DGO Gold Limited Annual Report 2014

FY2014 Annual Report · DGO Gold Limited

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Drummond Gold Limited
ABN 96 124 562 849

Annual Report for the financial year ended 30 June 2014

For personal use only

TABLE OF CONTENTS

Corporate Governance Statement
Directors’ report
Auditor’s independence declaration
Independent auditors’ report
Directors’ declaration
Consolidated statement of profit and loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Unaudited additional ASX and other information as at 10 September 2014
Corporate Directory

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Corporate Governance Statement
The Board of directors of Drummond Gold Limited (“the Company”) is responsible for establishing the corporate
governance framework of the Group having regard to the ASX Corporate Governance Council (“CGC”) Second Edition
of Corporate Governance Principles and Recommendations and published guidelines relating to the eight core
corporate governance principles (the Principles) and recommendations. The Board guides and monitors the business
and affairs of the Company on behalf of the shareholders.

The following table summarises the Company’s compliance with the CGC recommendations and states whether the
Company has complied with each recommendation. Where the Company considered it was not appropriate to comply
with a particular recommendation the reasons are set out in the notes relating to the relevant Principle referred to in the
table.

Recommendation

Comply
Yes/No

Refer
Page
No.

Principle 1 – Lay solid foundations for management and oversight
1.1: Companies should establish the functions reserved to the board and those delegated to senior
executives and disclose those functions.
1.2: Companies should disclose the process for evaluating the performance of senior executives.
1.3: Companies should provide the information including departure from recommendations and
whether performance appraisals took place and in accordance with the process disclosed.
Principle 2 – Structure the board to add value
2.1: A majority of the board should be independent directors.
2.2: The chair should be an independent director.
2.3: The roles of chair and chief executive officer should not be exercised by the same individual.
2.4: The board should establish a nomination committee.
2.5: Companies should disclose the process for evaluating the performance of the board, its
committees and individual directors
2.6: Companies should provide the information indicated in the Guide to reporting on Principle 2.
Principle 3 – Promote ethical and responsible decision-making
3.1: Companies should establish a code of conduct and disclose the code or
a summary of the code as to:
•
•

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; and
the responsibility and accountability of individuals for reporting and investigating reports of
unethical practices.

•

3.2: 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 measureable
objectives for achieving gender diversity and for the board to asses annually both the objectives and
progress in achieving them.
3.3: Companies should disclose in each annual report the measureable objectives for achieving
gender diversity set by the board in accordance with the diversity policy and progress towards
achieving them.

3.4 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.
3.5 Companies should provide an explanation of any departures from Recommendations 3.1 to 3.5
in the corporate governance statement in the annual report.
Principle 4 – Safeguard integrity in financial reporting
4.1: The board should establish an audit committee.
4.2: 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.

4.3: The audit committee should have a formal charter
4.4: Companies should provide the information indicated in the Guide to reporting on Principle 4.
Principle 5 – Make timely and balanced disclosure
5.1: Companies should establish written policies and procedures 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.

5.2: Companies should provide the information indicated in the Guide to reporting on Principle 5.
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.

Yes

No
No
No
Yes

Yes

Yes
No
No
No

Yes
Yes

Yes

5
5
5
5

7
7

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Recommendation

6.2: Companies should provide the information indicated in the Guide to reporting on Principle 6.
Principle 7 – Recognise and manage risk
7.1: Companies should establish policies for the oversight and management of material business
risks and disclose a summary of those policies.
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: 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.
7.4: 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.
8.2: The remuneration committee should be structured so that it:
•
•
•
8.3: The Company should clearly distinguish the structure of Non-Executive directors’ remuneration
from that of executive directors and senior executives.
8.4: Companies should provide the information indicated in the Guide to reporting on Principle 8.

consists of a majority of independent directors
is chaired by an independent chair, and
have at least three members.

Comply
Yes/No

Yes

No
No
Yes
Yes

Yes

Refer
Page
No.
7

8
8
8
8

Corporate Governance Documents including the Corporate Governance Statement, Board Charter, Audit Committee
Charter, and Remuneration and Nomination Committee Charter, Risk Management Policy, Communications Policy,
Code of Conduct Policy and Ethics Policy are publicly available and can be found in the Corporate Governance section
of the Company’s website at www.drummondgold.com.au

Principle 1 – Lay solid foundations for management and oversight

The Board Charter clearly defines the respective roles and responsibilities of the Board and establishes functions that
are reserved to the Board and functions delegated to senior executives. The responsibilities for the operation and
administration of the Company have been delegated by the Board to the Chairman and the executive management
team.

The Board has a number of responsibilities including input into the development of the Company’s corporate strategy,
understanding and monitoring the budget and identifying areas of material business risk and ensuring arrangements are
in place to adequately manage those risks. The Company has established functions reserved to the Board and matters
delegated to senior executives which are outlined in the Board Charter and other corporate governance documents
which are publicly available on the Company’s website.

Even though the Board is responsible for guiding and monitoring the Group, the Audit Committee, and Remuneration
and Nomination Committee provides focus on particular areas of responsibility and reports to the Board. Overall risk
management roles and responsibilities have been identified in the Risk Management Policy which is publicly available
on the Company’s website.

The existing directors have been provided with a formal letter of appointment that sets out the terms and conditions of
their appointment, any special duties attaching to their position, details of their duties, functions and responsibilities,
company policies on dealing with conflicts of interest, trading securities, access to professional advice and relevant
company records. The directors are required to adhere to the Code of Conduct Policy and Ethics Policy which has
been made publicly available on the Company’s web site. All existing directors have entered into a director’s disclosure
deed with the Company that requires directors to provide the Company with the information required to be disclosed in
relation to the trading of securities.

There are procedures in place for directors to seek independent professional advice at the expense of the Company.
Individual directors have the right to seek independent legal and other professional advice at the Company’s expens e
concerning any aspect of the Company’s operations or undertakings to fulfill their duties and responsibilities as
directors. The engagement of an outside adviser by individual director is subject to the prior approval of the Board,
which will not be unreasonably withheld.

The directors are subject to re-election by shareholders. All directors, apart from the Executive Chairman, are subject to
re-election by rotation within every two years. The Company’s Constitution provides that one-third of the directors retire
by rotation each Annual General Meeting (AGM). Those directors who are retiring may submit themselves for re-
election by shareholders, including any director appointed to fill a casual vacancy or recruited since the date of the last
AGM.

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The Remuneration and Nomination Committee has been established to review the performance of senior management
against a formalised set of qualitative performance criteria. Formal performance evaluations are completed from time to
time with the next performance evaluation due on the December quarter.. The Remuneration and Nomination
Committee reports its findings from the performance evaluation to the Board. The performance criteria for evaluating
senior management are aligned with objectives of the Company. The Remuneration and Nomination Committee
conducts performance evaluations of the Executive Chairman, Non Executive Directors and the Company Secretary
against the formalised performance criteria.

Principle 2 – Structure the Board to add value

The skills, expertise and experience relevant to each position of director in office at the date of the Annual Report are
included in the Directors’ Report. The directors are considered to be independent when they are independent of
management and free from any business or relationship that could interfere with or reasonably interfere with their
independent judgement.

In the context of director independence, “Materiality” is considered from both the consolidated entity and individual
director perspective. The determination of materiality requires consideration of both quantitative and qualitative
elements. An item is presumed immaterial if it is equal to or less than 5% of the appropriate base amount. It is
presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 5% of the
appropriate base amount. Qualitative factors considered in determining “Materiality” include previous employment by
the Company, shares held in the Company and any previous contractual and other relationships that the director has
held with the Company.

In accordance with the concept of independence outlined above, the Board has considered the independence of
directors as follows:

Name of Director

Position

Independent/Non Independent

Date of Appointment

Mr. E. Eshuys

Chairman

Mr. B. K. Mutton

Executive director

Mr. R. C. Hutton

Non-executive director

Mr. M. J. Ilett

Alternate director for Mr. R. C.
Hutton

Not independent as employed in
executive capacity by the Company.
Not independent as previously
employed in executive capacity by the
Company.
Not independent as is a substantial
shareholder of the Company.
Not independent as contracted in an
executive capacity.

15 July 2010

5 April 2007

22 April 2009

The Company does not have any independent directors. The Board consists of two non-executive director (excluding
the alternate director) and one executive director.. The Board does not believe that it is warranted to have a majority of
independent directors due to the Company’s size and its current focus on exploration and development of exploration
tenements and acquisition of new tenements.

Mr. E. Eshuys, as the Executive Chairman, is not considered to be an independent director as he acts in the role as the
Chief Executive Officer. The Board believes that Mr. E. Eshuys is the most appropriate person to lead the Board and
recognises his current and past leadership and exploration experience. Due to the size of the Company, its operations
and the focus on the development of its mining and exploration tenements, the Board does not believe that it is
warranted for the Chairman to be an independent director and the roles of the Chairman and Chief Executive Officer to
be exercised by two different individuals.

The Board must ensure that any candidate applying to be a Director has the appropriate range of skills, expertise and
experience that will complement the Board. The Company recognises the importance of Non-Executive Directors to
add value to the Board. Any director’s appointment will require the Board to consider a mix of skills including diversity,
leadership, technical expertise, corporate and governance experience, interpersonal communication, management
skills, exploration and mining experience, reputation, qualifications, specific requirements of the Company at the time
and the additional skills that can be added by the individual to the Board. The appointment procedures are outlined in
the Diversity Policy and Remuneration and Nomination Committee Charter which are publicly available on the
Company’s website at www.drummondgold.com.au .

The Company has formed a Remuneration and Nomination Committee to assess the skills, performance and
remuneration of existing directors, Board performance and set criteria for the appointment and removal of directors.
The Remuneration and Nomination Committee does not consist of a majority of independent directors. Due to the
current size, nature and complexity of the Company’s operations, the Remuneration and Nomination Committee
comprises of only three members being Mr. R. C. Hutton as Chairman and Mr. E Eshuys and Mr. B. Mutton as
members.

The Company has developed a formal board evaluation, committee and director’s performance evaluation process. The
performance evaluation of the Board, its committees and directors takes place in accordance with this process. During
the performance evaluation process the Board completes an extensive board evaluation questionnaire and provides

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feedback on individual director and Board performance. The results of the evaluations are provided to the
Remuneration and Nomination Committee and the Board for consideration.

The Remuneration and Nomination Committee provides for the evaluation of its own performance from time to time.
The Charter provides details of the process for determining the composition of the Board, re-election of existing
directors and the appointment of new candidates for directors.

Any Director of the Company is entitled to access independent legal, financial or other advice as they consider
necessary at the reasonable expense of the Company or any matter connected with the discharge of responsibilities.
Where appropriate a copy of this advice is to be made available to all other members of the Board.

The details of the skills, experience and expertise relevant to the position of director can be found in the Directors’
Report. Information regarding the director’s attendance at meetings of the Remuneration and Nomination Committee
can also be found in the Directors’ Report. The term of office held by each Director at the date of this Annual Report is
set out in the Directors’ Report section of the Annual Report.

Principle 3 – Promote ethical and responsible decision-making

The Company endeavours to foster a culture requiring that the directors and officers act with the utmost integrity,
objectivity and in compliance with the spirit of the law and Company policies.

The Code of Conduct Policy and Ethics Policy provides practices necessary to maintain confidence in the Company’s
integrity practices necessary to take into account legal obligations and reasonable expectations of stakeholders and
outlines the responsibility and accountability of individuals for reporting and investigating r eports of unethical practices.

The Code of Conduct and Ethics Policy also outlines the policy concerning trading in its securities by directors, senior
executives and other employees. The Company has taken reasonable steps to ensure compliance with the share
trading policy. Directors, officers, senior executives and certain employees are required to advise the Chairman of their
intentions prior to undertaking any transaction in the Company’s securities. If a Director, officer, senior executive and
employee is considered to hold material non-public information, they will be precluded from making a security
transaction until that information has become publicly available. The trading policy also precludes Directors and Senior
Management from trading in the Company’s securities during the period from when the books are closed until the next
day after the release of the financial results.

Details of the policy concerning the trading of securities, terms of code of conduct and ethics can be found in the Code
of Conduct Policy and Ethics Policy which is publicly available in the Corporate Governance section of Company’s
website at www.drummondgold.com.au .

The Company had adopted a Diversity Policy and is committed to developing diversity in its workplace to assist the
Company to meet its goals and objectivities by providing an environment whereby appointments, advancement and
opportunities are considered on a fair and equitable basis. The Company is committed to promoting a corporate culture
which embraces diversity when determining the composition of the Board, senior management and employees and
considered during its recruitment and selection process. Due to the current size and scale of operations, the Company
is unable to comply with the recommendation to assess the measurable objectives for achieving gender diversity and for
the board to asses annually both the objectives and progress in achieving them. Further due to the current scale and
size of operations the Company is unable to comply with recommendation 3.3 that requires companies to disclose in
each Annual Report the measurable objectives for achieving gender diversity set by the Board in accordance with the
gender diversity and the progress towards achieving them.

The Company will ensure that recruitment and selection decisions are based on the principle of merit, skills and
qualifications and regardless of age, gender, nationality, cultural background or any other factor not relevant to the
position. Past skills and experience in the mining and exploration industries will be a key determinant in the selection
process. The Diversity Policy is publicly available in the Corporate Governance section of Company’s website at
www.drummondgold.com.au .

The percentage of women in the whole organisation as a whole organisation, senior management, and the Board are as
follows:-

Whole organisation 25%
Senior Management Nil
Board Nil

Principle 4 – Safeguard integrity in financial reporting

The Company has established an Audit Committee which operates under a Charter approved by the Board. T he Audit
Committee comprises of only two non-executive directors being Mr. R. C. Hutton (Chairman of the Audit Committee)
and Mr. B. K. Mutton as a member. Mr. R. C. Hutton and Mr. B. K. Mutton are not considered to be independent.
Details of the qualifications of those appointed to the Audit Committee, their attendance at Audit Committee meetings
and the number of meetings of the Audit Committee are contained in the Directors’ Report.

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The membership of the audit committee is a departure from Best Practice Recommendation 4.2 that requires that the
Audit Committee consist of a majority of independent directors, chaired by an independent director and has at least
three members. Due to the size, nature and level of complexity of the Company, the Board does not believe that it is
necessary to have a majority of independent directors on the Audit Committee, that the chairman is an independent
director and that the Audit Committee should consist of at least three members.

The Audit Committee through its own investigations and in consultation with its external auditors ensures that the
Company has met the ASX guidelines regarding the selection, appointment of the external auditor and the rotation of
external audit engagement partners. Details of the procedures for the engagement of the external auditor can be found
in the Code of Conduct Policy and Ethics Policy. The Audit Committee Charter is publicly available on the Company’s
website at www.drummondgold.com.au .

Principle 5 – Make timely and balanced disclosure

The Board is committed to the promotion of investor confidence by ensuring that tr ading in the Company’s securities is
undertaken in an efficient, competitive and informed market. There are written policies and procedures in place to
ensure compliance with ASX listing rule disclosure requirements and accountability at a senior executive level for that
compliance. The directors and senior management are made aware of their disclosure requirements and obligations.
Details of the continuous disclosure policy can be found in the Code of Conduct Policy and Ethics Policy which is
publicly available on the Company’s website at www.drummondgold.com.au .

The Directors’ Report of this Annual Report contains a review of operations of the Company.

Principle 6 – Respect the rights of shareholders

The Company has designed a Communications Policy for promoting effective communication with shareholders and
encouraging shareholder participation at Annual General Meetings of members.

Shareholder Communications Policy
The Company believes that the promotion of effective communication with its shareholders at all times is integral to
ensuring the Company respects the rights of its shareholders.

Drummond Gold Limited is committed to:-

 Communicating effectively with its shareholders and ensuring that it is easy for shareholders to communicate

with the Company;

 Complying with its continuous disclosure obligations applicable to the ASX listing rules and other regulators;


Ensuring that the shareholders and other stakeholders are provided with timely and full inf ormation about the
Company’s activities.

To promote effective communications with shareholders and to encourage participation by shareholders the Company
ensures that information is communicated to its shareholders through:-










An email based communications system;
Posting information on the Company’s web site at www.drummondgold.com.au
The distribution of Notice of Meetings and other information directly to shareholders through letters and other
forms of communications;
Ensuring that auditors are invited to the Annual General Meeting to consider questions regarding the conduct
of the audit and the preparation and content of the auditor report;
Allowing shareholders the opportunity at meetings to discuss resolutions; and
Ensuring timely release of information to the market through the ASX.

The shareholder communication policy is designed to ensure equal and timely access to information for shareholders.

Principle 7 – Recognise and manage risk

The Company has established policies for the oversight of material business risks and believes that risk management
and recognition is integral to the Company meeting its objectives. The Board is responsible for reviewing the
Company’s policy on risk management and risk oversight. The Audit Committee also separately assesses management
of the Company’s risks and makes recommendations to the Board.

The Company has designed and implemented a risk management and internal control system to manage the
Company’s material business risks and report to it on whether the risks are being effectively managed. The Company
has reviewed its risk management procedures and considered the “Guide for small-mid market capitalised companies
on Principle 7: Recognise and Manage Risk” released under the ASX Markets Supervision Education and Research
Program. The Company continues to review its existing risk management procedures, the material business risks
affecting the Company and where necessary delegated further responsibilities for those material business risks to
senior staff members. The updated risk management system has been designed to effectively manage and report on
the consolidated entity’s material business risks.

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The Company has developed risk management procedures including revised Risk Management Policy, Risk Register,
Risk Tolerance Review and a Risk Management Framework which forms the basis of the Company’s risk management
and internal control system.

The Risk Register has identified risk in the broad categories of operations management, asset management,
environment, compliance/financial reporting, strategic management, ethical conduct, reputation, occupational health and
safety/human resources, IT/technology, finance/business continuity, tenements/resource statements and st akeholder
communications. The Company’s material business risks have been identified. A copy of the Risk Management Policy is
publicly available on the Company’s web site at www.drummondgold.com.au .

The Company has a number of mechanisms in place to ensure that management regularly report on matters relating to
risks. During the year, the Board has received reports from management as to the effectiveness of the Company’s
management of its material business risks. The reports by management to the Board have been provided under the
former system of risk management and internal control. The Company has updated its risk management procedures
and the Board has recently received reports from management as to the effectiveness of the company’s updated
system for managing its material business risks.

In accordance with section 259A of the Corporations Act 2001, the Chief Executive Officer and Chief Financial Officer
have provided a declaration to the Board that:


their view provided in the Company’s financial report is founded on a sound system of risk management and
internal compliance and control which implements the financial policies adopted by the Board; and
the Company’s risk management and internal compliance and control system is operating effectively in all material
respects.



It is noted that the assurance from the Executive Chairman and Chief Financial Officer can only be reasonable and not
absolute due to the level of judgement required, the limitations of sampling and the difficulty in designing systems to
detect all weaknesses in internal control procedures.

Principle 8 – Remunerate fairly and responsibly

The Company has established a Remuneration and Nomination Committee. The remuneration policies are included in
the Remuneration and Nomination Charter which is posted on the Company’s website. The Remuneration and
Nomination Committee considers the procedures, policies and key performance indicators used to measure the
performance of key executives and directors. Any equity based executive remuneration may be made in accordance
with thresholds approved by shareholders and be developed over time. The Remuneration and Nomination Committee
makes recommendations to the Board on performance and remuneration who is ultimately responsible for reviewing
compensation agreements for the directors and the executive management.

Full discussion of the Company’s remunerations philosophy and framework and remuneration received by directors and
executives and structure in the current financial year is contained in the Remuneration Report section of the Directors’
Report. The Directors’ Fees reflect the demands that are made on and the responsibilities of the Non-Executive
Directors and are reviewed annually. There is no scheme to provide retirement benefits to non-executive directors,
except for their entitlement to the nine (9) percent Superannuation Guarantee. Each member of the executive team has
signed a formal employment contract at the time of their appointment covering matters including the rights,
responsibilities and entitlements on termination. Further details of the structure of the remuneration procedures can be
found in the Remuneration and Nomination Committee Charter.

Due to size, nature and complexity of the Company the Remuneration and Nomination Committee does not consist of a
majority of independent directors, only has three members including the Chairman of the Company and is chaired by a
non executive director who is not an independent director. The Chairman of the Board is not the chairman of the
Remuneration and Nomination Committee.

No employee or director of the Company is permitted to enter into transactions with securities (or any derivative thereof)
which limit the economic risk of any unvested entitlements awarded any equity-based remuneration scheme, or
otherwise awarded, or which will be offered by the Company in the future.

The members of the Remuneration and Nomination Committee are Mr. R. C. Hutton, Mr. B. Mutton and Mr. E. Eshuys.
Details of the qualifications of the members of the Remuneration and Nomination Committee, number of meetings held
during the year and the attendees at those meetings are found in the Directors’ Report. A copy of the Remuneration
and Nomination Committee Charter can be found at the Company’s website at www.drummondgold.com.au .

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Directors’ report

The Directors of Drummond Gold Limited (“the Company”, “Drummond”) submit herewith the annual report of
Drummond Gold Limited and its’ subsidiaries Mt Coolon Gold Mines Pty Ltd and Yandan Gold Mines Pty Ltd
(“Consolidated Entity” or “Group”) for the financial year ended 30 June 2014. In order to comply with the provisions of
the Corporations Act 2001, the Directors report as follows:

Information about Directors and the Company Secretary

The names and particulars of the Directors and the Company Secretary of the Company during or since the end of the
financial year are:

Mr. Eduard Eshuys BSc, FAusIMM, FAICD (Executive Chairman)

Eduard, aged 69 is a geologist with several decades of exploration experience in Australia. His successes as Joseph
Gutnick’s exploration director are well known. In the late 1980s and early 1990s he led the teams that discovered the
Plutonic, Bronzewing and Jundee gold deposits, and the Cawse Nickel Deposit. He has also had involvement in the
Maggie Hays and Mariners nickel discoveries in the 1970’s. More recently he was the Managing Director and CEO of St
Barbara Limited from July 2004 to March 2009. During this time St Barbara Limited grew substantially as a gold
producer.
During the past three years Mr. Eduard Eshuys has also serviced as director of Apex Minerals NL(Receivers and
Managers Appointed)(In Liquidation) from 19 April 2012 to date.

Mr. Eduard Eshuys joined the Company on 15 July 2010 as Executive Chairman with responsibility for the corporate
governance, exploration activities, administration, board conduct and leadership. As Chairman he will ensure that the
Company maintains a well-balanced, suitably qualified, focused and motivated management team working for the
benefit of all shareholders. Mr. Eduard Eshuys is a member of the Remuneration and Nomination Committee.

Mr. Brice K. Mutton BSc (Appl Geology) UNSW, FAusIMM, FAIG, MSEG (Non-Executive Director)

Brice, aged 63, is a geologist with over 30 years’ experience in the resources industry, from exploration to mining and
corporate management. Brice gained 20 years experience in a range of positions with MIM Group Holdings. He was
Chief Geologist at Hilton and Mount Isa Mines from 1988 to 1992. He was Executive Assistant to the CEO, MIM
Holdings from 1992 to 1994, Deputy General Manager, MIM Petroleum Exploration 1995 to 1996 and General Manager
Exploration Support MIM Exploration from 1996 to 1998. During this time he represented MIM and industry
associations nationally and internationally. In between periods with MIM from 1979 to 1983 he worked on major mining
and civil engineering projects in Australasia with Snowy Mountains Engineering Corporation and Golder Associates. He
was Managing Director of Giants Reef Mining from 1998 to 2000. More recently he has consulted to the resources
industry through Brice Mutton & Associates. During the past three years Mr. Brice Mutton has also serviced as Non-
Executive Director Cusesta Coal Limited (27 September 2003 to date) and Non-Executive Director Apex Minerals
Limited (Receivers and Managers Appointed)(In Liquidation) from 19 April 2012 to 30 April 2013.

Mr. Brice K. Mutton was appointed as Executive Director Exploration from 5 April 2007 until 31 May 2008. He provided
consulting services as Exploration Manager from 1 June 2008 to 12 September 2008, becoming a Non-Executive
Director on the 13 September 2008. Mr. B. K. Mutton from 1 August 2013 is the registered Senior Site Executive (SSE)
for the company’s Mining Leases and exploration tenements, and responsible for the management of the field
operations at its Mt Coolon base. Brice is a member of the Remuneration and Nomination Committee and Audit
Committees.

Mr. Ross C. Hutton B. Eng (Min), MAusIMM (Non-Executive Director)

Ross, aged 66, is a Mining Engineer with over 45 years’ experience in the minerals industry ranging from mining to
project management in technical and executive management roles. He has worked in corporate and consultative roles
managing activities from feasibility studies to operations both in Australia and internationally. He was appointed Non-
Executive Director on 5 April 2007. Hutton is the Chairman of the Audit Committee and Remuneration and Nomination
Committee.

During the past three years Mr. Ross C. Hutton has also serviced as Non-Executive Director Kagara Limited (in
Liquidation) from 2003 to date, Non-Executive Director Apex Minerals Limited (Receivers and Managers Appointed)(In
Liquidation) (in Liquidation) from 19 April 2012 to 3 December 2012 and Non-Executive Director Mungana Goldmines
Limited from 17 July 2009 to 24 October 2013.

Mr. Michael J. Ilett BBus(Accy), GradDipAdvAcctg, GradDipCorpGov, MBA, ACIS, CPA, CA (Company Secretary
Chief Financial Officer and Alternate Director for Mr. Ross. C. Hutton)

Michael, aged 48, is a Chartered Accountant and a member of Chartered Institute of Company Secretaries in Australia.
In 2003, Mr. Michael J. Ilett was awarded the MBA Medallion from the Queensland University of Technology and in
2004 was awarded the J. S. Goffage Prize from Chartered Secretaries Australia Limited. Michael has over 20 years’

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commercial experience and was the former Company Secretary and Chief Financial Officer for Gold Aura Limited and
Union Resources Limited. He has provided a key role in the listing of exploration companies on the ASX, capital
raisings, corporate governance, administration and the duel listing of an Australian public company on the Alternative
Investment Market (AIM).

Principal activities

The principal activity of the Group is exploration for gold and other minerals through the Company and its wholly owned
subsidiaries Mt Coolon Gold Mines Pty Ltd and Yandan Gold Mines Pty Ltd.

Operating Results

The net loss from operations of the Consolidated Entity for the year ended 30 June 2014 was $4,632,510 (2013: net
loss $5,103,895).

Review of Operations

Introduction

The objective of the Group is to significantly increase its resources and reserves through the discovery and acquisition
of gold and base metal deposits. The Company considered various options in relation to its Mt Coolon-Drummond Basin
tenements including the potential for a joint venture or the sale of part or the entire package.

Review and value-adding work continued on the core EPM 15902 and EPM 7259 exploration tenements and Mining
Leases 1029, 1085, 1086 and 10227 located approximately 200 km west of Mackay and centered on Mt Coolon in the
Drummond Basin. Importantly the effort focused on the intrusion-related style gold at the Sullivans Prospect, the
epithermal gold prospects at Bimurra and Eugenia and the related TPM (Copper-Gold Skarn) Prospect.

Specific work was carried out including new analyses, independent geophysical review and 3D modeling of the Eugenia
Resource and the Sullivan’s Prospect both in EPM 15902 and on the Bimurra System Prospects in EPM 7259.

Limited work also commenced on new information sourced for the nearby TPM Copper-Gold Skarn Prospect and
associated anomalous zones around the regional Manaman Granodiorite complex in the western part of EPM 15902.
Fieldwork for the year was curtailed to field checks and sampling at the Sullivans and Bimurra Prospects.

Sullivans Prospect

The Sullivans Prospect located 6km south of Mt Coolon, has strong indications of Intrusion- Related Gold System
(IRGS) style mineralisation including strong geochemical and geophysical features akin to the multi-million ounce Mt
Wright - Mt Leyshon style gold bearing deposit systems, both located approximately 1OOkm to the north.

Importantly, the Sullivans Prospect is located within 2km of the Manaman Granodiorite Complex, a polyphase biotite-
hornblende granodiorite to medium grained granite and diorite that has been intruded by numerous porphyry and
rhyolite dykes. The granitoid body has been emplaced along a 5 kilometre extent of the Anakie-Drummond Basin
contact, a major regional district fault.

Figure 1. Location Plan of Sullivans and TPM Prospects

For personal use only

Work during the year focused on several fronts, further modelling of drill results, selection and preparation of samples
for mineralogical quantification and geometallurgical test work and review of the extended Sullivans area. Some limited
field work was conducted and rock chip sampling completed on some narrow highly ferruginous and arsenic stained
quartz veining.

The key outcome of the study were the holes intersected a feldspar > quartz (biotite) crystal lithic tuff. The alteration
can be divided into three mappable facies being propylitic, sericitic and phyllic.

The mineralisation also has three facies being:-





discrete crystalline quartz veins with pyrite and arsenopyrite +/- chalcopyrite
sphalerite, discrete carbonate veins with dispersed sulphides (sphalerite, galena chalcopyrite); and
disseminated pink-buff carbonate locally with fine sulphides (sphalerite, galena +- chalcopyrite.

Multi-element geochemical data was compiled for the past RC holes drilling. The element suite can be divided into the
following three groups:-

 A core suite of metals typical of hydrothermal systems
 Other metals of interest; and
 Silicate elements of interest for alteration.

There was consistent enrichment of the following hydrothermal system metals in the drill chips of the area drilled
including Mn, Zn, As, Ag, Au (Bi, Cu, Pb).

This metal association is suggestive of a polymetallic pluton-level partly evolved magmatic hydrothermal system
(Morrison & Blevin 1997, AMIRA project P425).

The presence of consistently anomalous Bi indicates a felsic magmatic system and the association of Au with Pb, Bi,
Zn, Cu and As is consistent with a granodiorite composition of associated intrusion which is similar to Mt Leyshon for
overall metallogenic character but not for the inferred level of emplacement.

To further assess the wider extent of the mineralisation alteration and metallurgical characteristics, key drill holes have
been submitted for third party laboratory analysis and identification utilising digital spectral scanning (PSM3500),
spectral analyses and calculations, and, interpretation. This work and these results will be supported by selected
petrological, mineragraphic and scanning electron microscopy on key samples.

The review of the wider Sullivans Prospect identified a gold anomaly far wider than previously considered including:

a) Localised, narrow quartz-pyrite veining scattered outcrops of rhyolitic ignimbrite located 1300m North of the

Sullivans Prospect.

b) Linear gossanous vein material has occurs as subcrop within red lateritic soil and extends for some 100m on a

north-south trend located 1,200 m Southwest.

c) A “bleached” zone associated with a distinct circular feature in the magnetics. Some narrow, highly ferruginous

and arsenic stained quartz veining was also found 2-3kms to the South.

The widespread anomalism highlights the wider potential of the Sullivans and Manaman Granodiorite area for a large
intrusion-related gold system.

Eugenia Prospect and Gold Resource

The Eugenia Prospect and Gold Resource are located approximately 6km NE of Mt Coolon. The current Inferred
Resource by H&S Consultants (H&S) for Eugenia stands at a total of 4,416,000t at 1.3g/t Au for 178,200oz gold at a
0.5g/t Au cut off.

Work focused on further accessing and reassessing of drill data by previous companies extending back to 1990, to
better define the geological model and conduct important and necessary comparative QA/QC work on all phases of
drilling, to include but not limited to, surveys, assay methods and logging. There is confidence this work can be
achieved to warrant undertaking an updated model and to progress to a new upgraded resource estimate on completion
of the work.

The review has identified a number of data gaps on the near margins of the model (oxide and sulphide zones) where
data spacing is poor. Also as previously reported, only the oxide zone has been explored intensively and potential exists
to expand this resource along strike and at depth with additional drilling.

Accordingly , work primarily focused on the Surpac 3D Eugenia resource model by H&S. Review commenced and
continued on all data and other inputs to the model such as assays (multi-element), oxidation depth, rock densities,
geological interpretation of lithology and structures.

Significantly , the model highlights a poorly defined sub-vertical NNW trending sulphide zone towards the base of the
current model, interpreted as a possible feeder zone, which is characterised by a lack of drilling. This tr end aligns with
the main linears clearly visible in the magnetics and extending to several of the area targets identified.

Bimurra Prospect(s)

Review work continued and limited field work was undertaken on the Bimurra epithermal gold system propsects whic h
is located within the southern sub-block portion of EPM 7259.The centre of the system was formerly held by another

For personal use only
company as Mineral Development Lease (MDL22), which has now lapsed into EPM7259. It allows exploration by one
owner, Drummond Gold Limited, for the first time since 1980.

Bimurra Deposit itself was discovered in 1928. The former Bimurra MDL area has been explored however, much of this
work has been near surface and at shallow depths. A small gold resource (non-JORC) has been variously reported.

It is recognised that the Bimurra System is part of a large epithermal mineralised cell that extends well outside the
former MDL and into EPM7259 as strong structurally defined strike linears extending to the north east, referred to as
Bimurra East Prospect and the southwest, referred to as Ramillies West Prospect.. The alteration system covers an
area greater than 10 square km.

Drummond Gold Limited is continuing to re-assess the entire mineralised system which has included a geophysical
review and will now focus on all new data received.

TPM Copper-Gold Skarn Prospect

The TPM Prospect lies approximately 5km south-southwest of the small township of Mt Coolon, central Queensland
(Figure 1). Mineralisation is associated with a weathered magnetite skarn tentatively interpreted as a near surface roof
pendant perched on the western flank of the Carboniferous Manaman Granodiorite (Figure 1). Work during the year
focused on reviewing historical work and Drummonds 2007 drilling program.

The Prospect coincides with the Manaman Granodiorite and Anakie Inlier- Drummond Basin contact, a major regional
north northwest striking linear interpreted from magnetic surveys. Mineralisation can be traced north-northwest
discontinuously for 3.5km along the Manaman Granite/Drummond Basin/Anakie Basin contact. Mineralising fluids have
preferentially altered calcareous units of the basal “Cycle 1” package of the Drummond Basin (Ukalunda Beds).

Drummond Gold completed a preliminary drilling program over the TPM Prospect in 2007. Of the 25 holes drilled by
Drummond, 12 holes intersected copper mineralisation over a strike length of 400m and a width of 40m -1OOm and a
true thickness varying from 4m to 28m. The best intersections (previously reported form -60 degree declined RC holes)
were:




33m @ 1.0% Cu from 16m downhole below surface,
25m @ 0.9% Cu from 3m downhole below surface , and
16m @ 1.0% Cu From 6m downhole below surface.

TPM skarn exploration has only tested Lode 3 (of 4 known lodes) by drilling over an 800m strike extent. Review and
investigation indicates that Lode 3 has not been fully explored with further work required to determine the local extent of
mineralisation and relationship with structure and host unit orientation. The prospect is interpreted to be open north,
south, east and west in the immediate vicinity.

Further, investigation at the TPM Prospect needs to be expanded to include outcropping iron stone Lodes 1, 2 and 4 as
well as the regional western Manaman Granodiorite strike extent together with the Drummond Basin/Anakie Inlier
contact.

Outlook

Only limited field work was conducted during the year to 30 June 2014 to keep expenditure at a minimum but at the
same time meet regulatory requirements and tenement management related matters. However, substantial past
expenditure on the Company's Drummond Basin Prospects is a safeguard to minimising current expenditure while
maintaining the tenements in good standing for future activity. The Queensland Government holding costs for the
tenements are up to date.

The Company has initiated preliminary discussions with others for the joint venturing or possible sale of the Company's
Drummond Basin assets. No agreements have been entered into but parties are continuing with their due diligence of
the Company and its assets. The Directors see this process as an important step to refresh the Company's assets.

A number of opportunities to acquire or joint venture into have also been evaluated with particular emphasis on gold,
copper and zinc exploration opportunities in Australia are being sought.

Improved geological understanding of the formation of large gold and mineralisation systems in Australia are likely to
lead to new frontiers in exploration for those commodities similar to the new geological sciences which led to n ew major
discoveries in the 1980-1990s some 25-30 years ago.

It could be expected that existing gold and base metal prospects could represent the window into these large mineral
systems once the geological history and structures of these prospects are placed in the context of the better
understanding.

Changes in state of affairs

On 10 September 2013, the Company completed a share placement of 35,000,000 fully paid ordinary shares at an
issue price of $0.002 (0.2 cents) per share raising a total of $70,000.On 21 November 2013, the Company completed a
share placement of 155,000,000 fully paid ordinary shares to RCF at an issue price of $0.002 (0.2 cents) per share
raising a total of $310,000.
On 21 November 2013 the Company also completed a share placement of a total of 33,333,333 fully paid ordinary
shares at an issue price of $0.003 (0.3 cents) per share to the directors or their nominees as approved by shareholders

For personal use only

at the Annual General Meeting held on 15 November 2013. The shares were issued in lieu of payment of $58,333.30 in
Directors’ Fees and the payment of $41,666.70 for the Executive Chairman’s salary.

Other than above there was no significant change in the state of the affairs of the consolidated entity during the financial
year.

Future developments

The current strategy is to undertake exploration necessary to discover new zones of mineralisation through further
investigation of existing and new prospects, and testing of previously unexplored areas. The Company has defined a
number of prospects at Mt Coolon and also pursuing the discovery and acquisition of gold and base metal deposits.

Health and Safety Policy

The Company is committed to developing a culture which supports the health and safety of all employees, contractors,
customers and communities associated with its business and operations.

Environmental regulations

The Company is subject to environmental regulation in respect of its exploration activities in Australia and is committed
to undertaking all its operations in an environmentally responsible manner. The Company is also subject to
environmental regulation in relation to its former mining activities in Queensland by the Environmental Protection
Agency of Queensland. The Company complies with the Mineral Resources Act (1989), Metalliferous Mining &
Quarrying Safety and Health Care Act (1999) and Environmental Protection Act (1994) and legislations.

So far as the Directors are aware, there have been no material breaches of the Group’s licenses and all exploration
activities have been undertaken in compliance with the relevant environmental regulations.

Tenement obligations

The Company has met its obligations on all its exploration and mining tenements with the Queensland Government
authorities and local government.

Cultural and community performance obligations

The Company has held discussions with the Bulganunna People who are the traditional landowners in the Mt Coolon
region. The Company has a Cultural Heritage Management Agreement with respect to the Bulganunna People. The
Company has liaised with the landholders in this region and held discussions in relation to the use of infrastructure and
exploration on their land.

It is the Company’s policy that the activities will not cause disturbance or encroachment or offence to any cultural site or
belief or member of traditional landowner groups or to any landholder or business enterprise falling within the
exploration tenements of the Company.

Dividends

No dividends have been paid or proposed since the start of the financial year, and the Directors do not recommend the
payment of a dividend in respect of the financial year.

Shares under option or issued on exercise of options

There were no options on issue at the date of this report.

Indemnification of Directors and Officers

During the financial year, the Company paid a premium in respect of Directors’ and Officers’ Insurance insuring the
Directors and Officers of the Company against a liability incurred as a Director and Officer to the extent permitted by the
Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the
premium.

The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an Officer or auditor of the Company or of any related body corporate against a
liability incurred by such an Officer or auditor.

Directors’ meetings

The following table sets out the number of Board of Directors’ Meetings (excluding four Directors’ Meetings requiring
circulating resolutions), Remuneration & Nomination Committee Meetings and Audit Committee Meetings held during
the financial year and attendance at such meeting by each Director and member of the committee.

For personal use only

Directors

Mr. E. Eshuys (i)

Mr. B. K. Mutton

Mr. R. C. Hutton

Board of Directors

Remuneration
& Nomination
Committee

Held
23

Attended
23

Held
1

Attended
1

Audit Committee

Held
N/A

Attended
N/A

(i) Mr. E. Eshuys is not a member of the Audit Committee.

Directors’ shareholdings

The following table sets out each Director’s direct and indirect interest and relevant interest in fully paid ordinary shares
in the Company as at the date of this report:

Directors

Mr. E. Eshuys

Mr. B. K. Mutton (ii)

Mr. R. C. Hutton (iii)

Mr. M. J. Ilett (iv)

Fully paid
ordinary shares
Number

31,327,322

10,138,947

16,467,205

1,284,627

Mt Coolon Mines
Trust holding (i)

Total shares held
(beneficial interest)

Relevant
Interest

31,327,322

1,046,270

2,098,134

11,185,217

10,138,947

18,565,339

23,442,420

1,284,627

(i) The Mt Coolon Gold Mines Trust (MCGMT) holds 6,975,215 fully paid ordinary shares in the Company. This
indirect holding represent the beneficial interest of approximately 15% and 30% respectively that Mr. B. K. Mutton
and Mr. R. C. Hutton hold in the MCGMT.

(ii) Mr. B. K. Mutton has approximately a 15% beneficial interest (but not a relevant) interest in the MCGMT.
(iii) Mr. R. C. Hutton has a relevant interest in all the fully paid ordinary shares held by the MCGMT as he holds

approximately a 30% beneficial interest in the MCGMT.
(iv) Mr. M. J. Ilett is an alternate director for Mr. R. C. Hutton.

Remuneration report

The remuneration report, which forms part of the Directors’ Report, sets out the information about the remuneration of
the Group’s key management personnel and relevant Group executives for the financial year ended 30 June 2014. The
prescribed details for each person covered by this remuneration report are detailed below under the following
headings:-

A. Key management personnel and relevant group executives’ details
B. Remuneration policy for key management personnel
C. Relationship between remuneration policy and company performance
D. Remuneration of the key management personnel and relevant group executives
E. Key terms of employment contracts

Key management and relevant group executives’ details

The following persons acted as directors of the Company during or since the end of the financial year:

 Mr. E. Eshuys (Executive Chairman) appointed on15 July 2010;
 Mr. R. C. Hutton (Non-Executive Director) appointed on 5 April 2007;
 Mr. B. K. Mutton (Non-Executive Director) appointed on 5 April 2007 and was Exploration Manager until 12

September 2008 and became a Non-Executive Director on 13 September 2008; and

 Mr. M. J. Ilett (Alternate Director for Mr. R. C. Hutton).

The term “senior management” is used in this remuneration consists of Mr. M. J. Ilett (Company Secretary and Chief
Financial Officer) who was appointed on 5 April 2007.

Mr. B. K. Mutton was re-elected as a Director at the Annual General Meeting held on 15 November 2013.. Mr. R. C.
Hutton who retires by rotation will be eligible to be re-elected as a Director at the next Annual General Meeting.

Remuneration policy for key management personnel

The Board of Directors is responsible for determining and reviewing compensation arrangements for key management
personnel. The Remuneration and Nomination Committee makes recommendations to the Board on performance and
remuneration of the key management personnel.

For personal use only

Executive Remuneration

Contracts for services for the executive members of the key management personnel are reviewed on a regular basis to
ensure that they properly reflect the duties and responsibilities of the individuals concerned. The executive
remuneration is based on a number of factors including length of service, relevant market conditions, knowledge and
industry experience, organisational experience, performance of the Company and competitive factors within the
industry. There is no guaranteed pay increases included in senior executives' contracts. The executives are not
entitled to any retirement benefits other than those provided for under the key terms of the employment contracts as
outlined below.

The Company has formulated a set of criteria for the performance review of the key executives. During the financial
year, the Remuneration and Nomination Committee held a performance review for the Chairman, Non-Executive
Directors and key executives and recommendations were made to and adopted by the Board. The senior executive
consisting of Mr. E. Eshuys, and Mr. M. J. Ilett have the opportunity to participate in executive decision making and
make regular reports to the Board. The senior executives have an understanding of the Company’s financial position,
strategies, operations and risk management policies and an undertaking of their respective rights, duties,
responsibilities, and the roles of board and senior executives.

Directors

The Directors’ Fees are reviewed on a regular basis against industry benchmarks. The Directors received no equity-
based payments during the year. Other than compulsory payments made under the superannuation guarantee
legislation there have been no retirement benefits provided to the Directors.

C. Relationship between remuneration policy and company performance
The performance of the Company is considered in setting remuneration policy. Drummond Gold Limited’s performance
in the exploration industry will be dependent upon the Company meeting the following corporate objectives:-





conducting exploration that discovers major gold and base metal deposits;
seeking long term cash flow and profitability through the development of its tenements; and
actively pursuing acquisition opportunities in the Drummond Basin and elsewhere.

The table below sets out summary information about the Consolidated Entity’s earning and movements in shareholders
wealth for the five years to 30 June 2014:

Description

30 June 2014

30 June 2013

30 June 2012

30 June 2011

30 June 2010

Interest revenue and other income
Net loss before tax
Net (loss)/profit after tax
Share price at start of year
Share price at end of year
Share-based payments
Interim dividend
Final dividend
Return of capital
Basic profit/(loss) per share
Diluted profit/(loss) per share

$4,346
(4,906,009)
($4,632,510)
0.3 cents
0.2 cents
$100,000
-
-
-
(1.22 cents)
(1.22 cents)

$358,973
($5,581,860)
($5,103,895)
0.8 cents
0.3 cents
-
-
-
-
(2.17 cents)
(2.17 cents)

$1,061,452
($261,783)
$1,454,859
5.5 cents
0.8 cents
$34,070
-
-
-
0.62 cents
0.62 cents

$202,731
($3,470,981)
($3,047,503)
4.8 cents
5.5 cents
$405,582
-
-
-
(1.39 cents)
(1.39 cents)

$33,921
($4,295,649)
($4,295,649)
6 cents
4.8 cents
-
-
-
-
(4.77 cents)
(4.77 cents)

(i) Drummond Gold Limited was admitted to the official list of the ASX on 21 December 2007 and this share price reflects price on quotation.

D. Remuneration of directors and senior management
The following table provides information about the remuneration of the Consolidated Entity’s directors and senior
management during the 30 June 2014 year:

2014

Executive chairman
Mr. E. Eshuys (i), (ii)
Non-executive directors
Mr. R. C. Hutton (i), (ii)
Mr. B. K. Mutton (i), (ii), (iii)
Company secretary
Mr. M. J. Ilett (iv)

Salary
& fees
$

92,500

33,750
33,750

Short-term employee benefits

Bonus

Non-
monetary
$

Other

Post-
employment
benefits
Super-
annuation
$

Other long-
term
employee
benefits

Share-
based
payment

Total

-
-

20,000

-
126,350

110,862

-
-

37,500

150,000

11,250
11,250

45,000
171,350

110,862

(i)

The amount described in “Share-based payment” represents part payment of the Chairman’s salary and Director’s fees for the 2014
financial year in the form of Drummond Gold Limited shares in lieu of cash consideration.

(ii) The amount described in “ Salary and fees” includes Directors’ Fees and Salary totalling $160,000 owing to Mr. E. Eshuys, Mr. B. K.

Mutton and Mr. R. C. Hutton which has been accrued and not paid as at 30 June 2014.

(iii) The amount disclosed in “Short term employee benefits – other” for Mr. B. K. Mutton of $126,350 Mr B. K. Mutton’s consulting fees were

paid to his company Brice Mutton & Associates Pty Ltd.

(iv) The amount disclosed in “Short term employee benefits – other” column represents consulting fees of $110,862 (net of Goods and

Services Tax). Mr. M. J. Ilett’s consulting fees were paid to his company Kaus Australis Pty Ltd.

For personal use only

The following table provide information about the remuneration of the Consolidated Entity’s directors and senior
management during the 30 June 2013 year:

2013

Executive chairman
Mr. E. Eshuys (i)
Non-executive directors
Mr. R. C. Hutton (i)
Mr. B. K. Mutton (i), (ii)
Company secretary
Mr. M. J. Ilett (iii)

Salary
& fees
$

150,000

45,000
45,000

Short-term employee benefits

Bonus

Non-
monetary
$

Other

Post-
employme
nt benefits
Super-
annuation
$

Other long-
term
employee
benefits

Share-
based
payment
Options

Total

-
-

13,500

-
120,102

151,287

4,050
4,050

-
-

163,500

49,050
169,152

151,287

(i)

The salary and fees includes Directors’ Fees and Salary totalling $40,000 for Mr. E. Eshuys, Mr. B. K. Mutton and Mr. R. C. Hutton which
has been accrued and not paid as at 30 June 2013.

(ii) The amount disclosed in “Short term employee benefits – other” for Mr. B. K. Mutton of $120,102 Mr B. K. Mutton’s consulting fees were

paid to his company Brice Mutton & Associates Pty Ltd.

(iii) The amount disclosed in “Short term employee benefits – other” column represents consulting fees of $151,287 (net of Goods and

Services Tax). Mr. M. J. Ilett’s consulting fees were paid to his company Kaus Australis Pty Ltd.

Bonus and share-based payments granted as compensation for the current financial year

No bonuses were granted during the financial year.

Share-based payments granted as compensation during the financial year
On 21 November 2013, the Company issued 33,333,333 fully paid ordinary shares at an issue price of $0.003 (0.3
cents) per share to the directors or their nominees as approved by shareholders at the Annual General Meeting held on
15 November 2013. The funds were issued in lieu of payment of outstanding Directors fees of $58,333 including
$23,333 outstanding at 30 June 2013 and outstanding Chairman’s Salary of $41,667 including $16,667 outstanding as
at 30 June 2013.

Key management personnel equity holdings
Fully paid ordinary shares of Drummond Gold Limited held directly or indirectly at end of financial year:

Balance
at beginning
of year

Granted as
compensation
(iii)

No.

10,493,989
4,935,217
12,315,339
1,284,627

20,833,333
6,250,000
6,250,000
-

10,493,989
4,935,217
12,315,339
1,284,627

-
-
-
-

Received
on
exercise
of options
No.

Net other
change

Balance
at the end of
the year

Relevant
interest

Balance
held
nominally

No.

-
-
-
-

31,327,322
11,185,217
18,565,339
1,284,627

31,327,322
10,138,947
23,442,420
1,284,627

10,493,989
4,935,217
12,315,339
1,284,627

10,493,989
3,888,947
17,192,420
1,284,627

-
-
-
-

2014
Mr. E. Eshuys
Mr. B. K. Mutton (i)
Mr. R. C. Hutton (i),(ii)
Mr. M. J. Ilett

2013
Mr. E. Eshuys
Mr. B. K. Mutton (i)
Mr. R. C. Hutton (i)
Mr. M. J. Ilett

(i) Mt Coolon Holdings Pty Ltd (MCGMT) holds 6,975,215 shares in the Company. Included in the balance of the share
holdings at the end of the year for Mr. B. K. Mutton, Mr. R. C. Hutton are their relevant interests in 6,975,215
shares held indirectly through the MCGMT.

(ii) Mr. R. Hutton holds a 30 per cent beneficial interest in MCGMT. The relevant interest for Mr. R. C. Hutton includes

the total of 6,975,215 shares (2013: 6,975,215) held indirectly through the MCGMT.

(iii) On 21 November 2013 the Company issued a total of 33,333,333 fully paid ordinary shares at an issue price of
$0.003 (0.3 cents) per share to the directors or their nominees as approved by shareholders at the Annual General
Meeting held on 15 November 2013. The funds were issued in lieu of payment of $58,333.30 in Directors’ Fees
and the payment of $41,666.70 for the Executive Chairman’s salary.

E. Key terms of employment contracts

Contracts for services of key management personnel and relevant executives

Remuneration and other terms of employment for the Directors and other key management personnel are formalised in
service agreements. The contractual arrangements contain certain provisions typically found in contracts of this nature.

For personal use only

Mr. E. Eshuys

The Company has entered into an agreement with Mr. E. Eshuys pursuant to which Mr. E. Eshuys has agreed to act in
the capacity as an Executive Chairman and provided geological services to the Company. The key terms of the
agreement are as follows:-









Annual Executive Chairman’s Fees of $50,000 per annum plus 9% superannuation payable on a monthly
basis for the provision of services as Executive Chairman;
Annual Fee of $100,000 per annum plus 9% superannuation to be paid monthly effective from 1 May 2014.
Term of the Agreement: One (1) year renewed on an annual basis by mutual consent.
Annual leave accrued on equivalent of being employed one week per month and long service leave
entitlement provided in accordance with the National Employment Standards;
Termination due to resignation: Mr. E. Eshuys is required to provide one (1) month’s notice and be paid the
equivalent of one (1) month’s fees for the provision of geological services together with accrued leave;
Termination due to company notice: The Company is required to provide three (3) month’s notice and make a
payment equivalent of three (3) month’s fee for the provision of geological services in lieu of notice together
with accrued leave; and
Termination due to change in control: In the event that a party acquires more than 50% of the Company an d
Mr. E. Eshuys is terminated, he shall be entitled total remuneration payable in respect of the equivalent of one
(1) month’s fees for the provision of geological services together with accrued leave.

Mr. B. K. Mutton

The Company has entered into an agreement with Mr. B. K. Mutton pursuant to which Mr. B. K. Mutton has agreed to
act in the capacity as a Non-Executive Director of the Company. The key terms of the agreement are as follows:-



Annual Director’s Fees: $45,000 per annum plus 9% superannuation payable on a monthly basis for the
provision of services as a Non Executive Director;
Term of the Agreement: One (1) year renewed on an annual basis by mutual consent.


 Consulting Fees: $175 per hour (exclusive of GST) for each hour worked and invoiced on projects approved by
the Board, other than for work that forms part of his Director’s duty, to a maximum amount of $5,000 per month
(excluding GST) unless otherwise agreed by the Company;
Termination due to resignation: Mr. B. K. Mutton is required to provide one (1) month’s notice and be paid one
(1) month’s Director’s Fees during this notice period;
Termination due to company notice: The Company is required to provide three (3) month’s notice and make a
payment of four (4) month’s Director’s Fees in lieu of notice; and
Termination due to change in control: In the event that a party acquires more than 50% of the Company and
Mr. B. K. Mutton is terminated, he shall be entitled total remuneration payable in respect of four (4) months’
Directors’ fees.



Mr. R. C. Hutton

The Company has entered into an agreement with Mr. R. C. Hutton pursuant to which Mr. R. C. Hutton has agreed to
act in the capacity as a Non-Executive Director of the Company. The key terms of the agreement are as follows:-




 Consulting Fees: $175 per hour (exclusive of GST) for each hour worked and invoiced on projects approved by
the Board, other than for work that forms part of his Director’s duty, to a maximum amount of $5,000 per month
(excluding GST) unless otherwise agreed by the Company;
Termination due to resignation: Mr. R. C. Hutton is required to provide one (1) month’s notice and be paid one
(1) month’s Director’s Fees during this notice period;
Termination due to company notice: The Company is required to provide three (3) month’s notice and make a
payment of four (4) month’s Director’s Fees in lieu of notice; and
Termination due to change in control: In the event that a party acquires more than 50% of the Company and
Mr. R. C. Hutton is terminated, he shall be entitled total remuneration payable in respect of four (4) months’
Directors’ fees.



Mr. M. J. Ilett

The Company has entered into an agreement with Kaus Australis Pty Ltd dated 1 July 2010 pursuant to which Mr. M. J.
Ilett has agreed to provide certain consultancy services to the Company and be appointed as the Company Secretary.
The key terms of the agreement are as follows:-

 Consulting fee: Hourly rate of $175 per hour (exclusive of GST);
 Outgoings: Provision to reimburse Kaus Australis Pty Ltd for all reasonable and necessary expenses incurred by

it or Mr. M. J. Ilett in the performance of the services under the agreement;

 Term of the Agreement: One (1) year renewed on an annual basis by mutual consent;
 No annual leave or long service leave accrued;

For personal use only

 Termination due to Company notice: The Company is required to provide three (3) month’s notice and make a
payment equal to the invoices for services provided in the preceding three (3) months prior to the date of the
company notice event; and

 Termination due to change in control: In the event that a party acquires more than 50% of the Company and the
services of Kaus Australis Pty Ltd is terminated, Kaus Australis Pty Ltd shall be entitled total remuneration
payable in respect of three (3) months’ invoice equal to the invoices for services provided in the preceding three
(3) months prior to the date of the change in control event.

End of audited remuneration report

Non-audit services

Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are
outlined in note 28 to the financial statements.

The Directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person
or firm on the auditor’s behalf) is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.

The Directors are of the opinion that the services as disclosed in note 28 to the financial statements do not compromise
the external auditor’s independence, based on advice received from the Audit Committee, for the following reasons:



all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and
objectivity of the auditor, and
none of the services undermine the general principles relating to auditor independence as set out in Code of
Conduct APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional &
Ethical Standards Board, including reviewing or auditing the auditor’s own work, acting in a management or
decision-making capacity for the company, acting as advocate for the company or jointly sharing economic
risks and rewards.

Auditor’s independence declaration
The auditor’s independence declaration is included on page 21 of the Annual Report.

The directors’ report is signed in accordance with a resolution of Directors made pursuant to s.298 (2) of the
Corporations Act 2001.

On behalf of the Directors

Eduard Eshuys
Executive Chairman
Brisbane, 30 September 2014

For personal use only

Deloitte Touche Tohmatsu
ABN 74 490 121 060

Riverside Centre
Level 25
123 Eagle Street
Brisbane QLD 4000
GPO Box 1463
Brisbane QLD 4001 Australia

Tel: +61 7 3308 7000
Fax: +61 (0) 3308 7001
www.deloitte.com.au

The Board of Directors
Drummond Gold Limited
Unit 3, 636 Progress Road
Wacol QLD 4076

30 September 2014

Dear Board Members

Drummond Gold Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of Drummond Gold Limited.

As lead audit partner for the audit of the financial statements of Drummond Gold Limited for the financial
year ended 30 June 2014, I declare that to the best of my knowledge and belief, there have been no
contraventions of:

(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit;

and

(ii) any applicable code of professional conduct in relation to the audit.

Yours sincerely

DELOITTE TOUCHE TOHMATSU

Stephen Tarling
Partner
Chartered Accountants

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited.

For personal use only

Deloitte Touche Tohmatsu
ABN 74 490 121 060

Riverside Centre
Level 25
123 Eagle Street
Brisbane QLD 4000
GPO Box 1463
Brisbane QLD 4001 Australia

Tel: +61 7 3308 7000
Fax: +61 (0) 3308 7001
www.deloitte.com.au

Independent Auditor’s Report
to the Members of Drummond Gold Limited

Report on the Financial Report

We have audited the accompanying financial report of Drummond Gold Limited, which comprises the
consolidated statement of financial position as at 30 June 2014, the consolidated statement of profit and
loss and other comprehensive income, the consolidated statement of cash flows and the consolidated
statement of changes in equity for the year ended on that date, notes comprising a summary of significant
accounting policies and other explanatory information, and the directors’ declaration of the consolidated
entity, comprising the company and the entities it controlled at the year’s end or from time to time during
the financial year as set out on pages 22 to 49.

Directors’ Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such
internal control as the directors determine is necessary to enable the preparation of the financial report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 3,
the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the consolidated financial statements comply with International Financial Reporting
Standards.

Auditor’s Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. Those standards require that we comply with
relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain
reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial report. The procedures selected depend on the auditor’s judgement, including the assessment of
the risks of material misstatement of the financial report, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control, relevant to the company’s preparation of the
financial report that gives a true and fair view, in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation
of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

For personal use only

Auditor’s Independence Declaration

In conducting our audit, we have complied with the independence requirements of the Corporations Act
2001. We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of Drummond Gold Limited, would be in the same terms if given to the
directors as at the time of this auditor’s report.

Opinion

In our opinion:

(a) the financial report Drummond Gold Limited is in accordance with the Corporations Act 2001,

including:

(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2014 and of

its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) the consolidated financial statements also comply with International Financial Reporting Standards as

disclosed in Note 3.

Material Uncertainty Regarding Continuation as a Going Concern

Without modifying our opinion, we draw attention to Note 3(b) in the financial report which indicates that
the consolidated entity experienced net cash outflows from operations of $338,294 (excluding the research
and development tax refund of $398,780) and generated a net loss of $4,632,510 during the year ended 30
June 2014. These conditions, along with other matters as set forth in Note 3(b), indicate the existence of a
material uncertainty which may cast significant doubt about the company’s and consolidated entity’s ability
to continue as going concerns and therefore, the company and consolidated entity may be unable to realise
their assets and extinguish their liabilities in the normal course of business and at the amounts stated in the
financial report.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 14 to 18 of the directors’ report for the year
ended 30 June 2014. The directors of the company are responsible for the preparation and presentation of
the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.

Opinion

In our opinion the Remuneration Report of Drummond Gold Limited for the year ended 30 June 2014,
complies with section 300A of the Corporations Act 2001.

DELOITTE TOUCHE TOHMATSU

Stephen Tarling
Partner
Chartered Accountants
Brisbane, 30 September 2014

For personal use only

Directors’ declaration
The Directors declare that:

in the Directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its
debts as and when they become due and payable;
in the Directors’ opinion, the attached financial statements and notes thereto are in accordance with the
Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the
financial position and performance of the consolidated entity;
In the director’s opinion, the financial statements and notes thereto are in accordance with International
Financial Reporting Standards issued by the International Accounting Standards Board as stated in note 3 in
the financial statements; and
the Directors have been given declarations required by s.295A of the Corporations Act 2001.

Signed in accordance with a resolution of the Directors made pursuant to s.295(5) of the Corporations Act 2001.

On behalf of the Directors

Eduard Eshuys
Executive Chairman
Brisbane, 30 September 2014

For personal use only

Consolidated statement of profit and loss and other comprehensive income

for the financial year ended 30 June 2014

Interest income
Other income
Other income –options

Marketing expenses
Operating lease rental expenses:
Minimum lease payments
Depreciation expenses
Employee benefit expenses
Directors’ fees
Consultants and contractor expenses
Administration expenses
Finance costs
Loss on sale of fixed asset
Bad debts written off
Impairment- share options
Impairment - shares
Impairment - exploration and evaluation expenditure

Loss before tax
Income tax benefit

Loss attributable to members of the parent entity

Other comprehensive income
Items that may be reclassified subsequent to profit and loss
Reclassification adjustment relating to available for sale financial assets that
were written off during the financial year

Income tax on other items of other comprehensive income

Note

Year ended
30/06/14
$

Year ended
30/06/13
$

3,901
455
-

11,742
-
347,231

(12,933)

(37,594)
(67,744)
(75,614)
(98,611)
(177,444)
(159,780)
(590)
(7,561)
-
-
-
(4,285,427)

(53,519)
(75,175)
(22,438)
(71,250)
(162,377)
(120,558)
(567)
-
(60,716)
(986,206)
(320,000)
(4,055,094)

(4,906,009)
273,499

(5,581,860)
477,965

(4,632,510)

(5,103,895)

-
-

112,500
112,500

Total comprehensive loss for the year

(4,632,510)

(4,991,395)

Earnings per share

Basic loss per share (cents per share)
Diluted loss per share (cents per share)

16
16

(1.22)
(1.22)

(2.17)
(2.17)

Notes to the financial statements are included on pages 27 to 49.

For personal use only

Consolidated statement of financial position

as at 30 June 2014

Current assets
Cash and cash balances
Current tax assets
Trade and other receivables
Total current assets

Non-current assets
Trade and other receivables
Property, plant and equipment
Exploration and evaluation expenditure
Total non-current assets

Total assets

Current liabilities
Trade and other payables
Provisions
Total current liabilities

Non-current liabilities
Provisions
Total non-current liabilities

Total liabilities

Net assets

Equity
Issued capital
Reserves
Accumulated losses
Total equity

Notes to the financial statements are included on pages 27 to 49.

Note

Year ended
30/06/14
$

Year ended
30/06/13
$

7
6
8

8
9
10

11
12

13
14
15

241,700
271,784
12,948
526,432

169,612
397,065
43,914
610,591

371,183
245,907
2,000,000
2,617,080

378,408
360,305
5,879,972
6,618,685

3,143,522

7,229,276

343,656
7,877
351,533

238,389
11,610
249,999

471,054
471,054

822,587

721,053

2,320,935

6,508,223

20,026,223
300,652
(18,005,940)
2,320,935

19,581,001
300,652
(13,373,430)
6,508,223

For personal use only

Consolidated statement of changes in equity

for the financial year ended 30 June 2014

Fully paid
ordinary
shares

Option
premium
reserve

Consolidated

Share
revaluation
reserve
$

Accumulated
Losses

Total

Balance at 1 July 2012
Loss for the year
Other comprehensive
income for the year, net of
income tax
Total comprehensive loss
for the year

19,581,001
-

300,652
-

(112,500)
112,500

(8,269,535)
(5,103,895)

11,499,618
(4,991,395)

112,500

(5,103,595)

(4,991,395)

Balance at 30 June 2013

19,581,001

300,652

(13,373,430)

6,508,223

Balance at 1 July 2013

19,581,001

300,652

Issue of shares

Loss for the year

445,222

Total comprehensive loss
for the year

Balance at 30 June 2014

20,026,223

300,652

(13,373,430)

6,508,223

445,222

(4,632,510)

(18,005,940)

2,320,935

Notes to the financial statements are included on pages 27 to 49.

For personal use only

Consolidated statement of cash flows

for the financial year ended 30 June 2014

Cash flows from operating activities
Payments to suppliers and employees
Interest and other costs of finance paid
Income tax refund relating to eligible research and development activities
Net cash generated/(used) by operating activities

Year ended
30/06/14
$

Year ended
30/06/13
$

(337,704)
(590)
398,780
60,486

(644,221)
(567)
1,172,894
528,106

Note

Cash flows from investing activities
Interest received
Proceeds from security deposits
Proceeds from property, plant and equipment
Refunds of deposits
Payments for exploration and evaluation activities

Net cash used by investing activities

Cash flows from financing activities
Proceeds from issues of equity securities
Payment for share issue costs

Net cash generated by financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at the beginning of the financial year

Cash and cash equivalents at the end of the financial year

7, 21

Notes to the financial statements are included on pages 27 to 49.

3,663
-
43,501
10,911
(391,695)

12,422
600
-
-
(949,831)

(333,620)

(936,809)

380,000
(34,778)

345,222

-
-

72,088

(408,703)

169,612

578,315

241,700

169,612

For personal use only

Notes to the financial statements

for the year ended 30 June 2014

Income taxes

Issued capital

Trade and other receivables

1. General information
2. Application of new and revised Accounting Standards
3. Significant accounting policies
4. Critical accounting judgements and key sources of estimation uncertainty
5. Business and geographical segments
6.
7. Cash and cash balances
8.
9. Property, plant and equipment
10. Exploration and evaluation expenditure
11. Trade and other payables
12. Provisions
13.
14. Reserves
15. Accumulated losses
16. Loss per share
17. Dividends
18.
19. Leases
20. Subsidiaries
21. Notes to the statement of cash flows
22. Contingent liabilities and contingent assets
23. Financial instruments
24. Key management personnel compensation
25. Share-based payments
26. Related party transactions
27. Parent entity disclosures
28. Remuneration of auditors
29. Farm-In agreements

Information relating to mining tenements

28
28
31
38
39
39
40
41
41
42
42
42
43
43
43
43
44
44
45
45
45
46
46
47
47
48
48
49
49

For personal use only

1. General information

Drummond Gold Limited (the Company) is a public company listed on the Australian Securities Exchange (trading under
the code DGO), incorporated in Australia and operating in Queensland. Drummond Gold Limited’s registered office and
its principal place of business are as follows:

Registered office
Unit 3 636 Progress Road
Wacol Qld 4076

Principal place of business
Lot 1 Mill Street
Mt Coolon Qld 4804

The Group’s principal activity is exploration for gold and other minerals through the Company and its wholly owned
subsidiaries Mt Coolon Gold Mines Pty Ltd and Yandan Gold Mines Pty Ltd.

2. Application of new and revised Accounting Standards

2.1 New and revised ASSBs affecting amount reported and/or disclosures in the financial statements.

In the current year, the Group has applied a number of new and revised AASB’s issued by the Australian Accounting
Standards Board (AASB) that are mandatory effective for an accounting period that begins on or after 1 January 2013.

AASB 2011-4 ‘Amendments to Australian
Accounting Standards to Remove Individual
Key Management Personnel Disclosure
Requirements’

This standard removes the individual key management personnel
disclosure requirements in AASB 124 ‘Related Party Disclosures.’ As a
result the Group only discloses the key management personnel
compensation in total and for each of the categories required in AASB
124.

AASB 2012-2 ‘Amendments to Australian
Accounting Standards – Disclosures –
Offsetting Financial Assets and Financial
Liabilities’

AASB 2012-5 ‘Amendments to Australian
Accounting Standards arising from Annual
Improvements 2009- 2011 Cycle’

In the current year the individual key management personnel disclosure
previously required by AASB 124 is now disclosed in the remuneration
report due to an amendment to Corporations Regulations 2001 issued in
June 2013.

The Group has applied the amendments to AASB 7 ‘Disclosures –
Offsetting Financial Assets and Financial Liabilities’ for the first time in
the current year. The amendments to AASB 7 require entities to disclose
information about rights of offset and related arrangements (such as
collateral posting requirements) for financial instruments under an
enforceable master netting agreement or similar arrangement.

The amendments have been applied retrospectively. As the Group does
not have any offsetting arrangements in place, the application of the
amendments does not have any material impact on the consolidated
financial statements.

The Annual Improvements to AASBs 2009 - 2011 have made a number
of amendments to AASBs. The amendments that are relevant to the
Group are the amendments to AASB 101 regarding when a statement of
financial position as at the beginning of the preceding period (third
statement of financial position) and the related notes are required to be
presented. The amendments specify that a third statement of financial
position is required when a) an entity applies an accounting policy
retrospectively, or makes a retrospective restatement or reclassification
of items in its financial statements, and b) the retrospective application,
restatement or reclassification has a material effect on the information in
the third statement of financial position. The amendments specify that
related notes are not required to accompany the third statement of
financial position.

AASB 2012-9 ‘Amendment to AASB 1048
arising from the Withdrawal of Australian
Interpretation 1039’

This standard makes amendment to AASB 1048 ‘Interpretation of
Standards’ following the withdrawal of Australian Interpretation 1039
‘Substantive Enactment of Major Tax Bills in Australia’. The adoption of
this amending standard does not have any material impact on the
consolidated financial statements.

For personal use only

2.1 New and revised ASSBs affecting amount reported and/or disclosures in the financial statements (cont’d)

AASB CF 2013-1 ‘Amendments to the
Australian Conceptual Framework’ and
AASB 2013-9 ‘Amendments to Australian
– Conceptual
Accounting Standards
and Financial
Framework, Materiality
Instruments’
Conceptual
Framework)

(Part

This amendment has incorporated IASB’s Chapters 1 and 3 Conceptual
Framework for Financial Reporting as an Appendix to the Australian
the Preparation and Presentation of Financial
Framework
Statements. The amendment also
included not-for-profit specific
paragraphs to help clarify the concepts from the perspective of not-for-
profit entities in the private and public sectors.

for

As a result the Australian Conceptual Framework now supersedes the
objective and the qualitative characteristics of financial statements, as
well as the guidance previously available in Statement of Accounting
Concepts SAC 2 ‘Objective of General Purpose Financial Reporting’.
The adoption of this amending standard does not have any material
impact on the consolidated financial statements.

New and revised Standards on consolidation, associates and disclosures

In August 2011, a package of five standards on consolidation, joint arrangements, associates and disclosures was
issued comprising AASB 10 ‘Consolidated Financial Statements’, AASB 11 ‘Joint Arrangements’, AASB 12 ‘Disclosure
of Interests in Other Entities’, AASB 127 (as revised in 2011) ‘Separate Financial Statements’ and AASB 128 (as
revised in 2011) ‘Investments in Associates and Joint Ventures’. Subsequent to the issue of these standards,
amendments to AASB 10, AASB 11 and AASB 12 were issued to clarify certain transitional guidance on the first-time
application of the standards.

In the current year, the Group has applied for the first time AASB 10, AASB 11, AASB 12 and AASB 128 (as revised in
2011) together with the amendments to AASB 10, AASB 11 and AASB 12 regarding the transitional guidance. AASB
127 (as revised in 2011) is not applicable to the Group as it deals only with separate financial statements.

The impact of the application of these standards is set out below.

AASB
Statements’

‘Consolidated

Financial

AASB 12 ‘Disclosure of Interests in Other
Entities’ and AASB 2011-7 ‘Amendments to
Australian Accounting Standards arising
from
Joint
consolidation
Arrangements standards’

and

the

AASB 13 ‘Fair Value Measurement’ and
AASB 2011-8 ‘Amendments to Australian
Accounting Standards arising from AASB
13’

ASB 10 amends the definition of ‘control’ in AASB 127. As the
subsidiaries are wholly-owned, there is no change in the assessment of
control over the subsidiaries. The application of AASB 10 does not have
any material impact on the financial statements.

AASB 12 is a new disclosure standard and is applicable to entities that
have interests in subsidiaries, joint arrangements, associates and/or
unconsolidated structured entities. In general, the application of AASB
12 has resulted in more extensive disclosures in the consolidated
financial statements.

The Group has applied AASB 13 for the first time in the current year.
AASB 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements. The
scope of AASB 13 is broad; the fair value measurement requirements of
AASB 13 apply to both financial instrument items and non-financial
instrument items for which other AASBs require or permit fair value
measurements and disclosures about fair value measurements, except
for share based payment transactions that are within the scope of AASB
2 ‘Share-based Payment’, leasing transactions that are within the scope
of AASB 117 ‘Leases’, and measurements that have some similarities to
fair value but are not fair value (e.g. net realisable value for the purposes
of measuring inventories or value in use for impairment assessment
purposes).

AASB 13 defines fair value as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction in the
principal (or most advantageous) market at the measurement date under
current market conditions. Fair value under AASB 13 is an exit price
regardless of whether that price is directly observable or estimated using
another valuation technique. Also, AASB 13 includes extensive
disclosure requirements.

AASB 13 requires prospective application from 1 July 2013. In addition,
specific transitional provisions were given to entities such that they need
not apply the disclosure requirements set out in the Standard in
comparative information provided for periods before the initial application
of the Standard. In accordance with these transitional provisions, the
Group has not made any new disclosures required by AASB 13 for the

For personal use only

AASB 13 ‘Fair Value Measurement’ and
AASB 2011-8 ‘Amendments to Australian
Accounting Standards arising from AASB
13’

2013 comparative period. Other than the additional disclosures, the
application of AASB 13 does not have any material impact on the
amounts recognised in the consolidated financial statements.

AASB 2012-10 ‘Amendments to Australian
Accounting
Guidance and Other Amendments’

Standards

Transition

–

This standard amends AASB 10 and various Australian Accounting
Standards to revise the transition guidance on the initial application of
those Standards . This standard also clarifies the circumstances in which
adjustments to an entity’s previous accounting for its involvement with
other entities are required and the timing of such adjustments. The
adoption of this amending standard does not have any material impact
on the consolidated financial statements.

2.2 Standards and Interpretations in issue not yet adopted

At the date of authorisation of the financial statements, the Standards and Interpretations listed below were in issue but
not yet effective.

Standard/Interpretation

Effective for annual reporting
periods beginning on or after

Expected to be initially applied in
the financial year ending

AASB 9 ‘Financial Instruments’, and
the relevant amending standards1

AASB 1031 ‘Materiality’ (2013)

2012-3

‘Amendments

AASB
to
Australian Accounting Standards –
Offsetting Financial Assets
and
Financial Liabilities’

1 January 2018

30 June 2019

1 January 2014

30 June 2015

AASB 2013-3 ‘Amendments to AASB
Amount
Recoverable
135
Disclosures for Non- Financial Assets’

–

1 January 2014

30 June 2015

2013-4

‘Amendments

AASB
to
Australian Accounting Standards –
Novation
and
Continuation of Hedge Accounting’

Derivatives

2013-5

AASB
to
Australian Accounting Standards –
Investment Entities’

‘Amendments

2013-9

‘Amendments

AASB
to
Australian Accounting Standards –
Conceptual Framework, Materiality
and Financial Instruments’

INT 21 ‘Levies’

2014-1

‘Amendments

AASB
to
Australian Accounting Standards’ -
Part A: ‘Annual Improvements 2010–
2012 and 2011–2013 Cycles’ - Part B:
‘Defined Benefit Plans: Employee
Contributions (Amendments to AASB
119)’ - Part C: ‘Materiality’

2014-1

‘Amendments

AASB
to
Australian Accounting Standards’ –
Part D: ‘Consequential Amendments
arising from AASB 14’

2014-1

AASB
to
Australian Accounting Standards’ –
Part E: ‘Financial Instruments’

‘Amendments

1 January 2014

30 June 2015

1 January 2014

30 June 2015

1 January 2014

30 June 2015

1 January 2014

1 July 2014

30 June 2015

1 January 2016

30 June 2017

1 January 2015

30 June 2016

AASB
Accounts’

‘Regulatory Deferral

1 January 2016

30 June 2017

2014-3

‘Amendments

AASB
to
Australian Accounting Standards –
Accounting
of
Interests in Joint Operations

Acquisitions

for

1 January 2016

30 June 2017

For personal use only

2014-4

‘Amendments

AASB
to
Australian Accounting Standards –
Clarification of Acceptable Methods of
Depreciation and Amortisation

1 January 2016

30 June 2017

2.2 Standards and Interpretations in issue not yet adopted (cont’d)

At the date of authorisation of the financial statements, the following IASB Standards and IFRIC Interpretations were
also in issue but not yet effective, although Australian equivalent Standards and Interpretations have not yet been
issued.

Standard/Interpretation

Effective for annual reporting
periods beginning on or after

Expected to be initially applied in
the financial year ending

IFRS 15 ‘Revenue from Contracts with
Customers’

1 January 2017

30 June 2018

1 January 2016

30 June 2017

1 January 2016

30 June 2017

1 January 2016

30 June 2017

Agriculture:
(Amendments to IAS 16 and IAS 41)

Bearer

Plants

Equity Method in Separate Financial
Statements (Amendments to IAS 27)

Narrow-scope amendments to IFRS
10 Consolidated Financial Statements
and IAS 28 Investments in Associates
and Joint Ventures (2011)

3. Significant accounting policies

Statement of compliance

The financial report is a general purpose financial report which has been prepared in accordance with the Corporations
Act 2001, Accounting Standards and Interpretations, and complies with other requirements of the law.

The financial statements comprise the consolidated financial statements of the Group. For the purpose of preparing the
consolidated financial statements, the Company is a for-profit entity.

Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘A-IFRS’).
Compliance with A-IFRS ensures that the financial statements and notes of the Group comply with International
Financial Reporting Standards (‘IFRS’).

The financial statements were authorised for issue by the Directors on 30 September 2014.

Basis of preparation
The financial report has been prepared on the basis of historical cost, except for the revaluation of certain non-current
assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All
amounts are presented in Australian dollars, unless otherwise noted.

The following significant accounting policies have been adopted in the preparation and presentation of the financial
report:

(a) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities (including
special purpose entities) controlled by the Company (its subsidiaries) (referred to as ‘the Group’ in these financial
statements). Control is based on whether the investor has power over the investee, exposure, or rights, to
variable returns from its involvement in the investee, and the ability to use its power over the investee to affect
the amount of the returns.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of
comprehensive income from the effective date of acquisition or up to the effective date of disposal, as
appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with those used by other members of the Group. All intra-group transactions, balances, income
and expenses are eliminated in full on consolidation.

For personal use only

(b) Going concern

The financial report has been prepared on the basis that the consolidated entity is a going concern, which
contemplates the continuity of planned business activity and the realisation of assets and the settlement of
liabilities in the normal course of business. The consolidated entity experienced net cash outflows from
operations of $338,294 (excluding the research and development tax refund of $398,780) during the financial
year ended 30 June 2014 and held a cash balance of $241,700 as at that date. The consolidated entity
generated a net loss of $4,632,510 during the financial year (after impairment losses recorded of $4,285,427).

During the financial year ended 30 June 2014 and the period to the date of this report the directors have taken
steps to ensure the company and the consolidated entity continue as going concerns. These steps include the
following:

• On 10 September 2013 the Company announced the successful share placement of 35,000,000 fully
paid ordinary shares at an issue price of $0.002 (0.2 cents) per share raising a total of $70,000 which
includes the placement of 20,000,000 shares at an issue price of $0.002 (0.2 cents) per share to
Resource Capital Fund V L.P. (“RCF”);

• On 21 November 2013 the Company completed a share placement of 155,000,000 fully paid ordinary

shares at an issue price of $0.002 (0.2 cents) per share raising a total of $310,000 to RCF;

•

• On 21 November 2013 the Company issued 33,333,333 fully paid ordinary shares at an issue price of
$0.003 (0.3 cents) per share to the directors or their nominees in lieu of payment of $58,333.30 in
Directors’ Fees and in lieu of payment of $41,666.70 in Chairman’s Salary. Non-cash consideration will
be considered by the Directors in relation to the settlement of Directors’ fees and Chairman’s Sal ary in
lieu of cash payments in current and future periods depending on corporate outcomes and
circumstances;
Throughout the year, the Company has prepared and continues to review a series of scenario budgets
and cash flow forecasts, including the current hibernation scenario, prepared and updated by
management for board review and approval. These tools have been used by management in tightly
controlling expenditure and cash outgoings of the Company and the consolidated entity which has
resulted in a reduction of administration costs;
The Company has negotiated arrangements with specific creditors and related parties to manage short
term cash requirements; and
The Board of Directors is considering various options in relation to negotiating farm in or joint venture
arrangements for the Mt Coolon tenements that would result in the reduction of tenement holding costs
by approximately $147,000 per annum.

•

Notwithstanding the above initiatives, the ability of the Company and the consolidated entity to continue as going
concerns is dependent upon:

•

•
•

receipt of approximately $244,000 (net of expenses) in November 2014 for a research and development
tax refund relating to eligible research and development activities for the 2014 year;
completion of a an intended capital raising of $250,000 by March 2015; and
receipt of approximately $247,000 (net of expenses) in September 2015 for a research and development
tax refund for the 2015 year.

If additional funds are raised the Company and the consolidated entity would have funds available for further
exploration activities and ongoing corporate expenditure.

The Directors are of the opinion that the basis upon which the financial statements are prepared is appropriate in
the circumstances as the Directors believe that they can raise sufficient capital to meet their budgeted activities
and continue planned operations. However, if the Company and consolidated entity are unable to complete the
intended capital raising and do not receive the research and development tax refunds on a timely basis or is
unable to joint venture its Mt Coolon Exploration Tenements there is significant uncertainty as to whether the
Company and the consolidated entity can continue as going concerns. Should the Company and consolidated
entity be unable to continue as going concerns they may be required to realise their assets and extinguish their
liabilities other than in the normal course of business and at amounts different from those stated in the financial
report.

The financial report does not include any adjustments relating to the recoverability and classification of recorded
asset amounts nor to the amounts and classification of liabilities that may be necessary should the Company and
consolidated entity be unable to continue as going concerns.

Under AASB3 Business Combinations, acquisitions of subsidiaries and businesses are accounted for using the
acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values (at the
date of exchange) of assets given, liabilities incurred or assumed, and equity instruments issued by Group in
exchange for control of the acquiree. Acquisition-related costs are recognised in profit or loss as incurred.

Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent
consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in such fair values

For personal use only

are adjusted against the cost of acquisition where they qualify as measurement period adjustments (see below).
All other subsequent changes in the fair value of contingent consideration classified as an asset or liability are
accounted for in accordance with relevant Standards. Changes in the fair value of contingent consideration
classified as equity are not recognised.

Where a business combination is achieved in stages, the Group’s previously held interests in the acquired entity
are remeasured to fair value at the acquisition date (i.e. the date the Group attains control) and the resulting gain
or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition
date that have previously been recognised in other comprehensive income are reclassified to profit or loss, where
such treatment would be appropriate if that interest were disposed of.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition
under AASB 3(2008) are recognised at their fair value at the acquisition date, except that:

•

deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements are
recognised and measured in accordance with AASB 112 Income Taxes and AASB 119 Employee
Benefits respectively;
liabilities or equity instruments related to the replacement by the Group of an acquiree’s share based
payment awards are measured in accordance with AASB 2 Share-based Payment; and
assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 Noncurrent
Assets Held for Sale and Discontinued Operations are measured in accordance with that Standard.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see below), or additional assets or
liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the
acquisition date that, if known, would have affected the amounts recognised as of that date.

The measurement period is the period from the date of acquisition to the date the Group obtains complete
information about facts and circumstances that existed as of the acquisition date – and is subject to a maximum
of one year.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition
under AASB 3 ‘Business Combinations’ are recognised at their fair values at the acquisition date, except for non -
current assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 ‘Non-current
Assets Held for Sale and Discontinued Operations’, which are recognised and measured at fair value less costs
to sell.

(d) Cash and cash equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term, highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in
value.

(e) Employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long
service leave, and sick leave when it is probable that settlement will be required and they are capable of being
measured reliably. Liabilities recognised in respect of short-term employee benefits are measured at their
nominal values using the remuneration rate expected to apply at the time of settlement.

Liabilities recognised in respect of long-term employee benefits are measured as the present value of the
estimated future cash outflows to be made by the Group in respect of services provided by employees up to
reporting date.

Defined contribution plans
Contributions to defined contribution superannuation plans are expensed when incurred.

(f) Financial assets

AFS financial assets
Listed shares and listed redeemable notes held by the Group that are traded in an active market are classified as
AFS and are stated at fair value. Investments in unlisted shares that are not traded in an active market but that
are also classified as AFS financial assets and stated at fair value (when the directors consider that fair value can
be reliably measured). Gains and losses arising from changes in fair value are recognised in other
comprehensive income and accumulated in the investments revaluation reserve, with the exception of
impairment losses, interest calculated using the effective interest method, and foreign exchange gains and losses
on monetary assets, which are recognised in profit or loss. Where the investment is disposed of or is determined
to be impaired, the cumulative gain or loss previously accumulated in the investments revaluation reserve is
reclassified to profit or loss.

For personal use only

Investments are recognised and derecognised on trade date where the purchase or sale of an investment is
under a contract whose terms require delivery of the investment within the timeframe established by the market
concerned, and are initially measured at fair value, net of transaction costs except for those financial assets
classified as at fair value through profit or loss which are initially measured at fair value.

Subsequent to initial recognition, investments in subsidiaries are measured at cost in the company financial
statements.

Other financial assets are classified into the following specified categories: financial assets ‘at fair value through
profit or loss’, ‘held-to-maturity investments’, ‘available-for-sale’ financial assets, and ‘loans and receivables’.
The classification depends on the nature and purpose of the financial assets and is determined at the time of
initial recognition.

Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating
interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset, or, where appropriate, a shorter period.

Income is recognised on an effective interest rate basis for debt instruments other than those financial assets ‘at
fair value through profit or loss’.

Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss where the financial asset:






has been acquired principally for the purpose of selling in the near future;
is a part of an identified portfolio of financial instruments that the Group manages together and has a
recent actual pattern of short-term profit-taking; or
is a derivative that is not designated and effective as a hedging instrument.

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss
recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest
earned on the financial asset.

Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in
an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost
using the effective interest method less impairment. Interest is recognised by applying the effective interest rate.

Impairment of financial assets
Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment at
each balance sheet date. Financial assets are impaired where there is objective evidence that as a result of one
or more events that occurred after the initial recognition of the financial asset the estimated future cash flows of
the investment have been impacted.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the assets
carrying amount and the present value of estimated future cash flows, discounted at the original effective interest
rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with
the exception of trade receivables where the carrying amount is reduced through the use of an allowance
account. When a trade receivable is uncollectable, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying
amount of the allowance account are recognised in profit or loss.

With the exception of available-for-sale equity instruments, 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, the previously recognised impairment loss is reversed through profit or loss to the
extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the
amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale- equity instruments, any subsequent increase in fair value after an impairment
loss is recognised directly in equity.

Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flow from the asset expire,
or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and
continues to control the transferred asset, the Group recognises a retained interest in the asset and an
associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of
ownership of the transferred financial asset, the Group continues to recognise the financ ial asset and also
recognises a collateralised borrowing for the proceeds received.

For personal use only

(g)

Exploration and evaluation assets

An exploration and evaluation asset shall only be recognised in relation to an area of interest if the following
conditions are satisfied:

(i)
(ii)

the rights to tenure of the area of interest are current; and
at least one of the following conditions is also met:




the exploration and evaluation expenditures are expected to be recouped through successful
development and exploitation of the area of interest, or alternatively, by its sale; or
exploration and evaluation activities in the area of interest have not at the reporting date
reached a stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in, or in relation to, the
areas of interest are continuing.

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable
area of interest. These costs are only carried forward to the extent that they are expected to be recouped
through the successful development of the area or where activities in the area have not yet reached a stage that
permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in
relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the
area is made. Capitalised exploration and evaluation expenditure is also written off in circumstances where the
Board has made a determination in consideration of external indicators of impairment.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life
of the area according to the rate of depletion of the economically recoverable reserves. A regular review is
undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in
relation to that area of interest.

(h)

Impairment of tangible and intangible assets

At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where the asset does not generate cash flows that are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent
basis of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or
otherwise they are allocated to the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identified.

Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for
impairment annually and whenever there is an indication that the asset may be impaired.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the estimates
of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised in profit or loss immediately.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying
amount does not exceed the carrying amount that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised in
profit or loss immediately.

Exploration and evaluation are assessed for impairment when facts and circumstances suggest that the carrying
value of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the
exploration and evaluation asset (or the cash generating unit(s) to which it has been allocated, being no larger
than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an
impairment loss subsequently reverses, the carrying value of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised in the previous years.

(i)

Income tax

Current tax
Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the
taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or

For personal use only

substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or
asset) to the extent that it is unpaid (or refundable).

The current tax asset is calculated by reference to the estimated Research and Development tax refunds relating
to eligible research and development activities (R&D tax refunds) during the financial year. The Company and
the consolidated entity are expecting to receive research and development tax offset with respect to its research
and development activities.

Deferred tax
Deferred tax is accounted for using the balance sheet liability method. Temporary differences are differences
between the tax base of an asset or liability and its carrying amount in the balance sheet. The tax base of an
asset or liability is the amount attributed to that asset or liability for tax purposes.

In principle, deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are
recognised to the extent that it is probable that sufficient taxable amounts will be available against which
deductible temporary differences or unused tax losses and tax offsets can be utilised. However, deferred tax
assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial
recognition of assets and liabilities (other than as a result of a business combination) which affects neither
taxable income nor accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences associated with investments in
subsidiaries, except where the Group is able to control the reversal of the temporary differences and it is
probable that the temporary differences will not reverse in the foreseeable future. Deferred tax assets arising
from deductible temporary differences associated with these investments and interests are only recognised to the
extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the
temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period(s) when
the asset and liability giving rise to them are realised or settled, based on tax rates (and tax laws) that have been
enacted or substantively enacted by reporting date. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting
date, to recover or settle the carrying amount of its assets and liabilities.

Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation
authority and the company/Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax for the period
Current and deferred tax is recognised as an expense or income in the income statement, except when it relates
to items credited or debited directly to equity, in which case the deferred tax is also recognised directly in equity.

(j)

Leased assets

Leases are classified as finance leases when the terms of the lease transfer substantially all the risks and
rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating
leases.

Group as lessee
Assets held under finance leases are initially recognised at their fair value or, if lower, at amounts equal to the
present value of the minimum lease payments, each determined at the inception of the lease. The corresponding
liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve
a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against
income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance
with the Group’s general policy on borrowing costs. Contingent rentals are recognised as expenses in the periods
in which they are incurred.

Finance leased assets are amortised on a straight line basis over the estimated useful life of the asset.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except
where another systematic basis is more representative of the time pattern in which economic benefits from the
leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in
the period in which they are incurred.

(k)

Property, plant and equipment

Land and buildings are measured at an historical cost basis. Depreciation on buildings is charged to profit or loss.
Plant and equipment, leasehold improvements and equipment under finance lease are stated at cost less
accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the ac quisition

For personal use only

of the item. In the event that settlement of all or part of the purchase consideration is deferred, cost is determined
by discounting the amounts payable in the future to their present value as at the date of acquisition.

Depreciation is provided on property, plant and equipment, including freehold buildings but excluding land.
Depreciation is calculated on a straight line basis so as to write off the net cost or other revalued amount of each
asset over its expected useful life to its estimated residual value. Leasehold improvements are depreciated over
the period of the lease or estimated useful life, whichever is the shorter, using the straight line method. The
estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting
period, with the effect of any changes recognised on a prospective basis.

(l)

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.

The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cashflows estimated to settle the present obligation, its carrying amount is the
present value of those cashflows.

When some or all of the economic benefits required to settle a provision are expected to be recovered from a
third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received
and the amount of the receivable can be measured reliably.

Onerous contracts
Present obligations arising under onerous contracts are recognised and measured as a provision. An onerous
contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the
obligations under the contract exceed the economic benefits expected to be received under it.

(m) Revenue

Revenue is measured at the fair value of the consideration received or receivable.

Dividend and interest revenue
Dividend revenue from investments is recognised when the shareholder’s right to receive payment has been
established.

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest
rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of
the financial asset to that asset’s net carrying amount on initial recognition.

(n)

Share-based payments

Equity-settled share-based payments with employees and others providing similar services are measured at the
fair value of the equity instrument at the grant date. Fair value is measured by use of the Black Scholes method.
The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of
non-transferability, exercise restrictions, and behavioural considerations.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-
line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest.

Equity-settled share-based payment transactions with other parties are measured at the fair value of the goods
and services received, except where the fair value cannot be estimated reliably, in which case they are measured
at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the
counterparty renders the service.

For cash-settled share-based payments, a liability equal to the portion of the goods or services received is
recognised at the current fair value determined at each reporting date.

(o) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:

(i) where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as

part of the cost of acquisition of an asset or as part of an item of expense; or
for receivables and payables which are recognised inclusive of GST.

(ii)

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables
or payables.

For personal use only

Cash flows are included in the cash flow statement on a gross basis. The GST component of cash flows arising
from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified
as operating cash flows.

(p)

Provision for restoration and rehabilitation

A provision for restoration and rehabilitation is recognised when there is a present obligation as a result of
exploration and development activities undertaken, it is probable that an outflow of benefits will be required to
settle the obligation and the provision can be measured reliably. The estimated future obligations include the
costs of restoring the affected exploration and evaluation areas contained in the Group’s tenements.

The provision for future restoration is the best estimate of the present value of the expenditure required to settle
the restoration obligation at the reporting date. Future restoration costs will be reviewed annually and any
changes in the estimate are reflected in the present value of the restoration provision at eac h reporting date.

The initial estimate of restoration and rehabilitation relating to exploration and evaluation assets is capitalised into
the cost of the related asset and is amortised on the same basis as the related asset. Changes in the estimate of
the provision for restoration and rehabilitation are treated in the same way, except that the unwinding of the effect
of discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the
related asset.

(q) Government Grants

Government grants are assistance by the government in the form of transfers of resources to the Group in return
for past or future compliance with certain conditions relating to the operating activities of the entity. Government
grants include government assistance where there are no conditions specifically relating to the operating
activities of the Group other than the requirement to operate in certain regions or industry sectors.

Government grants are recognised when there is reasonable assurance that the Group will comply with the
conditions attaching to them and the grants will be received.

4. Critical accounting judgements and key sources of estimation uncertainty

In the application of the Group’s accounting policies, which are described in note 3, management is required to make
judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily ap parent from
other sources. The estimates and associated assumptions are based on historical experience and various other factors
that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments.
Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the
revision and future periods if the revision affects both current and future periods.

The following are the critical judgements (apart from those involving estimations, which are dealt with below), that
management has made in the process of applying the Group’s accounting policies and that have the most significant
effect on the amounts recognised in the financial statements:

Impairment of assets and exploration and evaluation expenditure
The Company determines whether non-current assets should be assessed for impairment based on identified
impairment triggers. At each reporting date management assesses the impairment triggers based on their knowledge
and judgement.

Recoverability of Deferred Tax Assets
Deferred tax assets are not recognised for deductible temporary differences or carried forward tax losses if Directors
consider that it is not probable that the Consolidated Group will able be to utilise those temporary differences until the
Consolidated Entity becomes profitable.

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the
balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and
liabilities within the next financial year:

Exploration, evaluation and development expenditure
The exploration, evaluation and development expenditure is reviewed regularly to ensure that the capitalised
expenditure is only carried forward to the extent that it is expected to be recouped through the successful development
of the areas of interest or when activities in the areas of interest have not yet reached a stage which permit reasonable
assessment of the existence of economically recoverable reserves.

For personal use only

The Board has reviewed the recoverable amount of the consolidated entity’s exploration and evaluation assets which
consist of the Mt Coolon Gold Mines Pty Ltd exploration tenements representing one complete segment. The
considered the various triggers for impairment including the level of short to medium term planned budget expenditure
on the Mt Coolon Tenements and that the fact that the carrying value of the consolidated entity’s net assets exceeds
Drummond Gold Limited’s market capitalisation.

The Board has determined that the recoverable amount of the consolidated entity’s exploration and evaluation assets to
be $2 million (2013: $5,879,972) after an impairment loss of $4,285,427 was recognised (2013: $4,055,094) as shown
in note 10. The recoverable amount have been calculated on an estimate of fair value less cost of disposal been based
on an Indicative Valuation Report prepared by an InterFinancial Corporate Finance Limited dated November 2013. The
Indicative Valuation Report makes reference to the enterprise value of ASX traded gold companies and the value of
proven gold resources.

Share-based payment transactions
The Company valued the 33,333,333 fully paid ordinary shares issued to Directors and the Chairman in lieu of
Directors’ Fees and Chairman’s Salary totalling $100,000 at $0.003 (0.3 cents) per share based. Further details
pertaining to the share-based be found in the Company’s Notice of Annual General Meeting dated 9 October 2013.

Provision for Rehabilitation
The provision for rehabilitation is based on the present obligations of the estimates of the future sacrifice of economic
benefits required to meet environmental liabilities on the Group’s tenements based on an assessment by the
Queensland Government’s Environmental Protection Agency. The Group has considered the provision for rehabilitation
for its exploration tenements based on report conducted by independent consultant. The Group estimates the
escalation in costs over time for rehabilitation would equate to the discount value in determining the present value of the
provision for rehabilitation.

Provision for Landowner Works
The provision of rehabilitation is based on the present obligations of the estimates of the future sacrifice of economic
benefits required to meet landowner obligations.

Research and Development

The current tax assets has been calculated on the information contained in the 2014 Application for Registration of R&D
Activities lodged with AusIndustry. AusIndustry has approved the registration of Mt Coolon Gold Mines Pty Ltd’s
research and developed activities for the 2014 financial year pursuant to section 27A of the Industry Research and
Development Act 1986. This registration allows the Mt Coolon Gold Mines Pty Ltd to complete the R&D Tax Incentive
Schedule which forms part of its 2014 income tax return. The current tax estimate represents the anticipated refund that
Mt Coolon Gold Mines Pty Ltd is expected to receive after lodgement of its 2014 Income Tax Return with the Australian
Taxation Office.

The eligibility of the activities under the R&D Tax Incentive is the responsibility of the registered entity under self -
assessment. It is noted AusIndustry may in the future examine the Mt Coolon Gold Mines Pty Ltd registration in detail
and this may lead to a formal finding about the eligibility of all or some of the registered activities.

During the 2014 financial year AusIndustry undertook a review of the Mt Coolon Gold Mines Pty Ltd R&D Tax Incentive
Registration for the 2012 financial year. On 22 July 2014 AusIndustry advised that they had completed their review
and no further compliance is proposed at this time in relation to the 2012 R&D Tax Incentive Registration.

Estimate of Useful lives of assets
The estimation of the useful lives of assets has been based on historical experience. In addition, the condition of the
assets is assessed at least once per year and considered against the remaining useful life. Details of the useful lives of
property, plant and equipment are set out in note 9.

5. Business and geographical segments

The Group operates predominately in one business segment being the evaluation and exploration of mineral deposits in
the Drummond Basin Queensland.

Income taxes

Tax (expense)/benefit comprises:
Current tax benefit (i)
Difference between the estimated and actual refund for the financial year (i)
Total income tax benefit (i)

Year ended
30/06/14
$

Year ended
30/06/13
$

271,784
1,715
273,499

397,065
80,900
477,965

For personal use only

The prima facie income tax expense on pre-tax accounting profit from operations reconciles to the income tax expense
in the financial statements as follows:

Loss from continuing operations
Income tax benefit calculated at 30%
Tax effects of amounts which are not assessable/ (deductible) in calculating
taxable income
Deferred tax assets not brought to account
Difference between the estimated and actual refund for the financial year (i)
Effect of concessions (research and development) (i)
Total tax (expense)/benefit (i)

Year ended
30/06/14
$
(4,906,009)
1,471,803

(482,371)
(989,432)
1,715
271,784
273,499

Year ended
30/06/13
$
(5,581,860)
1,674,558

(455,556)
(1,219,002)
80,900
397,065
477,965

(i) The current tax asset of $271,784 for the 30 June 2014 financial year represents the expected receivable from the
Australian Taxation Office for the 2014 financial year. It is noted that the income tax benefit of $273,499 detained
in the Consolidated Statement of Profit and Loss for 30 June 2014 financial year is represented by the estimated
2014 financial year income tax benefit of $271,784 and $1,715 income tax benefit from the 2013 financial year
being the difference between the estimated income tax benefit of $397,065 and the actual income tax benefit
received of $398,780.

The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on
taxable profits under Australian tax law. There has been no change in the corporate tax rate when compared with the
previous reporting period.

Unrecognised deferred tax balances

The following deferred tax assets have not been brought to account:
-Share issue costs
-Tax losses revenue

Recognised deferred tax assets and liabilities

Tax losses revenue
Accruals
Employee entitlements
Provision for rehabilitation

Deferred tax liabilities:
Interest receivable
Prepayments
Exploration and evaluation expenditure

Year ended
30/06/14
$

Year ended
30/06/13
$

24,995
5,589,651
5,614,646

50,732
4,574,483
4,625,215

Year ended
30/06/14
$

405,539
77,033
2,363
118,816

Year ended
30/06/13
$
1,592,847
56,690
3,483
118,816

(252)
(3,499)
(600,000)
-

(181)
(7,664)
(1,763,991)
-

No deferred tax asset has been recognised as it is not considered probable that there will be sufficient future taxable
profits available against which the unused tax losses can be utilised in the foreseeable future. The Company and
consolidated group are not in a tax consolidated group.

7. Cash and cash balances

Cash at Bank

Year ended
30/06/14
$

Year ended
30/06/13
$

241,700

169,612

For personal use only

8. Trade and other receivables

Current
Interest receivable
Prepayments
Other- deposits
Goods and services tax receivable

Non Current
Other – deposits
Environmental bonds – mining tenements (i)

Year ended
30/06/14
$

Year ended
30/06/13
$

842
11,663
-
443
12,948

-
371,183
371,183
384,131

604
25,545
3,687
14,078
43,914

7,224
371,184
378,408
422,322

(i) The Environmental Bonds are lodged with the Department of Employment, Economic Development and Innovation
and will not be refundable until the Group has received clearance advice from the Environmental Protection
Authority at a time when the Group relinquishes its exploration permits or mining leases.

9. Property, plant and equipment

Balance at 1 July 2013
Additions
Disposals
Balance at 30 June 2014

Accumulated depreciation
Balance at 1 July 2013
Depreciation expense
Disposals
Balance at 30 June 2014

Net book value
As at 30 June 2014

Balance at 1 July 2012
Additions
Disposals
Balance at 30 June 2013

Accumulated depreciation
Balance at 1 July 2012
Depreciation expense
Disposals
Balance at 30 June 2013

Net book value
As at 30 June 2013

2014 Consolidated

Freehold
land
at cost

Motor
vehicles at
cost

Leasehold and
freehold
improvements
at cost
$

51,668
-
-
51,668

-
-
-
-

189,314
-
(61,364)
127,950

(63,077)
(14,777)
14,710
(63,144)

144,954
-
-
144,954

(82,598)
(12,189)
-
(94,787)

Furniture
at cost

Other plant and
equipment at
cost

Total

31,525
-
-
31,525

(14,278)
(2,439)
-
(16,717)

343,298
-
(1,761)
341,537

760,759
-
(63,125)
697,634

(240,501)
(38,339)
1,761
(277,079)

(400,454)
(67,744)
16,471
(451,727)

51,668

64,806

50,167

14,808

64,458

245,907

2013 Consolidated

Freehold
land
at cost

Motor
vehicles at
cost

51,668
-
-
51,668

-
-
-
-

189,314
-
-
189,314

(45,870)
(17,207)
-
(63,077)

Leasehold and
freehold
improvements
at cost
$

144,954
-
-
144,954

(70,390)
(12,208)
-
(82,598)

Furniture
at cost

Other plant and
equipment at
cost

Total

31,525
-
-
31,525

(11,836)
(2,442)
-
(14,278)

343,298
-
-
343,298

760,759
-
-
760,759

(197,183)
(43,318)
-
(240,501)

(325,279)
(75,175)
-
(400,454)

51,668

126,237

62,356

17,247

102,797

360,305

The following useful lives are used in the calculation of depreciation:

Leasehold and freehold improvements

Motor vehicles

Furniture
Other plant and equipment

10 – 40 years

5 –12 years

10 – 20 years
3 – 25 years

For personal use only

10. Exploration and evaluation expenditure

Gross carrying amount balance:
Balance at beginning of financial year
Additions
Balance at end of the financial year

Accumulated write off/impairment:
Balance at beginning of financial year
Amounts written off/impaired
Balance at end of financial year

Net book value at end of financial year

Year ended
30/06/14
$

15,793,986
405,455
16,199,441

Year ended
30/06/13
$

14,827,263
966,723
15,793,986

(9,914,014)
(4,285,427)
(14,199,441)

(5,858,920)
(4,055,094)
(9,914,014)

2,000,000

5,879,972

(i) The exploration and evaluation expenditure for the Group represents capitalised costs of exploration areas of
interest carried forward as an asset in accordance with the accounting policy set out in note 3 ( g). The ultimate
recoupment of the exploration and evaluation expenditure in respect of the areas of interest carried forward is
dependent upon the discovery of commercially viable reserves and the successful development and exploitation of
the respective areas or alternatively the sale of the underlying areas of interest for at least their carrying value.
Amortisation, in respect to each relevant area of interest is not charged to the income statement until a mining
operation is commenced or when tenements are relinquished.

11. Trade and other payables

Trade payables (i)
Other – accrued expenses
Other – superannuation payable
Other – PAYG payable

Year ended
30/06/14
$
86,661
256,777
-
218
343,656

Year ended
30/06/13
$

44,699
188,967
2,166
2,557
238,389

(i) The average credit period on purchases of goods is 30 days. No interest is charged on the trade payables.

12. Provisions

Current
Employee benefits (i)

Non-current
Provision for rehabilitation expenditure (ii)
Provision for landowner works (iii)

Provision for rehabilitation expenditure (ii)

Balance at beginning of financial year
Disposals of tenements during the year
Balance at end of financial year

Provision for landowner works (iii)
Balance at beginning of financial year
Addition for the period
Balance at end of financial year

Year ended
30/06/14
$

Year ended
30/06/13
$

7,877
7,877

396,054
75,000
471,054
478,931

11,610
11,610

396,054
75,000
471,054
482,664

Year ended
30/06/14
$

396,054
-
396,054

Year ended
30/06/13
$
396,054
-
396,054

75,000
-
75,000

(ii) The Group’s current employee benefits are represented by provisions for annual leave totalling $7,877. The

average number of employees during the current financial year was 1 employee.

(iii) The non current provision for rehabilitation expenditure represents the current value of the Directors’ best estimates
of the future sacrifice of economic benefits required to meet environmental liabilities on the Group’s tenements

For personal use only

based on work conducted by the Queensland Environmental Protection Agency and the Company’s environmental
consultants.

(iv) The non current provision for landowner works represents the present value of the Directors’ best estimates of the

future sacrifice of economic benefits required to meet landowner works relating to the Group’s tenements.

13. Issued capital

459,021,975 fully paid ordinary shares
(2013: 235,688,642)

Fully paid ordinary shares
Balance at beginning of financial year
Issue of shares under private placements
Issue of shares to directors and chairman in lieu of payment
Share issue costs
Balance at end of financial year

Balance as at 1 July 2012
Movements

Balance as at 30 June 2013
Issue shares under private placements
Issue of shares to directors and chairman in lieu of payment
Share issue costs
Balance as at 30 June 2014

Other share options on issue as at 30 June 2014

There were no options on issue as at 30 June 2014.

Capital Management

Year ended
30/06/14
$

Year ended
30/06/13
$

20,026,223

19,581,001

19,581,001
380,000
100,000
(34,778)
20,026,223
Number of
shares
235,688,642
-

235,688,642
190,000,000
33,333,333
-
459,021,975

19,581,001
-
-
-
19,581,001

Share
capital $
19,581,001
-

19,581,001
380,000
100,000
(34,778)
20,026,223

Management controls the capital of the group in order to fund its operations and continue as a going concern. The
consolidated entity does not have any externally imposed capital requirements.

14. Reserves

Option premium reserve (i)

(i) The option premium reserve is a result of options being provided to directors.

15. Accumulated losses

Balance at beginning of financial year
Net loss attributable to members of the parent entity
Balance at end of financial year

16. Loss per share

Basic (loss) per share
From continuing operations
Total basic (loss) per share

Year ended
30/06/14
$

Year ended
30/06/13
$

300,652

Year ended
30/06/14
$
13,373,430
4,632,510
18,005,940

Year ended
30/06/13
$
8,269,535
5,103,895
13,373,430

Year ended
30/06/14
Cents
per share

Year ended
30/06/13
Cents
per share

(1.22)
(1.22)

(2.17)
(2.17)

For personal use only

Diluted (loss) per share
From continuing operations
Total diluted (loss)per share

(1.22)
(1.22)

(2.17)
(2.17)

Basic (loss) per share
The net (loss) and weighted average number of ordinary shares used in the calculation of basic (loss) per share are as
follows:

Net (loss)
(Loss) used in the calculation of basis (loss) per share from continuing operations

Weighted average number of ordinary shares used in the calculation of basic (loss)
per share

Year ended
30/06/14
$

Year ended
30/06/13
$

(4,632,510)

(5,103,895)

(4,632,510)

(5,103,895)

Year Ended
30/06/14
No.

Year Ended
30/06/13
No.

378,364,441

235,668,642

Diluted (loss) per share
The net (loss) and weighted average number of ordinary shares used in the calculation of diluted (loss) per share is as
follows:

Weighted average number of ordinary shares used in the calculation of diluted
(loss) per share

Net (loss)
(Loss) used in the calculation of diluted (loss) per share from continuing operations

17. Dividends

There were no dividends paid or proposed during the current or previous financial year.

18. Information relating to mining tenements

Year Ended
30/06/14
No.

Year Ended
30/06/13
No.

378,364,441

235,668,642

Year ended
30/06/14
$

Year ended
30/06/13
$

(4,632,510)

(5,103,895)

(4,632,510)

(5,103,895)

The Department of Natural Resources and Mines (DME) and other government authorities require holders of mining
tenements to pay rent, rates and to meet minimum exploration expenditures. It is noted that the Consolidated Entity can
apply to relinquish its mining tenements at any time thereby extinguishing its obligations to meet its rental obligations
and minimum exploration expenditure on the mining tenements. Moreover, variations to the terms of the current and
future tenement holdings, the granting of new tenements and changes at renewal or expiry, will change the minimum
exploration expenditures relating to the tenements.

DME has released Policy No 5/2012 dated October 2012 outlining expectations in relation to exploration permit work
programs pursuant to the Mineral Resources Act 1989 (MRA) which provides the tenement holder with greater flexibility
and time to complete the yearly expenditure commitments over a longer period. This Policy allows the consolidated
entity is able to meet its yearly expenditure in total over three years rather than annually.

The expected outlays which can be extinguished at any time which arise in relation to granted tenements inclusive are
as follows:-

Exploration and evaluation expenditure
Not longer than 1 year
Longer than 1 year and not longer than 5 years
Longer than 5 years

Year ended
30/06/14
$

Year ended
30/06/13
$

660,000
1,248,635
-
1,908,635

650,000
1,000,000
-
1,650,000

For personal use only

19. Leases

Operating leases
Leasing arrangements
Operating leases relate to the office lease that had a term of four years. In the 2013 financial year, the landlord granted
the Company a one year extension to the office lease. The office lease contract contains market review clauses in the
event that the Company exercises its option to renew.

Non-cancellable operating lease commitments

Not longer than 1 year
Longer than 1 year and not longer than 5 years

20. Subsidiaries

Name of entity

Country of incorporation

Parent entity
Drummond Gold Limited (i)
Subsidiaries
Mt Coolon Gold Mines Pty Ltd (i)
Yandan Gold Mines Pty Ltd (i)

Australia

Australia
Australia

Year ended
30/06/14
$

Year ended
30/06/13
$

-
-
-

14,485
-
14.485

Ownership interest

2014
%

100
100

2013
%

100
100

(i) The parent and the subsidiaries are not within a tax consolidated group.
(ii) There are no significant restrictions of the ability of the consolidated entity to use any of the consolidated entity’s

assets to settle the liabilities of the consolidated entity.

21. Notes to the statement of cash flows

(a) Reconciliation of cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents includes cash on hand and in banks and
investments in money market instruments, net of outstanding bank overdrafts. Cash and cash equivalents at the end of
the financial year as shown in the cash flow statement is reconciled to the related items in the statement of financial
position as follows:

Cash and cash equivalents

Year ended
30/06/14
$

241,700

Year ended
30/06/13
$
169,612

Reconciliation of (loss)/profit for the period to net cash flows from operating activities

Net (loss) for the year

Interest income
Receipt of shares and options recognised in profit or loss
Depreciation
Loss on sale of asset
Bad debts written off
Impairment and write off of options in Apex Minerals NL
Impairment and write off of shares in Apex Minerals NL
Impairment and write off of non-current-assets
Share based payment expense
Decrease/(increase) in assets:
Trade and other receivables
Prepayments
Income tax benefit receivable
(Decrease)/increase in liabilities:

Year ended
30/06/14
$
(4,632,510)

Year ended
30/06/13
$
(5,103,895)

(3,901)
-
67,744
7,106
-
-
-
4,285,427
100,000

4,483
13,882
125,281

(11,742)
(347,231)
75,175

60,716
986,206
320,000
4,055,094
-

11,267
26,934
694,929

For personal use only

Trade and other payables
Provisions – employee benefits
Net cash from operating activities

96,707
(3,733)

60,486

(233,761)
(5,586)

528,106

(b) Non cash transactions
During the financial year, the Company issued shares to the value of $100,000 in lieu of payment of outstanding
Director’s Fees and Chairman’s Salary.

22. Contingent liabilities and contingent assets

The Directors are not aware of any contingent liabilities or contingent assets that are likely to have a material effect on
the results of the Group as disclosed in these financial statements.

23. Financial instruments

(a) Financial risk management objectives
The Board monitors and manages the financial risk relating to the operations of the Group. The Group’s activities
include exposure to market risk, fair value interest rate risk, credit risk, liquidity risk and cas h flow interest rate risk. The
overall risk management program focuses on the unpredictability of the finance markets and seeks to minimise the
potential adverse effects on the financial performance. Risk management is carried out under the direction of the Board
of Directors.

(b) Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 3 to the financial statements.

(c) Market price risk
The Group is involved in the exploration and development of mining tenements for base metals including gold and
copper. Revenue associated with metal sales, and the ability to raise funds through equity and debt are dependent upon
the commodity price for resources.

(d) Interest rate risk
There is a limited amount of interest rate risk relating to the cash and cash equivalents that the company holds in
deposits. The Group will be exposed to further interest rate risk if it intends to borrow funds in the future for acquisition
and development.

(e) Credit risk management
The maximum credit risk equals the carrying amount of the financial assets as recognised in the Statement of Financial
Position.

(f) Fair value of financial instruments
The fair values of financial assets and financial liabilities are determined as follows:



the fair value of financial assets and financial liabilities with standard terms and conditions and traded on
active liquid markets are determined with reference to quoted market prices; and
the fair value of other financial assets and financial liabilities (excluding derivative instruments) are determined
in accordance with generally accepted pricing models based on discounted cash flow analysis; and
the Directors consider that the carrying amounts of financial assets and financial liabilities recorded at
amortised cost in the financial statements approximate their fair values.

The carrying amounts of financial assets and financial liabilities approximate the fair values.

(g) Liquidity risk management
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who has built an appropriate
liquidity risk management framework for the management of the Group’s short, medium and long-term funding and
liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves, and reserve
borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of
financial assets, expenditure commitments and liabilities.

(h) Cash flow and interest rate risk
The Group’s income and operating cash flows are not materially exposed to changes in market interest rates.

(i) Capital risk management
The Group manages its capital to ensure that it will be able to continue as a going concern. The capital structure of the
Group includes equity attributable to equity holders of the parent, comprising of issued capital, reserves and
accumulated losses as disclosed in notes 13, 14 and 15 respectively. The Group operates its exploration and

For personal use only

evaluation activities through its wholly owned subsidiary. None of the Group’s entities are subject to externally imposed
capital requirements. The Group intends to use a variety of capital market issues to meet anticipated funding
requirements. The Group currently has no short-term or long-term borrowings. The Group does not have any unused
credit facilities.

Liquidity and interest risk tables
The following tables detail the Group’s remaining contractual maturity for its non-derivative financial assets and
liabilities. The tables have been drawn up based on undiscounted cash flows and detail the Group’s exposure to liquidity
and interest rate risk as at 30 June 2014 and 30 June 2013:

2014

Financial assets
Non-interest bearing
Variable interest rate instrument

Financial liabilities
Non-interest bearing

2013

Financial assets
Non-interest bearing
Variable interest rate instrument

Financial liabilities
Non-interest bearing

Weighted
average
effective
interest rate
%

-
1.69

Weighted
average
effective
interest rate
%

-
2.59

Less than 1
month

1-3 months

3 months to
1 year

1-5 years

5 + years

Total

1,285

271,784

371,184

241,700
241,700

1,285

271,784

371,184

183,657
183,657

-
-

160,000
160,000

-
-

-
-
-

-
-

644,253
241,700
885,953

343,657
343,657

Less than 1
month

1-3 months

Maturity

3 months to
1 year

1-5 years

5 + years

Total

169,612
169,612

14,683
-
14,683

400,932
-
400,932

378,408
-
378,408

238,389
238,389

-
-

-
-
-

-
-

794,023
169,612
963,635

238,389
238,389

24. Key management personnel compensation

Short-term employee benefits (i)

Post-employment benefits

Other long-term benefits

Termination benefits

Share-based payment

Year ended
30/06/14
$

Year ended
30/06/13
$

417,212

60,000

477,212

511,389

21,600

532,989

(i) The short term employee benefits include Directors’ Fees and Salary totalling $160,000 owing to Mr. E. Eshuys,
Mr. B. K. Mutton and Mr. R. C. Hutton which has been accrued and not paid as at 30 June 2014. Further details of
the key management personnel compensation can be found in the Remuneration Report section of the Directors’
Report.

25. Share-based payments

On 21 November 2013 the Company issued 33,333,333 fully paid ordinary shares at an issue price of $0.003 (0.3
cents) per share to the directors or their nominees as approved by shareholders at the Annual General Meeting held on
15 November 2013. The funds were issued in lieu of payment of outstanding Directors fees of $58,333 and outstanding
Chairman’s Salary of $41,667.

For personal use only

26. Related party transactions

(a) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in the subsidiary are disclosed in note 20 to the financial statements.

(b) Transactions with key management personnel

Key management personnel compensation
The aggregate compensation made to key management personnel are disclosed in note 24 of the financial statements
and details of the compensation made to key management personal has been provided in the Remuneration Report
which forms part of the Directors’ Report. Included in the Remuneration Report indentifies is a payment of $126,350
(net of GST) for consulting fees to Brice Mutton & Associates Pty Ltd a related party of Mr. Brice Mutton and payment of
$110,862 (net of GST) to Kaus Australis Pty Ltd a related party of Mr. Michael Ilett.
Other related party transactions
From September 2013 Exploration Drill Rigs Pty Ltd, a company related to Mr. Michael Ilett and Mr. Ross Hutton,
provided the Company with a registered office, utilities and receptionist services for a rental and management fee of
$14,400 (levied at a rate of $1,600 per month excluding GST).

27. Parent entity disclosures

The parent entity in the Group is Drummond Gold Limited which was incorporated in Brisbane, Australia on 5 April
2007.

Financial position

Current assets
Non-current assets

Total assets

Current liabilities
Non-Current Liabilities

Total Liabilities

Issued capital
Accumulated losses

Option Premium Reserve
Share Valuation Reserve

Total equity

Total equity and liabilities

Financial performance

(Loss) for the year
Other comprehensive income

Total comprehensive (loss)

Year ended
30/06/14
$
250,944
1,727,601

Year ended
30/06/13
$
470,267
5,655,182

1,978,545

6,125,449

262,975
-

262,975

224,509
-

224,509

22,177,937
(20,763,019)

21,732,715
(16,132,427)

300,652
-

300,652

300,652
-

300,652

1,715,570

5,900,940

1,978,545

6,125,449

Year ended
30/06/14
$

Year ended
30/06/13
$

(4,630,592)
-

(5,165,087)
112,500

(4,630,592)

(5,052,587)

For personal use only

28. Remuneration of auditors

Auditor of the parent entity
Audit or review of the financial statements

Related practice of the parent entity auditor
Other non-audit services – tax advice
Other non-audit services – research and development tax related services

The auditor of Drummond Gold Limited is Deloitte Touche Tohmatsu.

29. Farm-In agreements

Year ended
30/06/14
$

Year ended
30/06/13
$

82,500
82,500

-
13,636
13,636

88,500
88,500

-
59,560
59,560

On 25 July 2013, the Company had formally withdrawn from the Farm In Agreement with Mt Cannindah Mining Pty Ltd
and Planet Metals Limited dated 23 December 2010 (“Agreement”). Under the terms of the Agreement, the Comp any
had the right to earn a 51 per cent interest in the Mt Cannindah Project by spending $3.25 million. As a result of
withdrawing from the Agreement, Drummond will have no residual interest in the Mt Cannindah Project. The carrying
value of Exploration and Evaluation Assets of approximately $2,264,168 relating to the Mt Cannindah Project was
written off in the Group’s financial statements in the 30 June 2013 financial year.

At the date of this report the Company has no farm in agreements.

For personal use only

Unaudited additional ASX and other information as at 12 September 2014
Number of holders of equity securities
Ordinary share capital
459,021,975 fully paid ordinary shares are held by 608 individual shareholders.

All issued ordinary shares carry one vote per share. There is not a market buyback occurring.

Distribution of holders of equity securities

Fully paid
Ordinary
Shares

128

203

180

608

495

0.00

0.01

0.24

1.23

1.08

97.44

100.00

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,000 – 50,000

50,001 – 100,000

100,001 and over

Holding less than a
marketable parcel

Line
item

1
2
3
4
5
6
7

8
9
10
11
12
13
14
15
16
16
16
17
18

19
19

Twenty largest shareholders of quoted equity securities

Ordinary shareholders

A/C Designation

Fully paid ordinary shares

Number

Percentage

MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
CAIRNGLEN INVESTMENTS PTY LTD
SCINTILLA STRATEGIC INVESTMENTS LIMITED
RESOURCE SURVEYS PTY LTD
MR BRICE KENNETH MUTTON & MRS GAI MUTTON
ROSS CLIVE HUTTON & MARIE JEAN HUTTON
RESOURCE SURVEYS PTY LTD

MR ROSS CLIVE HUTTON & MRS MARIE JEAN HUTTON
MT COOLON HOLDINGS PTY LTD
DOUBLE JAY GROUP HOLDINGS PTY LTD
GEE NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
MR TREVOR NEIL HAY
MR DAVID COURTNEY ROBINS
MR ALAN BRIEN & MRS MELINDA BRIEN
DR PETER KENCH
MRS CHLOE PODGORNIK
TESORO M B PTY LTD
BACTALL PTY LIMITED
ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD
MR ANDREW JAMES MOSSMAN & MRS MARGOT
PATRICIA MOSSMAN
COMMERCIAL TRADE AUSTRALIA PTY LTD

MR IAN CHARLES PITCHER & MRS LINDAL KAY PITCHER
TOTAL FOR TOP 20:

Balance of Register

Grand TOTAL

R & M SUPERANNUATION
RESOURCE SURVEYS S/F

MT COOLON GOLD MINES

THE G & T TRUST

205,660,000
32,172,464
25,000,000
23,078,698
10,120,946
8,801,204
7,746,624

7,630,000
6,975,215
6,000,000
5,572,936
5,000,000
4,464,427
4,445,600
4,306,173
3,000,000
3,000,000
3,000,000
2,200,000
2,153,104

2,000,000
2,000,000

44.80%
7.01%
5.45%
5.03%
2.20%
1.92%
1.69%

1.66%
1.52%
1.31%
1.21%
1.09%
0.97%
0.97%
0.94%
0.65%
0.65%
0.65%
0.48%
0.47%

0.44%
0.44%

1,860,000
376,187,391

0.41%
81.95%

82,834,584

18.05%

459,021,975

100.00%

For personal use only

Substantial shareholders

Ordinary shareholders

Fully Paid Shares

RESOURCE CAPITAL FUND V L. P.
CAIRNGLEN INVESTMENTS PTY LTD
EDUARD ESHUYS
SCINTILLA STRATEGIC INVESTMENTS LIMITED
TOTAL

Number
205,660,000
32,172,464
31,327,322
25,000,000
294,159,786

For personal use only

Tenements held

Mt Coolon Gold Mines Pty Ltd holds a 100% interest in 4 Mining Leases (MLs) comprising 300.052 hectares. Mt
Coolon Gold Mines Pty Ltd holds a 100% interest in 2 Exploration Permit Minerals (“EPM”) covering hectares, plus an
application covering an additional 14,400 hectares adjoining EPM 15902 at Mt Coolon. All the mining tenements are
held in Queensland, Australia.

Mt Coolon Gold Mines Pty Ltd
Name

Tenement No.

Area (Sub
Blocks)

Area
(Hectares)

12
100

112

Conway
Mt Coolon

Name

Koala 1
Koala Camp
Koala Plant
Glen Eva

4,480
32,000

36,480

Area
(Hectares)
70.82
4.902
97.55
126.78
300.052

Grant
(Renewal)
Date
18/5/2014
13/06/2014

Expiry Date

17/5/2019
12/06/2018

Grant Date

Expiry Date

30/05/1974
27/01/1994
27/01/1994
05/12/1996

31/01/2014 (i)
31/01/2014 (i)
31/01/2014 (i)

31/12/2016

Name

Area (Sub
Blocks)

Area
(Hectares)

Application
Date

Comments

Mt Coolon North

45
45

14,400
14,400

06/08/2014

Grant pending

EPM 7259
EPM 15902

Total Area

Mining Lease
No.
ML 1029
ML 1085
ML 1086
ML 10227
Total Area

Tenement
Application No.

EPMA 25365

Total Area

(i)

Renewal Submitted

For personal use only

Resources Tables

Drummond Consolidated Group Resources

Mt Coolon Gold Resources – 30 June 2010

Resource Category

Mine

Location

Measured

Indicated

Inferred

Total

cut-off

000’ t

Au g/t

Au oz

000’
t

Au g/t

Au oz

000’ t

Au
g/t

Au oz

000’ t

Au g/t

Au oz

Au g/t

Koala

Hectorina Pit

2.6

1,300

2.6

1,300

None

Underground
Extension

Tailings

Total

Eugenia

in whittle pit -
direct mill

outside pit

Total

Glen
Eva

Underground
below pit

205

305

1.6

15,800

231

5.9

1.6

5.5

39,600

5.3

10,600

500

1.5

300

40,400

267

322

604

5.7

1.6

3.5

49,300

3.0

16,700

None

67,200

428

1.5

20,800

428

1.5

20,800

0.5

3,988

1.2

4,416

1.3

157,50
0

178,20
0

3,988

1.2

157,500

0.5

4,416

1.3

178,200

0.5

132

7.8

33,200

21,000

5.9

4,000

154

7.5

37,200

3.0

Total

305

1.6

15,800

363

6.3

73,600

4,506

1.3

193,10
0

5,174

1.7

283,000

(minor rounding errors)

Resources Statements

The data in this report that relates to Mineral Resources for the Eugenia, Glen Eva and Koala Deposit is based on information
evaluated by Mr. Simon Tear who is a Member of The Australasian Institute of Mining and Metallurgy (MAusIMM) and who has
sufficient experience relevant to the style of mineralisation 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 Edition of the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”). Mr. Tear is a full-time employee of Hellman &
Schofield Pty Ltd and he consents to the inclusion in the report of the Mineral Resource in the form and context in which they
appear.

The Eugenia Gold Resource was updated and announced in the Company’s June 2009 Quarterly Report to the Australian
Securities Exchange (ASX) dated 29th July 2009, and, Amendments to June Quarterly Activities Report 2009, also dated 29th
July 2009. The Mt Coolon (Koala) and Glen Eva Gold Resources were updated and announced in the Company’s September
2009 Quarterly Report to the Australian Securities Exchange (ASX), dated 30th October 2009.

The Company confirms that it is not aware of any new information or data that materially affects the information included in the
market announcements referred to above and that all material assumptions and technical parameters underpinning the
estimates in the original announcement continue to apply and have not materially changed.

Exploration Results

The data in this report that relates to Exploration Results, the accuracy and quality of data and the interpretation of
mineralisation in the Drummond Basin at Mt Coolon, Central Queensland, are based on information compiled by Mr Brice
Mutton who is a Fellow of The Australasian Institute of Mining & Metallurgy (FAusIMM) and who has sufficient experience
relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is und ertaking to
qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves (the “JORC Code”). Mr Mutton is a Non–executive Director of Drummond Gold Ltd and
an industry consultant via Brice Mutton & Associates Pty Ltd, and he consents to the inclusion in the report of the Exploration
Results in the form and context in which they appear.

The Company confirms that it is not aware of any new information or data that materially affects the information included in the
original market announcements and that all material assumptions and technical parameters in the original announcements
continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent
Person’s findings are presented have not been materially modified from the original announcements.

For personal use only

Corporate Directory

Directors:

Mr. E. Eshuys (Executive Chairman)
Mr. B. K. Mutton (Non-Executive Director)
Mr. R. C. Hutton (Non-Executive Director)

Alternate director:

Mr. M. J. Ilett (Alternate director for Mr. R. C. Hutton)

Company secretary and chief
financial officer

Mr. M. J. Ilett

Registered office and
principal administrative office:

Share registry:

Auditors:

Lawyers:

Unit 3 636 Progress Road
Wacol Qld 4076
P.O. Box 294
Carole Park Qld 4300
Telephone: + 61 7 3879 4390
Facsimile: + 61 7 3271 6221
Link Market Services Limited
Level 15, ANZ Building
324 Queen Street
BRISBANE QLD 4000

Postal Address:
GPO Box 2537
BRISBANE QLD 4001
Telephone: 1300 554 474
Telephone: + 61 2 8280 7454 (overseas)
Facsimile: + 61 2 8280 0303

Deloitte Touche Tohmatsu
Level 25, Riverside Centre
123 Eagle Street
BRISBANE QLD 4000
Telephone: + 61 7 3308 7000
Facsimile: + 61 7 3308 7001

McCullough Robertson Lawyers
Level 11, Central Plaza Two
66 Eagle Street
BRISBANE QLD 4000
Telephone: + 61 7 3233 8888
Facsimile: + 61 7 3229 9949

Stock exchange listings:

Drummond Gold Limited shares are quoted on ASX Limited (ASX Code: DGO).

Website:

ABN:

www.drummondgold.com.au

96 124 562 849

For personal use only

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