB
2009–11 & AASB 2011–7] (applies to periods beginning on or after 1 January 2013)
This Standard makes amendments to AASB 2009–11: Amendments to Australian Accounting Standards arising from AASB 9, and
AASB 2011–7: Amendments to Australian Accounting Standards arising from AASB 9 (December 2010).
The amendments brought in by this Standard ultimately affect AASB 1: First-time Adoption of Australian Accounting Standards and
provide relief for first-time adopters from having to reconstruct transactions that occurred before their transition date.
[The amendments to AASB 2009–11 will only affect early adopters of AASB 2009–11 (and AASB 9: Financial Instruments that was
issued in December 2009) as it has been superseded by AASB 2010–7.]
This Standard is not expected to impact the Group.
AASB 1054: Australian Additional Disclosures (applies to periods beginning on or after 1 January 2013)
This Standard is as a consequence of phase 1 of the joint Trans-Tasman Convergence project of the AASB and FRSB.
This Standard relocates all Australian specific disclosures from other standards to one place and revises disclosures in the following
areas:
compliance with Australian Accounting Standards;
the statutory basis or reporting framework for financial statements;
whether the financial statements are general purpose or special purpose;
audit fees; and
imputation credits.
This Standard is not expected to impact the Group.
AASB 2011-2: Amendments to Australian Accounting Standards arising from the Trans-Tasman Convergence project – Reduced
disclosure regime [AASB 101 & AASB 1054] (applies to periods beginning on or after 1 July 2013)
This Standard makes amendments to the application of the revised disclosures to Tier 2 entities that are applying AASB 1053.
This Standard is not expected to impact the Group.
AASB 10: Consolidated Financial Statements (applies to periods beginning on or after 1 January 2013)
This Standard establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate
Financial Statements dealing with the accounting for consolidated financial statements and Interpretation 112Consolidation – Special
Purpose Entities.
The new control model broadens the situations when an entity is considered to be controlled by another entity and includes new guidance
for applying the model to specific situations, including when acting as a manager may give control, the impact of potential voting rights
and when holding less than a majority voting rights may give control. This Standard is not expected to impact the Group.
AASB 11: Joint Arrangements (applies to periods beginning on or after 1 January 2013)
This Standard replaces AASB 131 Interests in Joint Ventures and Interpretation 113 Jointly-Controlled Entities – Non-monetary
Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of
whether joint control exists may change. In addition, AASB 11 removes the option to account for jointly controlled entities (JCEs) using
proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising
from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves is accounted for
by recognising the share of those assets and obligations. Joint ventures that give the venturers a right to the net assets is accounted for
using the equity method. This may result in a change in the accounting for the joint arrangements held by the Group.
AASB 12: Disclosures of Interests in Other Entities (applies to periods beginning on or after 1 January 2013)
This Standard includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structures
entities. New disclosures have been introduced about the judgements made by management to determine whether control exists, and to
require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling
interests. The Group has not yet determined any potential impact on the financial statements.
B25
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De Grey Mining Limited
Notes to the Consolidated Financial Statements continued
30 JUNE 2012
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
AASB 13: Fair Value Measurement (applies to periods beginning on or after 1 January 2013)
This Standard establishes a single source of guidance under AASB for determining the fair value of assets and liabilities. AASB 13 does
not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value under AASB when
fair value is required or permitted by AASB. Application of this definition may result in different fair values being determined for the
relevant assets.
AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the
assumptions made and the qualitative impact of those assumptions on the fair value determined. The Group has not yet determined any
potential impact on the financial statements.
AASB 119: Employee Benefits (applicable for annual reporting periods commencing on or after 1 January 2013)
The main change introduced by this standard is to revise the accounting for defined benefit plans. The amendment removes the options
for accounting for the liability, and requires that the liabilities arising from such plans is recognized in full with actuarial gains and losses
being recognized in other comprehensive income. It also revised the method of calculating the return on plan assets. The definition of
leave entitlements may become long-term in nature with a revised
short-term benefits has been revised, meaning some annual
measurement. Similarly the timing for recognising a provision for termination benefits has been revised, such that provisions can only be
recognised when the offer cannot be withdrawn.
Consequential amendments were also made to other standards via AASB 2011-10.
Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine (applicable for annual reporting periods commencing on
or after 1 January 2013)
This interpretation applies to stripping costs incurred during the production phase of a surface mine. Production stripping costs are to be
capitalised as part of an asset, if an entity can demonstrate that it is probable future economic benefits will be realised, the costs can be
reliably measured and the entity can identify the component of an ore body for which access has been improved. This asset is to be called
the “stripping activity asset”.
The stripping activity asset shall be depreciated or amortised on a systematic basis, over the expected useful life of the identified
component of the ore body that becomes more accessible as a result of the stripping activity. The units of production method shall be
applied unless another method is more appropriate.
(u) Significant accounting judgements, estimates and assumptions
The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements are:
(i) Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgement:
Exploration expenditure
Exploration and evaluation costs are expensed as they are incurred.
(ii) Significant accounting estimates and assumptions
The Group has not made any significant estimates or assumptions that have a significant risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next financial year.
(v) Going concern
The Group recorded a loss of $1,580,537 (2011: $2,298,986) for the year ended 30 June 2012, a cash and cash equivalents balance of
$2,418,214 (2011: $1,375,979) and exploration and other commitments due within one year as described in note 19 to the financial
statements of $1,213,045. The directors reviewed the working capital requirements of the Group for the period of a year from the date of
the directors’ report, and determined that subject to an additional capital raising, the Group will be able to continue to pay its debts as and
when they fall due.
Although the above facts indicate a material uncertainty in relation to the applicability of the going concern concept as it pertains to these
financial statements, the directors are confident of the successful outcome of capital raising activities and therefore the financial report
has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets
and settlement of liabilities in the ordinary course of business.
B27
B27
A50
Notes to the Consolidated Financial Statements continued
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
De Grey Mining Limited
30 JUNE 2012
relevant assets.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
AASB 13: Fair Value Measurement (applies to periods beginning on or after 1 January 2013)
This Standard establishes a single source of guidance under AASB for determining the fair value of assets and liabilities. AASB 13 does
not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value under AASB when
fair value is required or permitted by AASB. Application of this definition may result in different fair values being determined for the
AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the
assumptions made and the qualitative impact of those assumptions on the fair value determined. The Group has not yet determined any
potential impact on the financial statements.
AASB 119: Employee Benefits (applicable for annual reporting periods commencing on or after 1 January 2013)
The main change introduced by this standard is to revise the accounting for defined benefit plans. The amendment removes the options
for accounting for the liability, and requires that the liabilities arising from such plans is recognized in full with actuarial gains and losses
being recognized in other comprehensive income. It also revised the method of calculating the return on plan assets. The definition of
short-term benefits has been revised, meaning some annual
leave entitlements may become long-term in nature with a revised
measurement. Similarly the timing for recognising a provision for termination benefits has been revised, such that provisions can only be
recognised when the offer cannot be withdrawn.
Consequential amendments were also made to other standards via AASB 2011-10.
Interpretation 20: Stripping Costs in the Production Phase of a Surface Mine (applicable for annual reporting periods commencing on
or after 1 January 2013)
the “stripping activity asset”.
This interpretation applies to stripping costs incurred during the production phase of a surface mine. Production stripping costs are to be
capitalised as part of an asset, if an entity can demonstrate that it is probable future economic benefits will be realised, the costs can be
reliably measured and the entity can identify the component of an ore body for which access has been improved. This asset is to be called
The stripping activity asset shall be depreciated or amortised on a systematic basis, over the expected useful life of the identified
component of the ore body that becomes more accessible as a result of the stripping activity. The units of production method shall be
applied unless another method is more appropriate.
(u) Significant accounting judgements, estimates and assumptions
The preparation of these financial statements requires the use of certain critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the financial statements are:
(i) Significant accounting judgements
In the process of applying the Group’s accounting policies, management has made the following judgement:
Exploration expenditure
Exploration and evaluation costs are expensed as they are incurred.
(ii) Significant accounting estimates and assumptions
The Group has not made any significant estimates or assumptions that have a significant risk of resulting in a material adjustment to the
carrying amounts of assets and liabilities within the next financial year.
(v) Going concern
when they fall due.
The Group recorded a loss of $1,580,537 (2011: $2,298,986) for the year ended 30 June 2012, a cash and cash equivalents balance of
$2,418,214 (2011: $1,375,979) and exploration and other commitments due within one year as described in note 19 to the financial
statements of $1,213,045. The directors reviewed the working capital requirements of the Group for the period of a year from the date of
the directors’ report, and determined that subject to an additional capital raising, the Group will be able to continue to pay its debts as and
Although the above facts indicate a material uncertainty in relation to the applicability of the going concern concept as it pertains to these
financial statements, the directors are confident of the successful outcome of capital raising activities and therefore the financial report
has been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets
and settlement of liabilities in the ordinary course of business.
30 JUNE 2012
2.
FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk),
credit risk and liquidity 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.
Risk management is carried out by the full Board of Directors as the Group believes that it is crucial for all Board members to be
involved in this process. The Board, with the assistance of senior management as required, has responsibility for identifying, assessing,
treating and monitoring risks and reporting to the Board on risk management.
(a) Market risk
(i) Foreign exchange risk
The Group has operations internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with
respect to the Argentine Peso.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is
not the entity’s functional currency and net investments in foreign operations. The Group has not formalised a foreign currency risk
management policy, however it monitors its foreign currency expenditure in light of exchange rate movements.
The functional currency of the Group’s foreign subsidiary company is the Argentine Peso. All parent entity and Australian subsidiary
entity balances are in Australian dollars and all Group balances are in either Australian dollars or Argentine Peso, so the Group has only
minimal exposure to foreign currency risk at the reporting date.
(ii) Price risk
Given the current level of operations, the Group is not exposed to price risk.
(iii) Interest rate risk
The Group is exposed to movements in market interest rates on cash and cash equivalents. The Group policy is to monitor the interest
rate yield curve out to six months to ensure a balance is maintained between the liquidity of cash assets and the interest rate return. The
entire balance of cash and cash equivalents for the Group $2,418,214 (2011: $1,375,979) is subject to interest rate risk. The proportional
mix of floating interest rates and fixed rates to a maximum of six months fluctuate during the year depending on current working capital
requirements. The weighted average interest rate received on cash and cash equivalents by the Group was 3.4% (2011: 5.8%).
Sensitivity analysis
At 30 June 2012, if interest rates had changed by -/+ 80 basis points from the weighted average rate for the year with all other variables
held constant, post-tax loss for the Group would have been $15,000 lower/higher (2011: $15,000 lower/higher) as a result of
lower/higher interest income from cash and cash equivalents.
(b) Credit risk
The maximum exposure to credit risk at balance date is the carrying amount (net of provision for impairment) of those assets as disclosed
in the statement of financial position and notes to the financial statements. The only significant concentration of credit risk for the Group
is the cash and cash equivalents held with financial institutions. All material deposits are held with the major Australian banks for which
the Board evaluate credit risk to be minimal.
As the Group does not presently have any trade debtors, lending, significant stock levels or any other credit risk, a formal credit risk
management policy is not maintained.
(c) Liquidity risk
The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable
securities are available to meet the current and future commitments of the Group. 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.
The Board of Directors constantly monitor the state of equity markets in conjunction with the Group’s current and future funding
requirements, with a view to initiating appropriate capital raisings as required.
The financial liabilities of the Group are confined to trade and other payables as disclosed in the Statement of financial position. All trade
and other payables are non-interest bearing and due within 12 months of the reporting date.
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
All financial assets and financial liabilities of the Group at the balance date are recorded at amounts approximating their carrying amount.
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The quoted market
price used for financial assets held by the Group is the current bid price.
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their
short-term nature.
B27
B28
B28
A51
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
30 JUNE 2012
3.
SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make
strategic decisions. For management purposes, the Group has identified two reportable segments being exploration activities undertaken
in Australia and Argentina. These segments include the activities associated with the determination and assessment of the existence of
commercial economic reserves, from the Group’s mineral assets in these geographic locations.
Segment performance is evaluated based on the operating profit and loss and cash flows and is measured in accordance with the Group’s
accounting policies.
Australia
Argentina
2012
$
2011
$
2012
$
2011
$
Consolidated Total
2011
2012
$
$
Segment revenue
1,500,000
102,321
-
-
1,500,000
102,321
Reconciliation of segment revenue to total
revenue before tax:
Interest revenue
Other revenue
Total revenue
Segment results
Reconciliation of segment result to net loss
before tax:
Other corporate and administration
Net loss before tax
64,225
16,459
1,580,684
108,339
1,973
212,633
1,338,838
(665,393)
(1,603,859)
(557,676)
(265,021)
(1,223,069)
(1,315,516)
(1,075,917)
(1,580,537)
(2,298,986)
Segment operating assets
-
-
-
-
-
-
Reconciliation of segment operating assets
to total assets:
Other corporate and administration assets
Total assets
2,563,557
2,563,557
1,584,820
1,584,820
Segment operating liabilties
143,689
124,406
86,309
29,599
229,998
154,005
Reconciliation of segment operating
liabilities to total liabilities:
Other corporate and administration
liabilities
Total liabilities
4.
REVENUE
From continuing operations
Other revenue
Interest
Net gain on sale of tenements
Net gain on disposal of plant and equipment
Foreign exchange gains
Other revenue
47,334
277,332
89,473
243,478
Consolidated
2012
$
64,225
1,500,000
2,993
4,710
8,756
1,580,684
2011
$
108,339
100,000
-
-
4,294
212,633
B29
B29
A52
Notes to the Consolidated Financial Statements continued
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
De Grey Mining Limited
30 JUNE 2012
3.
SEGMENT INFORMATION
Management has determined the operating segments based on the reports reviewed by the Board of Directors that are used to make
strategic decisions. For management purposes, the Group has identified two reportable segments being exploration activities undertaken
in Australia and Argentina. These segments include the activities associated with the determination and assessment of the existence of
commercial economic reserves, from the Group’s mineral assets in these geographic locations.
Segment performance is evaluated based on the operating profit and loss and cash flows and is measured in accordance with the Group’s
accounting policies.
Australia
Argentina
Consolidated Total
2012
$
2011
$
2012
$
2011
$
2012
$
2011
$
Segment revenue
1,500,000
102,321
-
1,500,000
102,321
30 JUNE 2012
5.
EXPENSES
Loss before income tax includes the following specific expenses:
Net loss on disposal of plant and equipment
Rental of premises under operating lease
Contributions to superannuation funds
6.
INCOME TAX
(a) Income tax expense
Current tax
Deferred tax
Adjustments for current tax of prior years
Consolidated
2012
$
-
91,799
66,530
-
-
-
-
2011
$
346
85,681
66,553
-
-
-
-
Segment results
1,338,838
(665,393)
(1,603,859)
(557,676)
(265,021)
(1,223,069)
(b) Numerical reconciliation of income tax expense to prima facie tax
payable
Loss from continuing operations before income tax expense
(1,580,537)
(2,298,986)
Segment operating assets
-
-
-
-
-
Segment operating liabilties
143,689
124,406
86,309
29,599
229,998
154,005
(1,315,516)
(1,075,917)
(1,580,537)
(2,298,986)
Prima facie tax benefit at the Australian tax rate of 30% (2011: 30%)
Tax effect of amounts which are not deductible (taxable) in calculating
taxable income:
Capital raising fees
Sundry items
2,563,557
2,563,557
1,584,820
1,584,820
Tax effect of current year tax losses for which no deferred tax asset has been
recognised
Income tax expense
(c) Unrecognised deferred tax assets
Unrecognised deferred tax assets
Provisions
Capital raising fees
Carry forward tax losses
Gross deferred tax assets
(474,161)
(689,696)
(17,576)
(30,740)
(522,477)
522,477
-
(20,144)
(36,852)
(746,692)
746,692
-
24,788
66,328
11,898,706
11,989,822
44,420
15,900
11,376,229
11,436,549
No deferred tax asset has been recognised for the above balance as at 30 June 2012 as it is not considered probable that future taxable
profits will be available against which it can be utilised.
(d) Tax consolidation
Effective 1 July 2004, for the purposes of income taxation, De Grey Mining Limited and its 100% owned Australian subsidiaries formed
a tax consolidated group. Members of the group have entered into a tax sharing arrangement in order to allocate income tax between the
entities should the head entity default on its tax payment obligations. At the balance date, the possibility of default is remote. The head
entity of the tax consolidated group is De Grey Mining Limited.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate De Grey Mining
Limited for any current tax payable assumed and are compensated by De Grey Mining Limited for any current tax receivable and
deferred tax assets relating to unused tax losses or unused tax credits that are transferred to De Grey Mining Limited under the tax
consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’
financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head entity, which
is issued as soon as practicable after the end of each financial year. The head entity may also require payment of interim funding amounts
to assist with its obligations to pay tax instalments. The funding amounts are recognised as current intercompany receivables or payables.
(e) Franking credits
The company has no franking credits available for use in future years.
B29
B30
B30
A53
Reconciliation of segment revenue to total
revenue before tax:
Interest revenue
Other revenue
Total revenue
Reconciliation of segment result to net loss
before tax:
Other corporate and administration
Net loss before tax
Reconciliation of segment operating assets
Other corporate and administration assets
to total assets:
Total assets
Reconciliation of segment operating
liabilities to total liabilities:
Other corporate and administration
liabilities
Total liabilities
4.
REVENUE
From continuing operations
Other revenue
Interest
Net gain on sale of tenements
Net gain on disposal of plant and equipment
Foreign exchange gains
Other revenue
64,225
16,459
1,580,684
108,339
1,973
212,633
-
-
47,334
277,332
89,473
243,478
Consolidated
2012
$
64,225
1,500,000
2,993
4,710
8,756
1,580,684
2011
$
108,339
100,000
-
-
4,294
212,633
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
30 JUNE 2012
7.
CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
Cash and cash equivalents as shown in the statement of financial position and
the statement of cash flows
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Consolidated
2012
$
2011
$
56,261
2,361,953
166,970
1,209,009
2,418,214
1,375,979
Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of
the Group, and earn interest at the respective short-term deposit rates.
8.
CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
Sundry debtors
25,443
46,099
Sundry debtors are non-interest bearing and have repayment terms between 30 and 90 days.
9.
CURRENT ASSETS – OTHER ASSETS
Prepayments
10. NON-CURRENT ASSETS - PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated depreciation
Net book amount
Plant and equipment
Opening net book amount
Exchange differences
Additions
Disposals
Depreciation charge
Closing net book amount
11. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
40,413
40,168
474,303
(394,816)
79,487
122,574
(304)
7,668
(19,734)
(30,717)
79,487
122,844
133,690
256,534
550,686
(428,112)
122,574
143,333
(125)
19,071
(346)
(39,359)
122,574
74,285
109,714
183,999
Included in trade and other payables above is an amount of $229,998 (2011: $154,006) relating to exploration.
12. CURRENT LIABILITIES – PROVISIONS
Employee benefits
Annual leave
Long service leave
6,442
14,356
20,798
47,511
11,968
59,479
The current provision for employee benefits includes accrued annual leave and long service leave. For long service leave it covers all
unconditional entitlements where employees have completed the required period of service and also those where employees are entitled
to pro-rata payments in certain circumstances. The entire amount of the provision is presented as current, since the Group does not have
an unconditional right to defer settlement for any of these obligations.
B31
B31
A54
Notes to the Consolidated Financial Statements continued
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
De Grey Mining Limited
30 JUNE 2012
7.
CURRENT ASSETS - CASH AND CASH EQUIVALENTS
Cash at bank and in hand
Short-term deposits
the statement of cash flows
Cash and cash equivalents as shown in the statement of financial position and
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Consolidated
2012
$
2011
$
56,261
2,361,953
166,970
1,209,009
2,418,214
1,375,979
Short-term deposits are made for varying periods of between one day and three months depending on the immediate cash requirements of
the Group, and earn interest at the respective short-term deposit rates.
8.
CURRENT ASSETS - TRADE AND OTHER RECEIVABLES
Sundry debtors
25,443
46,099
Sundry debtors are non-interest bearing and have repayment terms between 30 and 90 days.
9.
CURRENT ASSETS – OTHER ASSETS
Prepayments
10. NON-CURRENT ASSETS - PLANT AND EQUIPMENT
Plant and equipment
Cost
Accumulated depreciation
Net book amount
Plant and equipment
Opening net book amount
Exchange differences
Additions
Disposals
Depreciation charge
Closing net book amount
11. CURRENT LIABILITIES - TRADE AND OTHER PAYABLES
Trade payables
Other payables and accruals
12. CURRENT LIABILITIES – PROVISIONS
Employee benefits
Annual leave
Long service leave
40,413
40,168
474,303
(394,816)
79,487
122,574
(304)
7,668
(19,734)
(30,717)
79,487
122,844
133,690
256,534
550,686
(428,112)
122,574
143,333
(125)
19,071
(346)
(39,359)
122,574
74,285
109,714
183,999
6,442
14,356
20,798
47,511
11,968
59,479
Included in trade and other payables above is an amount of $229,998 (2011: $154,006) relating to exploration.
The current provision for employee benefits includes accrued annual leave and long service leave. For long service leave it covers all
unconditional entitlements where employees have completed the required period of service and also those where employees are entitled
to pro-rata payments in certain circumstances. The entire amount of the provision is presented as current, since the Group does not have
an unconditional right to defer settlement for any of these obligations.
30 JUNE 2012
13. CONTRIBUTED EQUITY
(a) Share capital
Ordinary shares fully paid
Total contributed equity
(b) Movements in ordinary share capital
Beginning of the financial year
Issued during the year:
Issued for cash at 1.8 cents per share
Issued for cash at 4 cents per share
Transaction costs
End of the financial year
(c) Movements in options on issue
Beginning of the financial year
Issued/(cancelled or expired) during the year:
Exercisable at 6.5 cents, on or before 30 Apr 2014
Exercisable at 6.5 cents, on or before 30 Jun 2014
Exercisable at 7.5 cents, on or before 30 Jun 2011
Exercisable at 20 cents, on or before 4 Jul 2010
Exercisable at 20 cents, on or before 30 June 2011
Exercisable at 20 cents, on or before 31 Dec 2010
Exercisable at 25 cents, on or before 4 Jul 2011
Exercisable at 25 cents, on or before 30 Jun 2012
End of the financial year
2012
2011
Notes
Number of
shares
$
Number of
shares
$
13(b), 13(d) 396,914,226
42,197,751
258,862,350
39,939,495
396,914,226
42,197,751
258,862,350
39,939,495
258,862,350
39,939,495
225,112,350
38,655,744
138,051,876
-
-
396,914,226
2,484,935
-
(226,679)
42,197,751
-
33,750,000
-
258,862,350
-
1,350,000
(66,249)
39,939,495
Number of options
2011
2012
14,250,000
19,200,000
10,000,000
2,500,000
-
-
-
-
(3,000,000)
(3,250,000)
20,500,000
-
8,000,000
(2,500,000)
(5,200,000)
(3,250,000)
(2,000,000)
-
-
14,250,000
(d) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the number
of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll
each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Neither the Company, nor any of its subsidiaries, holds any shares in the Company at 30 June 2012 (2011: Nil).
B31
B32
B32
A55
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
30 JUNE 2012
13. CONTRIBUTED EQUITY (cont’d)
Consolidated
2012
$
2011
$
(e) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to
provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the 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. The Group’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 2012 and 30 June 2011 are as follows:
Cash and cash equivalents
Trade and other receivables
Other assets
Trade and other payables
Provisions
Working capital position
14. RESERVES AND ACCUMULATED LOSSES
(a) Reserves
Share-based payments reserve
Foreign currency translation reserve
Movements:
Share-based payments reserve
Balance at beginning of year
Option expense
Transfer to Accumulated Losses on expiry of options
Balance at end of year
Foreign currency translation reserve
Balance at beginning of year
Exchange differences on translation of foreign operation
Balance at end of year
(b)Accumulated losses
Balance at beginning of year
Net loss for the year
Transfer from Share-Based Payments Reserve
Balance at end of year
2,418,214
25,443
40,413
(256,534)
(20,798)
2,206,738
422,146
64,491
486,637
313,075
246,146
(137,075)
422,146
43,473
21,018
64,491
1,375,979
46,099
40,168
(183,999)
(59,479)
1,218,768
313,075
43,473
356,548
421,895
176,000
(284,820)
313,075
-
43,473
43,473
(38,954,701)
(1,580,537)
137,075
(40,398,163)
(36,940,535)
(2,298,986)
284,820
(38,954,701)
(c) Nature and purpose of reserves
(i) Share-based payments reserve
The share-based payments reserve is used to recognise the value of equity benefits provided to either employees or directors as
remuneration or to suppliers as payment for products and services.
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve, as
described in note 1(d). The reserve is recognised in profit and loss when the net investment is disposed of.
15. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
B33
B33
A56
Notes to the Consolidated Financial Statements continued
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
De Grey Mining Limited
30 JUNE 2012
Consolidated
The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they may continue to
provide returns for shareholders and benefits for other stakeholders.
Due to the nature of the 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. The Group’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 2012 and 30 June 2011 are as follows:
16. KEY MANAGEMENT PERSONNEL DISCLOSURES
(a) Key management personnel compensation
Short-term benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
2012
$
449,817
28,760
-
-
136,146
614,723
2011
$
681,458
50,630
-
-
61,875
793,963
Detailed remuneration disclosures are provided in the remuneration report on pages B5 to B7.
(b) Equity instrument disclosures relating to key management personnel
(i) Options provided as remuneration and shares issued on exercise of such options
Details of options provided as remuneration and shares issued on the exercise of such options, together with terms and conditions of the
options, can be found in the remuneration report on page B7.
(ii) Option holdings
The numbers of options over ordinary shares in the company held during the financial year by each director of De Grey Mining Limited
and other key management personnel of the Group, including their personally related parties, are set out below:
2012
Balance at
start of the
year
Granted as
compensation Exercised
Other
changes
Balance at
end of the
year
Vested and
exercisable
Directors of De Grey Mining Limited
Darren Townsend
Gary Brabham
Jason Brewer
1,000,000
3,250,000
-
2,000,000
6,000,000
2,000,000
All vested options are exercisable at the end of the year.
-
-
-
(1,000,000)
(3,250,000)
-
2,000,000
6,000,000
2,000,000
1,000,000
3,000,000
2,000,000
Unvested
1,000,000
3,000,000
2,000,000
2011
Balance at
start of the
year
Granted as
compensation Exercised
Other
changes
Balance at
end of the
year
Vested and
exercisable
Unvested
Directors of De Grey Mining Limited
Darren Townsend
Gary Brabham
Jason Brewer
Campbell Ansell
2,000,000
6,500,000
-
-
-
-
-
-
Other key management personnel of the Group
Dennis Wilkins
Glenn Martin
David Hammond
-
-
1,500,000
1,500,000
3,000,000
-
-
-
-
-
-
-
-
(1,000,000)
(3,250,000)
-
-
1,000,000
3,250,000
-
-
-
-
(1,500,000)
1,500,000
3,000,000
-
1,000,000
3,250,000
-
-
750,000
1,500,000
-
-
-
-
-
750,000
1,500,000
-
B34
B34
A57
30 JUNE 2012
13. CONTRIBUTED EQUITY (cont’d)
(e) Capital risk management
Cash and cash equivalents
Trade and other receivables
Other assets
Trade and other payables
Provisions
Working capital position
14. RESERVES AND ACCUMULATED LOSSES
(a) Reserves
Share-based payments reserve
Foreign currency translation reserve
Movements:
Share-based payments reserve
Balance at beginning of year
Option expense
Transfer to Accumulated Losses on expiry of options
Balance at end of year
Foreign currency translation reserve
Balance at beginning of year
Exchange differences on translation of foreign operation
Balance at end of year
(b)Accumulated losses
Balance at beginning of year
Net loss for the year
Transfer from Share-Based Payments Reserve
Balance at end of year
(c) Nature and purpose of reserves
(i) Share-based payments reserve
Consolidated
2012
$
2011
$
2,418,214
25,443
40,413
(256,534)
(20,798)
2,206,738
422,146
64,491
486,637
313,075
246,146
(137,075)
422,146
43,473
21,018
64,491
1,375,979
46,099
40,168
(183,999)
(59,479)
1,218,768
313,075
43,473
356,548
421,895
176,000
(284,820)
313,075
-
43,473
43,473
(38,954,701)
(1,580,537)
137,075
(40,398,163)
(36,940,535)
(2,298,986)
284,820
(38,954,701)
The share-based payments reserve is used to recognise the value of equity benefits provided to either employees or directors as
remuneration or to suppliers as payment for products and services.
(ii) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entities are taken to the foreign currency translation reserve, as
described in note 1(d). The reserve is recognised in profit and loss when the net investment is disposed of.
15. DIVIDENDS
No dividends were paid during the financial year. No recommendation for payment of dividends has been made.
B33
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
30 JUNE 2012
16. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont’d)
(iii) Shareholdings
The numbers of shares in the company held during the financial year by each director of De Grey Mining Limited and other key
management personnel of the Group, including their personally related parties, are set out below. There were no shares granted during
the reporting period as compensation.
2012
Received
during the
year on the
exercise of
options
Balance at
start of the
year
Other changes
during the
year
Balance at end
of the year
Directors of De Grey Mining Limited
Ordinary shares
Darren Townsend
Gary Brabham
Jason Brewer
2011
Directors of De Grey Mining Limited
Ordinary shares
Darren Townsend
Gary Brabham
Jason Brewer
Campbell Ansell
Other key management personnel of the Group
Ordinary shares
Dennis Wilkins
Glenn Martin
David Hammond
342,626
144,645
-
-
-
-
547,814
48,215
733,334
890,440
192,860
733,334
Received
during the
year on the
exercise of
options
Balance at
start of the
year
Other changes
during the
year
Balance at end
of the year
342,626
144,645
-
770,645
-
-
-
-
-
-
-
-
-
-
-
-
-
(770,645)(1)
342,626
144,645
-
-
-
-
-
-
(1) Mr Ansell’s change during the year represents his balance at the date of his retirement as a director of the Company.
(c) Loans to key management personnel
There were no loans to key management personnel during the year.
17. REMUNERATION OF AUDITORS
Consolidated
2012
$
2011
$
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and
non-related audit firms:
(a) Audit services
Butler Settineri (Audit) Pty Ltd - audit and review of financial reports
Total remuneration for audit services
(b) Non-audit services
Butler Settineri – tax compliance services
Total remuneration for other services
28,559
28,559
1,616
1,616
27,051
27,051
-
-
B35
B35
A58
1,150,500
3,767,000
-
4,917,500
(a) Exploration commitments
The Group has certain commitments to meet minimum expenditure requirements on the mineral exploration assets it has an interest in.
Outstanding exploration commitments are as follows:
within one year
later than one year but not later than five years
later than five years
Notes to the Consolidated Financial Statements continued
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
De Grey Mining Limited
The numbers of shares in the company held during the financial year by each director of De Grey Mining Limited and other key
management personnel of the Group, including their personally related parties, are set out below. There were no shares granted during
18. CONTINGENT LIABILITIES
There are no contingent liabilities or contingent assets of the Group at balance date.
19. COMMITMENTS
30 JUNE 2012
Consolidated
2012
$
2011
$
30 JUNE 2012
(iii) Shareholdings
16. KEY MANAGEMENT PERSONNEL DISCLOSURES (cont’d)
the reporting period as compensation.
2012
Directors of De Grey Mining Limited
Directors of De Grey Mining Limited
Ordinary shares
Darren Townsend
Gary Brabham
Jason Brewer
2011
Ordinary shares
Darren Townsend
Gary Brabham
Jason Brewer
Campbell Ansell
Ordinary shares
Dennis Wilkins
Glenn Martin
David Hammond
Received
during the
Balance at
start of the
year
year on the
Other changes
exercise of
during the
Balance at end
options
year
of the year
342,626
144,645
-
547,814
48,215
733,334
890,440
192,860
733,334
Received
during the
Balance at
start of the
year
year on the
Other changes
exercise of
during the
Balance at end
options
year
of the year
342,626
144,645
770,645
-
-
-
-
(770,645)(1)
-
-
-
-
-
342,626
144,645
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Mr Ansell’s change during the year represents his balance at the date of his retirement as a director of the Company.
(c) Loans to key management personnel
There were no loans to key management personnel during the year.
17. REMUNERATION OF AUDITORS
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related practices and
non-related audit firms:
(a) Audit services
Butler Settineri (Audit) Pty Ltd - audit and review of financial reports
Total remuneration for audit services
(b) Non-audit services
Butler Settineri – tax compliance services
Total remuneration for other services
Consolidated
2012
$
2011
$
28,559
28,559
1,616
1,616
27,051
27,051
-
-
Other key management personnel of the Group
(c) Capital commitments
The Group did not have any capital commitments as at the current or prior balance date.
(b) Lease commitments: Group as lessee
Operating leases (non-cancellable):
Minimum lease payments
within one year
later than one year but not later than five years
later than five years
Aggregate lease expenditure contracted for at reporting date but not
recognised as liabilities
62,545
-
-
62,545
75,054
62,545
-
137,599
The property lease is a non-cancellable lease with a two-year term, with rent payable monthly in advance. The lease allows for subletting
of all lease areas.
20. RELATED PARTY TRANSACTIONS
(a) Parent entity
The ultimate parent entity within the Group is De Grey Mining Limited.
(b) Subsidiaries
Interests in subsidiaries are set out in note 21.
(c) Key management personnel
Disclosures relating to key management personnel are set out in note 16.
(d) Loans to related parties
De Grey Mining Limited has provided unsecured loans to its wholly owned Argentinian subsidiary, De Grey Argentina SA, totalling
$2,688,231 (2011: $774,750). Interest is charged on these loans at the NAB standard lending rate plus 1%.
De Grey Mining Limited has provided unsecured, interest free loans to each of its wholly owned Australian subsidiaries totalling
$13,141,993 (2011: $13,089,999) at 30 June 2012.
An impairment assessment is undertaken each financial year by examining the financial position of the subsidiaries and the market in
which the subsidiaries operate to determine whether there is objective evidence that the loans are impaired. When such objective
evidence exists, the company recognises an allowance for the impairment loss.
B35
B36
B36
A59
946,159
1,593,772
-
2,539,931
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
30 JUNE 2012
21. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(b):
Name
Country of Incorporation
Class of Shares
Equity Holding*
Beyondie Gold Pty Ltd
Domain Mining Pty Ltd
Winterwhite Resources Pty Ltd
Last Crusade Pty Ltd
De Grey Argentina SA
Australia
Australia
Australia
Australia
Argentina
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
*The proportion of ownership interest is equal to the proportion of voting power held.
22.
INTERESTS IN JOINT VENTURES
2012
%
100
100
100
100
100
2011
%
100
100
100
100
100
(a) Wallareenya Iron Prospect
In September 2005 the company entered into an agreement to farm out 100% of the iron ore rights in tenements hosting the Wallareenya
Prospect, located 50 km south east of Port Hedland, to Atlas Iron Limited, an Australian publicly listed company. In consideration De
Grey received an initial 100,000 shares in Atlas on signing of the agreement to evaluate the prospect, and a further 1,000,000 shares
when Atlas exercised their option. The Atlas shares received as consideration were subsequently sold by De Grey during prior financial
periods. De Grey has retained a 2% gross sales revenue royalty and retains a one off right to claw back 30% equity for two times Atlas’
exploration spend across the prospect if Atlas defines a resource exceeding 3 million tonnes. De Grey’s rights under the agreement have
a carrying value of nil.
(b) Tabba Tabba Shear
In November 2005 the company entered into an agreement with Attgold Pty Ltd to acquire an extra 16 kilometres of strike along the
Tabba Tabba Shear in the company’s Turner River Province, 60 kms south of Port Hedland.
The agreement with Attgold (tenement ELA45/2364) required a payment of $50,000 to Attgold on signing of the option, after which De
Grey had 18 months to decide if they wish to acquire the tenement. In February 2007 De Grey acquired 100% of the tenement by
exercising the option and issuing 500,000 fully paid ordinary shares to Attgold and granting Attgold a royalty of $1/t up to a maximum of
$750,000. The agreement relates to gold, base and precious metals, and the joint venture has a carrying value of nil.
(c) Mount Dove Iron Rights
In June 2008 the company entered into an option agreement to sell the iron ore rights over the Mt Dove Project, being Exploration
Licence 47/891 located 70 km south east of Port Hedland, to Atlas Iron Limited. In April 2012 De Grey sold its royalty over the first 2
million tonnes of iron ore to be produced from Mt Dove to Atlas Iron for cash payment of $1,000,000, that payment being received in
April 2012.
At inception, De Grey received an initial consideration of 156,694 shares in Atlas (being $350,000 at the volume weighted average price
for the 5 days prior to 10 April 2008) on signing of the agreement, and was to receive a payment of $650,000 in cash or 325,000 Atlas
shares (at De Grey’s election) no later than 12 months from the date of the formal agreement. At Atlas’ request the option period was
extended by 30 days to 17 July 2009. On 16 July 2009 Atlas notified De Grey of its intention to exercise the option and De Grey elected
to receive the purchase payment as cash. De Grey subsequently received payment on 27 July 2009. De Grey retains a 1% gross sales
revenue royalty over tonnes produced from Mt Dove in excess of 2 million tonnes.
(d) Turner River Gold Farm-out
During May 2011, De Grey entered into an agreement with Lansdowne Resources Pty Ltd under which Lansdowne may earn up to 75%
interest in tenements in the west of the Turner River Project containing the Wingina Well gold resource and the T1, Mt Berghaus,
Brierly, Amanda and Edkins targets. Lansdowne paid $99,000 at execution and may earn 75% interest in the project by sole funding
exploration expenditure of $2 million over 3 years. Lansdowne must spend $250,000 in the first 6 months and $500,000 (cumulative) in
the first 12 months to keep the agreement afoot. Upon Lansdowne earning its 75% interest a 75:25 joint venture is formed and
Lansdowne continues to sole fund expenditures to Decision to Mine. Upon a Decision to Mine, a mining joint venture area is declared
and further joint venture expenditures are funded by De Grey and Lansdowne in proportion to their JV interests. De Grey’s free carried
interest continues in respect of exploration expenditures over project areas outside of the mining joint venture area. Should no decision to
mine occur within 4.5 years of commencement, Lansdowne can maintain its interest for up to a further 3 years by paying De Grey
$250,000 per annum and continuing to sole fund expenditures sufficient to meet statutory expenditure requirements. Should Lansdowne
elect not to maintain its interest, De Grey can elect to sole fund further expenditures and Lansdowne’s interest dilutes under a 2x
accelerated formula.
B37
B37
A60
Notes to the Consolidated Financial Statements continued
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
De Grey Mining Limited
30 JUNE 2012
21. SUBSIDIARIES
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the
accounting policy described in note 1(b):
Name
Country of Incorporation
Class of Shares
Equity Holding*
2012
2011
%
100
100
100
100
100
%
100
100
100
100
100
Beyondie Gold Pty Ltd
Domain Mining Pty Ltd
Winterwhite Resources Pty Ltd
Last Crusade Pty Ltd
De Grey Argentina SA
Australia
Australia
Australia
Australia
Argentina
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
*The proportion of ownership interest is equal to the proportion of voting power held.
22.
INTERESTS IN JOINT VENTURES
(a) Wallareenya Iron Prospect
In September 2005 the company entered into an agreement to farm out 100% of the iron ore rights in tenements hosting the Wallareenya
Prospect, located 50 km south east of Port Hedland, to Atlas Iron Limited, an Australian publicly listed company. In consideration De
Grey received an initial 100,000 shares in Atlas on signing of the agreement to evaluate the prospect, and a further 1,000,000 shares
when Atlas exercised their option. The Atlas shares received as consideration were subsequently sold by De Grey during prior financial
periods. De Grey has retained a 2% gross sales revenue royalty and retains a one off right to claw back 30% equity for two times Atlas’
exploration spend across the prospect if Atlas defines a resource exceeding 3 million tonnes. De Grey’s rights under the agreement have
a carrying value of nil.
(b) Tabba Tabba Shear
In November 2005 the company entered into an agreement with Attgold Pty Ltd to acquire an extra 16 kilometres of strike along the
Tabba Tabba Shear in the company’s Turner River Province, 60 kms south of Port Hedland.
The agreement with Attgold (tenement ELA45/2364) required a payment of $50,000 to Attgold on signing of the option, after which De
Grey had 18 months to decide if they wish to acquire the tenement. In February 2007 De Grey acquired 100% of the tenement by
exercising the option and issuing 500,000 fully paid ordinary shares to Attgold and granting Attgold a royalty of $1/t up to a maximum of
$750,000. The agreement relates to gold, base and precious metals, and the joint venture has a carrying value of nil.
(c) Mount Dove Iron Rights
April 2012.
In June 2008 the company entered into an option agreement to sell the iron ore rights over the Mt Dove Project, being Exploration
Licence 47/891 located 70 km south east of Port Hedland, to Atlas Iron Limited. In April 2012 De Grey sold its royalty over the first 2
million tonnes of iron ore to be produced from Mt Dove to Atlas Iron for cash payment of $1,000,000, that payment being received in
At inception, De Grey received an initial consideration of 156,694 shares in Atlas (being $350,000 at the volume weighted average price
for the 5 days prior to 10 April 2008) on signing of the agreement, and was to receive a payment of $650,000 in cash or 325,000 Atlas
shares (at De Grey’s election) no later than 12 months from the date of the formal agreement. At Atlas’ request the option period was
extended by 30 days to 17 July 2009. On 16 July 2009 Atlas notified De Grey of its intention to exercise the option and De Grey elected
to receive the purchase payment as cash. De Grey subsequently received payment on 27 July 2009. De Grey retains a 1% gross sales
revenue royalty over tonnes produced from Mt Dove in excess of 2 million tonnes.
(d) Turner River Gold Farm-out
During May 2011, De Grey entered into an agreement with Lansdowne Resources Pty Ltd under which Lansdowne may earn up to 75%
interest in tenements in the west of the Turner River Project containing the Wingina Well gold resource and the T1, Mt Berghaus,
Brierly, Amanda and Edkins targets. Lansdowne paid $99,000 at execution and may earn 75% interest in the project by sole funding
exploration expenditure of $2 million over 3 years. Lansdowne must spend $250,000 in the first 6 months and $500,000 (cumulative) in
the first 12 months to keep the agreement afoot. Upon Lansdowne earning its 75% interest a 75:25 joint venture is formed and
Lansdowne continues to sole fund expenditures to Decision to Mine. Upon a Decision to Mine, a mining joint venture area is declared
and further joint venture expenditures are funded by De Grey and Lansdowne in proportion to their JV interests. De Grey’s free carried
interest continues in respect of exploration expenditures over project areas outside of the mining joint venture area. Should no decision to
mine occur within 4.5 years of commencement, Lansdowne can maintain its interest for up to a further 3 years by paying De Grey
$250,000 per annum and continuing to sole fund expenditures sufficient to meet statutory expenditure requirements. Should Lansdowne
elect not to maintain its interest, De Grey can elect to sole fund further expenditures and Lansdowne’s interest dilutes under a 2x
accelerated formula.
30 JUNE 2012
22.
INTERESTS IN JOINT VENTURES (cont’d)
De Grey has also granted Lansdowne an option to purchase a 75% interest in the Wingina Well gold resource in return for $1,000 paid
upon signing and the issue of 2 million 20 cent shares in Lansdowne upon its listing on ASX. The option period commences immediately
but the option becomes exercisable only upon Lansdowne earnings its interest in the gold joint venture. The option exercise price
comprises $4.1 million plus, if the gold price at the exercise date exceeds $1,500 per ounce, an additional payment of $15 for each $100
by which the gold price exceeds A$1,500, payable in respect of each ore reserve ounce deriving from the Wingina Well resource as
presently delineated. The option expires 6 months after a decision to mine under the gold joint venture, 4.5 years after the
commencement date or upon termination of the gold farm-out agreement, whichever occurs earliest.
The carrying value of De Grey’s interest in the project is nil.
(e) Turner River Base Metals Farm-out
During May 2011, De Grey entered into an agreement with Lansdowne Resources Pty Ltd under which Lansdowne may earn up to 75%
interest in tenements in the east of the Turner River Project, site of high grade Pb-Zn-Ag VMS-style mineralisation discovered by De
Grey. Lansdowne may earn a 75% interest in the project by sole funding exploration expenditure of $1.5 million over 3 years.
Lansdowne must spend $175,000 in the first 6 months and $350,000 (cumulative) in the first 12 months to keep the agreement afoot.
Upon Lansdowne earning its 75% interest a 75:25 joint venture is formed and Lansdowne continues to sole fund expenditures to
Decision to Mine. Upon a Decision to Mine, a mining joint venture area is declared and further joint venture expenditures are funded by
De Grey and Lansdowne in proportion to their JV interests. De Grey’s free carried interest continues in respect of exploration
expenditures over project areas outside of the mining joint venture area. Until such time as a decision to mine is made, Lansdowne may
maintain its interest by continuing to sole fund expenditures sufficient to meet statutory expenditure requirements.
The carrying value of De Grey’s interest in the project is nil.
(f) Minera Sudamericana Option Agreement
In July 2010 De Grey, through the wholly owned subsidiary De Grey Argentina SA (“DGA”), entered into a binding letter of intent for
an option-to-purchase agreement with Minera Sudamericana SA (“MSA”) over nine project areas in Argentina. The option agreement
comprises two stages, an exploration stage and a project acquisition stage:
By paying US$15,000 per quarter, DGA retains exclusive rights to conduct exploration, excluding drilling, on any or all of the MSA
projects (a project being one or more contiguous mineral tenements) for up to 3 years from 1 April 2010. DGA must complete
payments totalling US$60,000 prior to terminating the agreement. DGA is then free to exclude any one or more of the projects from
the agreement or to withdraw from the agreement in entirety.
At any time until 31 March 2013, DGA may elect to enter into an option-to purchase agreement over any one or more of the projects.
The purchase of any one project requires DGA to make a series of escalating purchase payments over 3 years from the date that the
purchase agreement is entered into, those payments to total not more than US$2 million in respect of any one project. In the event
that DGA completes the purchase of any project, MSA retains a 1.5% net smelter royalty, 50% of which may be purchased by DGA
for US$1.5 million at the time of a decision to mine.
(g) Sierra Morena Purchase Option Agreement
In April 2012 2012 De Grey, through the wholly owned subsidiary De Grey Argentina SA (“DGA”), exercised its rights under the
Minera Sudamericana (“MSA”)Option Agreement to enter into an option-to-purchase agreement over the Sierra Morena Project
comprising tenements MS401.670/MSD/07 and MS401.671/MSD/07 located in Santa Cruz Province, Argentina. The purchase
agreement requires DGA to make a series of escalating payments over 3 years from the commencement date on 1 April 2012, those
payments to total US$2 million. In the event that DGA completes the purchase of Sierra Morena, MSA retains a 1.5% net smelter
royalty, 50% of which may be purchased by DGA for US$1.5 million at the time of a decision to mine. DGA may withdraw from the
purchase agreement at any time in which event it would retain no further interest in the project.
(h) Boleadora Project Farm-in
During July 2010 De Grey, through the wholly owned subsidiary De Grey Argentina SA (“DGA”), executed a binding letter of intent
with Minera Kingsgate Argentina SA, a wholly owned subsidiary of Kingsgate Consolidated Limited, over Kingsgate’s Boleadora
project. DGA may earn a 60% interest in the project by sole funding US$200,000 exploration expenditure over not more than 3 years.
Upon earning 60% interest, DGA may elect to form a joint venture with Kingsgate and the two parties contribute proportionally to
further exploration expenditure or, increase its interest to 80% by sole funding a further US$1 million expenditure over a further period
of two years at which point an 80:20 joint venture will be formed. DGA can withdraw at any time provided that it must incur minimum
expenditure of US$50,000 per year for so long as it is sole funding exploration.
(i) Pachi Project Option Agreement
In July 2011 De Grey, through the wholly owned subsidiary De Grey Argentina SA, executed a binding letter of intent with an Argentine
individual to enter into an option-to-purchase agreement over the Pachi Project, located in Santa Cruz Province, Argentina. The option
agreement provides for annual option fee payments of US$24,200 on commencement, US$60,500 second year and US$121,000 in the
third year. DGA is to undertake at least 500 metres of drilling in the first year option period provided all required permits are achieved.
DGA may elect to purchase 100% interest in the Project by paying US$1,210,000 purchase price no more than 3 years from
commencement. An additional US$1,210,000 is payable if a resource over 250,000 ounces of gold equivalent is defined and a decision to
mine is made within 5 years of commencement, and the vendor retains a 1% net smelter royalty. DGA may terminate the agreement at
any time after payment of the first annual option fee.
B37
B38
B38
A61
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
30 JUNE 2012
23. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
Following shareholder approval at the General Meeting of the Company on 3 September 2012, the Company raised $150,000 from the
issue of 7,142,858 ordinary shares to the Executive Chairman, Mr Peter Batten. Mr Batten was also granted, for nil consideration, a total
of 19,500,000 unlisted options with exercise prices ranging from 2.2 to 2.6 cents, and expiry dates from 3 September 2014 to 3
September 2015.
No other matter or circumstance has arisen since 30 June 2012, which has significantly affected, or may significantly affect the
operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years.
24. STATEMENT OF CASH FLOWS
Reconciliation of net loss after income tax to net cash outflow from
operating activities
Net loss for the year
Non-Cash Items
Depreciation of non-current assets
Net (gain)/loss on disposal of plant and equipment
Option expense
Change in operating assets and liabilities
Decrease in trade and other receivables
(Increase) in other assets
Increase/(decrease) in trade and other payables
(Decrease) in employee entitlement provisions
Net cash outflow from operating activities
25. LOSS PER SHARE
(a) Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners of the company used in calculating basic and
diluted loss per share
(b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share
Consolidated
2012
$
2011
$
(1,580,537)
(2,298,986)
30,717
(2,993)
246,146
20,656
(245)
72,535
(38,681)
(1,252,402)
39,359
346
176,000
29,043
(16,053)
(59,960)
(191,107)
(2,321,358)
(1,580,537)
(2,298,986)
Number of shares
Number of shares
303,300,415
250,447,966
(c) Information on the classification of options
As the Group has made a loss for the year ended 30 June 2012, all options on issue are considered antidilutive and have not been
included in the calculation of diluted earnings per share. These options could potentially dilute basic earnings per share in the future.
B39
B39
A62
Notes to the Consolidated Financial Statements continued
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
De Grey Mining Limited
30 JUNE 2012
September 2015.
23. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
Following shareholder approval at the General Meeting of the Company on 3 September 2012, the Company raised $150,000 from the
issue of 7,142,858 ordinary shares to the Executive Chairman, Mr Peter Batten. Mr Batten was also granted, for nil consideration, a total
of 19,500,000 unlisted options with exercise prices ranging from 2.2 to 2.6 cents, and expiry dates from 3 September 2014 to 3
No other matter or circumstance has arisen since 30 June 2012, which has significantly affected, or may significantly affect the
operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years.
24. STATEMENT OF CASH FLOWS
Reconciliation of net loss after income tax to net cash outflow from
operating activities
Net loss for the year
Non-Cash Items
Depreciation of non-current assets
Net (gain)/loss on disposal of plant and equipment
Option expense
Change in operating assets and liabilities
Decrease in trade and other receivables
(Increase) in other assets
Increase/(decrease) in trade and other payables
(Decrease) in employee entitlement provisions
Net cash outflow from operating activities
25. LOSS PER SHARE
(a) Reconciliation of earnings used in calculating loss per share
Loss attributable to the owners of the company used in calculating basic and
diluted loss per share
(b) Weighted average number of shares used as the denominator
Weighted average number of ordinary shares used as the denominator in
calculating basic and diluted loss per share
Consolidated
2012
$
2011
$
(1,580,537)
(2,298,986)
30,717
(2,993)
246,146
20,656
(245)
72,535
(38,681)
(1,252,402)
39,359
346
176,000
29,043
(16,053)
(59,960)
(191,107)
(2,321,358)
(1,580,537)
(2,298,986)
Number of shares
Number of shares
303,300,415
250,447,966
(c) Information on the classification of options
As the Group has made a loss for the year ended 30 June 2012, all options on issue are considered antidilutive and have not been
included in the calculation of diluted earnings per share. These options could potentially dilute basic earnings per share in the future.
30 JUNE 2012
26. SHARE-BASED PAYMENTS
Employees and contractors option plan
The Group provides benefits to employees (including directors) and consultants of the Group in the form of share-based payment
transactions, whereby employees or consultants render services in exchange for options (for nil consideration) to acquire ordinary shares.
The exercise price of the options granted range from 6.5 cents to 25 cents per option. All options granted to employees in previous
financial years have vested. Of options granted to employees during the current financial year, half vested on grant date, with the
remaining half to vest on 21 October 2012. The options have expiry dates ranging from 30 April 2014 to 30 June 2014.
The options are granted to employees to align their interests with that of the shareholders of the company.
Supplier options
Suppliers have been granted options as part consideration for tenement acquisitions. The exercise price of the options granted is 6.5 cents
with an expiry date of 30 June 2014.
Options granted carry no dividend or voting rights. When exercisable, each option is convertible into one ordinary share in the capital of
the company with full dividend and voting rights.
Set out below are summaries of granted options:
Grant date
Expiry date
Consolidated - 2012
10 Jul 2007
1 Dec 2009
18 May 2011
14 Jun 2011
21 Oct 2011
4 Jul 2011
30 Jun 2012
30 Jun 2014
30 Jun 2014
30 Apr 2014
Consolidated - 2011
10 Jul 2007
10 Jul 2007
19 Jul 2007
25 Jun 2009
1 Dec 2009
1 Dec 2009
17 Dec 2009
18 May 2011
14 Jun 2011
4 Jul 2010
4 Jul 2011
4 Jul 2010
30 Jun 2011
30 Jun 2011
30 Jun 2012
31 Dec 2010
30 Jun 2014
30 Jun 2014
Exercise price
Cents
Balance at start
of the year
Number
Granted during
the year
Number
Cancelled or
expired during
the year
Number
Balance at end
of the year
Number
Vested and
exercisable at
end of the year
Number
25
25
6.5
6.5
6.5
20
25
20
7.5
20
25
20
6.5
6.5
3,000,000
3,250,000
8,000,000
2,500,000
-
16,750,000
3,000,000
3,000,000
2,200,000
2,500,000
3,250,000
3,250,000
2,000,000
-
-
19,200,000
-
-
-
-
10,000,000
10,000,000
-
-
-
-
-
-
-
8,000,000
2,500,000
10,500,000
(3,000,000)
(3,250,000)
-
-
-
(6,250,000)
(3,000,000)
-
(2,200,000)
(2,500,000)
(3,250,000)
-
(2,000,000)
-
-
(12,950,000)
-
-
8,000,000
2,500,000
10,000,000
20,500,000
-
3,000,000
-
-
-
3,250,000
-
8,000,000
2,500,000
16,750,000
-
-
8,000,000
2,500,000
5,000,000
15,500,000
-
3,000,000
-
-
-
3,250,000
-
4,000,000
2,500,000
12,750,000
The weighted average remaining contractual life of share options outstanding at the end of the financial year was 1.9 years (2011: 2.1
years), and the exercise price is 6.5 cents.
Expenses arising from share-based payment transactions
The weighted average fair value of the options granted during the year was 1.6 cents (2011: 2.7 cents). The price was calculated by using
the Black-Scholes European Option Pricing Model applying the following inputs:
2012
2011
Weighted average exercise price (cents)
Weighted average life of the option (years)
Weighted average underlying share price (cents)
Expected share price volatility
Weighted average risk free interest rate
Historical volatility has been used as the basis for determining expected share price volatility as it assumed that this is indicative of future
trends, which may not eventuate.
6.5
2.5
2.6
140.54%
4.75%
6.5
3.1
3.8
136.2%
4.75%
B39
B40
B40
A63
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
30 JUNE 2012
Consolidated
2012
$
2011
$
26. SHARE-BASED PAYMENTS (cont’d)
No assumptions have been made relating to dividends or expected early exercise of the options and there are no other inputs to the model.
The life of the options is based on historical exercise patterns, which may not eventuate in the future.
Total expenses arising from equity settled share-based payment transactions recognised during the period were as follows:
Options issued to employees and contractors
Options issued to a supplier
27. PARENT ENTITY INFORMATION
246,146
-
246,146
110,000
66,000
176,000
Parent Entity
2012
$
2011
$
The following information relates to the parent entity, De Grey Mining Limited, at 30 June 2012. The information presented here has
been prepared using accounting policies consistent with those presented in Note 1.
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Contributed equity
Share-based payments reserve
Accumulated losses
Total equity
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
2,447,273
71,900
2,519,173
191,021
191,021
42,197,751
422,146
(40,291,745)
2,328,152
(1,475,124)
-
(1,475,124)
1,391,361
121,393
1,512,754
213,880
213,880
39,939,495
313,075
(38,953,696)
1,298,874
(2,277,844)
-
(2,277,844)
As detailed in note 19, there are contingent liabilities in respect to tenement acquisition agreements that the parent entity has co-signed
with a subsidiary entity.
B41
B41
A64
Notes to the Consolidated Financial Statements continued
De Grey Mining Limited
Directors' Declaration
De Grey Mining Limited
In the directors’ opinion:
(a)
No assumptions have been made relating to dividends or expected early exercise of the options and there are no other inputs to the model.
(ii)
the financial statements and notes set out on pages B15 to B41 are in accordance with the Corporations Act 2001, including:
(i)
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
giving a true and fair view of the company’s and the consolidated entity’s financial position as at 30 June 2012 and of
their performance for the financial year ended on that date;
The life of the options is based on historical exercise patterns, which may not eventuate in the future.
Total expenses arising from equity settled share-based payment transactions recognised during the period were as follows:
30 JUNE 2012
26. SHARE-BASED PAYMENTS (cont’d)
Options issued to employees and contractors
Options issued to a supplier
27. PARENT ENTITY INFORMATION
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Contributed equity
Share-based payments reserve
Accumulated losses
Total equity
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
with a subsidiary entity.
Consolidated
2012
$
2011
$
246,146
-
246,146
110,000
66,000
176,000
Parent Entity
2012
$
2011
$
2,447,273
71,900
2,519,173
191,021
191,021
42,197,751
422,146
(40,291,745)
2,328,152
1,391,361
121,393
1,512,754
213,880
213,880
39,939,495
313,075
(38,953,696)
1,298,874
(1,475,124)
(2,277,844)
-
-
(1,475,124)
(2,277,844)
As detailed in note 19, there are contingent liabilities in respect to tenement acquisition agreements that the parent entity has co-signed
(b)
(c)
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable;
and
a statement that the attached financial statements are in compliance with International Financial Reporting Standards has been
included in the notes to the financial statements.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
The following information relates to the parent entity, De Grey Mining Limited, at 30 June 2012. The information presented here has
been prepared using accounting policies consistent with those presented in Note 1.
Peter Batten
Executive Chairman
Perth, 21 September 2012
B41
B42
B42
A65
A66
A67
De Grey Mining Limited
ASX Additional Information
Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information
is current as at 20 September 2012.
(a) Distribution of equity securities
Analysis of numbers of equity security holders by size of holding:
1
1,001
5,001
10,001
100,001
-
-
-
-
1,000
5,000
10,000
100,000
and over
The number of shareholders holding less than a marketable parcel of shares are:
(b) Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest holders of quoted ordinary shares are:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Mineralogy Pty Ltd
Karari Australia Pty Ltd
Seaspin Pty Ltd
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