17 October 2014
The Manager Companies
ASX Limited
20 Bridge Street
SYDNEY NSW 2000
Dear Madam
(79 pages by email)
ANNUAL REPORT AND NOTICE OF AGM
In accordance with Listing Rule 4.7 and 3.17, I attach the Company’s Annual Report for the year ended
30 June 2014 and the Company’s Notice of Annual General Meeting to be held at 11.00 am on 20
November 2014.
In accordance with Listing Rule 15.4 two hard copies of the Company’s Annual Report will be delivered
to the Company’s Home Exchange.
Yours sincerely
Marcelo Mora
Company Secretary
Pjn7873
Equus Mining Limited ABN 44 065 212 679
Level 2, 66 Hunter Street
Sydney NSW 2000
Australia
T +61 2 9300 3366
F +61 2 9221 6333
E info@equusmining.com
W www.equusmining.com
2014
Annual Report
EQUUS MINING LIMITED
ABN. 44 065 212 679
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www.equusmining.com
Contents
Chairman’s Letter
Review of Operations
Statement of Corporate Governance
Directors’ Report
Lead Auditor’s
Independence Declaration
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of
Financial Position
1
2
6
12
22
23
24
Consolidated Statement of
Changes in Equity
Consolidated Statement of
Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
Additional Stock
Exchange Information
25
26
27
61
62
64
Corporate Directory
Directors
Norman Seckold Non-Executive Chairman
Edward Leschke Managing Director
Jürg Walker
Non-Executive Director
Company Secretary
Marcelo Mora
Principal Place of Business
and Registered Office
Level 2
66 Hunter Street
Sydney NSW 2000
Australia
Telephone:
Facsimile:
Email address:
Web site:
(61 2) 9300 3366
(61 2) 9221 6333
info@equusmining.com
www.equusmining.com
Share Registry
Advanced Share Registry Limited
150 Stirling Highway
Nedlands, Western Australia 6009
(61 8) 9389 8033
Telephone:
(61 8) 9389 7871
Facsimile:
Auditors
KPMG
Level 16, Riparian Plaza
71 Eagle Street
Brisbane QLD 4000
Stock Exchange Listings
Australian Securities Exchange (Code – EQE)
Berlin and Frankfurt Securities Exchanges
(Third Market Segment)
www.equusmining.com
Dear Fellow Shareholders,
Since Equus Mining’s entry into Chile,
numerous resource project opportunities
have been carefully evaluated. Besides
assessing the all-important mineral
prospectivity of any given project, the cost
of acquisition is obviously also a major
consideration. Chile’s position as a leading
destination for mineral explorers and miners
together with a secured licencing system
means vendor price expectations of projects
can be high.
So when Equus Mining was offered three thermal coal
projects which in aggregate comprised a dominant
position in Chile’s largest coal basin, within a country
that is severely deficient in domestically supplied
energy, and all at a price one order below that of lesser
projects, then the opportunity presented was obvious.
Thermal coal consumption in Chile has grown
considerably since gas supplies from Argentina were
severely reduced several years ago. The majority of this
consumed coal is imported. The growth trajectory in
thermal coal demand is expected to continue, driven by
Chile’s economic expansion, the relatively low pricing of
thermal coal as fuel for power generation and the lack of
viable alternatives except for relatively more expensive
and also imported LNG. Despite this demand outlook,
Chile’s coal industry is small by world standards with just
one significant producer. Clearly, there is ample room for
a new large local supplier of thermal coal.
Chairman’s Letter
Equus Mining’s three thermal coal projects are centred on
the Loreto Formation, a rock unit recognised as hosting
the most viable coal seams in the Magallanes basin.
Whilst Equus Mining is planning to drill test known
coal seams, the initial priority has been to accumulate
additional tenement acreage. Dominant land positions
are considered a strategic advantage in the coal industry
- mainly because coal seams tend to be laterally extensive
and a large land holding maximises resource potential
whilst at the same time excludes potential competitors.
Proximity to transport is also a strategic consideration.
A number of deep-water sounds transect the Magallanes
basin providing access for bulk-shipping vessels.
This deep water access is a distinct advantage when
compared to other developing coal basins.
A dominant land positon over known thermal coal
occurrences within easy reach of deep water means
Equus Mining has the potential to be an “energy bank”,
a solid place to be in an energy-starved country.
Yours sincerely,
Norman A. Seckold
Chairman
1
2014 Annual Report Review of Operations
Overview
Strategic Acquisition - Andean Coal Pty Ltd
On 25 May 2014, Equus Mining Limited (‘Equus’ or the
‘Company’) announced that it had secured the rights to
acquire 100% of Andean Coal Pty Ltd (‘Andean’). Equus is
to earn:
•
•
An initial 51% in Andean through the expenditure of
A$0.2 million on exploration and administration at
Andean’s coal projects.
The remaining 49% through a 2 year option for the
consideration of 16 million Equus shares.
Equus Mining Limited has strategically positioning
itself to take advantage of Chile’s growing demand for
electricity via the Andean Coal acquisition deal. Andean
Coal Pty Ltd holds a package of exploration licences
centred on the coal bearing Loreto Formation, located
in Chile’s largest coalfield, the Magallanes Basin (See
Map 1). On 22 June 2014, Equus assumed management
responsibility for Andean and the three project areas
called Rubens, Perez and Mina Rica with both Norman
Seckold and Edward Leschke appointed to the Andean
Board. The Company is not yet entitled to the 51%
interest in Andean until the expenditure requirement of
A$0.2 million has been met.
Map 1. Andean Coal Project Locations
2
EQUUS MINING LIMITED Review of Operations
Map 4. Mina Rica Project
Equus Mining Limited has further increased its strategic
ground position with exploration licence applications.
This has seen the Equus total area of interest over
the coal bearing Loreto formation increase from
approximately 166 km2 to 281 km2, an increase of 69%
in area (See Map 1). EQE intends to continue increasing
ground dominance via exploration licence applications
and potential joint ventures.
The Magallanes basin is recognised as the largest coal
occurrence in Chile and is the centre of a fledgling coal
mining industry. Andean’s licences are centred over
the main coal bearing unit, the Loreto Formation,
which extends over a distance of 200km. Despite Chile
importing 80% of its current thermal coal needs, the
Magallanes basin has just one operating mine.
The Rubens, Perez and Mina Rica project areas (See
Maps 2 to 4) all have strong potential to host shallow
dipping coal deposits suitable for bulk open cut
extraction as indicated by a combination of coal
outcrop, float and intercepts in oil and gas wells in the
general licence areas as well as regional work done by
BHP and Chile’s state owned petroleum company ENAP.
Both Rubens and Perez cover significant strike lengths
of the coal bearing Loreto Formation whilst Mina Rica is
located adjacent to the underutilised Pecket coal loader
owned by a third party. Field activities have commenced
and Equus expects to report on progress in due course.
Map 2. Rubens Project
Map 3. Perez Project
3
2014 Annual Report Review of Operations
Investment Thesis - Chile’s Energy Deficiency
Chile is an energy deficient country. Chile’s economic
development is driving strong growth in energy
demand. However, domestic energy production has
stagnated resulting in Chile currently importing
approximately three quarters of its energy needs.
Similarly, thermal coal imports are also three quarters
of domestic consumption (See Graph 1). Demand
for thermal coal has grown significantly since the
curtailment of gas exports from Argentina in 2007. Coal
fired power generation (coal consumption) doubled
from 2005 to 2012.
From 2007 to 2012 an additional 2,155 MW of coal
fired power capacity was introduced to Chile’s power
grid, almost as much as the 2,549 MW added over the
previous 70 years. The Chilean government forecasts
that 8,000 MW of new power generation capacity (from
all fuels sources) is needed by 2020 to meet demand
growth. Thermal coal consumption can be expected
to grow from 12 million tonnes per annum in 2013 to
around 30 million tonnes per annum over the next 10
years based on government power consumption growth
figures (6% - 7%) and coal remaining at just 27% of the
current power generation fuel mix compared to a world
average of 43%.
Graph 1. Chile’s Thermal Coal Consumption & Production
Photo 1. Coal loader at the recently commissioned 5mtpa
Mina Invierno Chile’s only large coal mine
Photo 2. Guacolda coal fired power station in Region
III (600MW) is one of Chiles 12 existing coal fired power
stations
4
EQUUS MINING LIMITED The potential for import replacement together with
forecasted strong growth in thermal coal demand
by domestic power producers provides an excellent
opportunity for new coal project developments in Chile.
Equus is strategically positioned to take advantage of
Chile’s growing energy needs. Currently there is just
one operating open-cut coal mines in Chile. Utilising
direct ship loading facilities on the Otway Sound (see
Photo 1) to supply just 20% of demand from five power
companies operating 12 coal fire power stations (See
Photo 2). Transportation of coal from the Magallanes
coal basin to markets is via bulk carrier ships.
Review of Operations
No Material Changes
Equus Mining Limited confirms that it is not aware of
any new information or data that materially affects the
information included in this Annual Report and that all
information continues to apply.
Yours sincerely
Ted Leschke
Managing Director
Dated this 30th day of September 2014
5
2014 Annual Report Statement of
Corporate Governance
This statement outlines the main Corporate Governance practices that were in place throughout
or implemented during the financial year, which comply with the Australian Stock Exchange
(‘ASX’) Corporate Governance Council recommendations, unless otherwise stated.
CORPORATE GOVERNANCE STATEMENT
The Board is committed to maintaining the highest
standards of Corporate Governance. Corporate
Governance is about having a set of core values and
behaviours that underpin the Group’s activities and
ensure transparency, fair dealing and protection of the
interests of stakeholders.
The Board of Directors supports the Principles
of Good Corporate Governance and Best Practice
Recommendations developed by the ASX Corporate
Governance Council (‘Council’). Whilst the
Group’s practices are largely consistent with the
Council’s guidelines, the Board considers that the
implementation of some recommendations are not
appropriate having regard to the nature and scale of
the Group’s activities and size of the Board. The Board
uses its best endeavours to ensure exceptions to the
Council’s guidelines do not have a negative impact on
the Group and the best interests of shareholders as a
whole. When the Group is not able to implement one
of the Council’s recommendations the Group applies
the ‘if not, why not’ explanation approach by applying
practices in accordance with the spirit of the relevant
principle.
The following discussion outlines the ASX Corporate
Governance Council’s eight principles and associated
recommendations and the extent to which the Group
complies with those recommendations.
Details of all of the Council’s recommendations can be
found on the ASX website at http://www.asx.com.au
Principle 1 – Lay solid foundations for
management and oversight
Board of Directors
The Board is responsible for, and has the authority to
determine, all matters relating to the policies, practices,
management and operations of the Group. The Board
is also responsible for the overall corporate governance
and management oversight of the Group and recognises
the need for the highest standards of behaviour and
accountability in acting in the best interests of the
Group as a whole.
6
The Board also ensures that the Group complies with
all of its contractual, statutory and any other legal
or regulatory obligations. The Board has the final
responsibility for the successful operations of the
Group.
Where the Board considers that particular expertise
or information is required, which is not available from
within their members, appropriate external advice may
be taken and reviewed prior to a final decision being
made by the Board.
Without intending to limit the general role of the Board,
the principal functions and responsibilities of the Board
include the following:
•
•
•
•
•
•
•
formulation and approval of the strategic direction,
objectives and goals of the Group;
the prudential control of the Group’s finances
and operations and monitoring the financial
performance of the Group;
the resourcing, review and monitoring of executive
management;
ensuring that adequate internal control systems
and procedures exist and that compliance with
these systems and procedures is maintained;
the identification of significant business risks and
ensuring that such risks are adequately managed;
the timeliness, accuracy and effectiveness of
communications and reporting to shareholders and
the market; and
the establishment and maintenance of appropriate
ethical standards.
The Group has followed Recommendation 1.1 by
establishing the functions reserved to the Board and
those delegated to senior executives as disclosed
above.
The Group has followed Recommendation 1.2 by
evaluating the performance of senior executives. The
Board reviews the performance of the Group’s senior
executives on a face-to-face basis and the Chairman of
the Board conducted the Managing Director evaluation
performance in the same manner.
EQUUS MINING LIMITED In addition, the Group has appropriately taken the
necessary measures to provide each Director and senior
executive with a copy of the Group’s policies that spells
out the rights, duties and responsibilities that they
should follow.
The Group has followed Recommendation 1.3 by
conducting the evaluations of senior executives in
accordance with the process described above.
Principle 2 – Structure the Board to add value
Board of Directors - Composition, Structure and Process
The Board has been formed so that it has effective
composition, size and commitment to adequately
discharge its responsibilities and duties given the
Group’s current size, scale and nature of its activities.
Independent Directors
At the date of this report, the Company classified all of
the present directors as Non-Independent Directors, the
Group does not follow Recommendation 2.1. However,
it is the Board’s opinion that all Directors bring to the
Board their independent judgement, irrespective of
whether they are independent or not. The names of the
directors of the Company in office at the date of this
report, specifying which are independent, are set out in
the Directors’ Report on pages 12 and 13 of this report.
Regular assessment of independence
An independent Director, in the view of the Group, is a
non-executive Director who:
•
is not a substantial shareholder of the Company or
an officer of, or otherwise associated directly with,
a substantial shareholder of the Company;
• within the last three years has not been
employed in an executive capacity by the Group,
or been a Director after ceasing to hold any such
employment;
• within the last three years has not been a principal
of a material professional advisor or a material
consultant to the Group, or an employee materially
associated with a service provider;
is not a material supplier or customer of the Group,
or an officer of or otherwise associated directly or
indirectly with a material supplier or customer;
has no material contractual relationship with the
Group other than as a Director of the Group;
•
•
Statement of
Corporate Governance
•
•
has not served on the Board for a period which
could, or could reasonably be perceived to,
materially interfere with the Director’s ability to act
in the best interests of the Group; and
is free from any interest and any business or other
relationship which could, or could reasonably be
perceived to, materially interfere with the Director’s
ability to act in the best interests of the Group.
The composition of the Board is reviewed periodically
in relation to the number and skills of Directors
required for the Board to perform its responsibilities
and functions properly.
Chairperson and Managing Director
Norman A. Seckold, a non-independent Director,
holds the office of Chair. The Group does not follow
Recommendation 2.2 because the small size of the
Group does not warrant the appointment of more
Directors. However, the Board considers that Norman
A. Seckold best serves the office of Chair due to his
extensive experience in the industry.
The Chairman leads the Board and has responsibility for
ensuring the Board receives accurate, timely and clear
information to enable the Directors to perform their
duties as a Board.
The Managing Director is responsible and accountable
to the Board for the Group’s management. Edwards
J. Leschke is the Managing Director of the Group and
performs the role of Chief Executive Officer. Therefore,
the Group follows Recommendation 2.3.
Board nominations
Having regard to the current membership of the
Board and the size and scope of operation of the
Group. The Board has not established a Nomination
Committee and therefore the Group does not follow
Recommendation 2.4. However, the Board has a joint
responsibility for the selection and appointment
practices of the company.
7
2014 Annual Report Statement of
Corporate Governance
Performance review and evaluation
Professional advice
The Group has followed Recommendations 2.5 and
2.6 by disclosing the process for evaluating the
performance of the Board, and disclosure requirements
under Principle 2 below.
It is the policy of the Board to ensure that the Directors
and executives of the Group are equipped with the
knowledge and information they need to discharge
their responsibilities effectively, and that individual
and collective performance is reviewed regularly and
fairly. Although the Group is not of a size to warrant
the development of formal processes for evaluating
the performance of its Board, the Chairman constantly
monitors individual Directors and executive’s
performance. The Chairman also speaks to Directors
individually regarding their role as a Director.
Board members, with the approval of the Chairman, may
seek from time to time external professional advice.
Term of appointment as a Director
The Constitution of the Company provides that a
Director, other than the Managing Director, may not
retain office for more than three calendar years or
beyond the third Annual General Meeting following his
or her election, whichever is longer, without submitting
himself or herself for re-election. One third of the
Directors (excluding the Managing Director) must retire
each year and are eligible for re-election. The Directors
who retire by rotation at each Annual General Meeting
are those with the longest length of time in office since
their appointment or last election.
Induction and education
Remuneration
The Group has the policy to provide each new Director
or officer with a copy of the following documents:
•
•
•
•
Code of Conduct;
Continuous Disclosure Policy;
Share Trading Policy; and
Shareholders Communication Policy.
Access to information
Each Director has access to Board papers and all
relevant documentation.
Skills, knowledge and experience
The appointment of Directors is based on the specific
corporate and governance skills and experience required
by the Group. The Board consists of a relevant blend
of personal experience in accounting and finance,
law, financial and investment markets, financial
management and public Group administration, and,
director-level business or corporate experience required
by the Group.
The remuneration of the Directors is determined by
the Board as a whole, with the Director to whom a
particular decision relates being absent from the
meeting during the time that the remuneration level is
discussed and decided upon.
For details on the amount of remuneration and any
amount of equity based executive remuneration
payment for each Director, refer to the Key Management
Personnel note to the financial statements and the
Remuneration Report in the Directors’ Report.
Internal controls
The Board acknowledges that it is responsible for the
overall internal control framework, but recognises
that no cost effective internal control system will
preclude all errors and irregularities. The system of
internal control adopted by the Group seeks to provide
an appropriate division of responsibility and careful
selection and training of personnel relative to the level
of activities and size of the Group.
8
EQUUS MINING LIMITED Principle 3 – Promote ethical and responsible
decision making
Code of Conduct and Ethical Standards
All Directors, executives and employees act with the
utmost integrity and objectivity in carrying out their
duties and responsibilities, endeavouring at all times
to enhance the reputation and performance of the
Group. Every employee has direct access to a Director
to whom they may refer any ethical issues that may
arise from their employment. The Group has followed
Recommendation 3.1 and has adopted a formal Code of
Conduct.
The following are the key practices that the Board
consider necessary to maintain confidence in the
company’s integrity.
Access to Group information and confidentiality
All Directors have the right of access to all relevant
Group books and to the Group’s executive management.
In accordance with legal requirements and agreed
ethical standards, Directors and executives of the Group
have agreed to keep confidential information received
in the course of exercising their duties and will not
disclose non-public information except where disclosure
is authorised or legally mandated.
Share dealings and disclosures
The Group has adopted a policy relating to the trading
in Company securities. The Board restricts Directors,
executives and employees from acting on material
information until it has been released to the market.
Executives, employees and Directors should consult
with the Chairman prior to dealing in securities in the
Company or other companies with which the Company
has a relationship.
Trading in Company securities by Directors, executives
or employees is not permitted at any time whilst in
the possession of price sensitive information that is
not already available to the market. In addition, the
Corporations Act prohibits the purchase or sale of
securities whilst a person is in possession of inside
information.
Statement of
Corporate Governance
The trading windows for restricted persons is one week
before and 24 hours after the release of the Company’s
quarterly reports, half year results, the full year results
or additional periods which are imposed by the Company
when senior management becomes aware of a matter
that is considered to be price sensitive. Restricted
persons are prohibited from trading in the Company’s
securities outside these trading windows unless in
special circumstances and with the approval of the
Board.
Conflicts of interest
To ensure that Directors are at all times acting in the
best interests of the Group, Directors must:
•
•
disclose to the Board actual or potential conflicts of
interest that may or might reasonably be thought
to exist between the interests of the Director and
the interests of any other parties in carrying out
the activities of the Group; and
if requested by the Board, within seven days or
such further period as may be permitted, take such
necessary and reasonable steps to remove any
conflict of interest.
If a Director cannot, or is unwilling to remove a conflict
of interest then the Director must, as required by the
Corporations Act, absent himself from the room when
Board discussion and/or voting occurs on matters about
which the conflict relates.
Related party transactions
Related party transactions include any financial
transaction between a Director and the Group as
defined in the Corporations Act or the ASX Listing Rules.
Unless there is an exemption under the Corporations
Act from the requirement to obtain shareholder
approval for the related party transaction, the Board
cannot approve the transaction. The Group also
discloses related party transactions in its financial
statements as required under relevant Accounting
Standards.
Board diversity
Given the small size of the Group, the Group has not
set a policy concerning diversity and therefore has
not followed Recommendations 3.2, 3.3, 3.4, and 3.5.
However, the Company’s Board does take into account
the gender, age, ethnicity, and cultural background of
potential Board members. The Company advises that no
women are employed directly by the Company, including
as key management personnel.
9
2014 Annual Report Directors’ Report
Principle 4 – Safeguard integrity in financial
reporting
Principle 6 – Respect the rights of
shareholders
Audit Committee
Having regard to the current membership of the Board
and the size and scope of operation of the Group. The
Board has not established an Audit Committee and
therefore the Group does not follow Recommendation
4.1, 4.2, 4.3 and 4.4.
The objective of an Audit Committee is to make
recommendations to the Board regarding various
matters including the adequacy of the external audit,
risk management and compliance procedures, to
evaluate from time to time the effectiveness of the
financial statements prepared for the Board and to
ensure that independent judgement is always exercised.
These Audit Committee functions are jointly perform by
the full Board.
Principle 5 – Make timely and balanced
disclosure
The Group has followed Recommendations 5.1 and 5.2
and has adopted a formal Continuous Disclosure Policy.
Continuous Disclosure to the ASX
The Board has designated the Managing Director
and the Company Secretary as being responsible for
overseeing and co-ordinating disclosure of information
to the ASX as well as communicating with the ASX.
Accordingly, the Company will notify the ASX promptly
of information:
•
•
concerning the Company, that a reasonable person
would expect to have a material effect on the price
or value of the Company’s securities; and
that would, or would be likely to, influence persons
who commonly invest in securities in deciding
whether to acquire or dispose of the Company’s
securities.
Announcements are made in a timely manner, are factual
and do not omit material information in order to avoid
the emergence of a false market in the Company’s
securities.
The Company has followed Recommendations 6.1 and
6.2 and has designed a communications policy for
promoting effective communication with shareholders
and encouraging their participation at general meetings
as disclosed below.
Communication to the market and shareholders
The Board recognises its duty to ensure that its
shareholders are informed of all major developments
affecting the Company’s state of affairs. The Board
considers that information will be communicated to
shareholders and the market through:
•
•
•
•
•
the Annual Report which is distributed to shareholders
(usually with the Notice of Annual General Meeting);
the Annual General Meeting and other general
meetings called to obtain shareholder approvals as
appropriate;
the half-yearly financial statements;
quarterly activities and cash flow reports; and
other announcements released to the ASX
as required under the continuous disclosure
requirements of the ASX Listing Rules and other
information that may be mailed to shareholders or
made available through the Company’s website.
The Company actively promotes communication
with shareholders through a variety of measures,
including the use of the Company’s website and email.
The Company’s reports and ASX announcements are
available on the Company’s website, www.equusmining.
com, and on the ASX website, www.asx.com.au, under
ASX code ‘EQE’.
Principle 7 – Recognise and manage risk
The Group has followed Recommendation 7.1 and has
designed policies for the oversight and management of
material business risks as disclosed below.
The Board is responsible for the identification,
monitoring and management of significant business
risks and the implementation of appropriate levels
of internal control, recognising however that no cost
effective internal control system will preclude all errors
and irregularities. The Board regularly reviews and
monitors areas of significant business risk.
1 0
EQUUS MINING LIMITED Having regard to the current membership of the Board
and the size and scope of operations of the Group, The
Board has followed Recommendation 7.2, whereby the
Board instead of management carried out the function
of overseeing risk management, internal control system
and oversight of material business.
Internal control and risk management
The Board reviews systems of external and internal
controls and areas of significant operational, financial
and property risk and ensures arrangements are in place
to contain such risks to acceptable levels.
Appropriate insurance policies are kept current to
cover all potential risks and maintaining Directors’ and
Officers’ professional indemnity insurance.
Internal audit function
The Board carried out the internal audit function. The
Group does not have an internal audit department nor
has an internal auditor. The size of the Group does not
warrant the need or the cost of appointing an internal
auditor.
CEO and CFO declarations
The Group has followed Recommendation 7.3. The Board
has determined that the Managing Director and the
CFO or the Company Secretary if the Company does not
have a CFO are the appropriate persons to make the CEO
and CFO declarations as required under section 295A of
the Corporations Act. The Board is also satisfied that
the internal control system is operating effectively in all
material respects.
The Group has followed Recommendation 7.4 by
disclosing the information above.
Principle 8 – Remunerate fairly and
responsibly
Having regard to the current membership of the Board
and the size and scope of operations of the Group, a
Remuneration Committee has not been established and
therefore Recommendations 8.1, 8.2, 8.3 and 8.4 have
not been followed.
However, the Board as follows carries out the functions
and responsibilities of a remuneration committee:
Directors’ Report
Remuneration responsibilities
The role and responsibility of the Board is to review the
following:
•
•
•
•
•
•
•
•
executive remuneration policy;
executive Director and senior management
remuneration;
executive incentive plan;
non-executive Directors’ remuneration;
performance measurement policies and procedures;
termination policies and procedures;
equity based plans; and
requirements of remuneration and remuneration
benefits public disclosure.
Remuneration policy
Shareholders at the Annual General Meeting adopt
the Directors’ total remuneration. The Board approves
the salary and emoluments paid to officers. The Board
engaged consultants as required pursuant to service
agreements. The Group ensures that fees, salaries and
emoluments are in line with general standards for
publicly listed companies of the size and type of the
Group. All salaries of Directors and officers are disclosed
in the Annual Report of the Group.
In line with Recommendation 8.3, the Group has a policy
to remunerate its Directors and officers based on fixed
and incentive component salary packages to reflect the
short and long-term objectives of the Group.
The salary component of the Managing Director’s
remuneration is made up of:
•
•
•
fixed remuneration;
Superannuation of 9.5%; and
equity based remuneration in the form of options
when the Board considers that the executive is able
to influence the generation of shareholders wealth
and thus have a direct impact on the Company’s
performance.
The salary component of non-executive and executive
Directors is made up of:
•
•
fixed remuneration; and
an entitlement to receive options, subject to
shareholders’ approval, when a director is able to
influence the generation of shareholders wealth.
1 1
2014 Annual Report Directors’ Report
The Directors present their report, together with the consolidated financial statements of the
Group, comprising of Equus Mining Limited (‘Equus’ or ‘the Company’) and its controlled entities
for the financial year ended 30 June 2014 and the auditor’s report thereon.
DIRECTORS
The names and details of the Directors in office during
or since the end of the previous financial year are as
follows. Directors were in office for the entire year
unless otherwise stated.
Norman Alfred Seckold, BEcon, Non-Executive Chairman
Director appointed 5 September 2012.
Norman Seckold graduated with a Bachelor of
Economics degree from the University of Sydney in
1970. He has spent more than 30 years in the full time
management of natural resource companies, both in
Australia and overseas, including the role of Chairman
for a number of publicly listed companies including:
• Moruya Gold Mines (1983) N.L., which acquired the
Golden Reward heap leach gold deposit in South
Dakota, USA.
Pangea Resources Limited, which acquired and
developed the Pauper’s Dream gold mine in
Montana, USA.
Timberline Minerals, Inc. which acquired and
completed a feasibility study for the development
of the MacArthur copper deposit in Nevada, USA.
Perseverance Corporation Limited, which
discovered and developed the Nagambie gold mine
in Victoria.
Valdora Minerals N.L., which developed the
Rustler’s Roost gold mine in the Northern Territory
and the Ballarat East Gold Mine in Victoria.
Viking Gold Corporation, which discovered a high
grade gold deposit in northern Sweden.
•
•
•
•
•
• Mogul Mining N.L., which drilled out the Magistral
•
•
•
and Ocampo gold deposits in Mexico.
Bolnisi Gold N.L. which discovered and is currently
operating the Palmarejo and Guadalupe gold and
silver deposits in Mexico.
Cockatoo Coal Limited, an Australian coal mining,
exploration and project development company.
Cerro Resources NL, a precious metals exploration
company with a development project in Mexico.
1 2
Mr Seckold is currently Chairman of the following listed
companies:
•
•
•
Augur Resources Ltd, a minerals exploration and
development company operating in Australia and
Indonesia.
Santana Minerals Limited, a precious metals
exploration company operating in Mexico.
Planet Gas Limited, an energy explorer in
conventional and unconventional oil and gas
resources operating in Australia.
He is also a director of the unlisted public companies
Mekong Minerals Limited and Nickel Mines Limited.
Edward Jan Leschke, BAppScApp Geo, Managing Director
Director appointed 5 September 2012
Mr. Leschke graduated with a Bachelor of Applied
Science – Applied Geology degree from the Queensland
University of Technology. During a 22 year professional
career Mr Leschke initially worked as a mine geologist
at the Elura zinc-lead-silver mine in central New South
Wales as well as holding geological positions in a
number of locations such as the Central Queensland
coal fields, South Australia and Papua New Guinea.
Mr Leschke made the transition to the financial
sector specialising in mining investment, analysis
and corporate finance and has worked for a number
of financial institutions including BZW Stockbroking,
Aberdeen Asset Management and Shaw Stockbroking.
Mr Leschke has been responsible for the inception
of Equus Resources Ltd and the two wholly owned
subsidiaries in the Republic of Chile.
He has not served as a director of any other listed
company during the past three years.
Jürg Walker, Non-Executive Director
Director appointed 20 May 2002
Jürg Walker is a European portfolio manager and
investor. He has over 20 years experience in the
Swiss banking industry, operating his own portfolio
management company after leaving his position as
senior vice president of a private bank in Zurich. He has
not served as a director of any other listed company
during the past three years.
EQUUS MINING LIMITED Robert John Perring, Non-Executive Director
Director appointed 15 February 2013, resigned
10 January 2014
Robert Perring is a geologist with more than 30 years
experience in the mineral industry and has held senior
corporate and technical positions in Normandy Mining
Limited and Newmont Australia. While at Newmont, his
regional exploration team discovered the Moolart Well
gold deposit in Western Australia (now in production).
He has also directed exploration within and around
some of Australia and New Zealand’s largest gold and
base metal mines - Boddington (WA), Jundee (WA),
Bronzewing (WA), Golden Grove (WA), Callie (NT), Mt
Leyshon (QLD), Pajingo (QLD) and Waihi (NZ).
Mr Perring has worked in a broad range of geological
terrains within Australia and New Zealand (General
Manager Exploration, Newmont Australia), the Middle
East (Managing Director, Gulf & Asian Mining Limited)
and South America (Technical Director, Equus Resources
Limited).
He is a graduate of Imperial College, London (DIC) and
the University of London (MSc) and is a Member of the
Australian Institute of Geoscientists (MAIG). He has not
served as a director of any other listed company during
the past three years.
COMPANY SECRETARY
Marcelo Mora
Company Secretary appointed 16 October 2012
Marcelo Mora holds a Bachelor of Business degree and
Graduate Diploma of Applied Corporate Governance,
and is a Chartered Secretary (AGIA). Mr Mora has been an
accountant for more than 25 years and has experience in
resources and mining companies both in Australia and
internationally, providing financial reporting and company
secretarial services to a range of publicly listed companies.
Susmit Mohanlal Shah BScEcon CA
Company Secretary appointed 30 April 2003, resigned 16
September 2013
Susmit Shah is a Chartered Accountant with over 25
years experience. Over the last 15 years, Mr Shah has
been involved with a diverse range of Australian public
listed companies in company secretarial and financial
roles. He ceased to serve as joint Company Secretary on
16 September 2013.
Directors’ Report
DIRECTORS’ MEETINGS
The number of Directors’ meetings and number of
meetings attended by each of the Directors (while they
were a Director) of the Company during the year are:
Director
Held
Attended
Board Meetings
Norman A. Seckold
Edward J. Leschke
Robert J. Perring
Jürg Walker
4
4
2
4
DIRECTORS’ INTERESTS
4
4
2
4
Directors’ beneficial shareholdings at the date of this
report are:
Director
Norman A. Seckold
Edward J. Leschke
Jürg Walker
Fully Paid
Ordinary Shares
Options over
ordinary shares
31,877,420
35,068,889
8,297,861
-
-
-
OPTION HOLDINGS
Options granted to directors’ and officers’
The Company did not grant any options over unissued
ordinary shares during or since the end of the financial
year to directors as part of their remuneration. The
Directors do not hold any options over unissued shares
at the date of this report nor did they hold any at the
reporting date.
The Company has not granted any options over
unissued ordinary shares during or since the end of the
financial year to officers as part of their remuneration.
Unissued shares under option
At the date of this report, unissued ordinary shares of
the Company under option are:
Number of shares
Exercise price
Expiry date
1,000,000
1,000,000
1,000,000
1,000,000
$0.075
$0.150
$0.200
$0.250
13 November 2015
13 November 2015
13 November 2015
13 November 2015
1 3
2014 Annual Report Directors’ Report
Details of options issued by the Company are set out in
the reserves note to the financial report. The names of
persons who currently hold options are entered in the
register of options kept by the Company pursuant to the
Corporations Act 2001. This register may be inspected free
of charge.
The persons entitled to exercise the options do not
have, by virtue of the options, the right to participate
in a share issue of the Company or any other body
corporate.
The Group has not issued any ordinary shares of the
Company as a result of the exercise of options during or
since the end of the financial year.
CORPORATE INFORMATION
Corporate Structure
Equus Mining Limited is a limited liability company
that is incorporated and domiciled in Australia.
It has prepared a consolidated financial report
incorporating the entities that it controlled during
the financial year. The Group’s structure at 30 June
2014 is outlined below.
EQUUS MINING LIMITED – GROUP STRUCTURE AT 30 JUNE 2014
1 4
EQUUS MINING LIMITED PRINCIPAL ACTIVITIES
•
The principal activity of the Group during the course of
the financial year was the mineral exploration of the
Naltagua Copper project in Chile and as at the date of
this report, the objective of the group concentrates on
the mineral exploration in the Magallanes Basin after
securing the rights to acquire 100% of Andean Coal Pty
Ltd which has seen the Group’s focus move to exploring
and further acquisitions of tenements prospective for
coal in Chile.
In the medium term, the Group’s objective is to seek
new opportunities of mineral prospective areas in
the region. However, there are no guarantees that
our existing or future exploration programs will be
successful.
FINANCIAL RESULTS
The consolidated loss after income tax attributable to
members of the Company for the year was $9,856,444
(2013: $3,546,382 loss).
REVIEW OF OPERATIONS
A review of the Group’s operations for the year ended
30 June 2014 is set out on pages 2 to 5 of this Annual
Report.
DIVIDENDS
The Directors do not recommend the payment of a
dividend in respect of the financial year ended 30 June
2014. No dividends have been paid or declared during
the financial year (2013 - $nil)
CHANGES IN STATE OF AFFAIRS
In the opinion of the Directors, significant changes in
the state of affairs of the Group that occurred during
the year ended 30 June 2014 were as follows:
•
•
•
•
Susmit Shah resigned as joint Company Secretary
effective 16 September 2013.
The Company announced the expiration of 460,000
options on 31 October 2013.
Robert Perring resigned as Director of the Company
effective 10 January 2014.
The Company sold its equity investment in Manas
Resources Limited raising $19,940.
Directors’ Report
The Company sold its royalty interest in the
Mansounia Gold Project in the Republic of Guinea
for consideration of up to US$700,000 comprising
US$42,857 plus the issue of shares in a US over the
counter traded company, Blox-Inc where the number
of Blox-Inc shares shall be calculated by dividing
US$328,555 by the lower of $0.20 or the volume
weighted average share price of Blox-Inc shares
traded on a security exchange platform over a 20-day
period preceding the issue date. In addition, upon
commencement of commercial gold production
Equus will receive a further US$328,555 in shares in
Blox-Inc calculated in the same manner. At 30 June
2014, the Company had received an initial deposit of
AUD$2,857. The remaining consideration was subject
to the satisfaction of certain conditions precedent.
These conditions were satisfied subsequent to year
end and the remaining cash consideration and first
tranche of Blox-Inc shares were received in July 2014.
•
• On 23 May 2014, Equus announced that it had
secured the rights to acquire 100% of Andean
Coal Pty Ltd (‘Andean’), a company that holds
exploration licences in the Magellanes coalfields
basin. Equus is to earn a 51% interest in Andean
through the expenditure of $200,000 on exploration
and administration and has the option to acquire
the remaining 49% of Andean for consideration of
16 million ordinary shares of Equus.
The Company executed a Sale and Purchase agreement
on 17 June 2014 for the sale of the drilling rig, the
plant and equipment and associated consumables
held in the Kyrgyz Republic for US$1.5 million with an
Australian private company. The buyer paid a deposit
of AUD$100,000 on execution of the agreement. The
sale is conditional to the purchaser finalising a joint
venture agreement with KazMunayGas, the national
petroleum company of Kazakhstan. Subsequent to
30 June 2014, the Company executed an amended
agreement. The amended consideration for the sale
is US$2.0 million in convertible notes with a maturity
date of 30 September 2015. The Company can convert
the notes at any time prior to maturity however
there is no mandatory requirement for conversion.
The AUD$100,000 deposit already paid is no longer
refundable.
• On 3 June 2014, the Group voluntarily deregistered
its subsidiary Brumby Mining Pty Limited (‘Brumby’)
in line with the Group corporate restructure. Brumby
was a subsidiary of Equus Resources Limited that
was dormant without assets and liabilities.
1 5
2014 Annual Report Directors’ Report
ENVIRONMENTAL REGULATIONS
LIKELY DEVELOPMENTS
The Group’s operations are not subject to any
significant environmental regulations under either
Commonwealth or State legislation.
The Group’s exploration activities in Chile are subject to
environmental laws, regulations and permit conditions
as they apply in the country of operation. There have
been no breaches of environmental laws or permit
conditions while conducting operations in Chile during
the year.
The Board believes that the Group has adequate
systems in place for the management of its
environmental requirements and is not aware of any
breach of those environmental requirements as they
apply to the Group.
EVENTS SUBSEQUENT TO BALANCE DATE
On 21 July 2014, the Group offered all eligible
shareholders of Equus Mining Limited the opportunity
to participate in a Share Purchase Plan (‘SPP’). The offer
closed on 22 August 2014. Shareholders subscribed
for 52,100,000 ordinary shares under the SPP, raising
$521,000. In conjunction with the SPP, on 1 September
2014 the Company issued 22,500,000 new shares for
a total consideration of $225,000, to sophisticated
investors.
As at 30 June 2014, the Group impaired its investment in
the Naltagua Copper Project in Chile. On 29 August 2014,
the Group notified the owner of the project in writing
that it will not acquire the project.
On 23 September 2014 the Company executed amended
agreement for the sale of the drilling rig, the plant
and equipment and associated consumables held in
the Kyrgyz Republic. The amended consideration for
the sale is US$2.0 million in convertible notes with a
maturity date of 30 September 2015. The Company can
convert the notes at any time prior to maturity however
there is no mandatory requirement for conversion.
The AUD$100,000 deposit already paid is no longer
refundable. Completion of the transaction is expected
to occur on 7 October 2014.
There has not arisen in the interval between the end of
the financial year and the date of this report any item,
transaction or event of a material or unusual nature
likely, in the opinion of the Directors of the Company,
to affect significantly the operations of the Group, the
results of those operations, or the state of affairs of the
Group, in future financial years.
1 6
Equus considers growth as a vital strategy for the
Company taking into consideration its existing
operations in Chile and the newly acquired option
rights to purchase 100% of Andean Coal Pty Ltd that
holds a strategic package of exploration coal licenses
in the province of Magellan’s southern Chile. The Group
believes that the farming of projects and the addition
of new projects through mergers or acquisitions are part
of the natural evolution of its business. The Group will
continue to seek good partners and good projects to
create business synergies for our company including the
farming of projects.
The Group will focus on its coal interest during the
course of 2014/2015 financial year. The Directors expect
to receive further results of the exploration programs
at Magellanes which they will make public once the
information is received in accordance with ASX listing
rules.
Further information as to likely developments in the
operations of the Group and the expected results of
those operations in subsequent years has not been
included in this report because disclosure of this
information would be likely to result in unreasonable
prejudice to the Group.
INDEMNIFICATION AND INSURANCE OF
OFFICERS AND AUDITORS
The Company’s Constitution requires it to indemnify
Directors and officers of any entity within the Group
against liabilities incurred to third parties and against
costs and expenses incurred in defending civil or
criminal proceedings, except in certain circumstances.
Directors and officers of the Group have been insured
against all liabilities and expenses arising as a result
of work performed in their respective capacities, to
the extent permitted by law. The Group has not paid
or agreed to pay, a premium in respect of a contract
insuring against a liability incurred by an auditor.
The insurance premium, amounting to $10,324 relates
to:
•
•
costs and expenses incurred by the relevant officers
in defending proceedings, whether civil or criminal
and whatever their outcome; and
other liabilities that may arise from their position,
with the exception of conduct involving a wilful
breach of duty or improper use of information or
position to gain a personal advantage.
EQUUS MINING LIMITED Directors’ Report
REMUNERATION REPORT – Audited
Principals of compensation - Audited
Key management personnel have authority and responsibility for planning, directing and controlling the activities
of the Group. Key management personnel comprise the directors of the Company. No other employees have been
deemed to be key management personnel.
The remuneration policy of Directors and senior executives is to ensure the remuneration package properly reflects
the persons’ duties and responsibilities, and that remuneration is competitive in attracting, retaining and motivating
people of the highest quality. The Board is responsible for reviewing its own performance. The evaluation process is
designed to assess the Group’s business performance, whether long-term strategic objectives are being achieved, and
the achievement of individual performance objectives.
The Constitution and ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be
determined from time to time by a general meeting. The latest determination was at a shareholders meeting on 29
November 2005 when the shareholders approved an aggregate remuneration of $200,000 per year.
Remuneration generally comprises of salary and superannuation. Long-term incentives are able to be provided
through the Company’s share option program, which acts, to align the Director’s and senior executive’s actions with
the interests of the shareholders, no options were granted or outstanding to key management personnel for the
year ended 30 June 2014, or in the prior year. The remuneration disclosed below represents the cost to the Group for
services provided under these arrangements.
All Directors, except for Edward Leschke, who is paid through the Company’s payroll, are compensated for their
services by way of arrangements with related parties.
There were no remuneration consultants used by the Company during the year ended 30 June 2014, or in the prior year.
Consequences of performance on shareholders’
wealth - Audited
In considering the Group’s performance and benefits for shareholders’ wealth, the Board has regard to the following
indices in respect of the current financial year and the previous four financial years.
2014
$
2013
$
2012
$
2011
$
2010
$
Net loss attributable to equity holders of
the parent
9,856,444
3,546,382
3,519,829
3,656,276
14,501,622
Dividends paid
Change in share price
-
(0.02)
-
0.00
-
(0.06)
-
0.02
-
(0.08)
Return on capital employed*
(748.56%)
(30.16%)
(73.19%)
(34.51%)
(98.99%)
*
Return on capital employed is calculated by dividing the profit or loss for the year by total assets less
current liabilities.
The overall level of key management personnel’s compensation has been determined based on market conditions,
advancement of the Group’s projects and the financial performance of the Group.
1 7
2014 Annual Report
Directors’ Report
REMUNERATION REPORT – Audited (Con’t)
Details of the nature and amount of each major element of the remuneration of each Director of the Company and
other key management personnel of the Company and Group are:
Short-term employee
benefits
Post
Employment
Benefits
Primary
Salary / Fees
$
Consulting
Fees
$
Super-
annuation
$
Share based
payments
share
options
$
150,000
121,154
-
124,382
-
128,626
30,000
24,600
15,833
11,250
-
20,512
30,000
30,000
-
18,750
-
5,346
225,833
484,620
-
-
-
-
-
-
-
-
-
53,000
-
-
-
-
-
-
-
-
-
53,000
13,875
10,904
-
11,194
-
3,000
-
-
-
-
-
1,846
-
-
-
-
-
-
13,875
26,944
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$
163,875
132,058
-
135,576
-
131,626
30,000
24,600
15,833
64,250
-
22,358
30,000
30,000
-
18,750
-
5,346
239,708
564,564
Executive Directors
Edward Leschke
Graeme Parsons ^
Colin Carson ^^^
Non-Executive Directors
Norman Seckold
Robert Perring *
Colin Carson ^^^
Jürg Walker
Year
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
Michael John Sandy ^^
2014
Avraham Ben-Natan ^
Total all directors
2013
2014
2013
2014
2013
*
^
Director since 15 February 2013 resigned 10 January 2014.
Ceased to be Director on 5 September 2012
^^
Ceased to be Director on 15 February 2013
^^^ Colin Carson ceased to serve as Executive Chairman on 10 September 2012 and, with effect from 1 October 2012,
he assumed a non-executive director role until the date of his resignation on 27 May 2013
1 8
EQUUS MINING LIMITED Directors’ Report
REMUNERATION REPORT – Audited (Con’t)
Remuneration Structure - Audited
In accordance with best practice corporate governance, the structure of Executive Director and Non-Executive Director
remuneration is separate and distinct.
Service contracts - Audited
There are no service contracts for the key management personnel.
Executive Directors - Audited
During the financial year ended 30 June 2014, only Edward Leschke was considered an Executive Director. His salary
comprised of fixed remuneration plus 9.25% statutory superannuation paid through the Company’s payroll.
Non Executive Directors - Audited
During the financial year ended 30 June 2014, the following Directors were considered Non Executive Directors:
• Norman Seckold;
Jürg Walker;
•
Robert Perring until 10 January 2014;
•
The salary component of Non-Executive Directors was made up of:
•
•
fixed remuneration; and
an entitlement to receive options, subject to shareholders’ approval.
The services of non-executive directors are provided by way of arrangements with related parties. No Directors of the
Company are engaged pursuant to a service agreement.
Options granted as compensation - Audited
There are no options held by Directors over ordinary shares.
Modification of terms of equity-settled share-based payment transactions - Audited
No terms of equity-settled share-based payment transactions (including options granted as compensation to a key
management person) have been altered or modified by the issuing entity during the 2014 and 2013 financial years.
Exercise of options granted as compensation - Audited
There were no shares issued on the exercise of options previously granted as compensation during the 2014 and 2013
financial years.
Options and rights over equity instruments - Audited
Directors or Key management personnel do not hold any options over unissued shares at the date of this report nor
did they hold any at the reporting date.
Loans to key management personal and their related parties - Audited
There were no loans made to key management personnel or their related parties during the 2014 and 2013 financial
years and no amounts were outstanding at 30 June 2014 (2013 - $nil).
1 9
2014 Annual Report Directors’ Report
REMUNERATION REPORT – Audited (Con’t)
Other transactions with key management personnel - Audited
A number of key management persons, or their related parties, hold positions in other entities that result in them
having control or joint control over the financial or operating policies of those entities.
A number of these entities transacted with the Group during the year as follows:
• During the year ended 30 June 2014, Norman A. Seckold had control over an entity, Mining Services Trust, which
provided full administrative services, including rental accommodation, administrative staff, services and supplies,
to the Group. Fees paid to Mining Services Trust during the year amounted to $240,000 (2013 - $176,500). For the
year ended 30 June 2014 the outstanding amount is $20,000 (2013 - $nil).
• During the year ended 30 June 2014, Mr Robert Perring had control over an entity, Quadramin Pty Ltd, which
provided geological consulting services to the Group. Fees paid to Quadramin Pty Ltd during the year amounted
to $10,000 (2013 - $117,400). There were no amounts outstanding as at year end (2013 - $nil).
Movements in shares - audited
The movement during the reporting period in the number of ordinary shares in the Company held directly, indirectly or
beneficially, by each key management person, including their related parties, is as follows:
Fully paid ordinary shareholdings and transactions - 2014
Key management personnel
Norman A. Seckold
Edward J. Leschke
Jurg Walker
Robert J. Perring **
Held at
1 July 2013
30,377,420
34,619,471
8,297,861
8,100,000
Consolidation
Purchases
Sales
-
-
-
-
-
449,418
-
-
Held at
30 June 2014
30,377,420
35,068,889
8,297,861
8,100,000
-
-
-
-
** Number of shares held at date of resignation as a Director.
2 0
EQUUS MINING LIMITED Directors’ Report
NON-AUDIT SERVICES
During the year ended 30 June 2014 KPMG, the Group’s auditor, has performed certain other services in addition to the
audit and review of the financial statements.
The board has considered the non-audit services provided during the year by the auditor and is satisfied that the
provision of those non-audit services during the year by the auditor is compatible with, and did not compromise, the
auditor independence requirements of the Corporations Act 2001.
Details of the amounts paid to the auditor of the Group, KPMG, and its network firms for audit and non-audit services
provided during the year are set out below.
Services other than audit and review of financial statements:
Other services
Taxation advisory services
Audit and review of financial statements
AUDITOR’S INDEPENDENCE DECLARATION
2014
$
2013
$
11,000
11,000
84,300
95,300
-
-
83,000
83,000
The lead auditor’s independence declaration is set out on page 22 and forms part of the Directors’ Report for the
financial year ended 30 June 2014.
Signed at Sydney this 30th day of September 2014
in accordance with a resolution of the Board of Directors:
Norman A. Seckold
Director
Edward J. Leschke
Director
2 1
2014 Annual Report
Lead Auditor’s
Independence Declaration
Lead Auditor’s Independence Declaration
under Section 307C of the Corporations Act 2001 to the Directors of Equus Mining Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2014,
there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Adam Twemlow
Partner
Brisbane
30 September 2014
2 2
EQUUS MINING LIMITED
Consolidated Statement of Profit or
Loss and Other Comprehensive Income
For the Year Ended 30 June 2014
Notes
2014
$
2013
$
4
2,857
2,000,000
CONTINUING OPERATIONS
Other income
Expenses
Employee, directors and consultants costs
Depreciation expense
Share based compensation expense
Impairment of exploration expenditure
Impairment of property
Travel expenses
Business development
Other expenses
Results from operating activities
Finance income
Finance costs
Net finance income
Profit/(loss) before tax
Tax benefit/(expense)
Profit/(loss) from continuing operations
DISCONTINUED OPERATION
Loss from discontinued operation (net of tax)
Loss for the year
Other comprehensive income for the year
Items that may be classified subsequently to profit or loss:
Exchange differences on translation of foreign operations
Transfer of foreign currency translation reserve to loss on disposal of
subsidiaries in profit or loss
Net change in fair value of available-for-sale financial assets
Net change in fair value of available-for-sale financial assets reclassified
to profit or loss
Total other comprehensive income/(loss)
Total comprehensive loss for the year
Loss for the year attributable to:
Equity holders of the Company
Non-controlling Interests
Total comprehensive loss attributable to:
Equity holders of the Company
Non-controlling Interests
Earnings per share
Basic and diluted loss per share attributable to ordinary equity holders
(dollars)
Earnings per share - continuing operations
Basic and diluted loss per share attributable to ordinary equity holders
(dollars)
(499,285)
(2,608)
-
(8,832,568)
(192,710)
(26,908)
(47,112)
(377,316)
(9,975,650)
24,912
(7,790)
17,122
(9,958,528)
378,804
(9,579,724)
(712,092)
(4,781)
(144,000)
-
-
(44,805)
(4,776)
(506,520)
583,026
607,807
(61,224)
546,583
1,129,609
(378,804)
750,805
(276,720)
(9,856,444)
(4,341,433)
(3,590,628)
(585,027)
914,098
-
(7,790)
2,902,675
(147,735)
7,790
(585,027)
(10,441,471)
(9,856,444)
-
(9,856,444)
(10,441,471)
-
(10,441,471)
(533,315)
3,135,723
(454,905)
(3,546,382)
(44,246)
(3,590,628)
(553,574)
98,669
(454,905)
(0.038)
(0.016)
(0.037)
0.003
11
12
4
5
6
28
15
10
10
16
16
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction
with the accompanying notes.
2 3
2014 Annual Report Consolidated Statement of
Financial Position
For the Year Ended 30 June 2014
Current Assets
Cash and cash equivalents
Receivables
Assets held for sale
Other
Total Current Assets
Non-Current Assets
Receivables
Available-for-sale financial assets
Exploration and evaluation expenditure
Property, plant and equipment
Total Non-Current Assets
Total Assets
Current Liabilities
Payables
Provision for tax
Total Current Liabilities
Total Liabilities
Net Assets
Equity
Share capital
Reserves
Foreign currency translation reserve relating to
disposal group held for sale
Accumulated losses
Parent entity interest
Non-controlling interests
Total Equity
Notes
2014
$
2013
$
7
8
25
9
8
10
11
12
13
6
14
15
167,597
2,039,772
25,307
25,697
1,442,125
1,760,797
2,863
3,675
1,637,892
3,829,941
-
-
12,427
27,730
43,092
8,268,874
1,775
247,058
44,867
8,556,089
1,682,759
12,386,030
366,027
-
366,027
366,027
249,023
378,804
627,827
627,827
1,316,732
11,758,203
106,622,162
106,622,162
(125,930)
261,524
15, 25
(3,022,797)
(2,804,524)
(102,156,703)
(92,320,959)
1,316,732
11,758,203
-
-
1,316,732
11,758,203
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
2 4
EQUUS MINING LIMITED Consolidated Statement of
Changes in Equity
For the Year Ended 30 June 2014
Share
Capital
$
Accumulated
Losses
$
Reserves
$
Total
$
Non-
controlling
Interest
$
Total
Equity
$
Balance at 1 July 2012
99,362,502 (91,852,352)
(2,602,033)
4,908,117
(98,669) 4,809,448
Loss for the year
Total other comprehensive (loss)/income
Total comprehensive loss for the year
-
-
-
(3,546,382)
-
(3,546,382)
(44,246)
(3,590,628)
-
2,992,808
2,992,808
142,915
3,135,723
(3,546,382) 2,992,808
(553,574)
98,669
(454,905)
Transactions with owners recorded
directly in equity
Ordinary shares issued
7,287,860
Transaction costs on issue of shares
(28,200)
Employee share options
Transfer of expired options
-
-
-
-
-
-
-
7,287,860
(28,200)
144,000
144,000
3,077,775
(3,077,775)
-
Balance at 30 June 2013
106,622,162 (92,320,959)
(2,543,000)
11,758,203
Balance at 1 July 2013
106,622,162 (92,320,959)
(2,543,000)
11,758,203
Loss for the year
Total other comprehensive income
Total comprehensive loss for the year
-
-
-
(9,856,444)
-
(9,856,444)
-
(585,027)
(585,027)
(9,856,444)
(585,027)
(10,441,471)
-
-
-
-
-
-
-
-
-
7,287,860
(28,200)
144,000
-
11,758,203
11,758,203
(9,856,444)
(585,027)
(10,441,471)
Transactions with owners recorded
directly in equity
Transfer of expired options
20,700
(20,700)
-
Balance at 30 June 2014
106,622,162 (102,156,703)
(3,148,727)
1,316,732
-
1,316,732
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
2 5
2014 Annual Report Consolidated Statement of
Cash Flows
For the Year Ended 30 June 2014
Cash flows from operating activities
Cash receipts in the course of operations
Cash payments in the course of operations
Net cash used in operations
Interest received
Notes
2014
$
2013
$
15,036
406,975
(1,260,016)
(2,282,004)
(1,244,980)
(1,875,029)
17,283
13,267
Net cash used in operating activities
17
(1,227,697)
(1,861,762)
Cash flows from investing activities
Payments for exploration and development expenditure
(861,739)
(1,490,830)
Payments for plant and equipment
Proceeds from the sale of royalty interest
Proceeds from sale of plant and equipment
Proceeds from sale of investments
Disposal of subsidiaries, net of cash disposed of
Deposit received for the sale of Leo Ghana
Deposit received for the sale of drill rig
Loans repaid from other entities
Payment for the acquisition of assets (net of cash acquired)
-
(230,041)
2,857
2,000,000
74,273
19,940
-
-
100,000
-
-
140,617
1,263,851
778,260
100,000
-
9,639
119,392
Net cash from/(used in) investing activities
(664,669)
2,690,888
Cash flows from financing activities
Proceeds from share issues
Share issue expenses
Repayment of borrowings - related party
Net cash provided by financing activities
Net increase / (decrease) in cash held
Cash and cash equivalents at 1 July
Effects of exchange rate fluctuations on cash held
Cash and cash equivalents
Less cash reclassified to assets held for sale
-
-
-
-
751,400
(28,200)
(100,000)
623,200
(1,892,366)
1,452,326
2,059,438
607,112
525
-
167,597
2,059,438
-
(19,666)
Cash and cash equivalents at 30 June
17
167,597
2,039,772
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
2 6
EQUUS MINING LIMITED
Notes to the Consolidated
Financial Statements
1. REPORTING ENTITY
Equus Mining Limited (the ‘Company’) is a company domiciled in Australia. The address of the Company’s registered
office is Level 2, 66 Hunter Street, Sydney, NSW, 2000. The consolidated financial statements of the Company as at
and for the year ended 30 June 2014 comprises the Company and its subsidiaries (together referred to as the ‘Group’).
The Group is a for-profit entity and is primarily engaged in identifying and evaluating copper, gold and coal resource
opportunities in the central and southern Chile, South America.
2. BASIS OF PREPARATION
(a) Statement of compliance
The consolidated financial statements are general purpose financial statements which have been prepared in
accordance with Australian Accounting Standards (‘AASBs’) adopted by the Australian Accounting Standards Board
(‘AASB’) and the Corporations Act 2001. The consolidated financial statements comply with International Financial
Reporting Standards (‘IFRSs’) and interpretations adopted by the International Accounting Standards Board (‘IASB’).
The consolidated financial statements were authorised for issue by the Directors on 30 September 2014.
(b) Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for available-for-sale
financial assets which are measured at fair value.
(c) Functional and presentation currency
These consolidated financial statements are presented in Australian dollars, which is the Company’s functional
currency.
(d) Going concern
The consolidated financial statements have been prepared on a going concern basis, which contemplates the
realisation of assets and settlement of liabilities in the ordinary course of business.
The Group recorded a loss of $9,856,444 for the year ended 30 June 2014, including impairment of $9,025,278 relating to
exploration and evaluation and other assets and has accumulated losses of $102,156,703 as at 30 June 2014. The Group has
cash on hand of $167,597 at 30 June 2014 and used $2,089,436 of cash in operations, including payments for exploration
and evaluation, for the year ended 30 June 2014. Additional funding will be required to meet the Group’s expenditure
commitments.
Subsequent to year end $521,000 was raised from shareholders participation in a Share Purchase Plan (‘SPP’). In
conjunction with the SPP an additional $225,000 was raised from sophisticated investors. As at the date of this report
all funds have been received by the Company.
These conditions give rise to a material uncertainty that may cast significant doubt upon the Group’s ability to
continue as a going concern. The ongoing operation of the Group is dependent upon:
•
•
•
the Group raising additional funding from shareholders or other parties; and/or
the Group disposing of non-core assets; and
the Group reducing expenditure in-line with available funding.
The Directors have prepared cash flow projections that support the ability of the Group to continue as a going
concern. These cash flow projections assume the Group obtains sufficient additional funding from the sale of its
remaining non-core assets, and/or the Group raising additional funding from shareholders or other parties. If such
funding is not achieved, the Group plans to reduce expenditure further to the level of funding available and this may
impact the Group’s ability to continue with certain exploration projects.
2 7
2014 Annual Report Notes to the Consolidated
Financial Statements
2. BASIS OF PREPARATION (Cont.)
(d) Going concern (Cont.)
In the event that the Group does not obtain additional funding and/or dispose of non-core assets and reduce
expenditure in-line with available funding, it may not be able to continue its operations as a going concern and
therefore may not be able to realise its assets and extinguish its liabilities in the ordinary course of operations and at
the amounts stated in the consolidated financial statements.
(e) Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with IFRS requires management to make
judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts
of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying
accounting policies that have the most significant effect on the amount recognised in the consolidated financial
statements are described in the following notes:
• Note 2(d) - Going concern;
• Note 6 – Income tax expense;
• Note 11 - Exploration and evaluation expenditure; and
• Note 25 – Disposal group held for sale.
(f) Changes in accounting policies
The Group has adopted the following standards and amendments to standards, including any consequential
amendments to other standards, with a date of initial application of 1 July 2013.
(i) AASB 10 Consolidated Financial Statements (2011)
As a result, of AASB 10 (2011), the Group has changed its accounting policy for determining whether it has control
over and consequently whether it consolidates its investees. AASB 10 (2011) introduces a new control model that
is applicable to all investees, by focusing on whether the Group has the power over an investee, exposure or rights
to variable returns from its involvement with the investee and ability to use its power to affect hose returns.
In particular, AASB 10 (2011) requires the Group consolidate investees that it controls on the basis of de facto
circumstances.
In accordance with the transitional provisions of AASB 10 (2011), the Group reassessed the control conclusion for its
investees at 1 July 2013 and have concluded that no adjustments to the financial statements are required.
(ii) AASB 11 Joint Arrangements (2011)
As a result, of AASB 11, the Group has changed its accounting policy for its interest in joint arrangements. Under AASB
11, the Group classifies its interests in joint arrangements as either joint operations or joint ventures depending on the
Group’s rights to the assets and obligations for the liabilities of the arrangements. When making this assessment, the
Group considers the structure of the arrangements, the legal form of any separate vehicles, the contractual terms of
the arrangements and other facts and circumstances.
The Group has assessed the impact of this change and has concluded that there is no impact on the financial
statements.
2 8
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
2. BASIS OF PREPARATION (Cont.)
(f) Changes in accounting policies (Cont.)
(iii) AASB 12 Disclosure of Interests in Other Entities (2011)
AASB 12 brings together into a single standard all the disclosure requirements about an entity’s interests in
subsidiaries, joint arrangements, associates and unconsolidated structured entities. The Group has assessed the
disclosure requirements under this standard and have concluded that no changes to current disclosures are required.
(iv) AASB 13 Fair Value Measurement
AASB 13 establishes a single framework for measuring fair value and making disclosures about fair value
measurements, when such measurements are required or permitted by other AASBs. In particular, it unifies the
definition of fair value as the price at which an orderly transaction to sell an asset or transfer a liability would take
place between market participants at the measurement date.
In accordance with the transitional provisions of AASB 13, the Group has applied the new fair value measurement
guidance prospectively, however, this has not had a significant impact on the measurement of the Group’s assets and
liabilities.
3. SIGNIFICANT ACCOUNTING POLICIES
Except for the changes in accounting policies noted in Note 2(f), the accounting policies set out below have been
applied consistently to all periods presented in these consolidated financial statements, and have been applied
consistently by entities in the Group.
(a) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entities and the
revenue can be reliably measured.
Finance income and finance costs
Finance income comprises interest income on funds invested (including available-for-sale financial assets), dividend
income and gains on the disposal of available-for-sale financial assets. Interest income is recognised as it accrues in
profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that the
Group’s right to receive payment is established, which in the case of quoted securities is the ex-dividend date.
Finance costs comprise interest expense on borrowings, losses on disposal of available-for-sale financial assets
and impairment losses recognised on financial assets. Borrowing costs that are not directly attributable to the
acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective
interest method.
Foreign currency gains and losses are reported on a net basis.
(b) Exploration and evaluation expenditure
Exploration and evaluation expenditure, including the costs of acquiring licences, are capitalised as intangible
exploration and evaluation assets on an area of interest basis, less any impairment losses. Costs incurred before the
Group has obtained the legal rights to explore an area are recognised in profit or loss.
Exploration and evaluation assets are only recognised if the rights of the area of interest are current and either:
•
•
the expenditures are expected to be recouped through successful development and exploitation of the area of
interest; or
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 area of interest are continuing.
2 9
2014 Annual Report Notes to the Consolidated
Financial Statements
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(b) Exploration and evaluation expenditure (Cont.)
Exploration and evaluation assets are assessed for impairment if sufficient data exists to determine technical
feasibility and commercial viability and facts and circumstances suggest that the carrying amount exceeds the
recoverable amount. For the purposes of impairment testing, exploration and evaluation assets are allocated to cash-
generating units to which the exploration activity relates. The cash generating unit shall not be larger than the area of
interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are
demonstrable, exploration and evaluation assets attributable to that area of interest are first tested for impairment
and then reclassified to developing mine properties.
(c) Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed
assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to
a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on
which they are located and capitalised borrowing costs. Cost also may include transfers from equity of any gain or loss
on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment. Purchased software
that is integral to the functionality of the related equipment is capitalised as part of that equipment.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as
separate items (major components) of property, plant and equipment.
The gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds
from disposal with the carrying amount of the property, plant and equipment, and is recognised net within
other income/other expenses in profit or loss. When revalued assets are sold, any related amount included in the
revaluation reserve is transferred to retained earnings.
Depreciation
Items of property, plant and equipment are depreciated from the date that they are installed and ready for use, or in
respect of internally constructed assets, from the date that the asset is completed and ready for use.
Depreciation is calculated to write off the cost of property, plant and equipment less their estimated residual values
using the straight-line basis over their estimated useful lives. Depreciation is generally recognised in profit or loss,
unless the amount is included in the carrying amount of another asset.
Depreciation rates
Class of assets
Depreciation basis
Depreciation rate
Computer and Office Equipment
Motor Vehicles
Building improvements
Plant & equipment
Office Fittings
Straight Line
Straight Line
Straight Line
Straight Line
Straight Line
20% to 50%
10% to 20%
10%
20%
25%
3 0
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(d) Financial instruments
Non-derivative financial assets
The Group initially recognises loans and receivables on the date that they are originated. All other financial assets
(including assets designated at fair value through profit or loss) are recognised initially on the trade date at which the
Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it
transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially
all the risks and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial
assets that is created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when,
and only when, the Group has a legal right to offset the amounts and intends either to settle them on a net basis or to
realise the asset and settle the liability simultaneously.
The Group classifies non-derivative financial assets into the following categories:
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held
for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are
expected to be settled within 12 months; otherwise they are classified as non-current. Financial assets at fair value
through profit or loss are measured at fair value and changes therein, which take into account any dividend income,
are recognised in profit or loss.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. Such assets are recognised at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition, loans and receivables are measured at amortised cost using the effective interest method, less
any impairment losses. They are included in current assets, except for those with maturities greater than 12 months
after the reporting period, which are classified as non-current assets. Loans and receivables comprise cash and cash
equivalents and trade and other receivables.
Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed
maturities that the Group’s management has the positive intention and ability to hold to maturity. Held-to-maturity
financial assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition, held-to-maturity financial assets are measured at amortised cost using the effective interest
method, less any impairment losses. Held-to-maturity financial assets are included in non-current assets, except for
those with maturities less than 12 months from the end of the reporting period, which are classified as current assets
3 1
2014 Annual Report Notes to the Consolidated
Financial Statements
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(d) Financial instruments (Cont.)
Available-for-sale financial assets
The Group’s investments in equity securities are classified as available-for-sale financial assets. Available-for-sale
financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any
of the above categories of financial assets. Available-for-sale financial assets are recognised initially at fair value plus
any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and
changes therein, other than impairment losses, are recognised in other comprehensive income and presented in the
fair value reserve in equity. When an investment is derecognised, the cumulative gain or loss is reclassified to profit or
loss.
Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated.
All other financial liabilities are recognised initially on the trade date, which is the date that the Group becomes a
party to the contractual provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expire.
Other financial liabilities comprise trade and other payables.
Share Capital
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are
recognised as a deduction from equity, net of any tax effects.
(e) Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power
over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases.
Loss of control
When the Group loses control over a subsidiary, it derecognises the assets and liabilities of the subsidiary, and any
related NCI and other components of equity. Any resulting gain or loss is recognised in profit or loss. Any interest
retained in the former subsidiary is measured at fair value when control is lost.
Transactions eliminated on consolidation
Intra-group balances and any unrealised gains and losses or income and expenses arising from intragroup
transactions, are eliminated in preparing the consolidated financial statements.
(f) Trade and other receivables and payables
Trade receivables and payables are carried at amortised cost. For receivables and payables with a remaining life of
less than one year, the notional amount is deemed to reflect the fair value. All other receivables and payables are
discounted to determine the fair value.
3 2
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(g) Impairment
Non-derivative financial assets
A financial asset not classified at fair value through profit or loss is assessed at each reporting date to determine
whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective
evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that
asset.
For an investment in an equity security classified as available-for-sale, a significant or prolonged decline in its fair
value below its cost is objective evidence of impairment. The Group consider a decline of 20 per cent to be significant
and a period of 9 months to be prolonged.
Financial assets measured at amortised cost
Individually significant financial assets are tested for impairment on an individual basis. The remaining financial
assets are assessed collectively in groups that share similar credit risk characteristics.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference
between its carrying amount and the present value of the estimated future cash flows discounted at the original
effective interest rate. Losses are recognised within profit or loss. When an event occurring after the impairment was
recognised causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through
profit or loss.
Available-for-sale financial assets
Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the
fair value reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the
difference between the acquisition cost and the current fair value, less any impairment loss recognised previously in
profit or loss. Any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised
in other comprehensive income.
Non-financial assets
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit (CGU) exceeds
its recoverable amount. The recoverable amount of an asset or CGU is the greater of their 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 or CGU. For impairment testing, assets are grouped together into the smallest group of assets that
generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or CGUs.
Impairment losses are recognised in profit or loss.
Reversals of impairment
An impairment loss in respect of a financial asset carried at amortised cost is reversed if the subsequent increase in
recoverable amount can be related objectively to an event occurring after the impairment loss was recognised.
In respect of non-financial assets, an impairment loss is reversed if there has been a conclusive change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the
asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
3 3
2014 Annual Report Notes to the Consolidated
Financial Statements
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(h) Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less.
(i) Income tax
Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business
combination or items recognised directly in equity or in other comprehensive income.
Current tax
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted
or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amount of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
•
•
•
temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business
combination and that affects neither accounting nor taxable profit or loss;
temporary differences related to investments in subsidiaries to the extent that the Group is able to control the
timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable
future; or
taxable temporary differences arising on the initial recognition of goodwill.
The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group
expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse,
using tax rates enacted or substantively enacted at the reporting date. Deferred tax assets and liabilities are offset
if there is a legally enforceable right to offset current tax liabilities and assets and they relate to taxes levied by the
same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the
extent that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax
assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
3 4
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(j) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the
functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the
difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective
interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate
at the end of the reporting period.
Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated
to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency
differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation
of available-for-sale equity instruments, a financial liability designated as a hedge of the net investment in a foreign
operation or qualifying cash flow hedges, which are recognised in other comprehensive income. Non-monetary items
that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of
the transaction.
(k) Foreign operations
The assets and liabilities of foreign operations are translated to Australian dollars at foreign exchange rates ruling
at the reporting date. The income and expenses of foreign operations are translated to Australian dollars at rates
approximating the foreign exchange rates ruling at the dates of the transactions. Foreign exchange differences arising
on retranslation are recognised directly in the foreign currency translation reserve (‘FCTR’), a separate component of
equity.
Foreign exchange gains and losses arising from a monetary item receivable or payable to a foreign operation, the
settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of a net
investment in a foreign operation and are recognised directly in the FCTR.
Any references to functional currency, unless otherwise stated, are to the functional currency of the Company,
Australian dollars.
When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to profit or
loss as part of the profit or loss on disposal.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor
likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered
to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and are
presented within equity in the FCTR.
3 5
2014 Annual Report Notes to the Consolidated
Financial Statements
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(l) Segment reporting
Determination and presentation of operating segments
The Group determines and presents operating segments based on the information that is provided internally to the
Managing Director, who is the Group’s chief operating decision maker.
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. All operating segments’ operating results are regularly reviewed by the Group’s Managing Director
to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete
financial information is available.
Segment results that are reported to the Managing Director include items directly attributable to a segment as well
as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily
the Company’s headquarters), head office expenses, and income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment,
and intangible assets other than goodwill.
(m) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is
not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost of
acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown
inclusive of GST.
Cash flows are presented in the Consolidated Statement of Cash Flows on a gross basis, except for the GST component
of investing and financing activities, which are disclosed as operating cash flows.
(n) Employee benefits
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount
expected to be paid if the Group has a present legal or constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be estimated reliably.
Share-based payment transactions
The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense,
with a corresponding increase in equity, over the period that the employees become unconditionally entitled to
the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related
service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised as an
expense is based on the number of awards that meet the related service and non-market performance conditions at
the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-
based payment is measured to reflect such conditions and there is no true-up for differences between expected and
actual outcomes.
3 6
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(o) Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that
can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the
current market assessments of the time value of money and the risks specific to the liability. The unwinding of the
discount is recognised as a finance cost.
Site restoration
In accordance with the Group’s environmental policy and applicable legal requirements, a provision for site
restoration in respect of contaminated land, and the related expense, is recognised when the land is contaminated.
(p) Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value for both financial
and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes
based on the following methods. When applicable, further information about the assumptions made in determining
fair values is disclosed in the notes specific to that asset or liability.
Investments in equity securities
The fair values of investments in equity securities are determined with reference to the quoted market price that is
most representative of the fair value of the security at the measurement date.
Share-based payment transactions
The fair value of the employee share options is measured using the Black-Scholes formula. Measurement inputs
include share price on measurement date, exercise price of the instrument, expected volatility (based on weighted
average historic volatility), expected dividends, and the risk-free interest rate (based on government bonds).
The grant-date fair value of share-based payment awards is recognised as an expense, with a corresponding increase
in equity, over the period that the recipient unconditionally become entitled to the awards. The amount recognised
as an expense is adjusted to reflect the number of awards for which the related service and non-market vesting
conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number
of awards that meet the related service and non-market performance conditions at the vesting date. For share-based
payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to
reflect such conditions and there is no true-up for differences between expected and actual outcomes. Service and
non-market performance conditions are not taken into account in determining fair value.
(q) Assets held for sale, and discontinued operations
Assets held for sale
Non-current assets, or disposal groups comprising assets and liabilities, are classified as held-for-sale if it is highly
probably that they will be recovered primarily through sale rather than continuing use.
Immediately before classification as held-for-sale, the assets, or components of a disposal group, are remeasured
in accordance with the Group’s other accounting policies. Thereafter generally the assets, or disposal group, are
measured at the lower of their carrying amount and fair value less costs to sell. Any impairment loss on a disposal
group is first allocated to goodwill, and then to remaining assets and liabilities on a pro rata basis, except that no
loss is allocated to inventories, financial assets or deferred tax assets, which continue to be measured in accordance
with the Group’s other accounting policies. Impairment losses on initial classification as held-for-sale and subsequent
gains or losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative
impairment loss.
3 7
2014 Annual Report Notes to the Consolidated
Financial Statements
3. SIGNIFICANT ACCOUNTING POLICIES (Cont.)
(q) Assets held for sale, and discontinued operations (Cont.)
Once classified as held-for-sale, intangible assets and property, plant and equipment are no longer amortised or
depreciated.
Discontinued operations
A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be
clearly distinguished from the rest of the Group and which:
•
•
•
represents a separate major line of business or geographical area of operations;
is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of
operations; or
is a subsidiary acquired exclusively with a view to re-sale.
Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be
classified as held-for-sale, if earlier.
When an operation is classified as a discontinued operation, the comparative Consolidated Statement of Profit or
Loss and Other Comprehensive Income is re-presented as if the operation had been discontinued from the start of the
comparative year.
(r) Inventories
Inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling
price in the ordinary course of business, less the estimated costs of completion and estimated costs necessary to
make the sale.
(s) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are effective for annual periods beginning
after 1 July 2013, and have not been applied in preparing these consolidated financial statements. Those, which may be
relevant to the Group, are set out below. The Group does not plan to adopt these standards early.
AASB 9 Financial Instruments (2010), AASB 9 Financial Instruments (2009)
AASB 9 (2009) introduces new requirements for the classification and measurement of financial assets. Under
AASB 9 (2009), financial assets are classified and measured based on the business model in which they are held
and the characteristics of their contractual cash flows. AASB 9 (2010) introduces additional changes relating to
financial liabilities. The IASB currently has an active project to make limited amendments to the classification and
measurement requirements of AASB 9 and add new requirements to address the impairment of financial assets and
hedge accounting.
AASB 9 (2010 and 2009) are effective for annual periods beginning on or after 1 January 2015, with early adoption
permitted. The Group does not plan to adopt this standard early and the extent of the impact has not been
determined.
3 8
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
4. LOSS FROM OPERATING ACTIVITIES
Continuing operations
Discontinued operations*
Revenue from ordinary
activities
2014
$
-
2013
$
2014
$
2013
$
Total
2014
$
Total
2013
$
-
7,419
388,950
7,419
388,950
The Group generated rental income from the provision of equipment from its subsidiary JSC Sherik
*Discontinued - see Note 28.
Other income
Recognised in profit or loss
Gain on sale of royalty interest
2014
$
2013
$
2,857
2,857
2,000,000
2,000,000
During the year the Group sold its royalty interest in the Mansounia Gold Project in the Republic of Guinea West
Africa for cash consideration of US$42,857 and shares in a US over the counter traded company, Blox-Inc. At 30 June
2014, Equus had received an initial amount of AUD$2,857 with the balance received in July 2014. At 30 June 2014 the
remaining consideration was subject to the satisfaction of certain conditions precedent.
Other expenses
Administration costs Chile
Legal fees Chile
Accounting and secretarial fees
Commissions
Unmarketable parcel
Insurance
ASIC and ASX fees
Share registry
Legal fees
Advertising and corporate relations
Audit fees
Loss on sale of plant and equipment
Other expenses
2014
$
9,800
8,793
107,771
54
-
14,577
25,838
12,650
17,645
1,475
80,209
10,227
88,277
377,316
2013
$
39,502
30,220
24,100
48,500
4,939
16,314
37,252
19,181
49,401
15,366
83,000
-
138,745
506,520
3 9
2014 Annual Report Notes to the Consolidated
Financial Statements
5. FINANCE INCOME
Recognised in profit and loss
Interest income on cash deposits
Net gain on disposal of available-for-sale investments
Income on sale of minor assets
Foreign exchange gain
2014
$
17,283
-
7,618
11
24,912
2013
$
13,268
594,539
-
-
607,807
Impairment of available-for-sale investments reclassified to profit or loss
(7,790)
(61,224)
Net finance income/(costs) recognised in profit or loss
17,122
546,583
Recognised in other comprehensive income
Net change in fair value of available-for-sale financial assets
Net change in fair value of available-for-sale financial assets reclassified to profit or loss
Finance cost recognised in other comprehensive income, net of tax
6. INCOME TAX EXPENSE
Current tax expense
Current year
Overprovision in prior year
Losses not recognised
Numerical reconciliation of income tax expense to prima facie tax payable:
Loss before tax
Prima facie income tax benefit at the Australian tax rate of 30% (2013 - 30%)
Decrease in income tax benefit due to:
- non-deductible expenses
- overprovision in prior year
- tax losses not recognised
- effect of net deferred tax assets not brought to account
Income tax expense/(benefit)
(7,790)
7,790
-
2014
$
(147,735)
(533,315)
(681,050)
2013
$
(134,834)
(378,804)
134,834
(378,804)
791,658
-
(412,854)
378,804
(10,235,248)
(3,070,574)
(3,211,824)
(963,547)
1,797,849
378,804
248,475
266,642
(378,804)
2,475,801
-
(234,914)
(898,536)
378,804
During the year the Company obtained tax advice in respect of a provision recorded in the prior year of $378,804 in
relation to an estimate of potential tax payable in a foreign jurisdiction. The Directors considered the provision to
be a conservative estimate based on the analysis performed at that time. Subsequent to obtaining tax advice, the
Company has removed the provision as it is no longer considered probable that a tax liability will arise in the foreign
jurisdiction.
4 0
EQUUS MINING LIMITED
Notes to the Consolidated
Financial Statements
6. INCOME TAX EXPENSE (Cont.)
Unrecognised deferred tax assets
Deferred tax assets have not been recognised in respect of the following items:
Capital losses
Tax losses
Net deductible temporary differences
Potential tax benefit at 30%
2014
$
2013
$
6,845,041
3,177,403
(568,853)
9,453,591
6,803,269
3,022,700
(813,277)
9,012,692
The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets
have not been recognised in respect of these items because it is not probable that future taxable profit will be
available against which the Group can utilise the benefits there-from.
7. CASH AND CASH EQUIVALENTS
Cash at bank
Deposits at call
8. RECEIVABLES
Current
Bank bond guarantee - credit card
Property bond deposit
Sundry debtors
Non-current
Bank bond guarantee - credit card
Property bond deposit
2014
$
58,979
108,618
167,597
2014
$
10,602
1,171
13,534
25,307
-
-
-
2013
$
184,536
1,855,236
2,039,772
2013
$
-
-
25,697
25,697
10,806
1,621
12,427
Trade and sundry debtors are non-interest bearing and generally on 30-day terms.
The Group’s exposure to credit and market risks, and impairment losses related to receivables, are disclosed in Note 21.
9. OTHER ASSETS
Current
Prepayments
2014
$
2013
$
2,863
3,675
4 1
2014 Annual Report Notes to the Consolidated
Financial Statements
10. INVESTMENTS
Equity securities - available-for-sale at fair value
-
27,730
During the financial year, the Company sold its investment of 470,000 shares in Manas Resources Limited for $19,940.
The investment was revalued on the date of disposal with the change in fair value of $7,790 recognised in profit or loss
(refer to Note 5).
11. EXPLORATION AND EVALUATION EXPENDITURE
Costs carried forward in respect of areas of interest in the following phases:
Carrying amount at the beginning of the year
Capitalised expenditure incurred - Kyrgyz Republic
Acquisition of Chilean mining interest Naltagua
Payment of instalment on option agreement - Cerro Oveja
Capitalised expenditure incurred - Naltagua, Chile
Capitalised expenditure incurred – Carbones del Sur, Chile
Impairments
Foreign currency translation movement
Balance carried forward
2014
$
2013
$
8,268,874
-
-
106,166
712,483
43,092
(8,832,568)
(254,955)
43,092
513,264
182,482
6,591,096
107,009
1,521,658
-
(695,746)
49,111
8,268,874
The ultimate recoupment of exploration and evaluation expenditure is dependent on the successful development and
commercial exploitation, or alternatively sale of the respective areas of interest.
During the year the Group fully impaired the carrying value of its investment in Naltagua, Central Chile. The total
impairment for the year ended 30 June 2014 is $8,832,568 (2013: $695,746 impairment of oil tenements in the Kyrgyz
Republic).
4 2
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
2014
$
2013
$
157,173
(155,546)
1,627
69,751
(69,603)
148
-
-
-
192,710
(192,710)
-
170,432
(156,754)
13,678
72,120
(71,400)
720
18,731
(2,188)
16,543
216,117
-
216,117
12. PROPERTY, PLANT AND EQUIPMENT
Furniture and fittings - at cost
Accumulated depreciation
Net book value
Office equipment – at cost
Accumulated depreciation
Net book value
Motor Vehicles – at cost
Accumulated depreciation
Net book value
Property – at cost
Impairment
Net book value
Total property, plant and equipment net book value
1,775
247,058
During the year the Group fully impaired the carrying value of the property held at Naltagua, Central Chile due to
uncertainty over the potential recoverability of the asset through future sale.
Reconciliation:
Carrying amount at the beginning of the year
Additions
Disposals
Disposal of subsidiary
Depreciation
Reclassified as held for sale
Impairment
Foreign currency translation movement
Carrying amount at the end of the year
13. TRADE AND OTHER PAYABLES
Current liabilities
Trade creditors and accruals
Employee leave entitlements
2014
$
2013
$
247,058
-
(23,466)
-
(2,608)
-
(192,710)
(26,499)
1,775
685,183
238,561
(359,793)
(120,450)
(4,953)
(202,262)
-
10,772
247,058
343,090
22,937
366,027
234,509
14,514
249,023
4 3
2014 Annual Report Notes to the Consolidated
Financial Statements
14. ISSUED CAPITAL
256,661,675 (2013: 256,661,675) fully paid ordinary shares
106,622,162
106,622,162
Fully paid ordinary shares
Balance at beginning of financial year
Consolidation of 1 share for every 10
Issued ordinary shares 5 September 2012 *
Issued ordinary shares 15 September 2012 for $0.055
Issued ordinary shares 2 May 2013 for $0.050
Less cost of issue
2014
2013
Nº
$
Nº
$
256,661,675
-
-
-
-
-
256,661,675
106,622,162
-
-
-
-
-
106,622,162
1,331,500,513
(1,198,350,703)
108,940,951
4,570,914
10,000,000
-
256,661,675
99,362,502
-
6,536,460
251,400
500,000
(28,200)
106,622,162
* Acquisition of controlled entity – see Note 29.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote
per share at the shareholders meetings. In the event of winding up of the Company, ordinary shareholders rank after
creditors and are fully entitled to any proceeds of liquidation.
15. RESERVES AND FOREIGN CURRENCY TRANSLATION RESERVE
RELATING TO DISPOSAL GROUP HELD FOR SALE
Equity based compensation reserve (a)
Fair value reserve (b)
Foreign currency translation reserve (c)
Option premium reserve (d)
2014
$
2013
$
144,000
-
(269,930)
-
(125,930)
164,700
-
96,824
-
261,524
Foreign currency translation reserve relating to disposal group held for sale (e)
(3,022,797)
(2,804,524)
Movements during the period:
(a) Equity based compensation reserve
Balance at beginning of period
Vesting of employee share options
Expired options
Balance at end of period
(b) Fair value reserve
Balance at beginning of period
Net change in fair value of available-for-sale financial assets
Net change in fair value of available-for-sale financial assets reclassified to profit or
loss
Balance at end of period
164,700
-
(20,700)
144,000
2,509,475
144,000
(2,488,775)
164,700
-
(7,790)
681,050
(147,735)
7,790
-
(533,315)
-
4 4
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
15. RESERVES AND FOREIGN CURRENCY TRANSLATION RESERVE RELATING TO DISPOSAL
GROUP HELD FOR SALE (Cont.)
(c) Foreign currency translation reserve
Balance at beginning of period
Currency translation differences
Transfer of foreign currency translation reserve to loss on disposal of subsidiaries in
profit or loss
Amounts reclassified to foreign currency translation reserve relating to disposal group
held for sale
Balance at end of period continuing operations
96,824
(366,754)
(6,381,558)
914,098
-
2,759,760
-
(269,930)
2,804,524
96,824
(d) Option premium reserve
Balance at beginning of period
Expired options
Balance at end of period
-
-
-
589,000
(589,000)
-
(e) Foreign currency translation reserve relating to disposal group held for sale
Balance at beginning of period
Currency translation differences
Amounts reclassified from foreign currency translation reserve
Balance at end of period
(2,804,524)
(218,273)
-
(3,022,797)
-
-
(2,804,524)
(2,804,524)
(f) Non-controlling interest
Opening balance
Current period loss
Foreign currency translation transfer on disposal
Nature and purpose of reserves
Equity based compensation reserve:
-
-
-
-
(98,669)
(44,246)
142,915
-
The equity based compensation reserve is used to record the fair value of options issued but not exercised.
Foreign currency translation reserve:
The foreign currency translation reserve records the foreign currency differences arising from the translation of the
financial statements of foreign operations where their functional currency is different to the presentation currency of
the reporting entity.
4 5
2014 Annual Report Notes to the Consolidated
Financial Statements
16. LOSS PER SHARE
Basic and diluted profit/(loss)
per share:
Net profit/(loss) for the year
attributable to equity holders
of the parent
Continuing
operations
$
2014
Discontinued
operations
$
Total
$
Continuing
operations
$
2013
Discontinued
operations
$
Total
$
(9,579,724)
(276,720)
(9,856,444)
750,805
(4,297,187)
(3,546,382)
Weighted average number of ordinary shares (basic and diluted)
Issued ordinary shares at beginning of year
Effect of shares issued (Note 14)
Weighted average ordinary shares at the end of the year
2014
256,661,675
-
256,661,675
2013
131,149,810
94,166,648
225,316,458
As the Group is loss making, none of the potentially dilutive securities are currently dilutive in the calculation of total
earnings per share.
Continuing operations recognised a profit in the year ended 30 June 2013, however as the exercise price of the options
on issue exceeded the average market price of the ordinary shares of the Company during both the current year and
the prior year, the options on issue are not deemed to be dilutive.
4 6
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
17. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES
Cash flows from operating activities
Loss for the year
Non-cash items
Depreciation
Profit on sale of plant and equipment
Loss / (profit) on sale of investments
Impairment of available for sale financial assets
Impairment of value added tax in Kyrgyzstan
Impairment of property, plant and equipment
Impairment of exploration and evaluation expenditure
Share based payments
Loss on sale of subsidiaries net of cash
Income tax expense/(benefit)
Employee benefits provision
Gain on sale of royalty
Changes in assets and liabilities
Decrease/(increase) in receivables
Decrease/(increase) in other assets
(Decrease)/Increase in payables
Net cash used in operating activities
Reconciliation of cash
2014
$
2013
$
(9,856,444)
(3,590,628)
2,608
(50,808)
-
7,790
8,526
192,710
8,832,568
-
-
(378,804)
-
13,696
(129,131)
(594,539)
61,224
187,461
-
695,746
144,000
2,694,373
378,804
(158,659)
(2,857)
(2,000,000)
390
812
15,812
(72,889)
162,603
346,177
(1,227,697)
(1,861,762)
For the purposes of the statement of cash flows, cash includes cash on hand and at
bank and cash on deposit net of bank overdrafts and excluding security deposits. Cash
at the end of the financial year as shown in the statement of cash flows is reconciled to
the related items in the statement of financial position as follows:
Cash and cash equivalents
Less cash reclassified to assets held for sale
Cash and cash equivalents held by continuing operations
167,597
2,059,438
-
(19,666)
167,597
2,039,772
4 7
2014 Annual Report Notes to the Consolidated
Financial Statements
18. RELATED PARTIES
Parent and ultimate controlling party
Equus Mining Limited is both the parent and ultimate controlling party of the Group.
Key management personnel and director transactions
A number of key management persons, or their related parties, hold positions in other entities that result in them
having control or joint control over the financial or operating policies of those entities.
A number of these entities transacted with the Group during the year as follows:
• During the year ended 30 June 2014, Norman A. Seckold had control over an entity, Mining Services Trust, which
provided full administrative services, including rental accommodation, administrative staff, services and supplies,
to the Group. Fees paid to Mining Services Trust during the year amounted to $240,000 (2013 - $176,500). For the
ended 30 June 2014 the outstanding amount is $20,000 (2013 - $nil).
• During the year ended 30 June 2014, Mr Robert Perring had control over an entity, Quadramin Pty Ltd, which
provided geological consulting services to the Group. Fees paid to Quadramin Pty Ltd during the year amounted
to $10,000 (2013 - $117,400). There were no amounts outstanding as at year end (2013 - $nil).
19. KEY MANAGEMENT PERSONNEL DISCLOSURES
Information regarding individual key management personnel’s compensation and some equity instruments
disclosures as permitted by Corporations Regulations 2M.3.03 are provided in the Remuneration Report section of the
Director’s Report.
Key management personnel compensation
Primary fees/salary
Consulting fees
Superannuation
2014
$
2013
$
225,833
484,620
-
13,875
239,708
53,000
26,944
564,564
At 30 June 2014 $18,656 of fees were outstanding (2013 - $nil). There were no loans made to key management personnel
or their related parties during the 2014 and 2013 financial years.
The Board reviews remuneration arrangements annually based on services provided. Apart from the details disclosed
in this note and Note 18, no Director has entered into a contract with the Company during the year and there were no
material contracts involving Directors’ interest’s existing at year end
4 8
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
20. SHARE BASED PAYMENTS
The Company makes share based payments to consultants and/or service providers from time to time, not under any
specific plan. The Company also may issue options to directors of the parent entity. Specific shareholder approval is
obtained for any share based payments to directors of the parent entity.
Options outstanding at 30 June 2014
Grant date
13 November 2012
13 November 2012
13 November 2012
13 November 2012
Number of options
1,000,000
1,000,000
1,000,000
1,000,000
Exercise price
$0.075
$0.150
$0.200
$0.250
Movement of options during the year ended 30 June 2014
Fair value at
grant date
$0.044
$0.037
$0.033
$0.030
Vesting Date
31 March 2013
31 March 2013
31 March 2013
31 March 2013
Expiry date
13 November 2015
13 November 2015
13 November 2015
13 November 2015
Grant date
24 May 2010
13 November 2012
13 November 2012
13 November 2012
13 November 2012
Outstanding at
the beginning of
the year
460,000
1,000,000
1,000,000
1,000,000
1,000,000
4,460,000
Granted
during the
year
-
-
-
-
-
-
Cancelled
during the
year
-
-
-
-
-
-
Exercised
during the
year
-
-
-
-
-
-
Expired
during the
year
460,000
-
-
-
-
460,000
Outstanding at
the end of the
year
-
1,000,000
1,000,000
1,000,000
1,000,000
4,000,000
Exercisable at
the end of the
year
-
1,000,000
1,000,000
1,000,000
1,000,000
4,000,000
Options outstanding at 30 June 2013
Grant date
24 May 2010
13 November 2012
13 November 2012
13 November 2012
13 November 2012
Number of options
460,000
1,000,000
1,000,000
1,000,000
1,000,000
Exercise price
$0.300
$0.075
$0.150
$0.200
$0.250
Movement of options during the year ended 30 June 2013
Fair value at
grant date
$0.045
$0.044
$0.037
$0.033
$0.030
Vesting Date
24 May 2010
31 March 2013
31 March 2013
31 March 2013
31 March 2013
Expiry date
31 October 2013
13 November 2015
13 November 2015
13 November 2015
13 November 2015
Grant date
24 May 2010
13 November 2012
13 November 2012
13 November 2012
13 November 2012
Outstanding at
the beginning of
the year
460,000
-
-
-
-
460,000
Granted
during the
year
-
1,000,000
1,000,000
1,000,000
1,000,000
4,000,000
Cancelled
during the
year
-
-
-
-
-
-
Exercised
during the
year
-
-
-
-
-
-
Expired
during the
year
-
-
-
-
-
-
Outstanding at
the end of the
year
460,000
1,000,000
1,000,000
1,000,000
1,000,000
4,460,000
Exercisable at
the end of the
year
460,000
1,000,000
1,000,000
1,000,000
1,000,000
4,460,000
4 9
2014 Annual Report Notes to the Consolidated
Financial Statements
20. SHARE BASED PAYMENTS (Cont.)
Weighted average exercise price of options
Outstanding at
the beginning of
the year
$0.300
$0.182
Granted
during the
year
$0.169
-
Year
2013
2014
Forfeited
during the
year
Exercised
during the year
-
-
-
-
Expired during
the year
-
$0.300
Outstanding at
the end of the
year
$0.182
$0.169
Exercisable at
the end of the
year
$0.182
$0.169
The weighted average remaining contractual life of share options outstanding at the end of the year was 1.37 years
(2013: 2.16 years).
Fair value of options
The fair value of options granted is measured at grant date and recognised as an expense over the period during
which the key management and senior employees become unconditionally entitled to the options. The fair value of
the options granted is measured using an appropriate option valuation methodology, taking into account the terms
and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the
actual number of options that vest.
The total fair value of the 460,000 options granted on 24 May 2010 was $20,700. The options were valued using the
Black-Scholes formula. The valuation inputs were the Company’s share price of $0.008 at the grant date, a volatility
factor of 119% (based on historical share price performance), a life of 3.4 years and a risk-free interest rate of 4.75%
based on the corresponding government bond rate and a dividend yield of 0%. The options vested immediately. The
options expired unexercised on 31 October 2013.
The total fair value of the 4,000,000 options granted on 13 November 2012 was $144,000. The options were issued to
the exploration Manager at the Naltagua project in Chile. The options were valued using the Black-Scholes formula.
The valuation inputs were the Company’s share price of $0.066 at the grant date, a volatility factor of 115% (based on
historical share price performance), a life of 3 years, a risk-free interest rate of 2.54% based on the 3 year government
bond rate and a dividend yield of 0%. The exercise price ranged from $0.075 - $0.250 as disclosed above. These options
had a non-market performance vesting condition whereby they did not vest until the commencement of exploration
drilling on the Naltagua Copper Project. Drilling commenced on 30 March 2013, and hence the options fully vested on
this date.
Expenses arising from share-based payment transactions
Total expenses from share-based payment transactions recognised during the year ended 30 June 2014 was $nil (2013:
$144,000).
21. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS DISCLOSURE
The Group’s financial instruments comprise deposits with banks, receivables, trade and other payables and from time
to time short term loans from related parties. The Group does not trade in derivatives.
The main risks arising from the Group’s financial instruments are market risk, credit risk and liquidity risks. This note
presents information about the Group’s exposure to each of these risks, its objectives, policies and processes for
measuring and managing risk, and the Group’s management of capital.
Risk management framework
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management
framework. Risk management policies are established to identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls, and to monitor risks and adherence to limits. These policies are reviewed regularly
to reflect changes in market conditions and the Group’s activities. The primary responsibility to monitor the financial
risks lies with the Managing Director and the Company Scretary under the authority of the Board.
5 0
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
21. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS DISCLOSURE (Cont.)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligation as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’s reputation.
The Group monitors rolling forecasts of liquidity based on expected fund raisings, trade payables and other obligations
for the ongoing operation of the Group. At balance date, the Group has available funds of $167,597 for its immediate use.
The following are the contractual maturities of financial liabilities:
Financial liabilities
Trade and other payables
30 June 2014
30 June 2013
Carrying
amount
$
Contractual
cash flows
$
Less than 6
months
$
6 to 12
months
$
1 to 5
years
$
More than 5
years
$
366,027
249,023
(366,027)
(249,023)
(366,027)
(249,023)
-
-
-
-
-
-
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly
different amounts.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations.
The carrying amount of the Group’s financial assets represents the maximum credit risk exposure as follows:
Cash and cash equivalents
Receivables
Cash and cash equivalents
2014
$
167,597
25,307
192,904
2013
$
2,039,772
25,697
2,065,469
At 30 June 2014, the Group held cash and cash equivalents of $167,597 (2013: $2,039,772 after reclassifying $19,666 of
cash under assets held for sale), which represents its maximum credit exposure on these assets. The cash and cash
equivalents are held with reputable banks and financial institution counterparties, which are rated AA- to AAA+, based
on rating agency ‘Moody’s rating’.
Receivables
For the year ended 30 June 2014, the Group trade receivables are guarantee deposits and GST refundable from the
Australian Taxation Office. At balance date, there were no significant concentrations of credit risk.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices
will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable parameters, while optimising the
return.
5 1
2014 Annual Report Notes to the Consolidated
Financial Statements
21. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS DISCLOSURE (Cont.)
Interest Rate Risk
The Group’s income statement is affected by changes in interest rates due to the impact of such changes on interest
income and expenses.
At year-end, the interest rate risk profile of the Group’s interest bearing financial instruments was:
Cash and cash equivalents
There are no fixed rate instruments (2013 - $nil).
2014
$
167,597
2013
$
2,039,772
The Group does not have interest rate swap contracts. The Group has two interest bearing accounts from where it
draws cash when required to pay liabilities as they fall due. The Group normally invests its funds in the two interest
bearing accounts to maximise the available interest rates. The Group analyses its interest rate exposure when
considering renewals of existing positions including alternative financing arrangements.
Sensitivity analysis
A change of 100 basis points in interest rates at the current and prior reporting date would have increased/(decreased)
equity and loss for the period by an immaterial amount.
Currency risk
The Group does not hold a significant value of financial instruments that are denominated in a currency other than
the functional currency in which they are measured, and therefore has minimal exposure to currency risk.
Price risk
The Group is exposed to equity securities prices risk. During the year ended 30 June 2014, the Group disposed of its
interest in Manas Resources Limited, an investment held and classified in the balance sheet as an available-for-sale
financial asset. Disposal of this investment has removed the Group’s exposure to equity securities price risk at 30 June
2014.
The Group is not exposed to commodity price risk.
5 2
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
21. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS DISCLOSURE (Cont.)
Capital management
Management controls the capital of the Group in order to maintain an appropriate debt to equity ratio, provide
the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going
concern.
The Group’s capital includes ordinary share capital supported by financial assets. There are no externally imposed
capital requirements on the Group.
Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital
structure in response to changes in these risks and in the market. These responses include the management of cash
levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Group since the prior
year.
Estimation of Fair Values
The carrying amounts of financial assets and financial liabilities included in the balance sheet approximate fair values.
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have
been defined as follows:
•
•
•
Level 1 - fair value measurements are those instruments valued based on quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 - fair value measurements are those instruments valued based on inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
Level 3 - fair value measurements are those instruments valued based on inputs for the asset or liability that are
not based on observable market data (unobservable inputs).
Available-for-sale financial assets
30 June 2014
30 June 2013
Level 1
$
-
27,730
Level 2
$
Level 3
$
-
-
-
-
Total
$
-
27,730
During the year the Group sold its available for sale financial asset (refer Note 10).
There have been no transfers between the levels of valuation method for each classification of financial assets held
during the years ended 30 June 2014 or 30 June 2013.
5 3
2014 Annual Report Notes to the Consolidated
Financial Statements
22. CONTROLLED ENTITIES
Parent entity
Equus Mining Limited is an Australian incorporated company listed on the Australian Securities Exchange.
Wholly owned controlled entities
Hotrock Enterprises Pty Ltd (ii)
Okore Mining Pty Ltd (iii)
Dataloop Pty Ltd
Textonic Consulting Limited (i)
Equus Resources Limited (iv)
(i) Subsidiaries of Textonic Consulting Limited
JSC Sherik
(ii) Subsidiary of Hotrock Enterprises Pty Ltd
Derrick Pty Ltd
(iii) Subsidiary of Okore Mining Pty Ltd
Leo Shield Exploration Ghana Ltd
(iv) Subsidiary of Equus Resources Limited
Brumby Mining Pty Ltd
Equus Resources Chile SpA (v)
Minera Equus Chile Ltda
(v) Subsidiary of Equus Resources Chile SpA and Equus
Resources Limited
Minera Equus Chile Ltda
Country of
incorporation
Australia
Australia
Australia
Canada
Australia
Kyrgyz Republic
Australia
Ghana
Australia
Chile
Chile
Ownership Interest
2013
2014
%
%
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
99.9
100
100
100
100
100
99.9
Chile
0.1
0.1
On 3 June 2014, the Group voluntarily deregistered its subsidiary Brumby Mining Pty Limited (‘Brumby’) in line with the
Group corporate restructure. Brumby was a subsidiary of Equus Resources Limited that was dormant without assets
and liabilities. Deregistration of Brumby had no impact on profit or loss or the Statement of Financial Position for the
year ended 30 June 2014.
23. COMMITMENTS
Exploration expenditure commitments
The Group does not have any minimum expenditure commitments in relation to its mineral interests at the date of
this report. The Group’s mineral interests in West Africa and the Democratic Republic of Congo are subject to farm-in
and joint venture agreements, under the terms of which the farm-in partners are responsible for the annual rates and
rents relating to those properties.
The Group decided not to acquire the Naltagua Copper Project in Chile and on the 29 August 2014 notified in writing
the owner of the project. Under the terms of the agreement, the Group had the right (but not the obligation) to
acquire the Naltagua Copper Project on an outright basis.
5 4
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
24. OPERATING SEGMENTS
The Group’s chief operating decision maker has considered the requirements of AASB 8, Operating Segments, and
has concluded that, during the year ended 30 June 2014, the Group operated in the mineral exploration and the
oil exploration industry within the geographical segments of Australia, Chile, Ghana and Kyrgyz Republic. The oil
exploration segment was discontinued during the year ended 30 June 2013 (see Note 28).
30 June 2014
External revenues
Oil
Exploration
(discontinued)
$
Mineral
Exploration
$
Total
$
7,419
-
7,419
Reportable segment loss before tax
(276,720)
(9,131,597)
(9,408,317)
Interest income
Interest expense
Depreciation
Other material non-cash items:
Impairment of exploration and evaluation
Impairment of property, plant & equipment
Reportable segment assets
Reportable segment liabilities
30 June 2013
External revenues
-
-
-
907
-
(2,608)
907
-
(2,608)
-
(119,054)
(8,832,568)
(192,710)
(8,832,568)
(311,764)
1,488,477
29,114
64,421
20,105
1,552,898
49,219
388,950
-
388,950
Reportable segment loss before tax
(4,341,433)
(80,225)
(4,421,658)
Interest income
Interest expense
Depreciation
Other material non-cash items:
Impairment of exploration and evaluation
Reportable segment assets
Reportable segment liabilities
-
-
(8,915)
838
-
(3,040)
838
-
(11,955)
(695,746)
-
(695,746)
1,760,797
-
8,699,819
94,592
10,406,616
94,592
Reconciliations of reportable segment revenues and profit or loss
Revenues
Total revenue for reportable segments
Elimination of discontinued operations disposed (Note 28)
Consolidated revenue
Profit or loss
Total loss for reportable segments
Elimination of discontinued operations (Note 28)
Unallocated amounts:
Royalty Income
Net finance Income
Net other corporate expenses
Consolidated (loss)/profit before tax
2014
$
2013
$
7,419
(7,419)
-
388,950
(388,950)
-
(9,408,317)
276,720
(4,421,658)
4,341,433
2,857
17,122
(468,106)
(9,579,724)
2,000,000
546,583
(1,715,553)
750,805
5 5
2014 Annual Report Notes to the Consolidated
Financial Statements
24. OPERATING SEGMENTS (Cont.)
Reconciliations of reportable segment revenues and profit or loss (Cont.)
Assets
Total assets for reportable segments
Unallocated corporate assets
Consolidated total assets
Liabilities
Total liabilities for reportable segments
Unallocated corporate liabilities
Consolidated total liabilities
Geographical information
2014
$
2013
$
1,552,898
129,861
1,682,759
10,460,616
1,925,414
12,386,030
49,219
316,808
366,027
94,592
533,235
627,827
In presenting information on the basis of geography, segment revenue and segment assets are based on the
geographical location of the operations.
Australia
All foreign locations
- Kyrgyz Republic
- Ghana
- Chile
-oil exploration (discontinued) disposed
2014
2013
Revenue
$
Non-current
assets
$
Revenues
$
Non-current
assets
$
-
-
-
651,323
7,419
-
-
(7,419)
-
-
937
44,867
-
45,804
388,950
-
-
(388,950)
-
-
937
7,876,099
-
8,528,359
The geographical information excludes financial instruments in determining non-current assets.
5 6
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
25. DISPOSAL GROUP HELD FOR SALE
Disposal group held for sale
The oil exploration segment of the Group in the Kyrgyz Republic is presented as a disposal group held for sale
following the continued commitment of the Group’s management to a plan to sell its one remaining oil exploration
entity in the Kyrgyz Republic, JSC Sherick. A Sale and Purchase Agreement was signed with an Australian Private
Company during June 2014 and subsequently amended in September 2014 (refer to Note 27). The agreement is only for
the fixed assets of the subsidiary in the Kyrgyz Republic and not the ownership interest. The subsidiary JSC Sherik is
expected to be wound up by the Group once the sale of the drill rig including the plant and equipment is completed.
These assets have therefore been classified as assets held for sale at 30 June 2014.
As at 30 June the disposal group comprised the following assets and liabilities:
Cash and cash equivalents
Property, plant and equipment
Consumables and operating supplies
Trade and other receivables
Trade and other payables
2014
$
2013
$
-
71,081
1,371,044
-
-
1,442,125
19,666
202,262
1,582,092
293
(43,516)
1,760,797
The Group determined that an adjustment was necessary to the carrying value of the assets held for sale at 30 June
2014, because the fair value less costs to sell was considered lower than the carrying value of the fixed assets and
inventory with reference to the Sale and Purchase Agreement signed. An impairment of $119,054 was recorded against
the disposal group at 30 June 2014.
Included within equity is a cumulative foreign currency translation reserve amount of $3,022,797 relating to the
disposal group (refer to Note 15).
Measurement of fair values
Fair value hierarchy
The non-recurring fair value measurement for the disposal group of $1,442,125 has been categorised as a Level 3 fair
value based on the inputs to the valuation technique used.
Valuation technique
A valuation technique was used in measuring the fair value of the disposal group. The fair value was measured with
reference to the signed Sale and Purchase agreement for consideration of US$2.0 million of convertible notes (face
value). The fair value of the convertible notes has been calculated based on a present value calculation of the expected
cash flows with a discount rate applied.
In the prior year Equus entered into an agreement to sell a ninety percent interest in its wholly owned subsidiary, Leo
Shield Exploration Ghana Ltd (‘Leo Ghana’), for consideration of US$600,000 (subject to obtaining local government
approval) to an entity incorporated in the Republic of Ghana. A refundable deposit of AUD$100,000 has been received
and the Company will retain a 10% interest in Leo Ghana. The assets and liabilities held in this entity are immaterial.
5 7
2014 Annual Report Notes to the Consolidated
Financial Statements
26. PARENT ENTITY DISCLOSURES
As at, and throughout, the financial year ending 30 June 2014 the parent entity of the Group was Equus Mining Limited
(formerly named Caspian Oil and Gas Limited).
Result of the parent entity
Net (loss)/profit
Other comprehensive Income
Total comprehensive profit/(loss)
Financial position of the parent entity at year end
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Accumulated losses
Fair value reserve
Equity based compensation reserve
Option premium reserve
Total equity
Company
2014
$
2013
$
(8,051,734)
-
(8,051,734)
525,646
681,050
1,206,696
129,919
43,092
173,011
316,808
-
316,808
(143,797)
1,897,685
6,564,187
8,461,872
533,235
-
533,235
7,928,637
106,622,162
(106,909,959)
-
144,000
-
(143,797)
106,622,162
(98,858,225)
-
164,700
-
7,928,637
The Directors are of the opinion that no contingencies existed at, or subsequent to year end.
27. SUBSEQUENT EVENTS
On 21 July 2014, the Group offered all eligible shareholders of Equus Mining Limited to participate on a Share Purchase
Plan (‘SPP’) the offered closed on 22 August 2014. Shareholders subscribed for 52,100,000 ordinary shares under the
SPP, raising $521,000. In conjunction with the SPP, on 1 September 2014 the Company issued 22,500,000 new shares for
a total consideration of $225,000, to sophisticated investors.
As at 30 June 2014, the Group impaired its investment in the Naltagua Copper Project in Chile. On 29 August 2014, the
Group notified the owner of the project in writing that it will not acquire the project.
On 23 September 2014 the Company executed amended agreement for the sale of the drilling rig, the plant and
equipment and associated consumables held in the Kyrgyz Republic. The amended consideration for the sale is US$2.0
million in convertible notes with a maturity date of 30 September 2015. The Company can convert the notes at any
time prior to maturity however there is no mandatory requirement for conversion. The AUD$100,000 deposit already
paid is no longer refundable. Completion of the transaction is expected to occur on 7 October 2014.
There has not arisen in the interval between the end of the financial year and the date of this report any other item,
transaction or event of a material or unusual nature likely, in the opinion of the Directors of the Company, to affect
significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in
future financial years.
5 8
EQUUS MINING LIMITED Notes to the Consolidated
Financial Statements
28. DISCONTINUED OPERATIONS
In September 2012, the Group discontinued its oil exploration segment. This occurred via management’s commitment
to a plan during the period to sell this segment following a strategic decision to focus on the exploration activities
on the Naltagua copper project in Chile. The entire ownership interest in LLC South Derrick and JSC Textonic was
disposed of on 26 September 2012 and the assets and liabilities of JSC Sherik were classified as held for sale at 30 June
2013. At 30 June 2014, certain fixed assets in JSC Sherik were classified as held for sale following the signing of a Sale
and Purchase Agreement with an Australian private company for the sale of the drill rig, plant and equipment and
associated consumables.
Results of discontinued operation
Revenue
Other income
Impairment of exploration and evaluation assets
Impairment of property, plant & equipment
Expenses
Results from operating activities
Income tax expense
Results from operating activities, net of income tax
Loss on sale of discontinued operation (including transfer of foreign currency
translation reserve to profit or loss)
Income tax on loss on sale of discontinued operation
Loss for the year
2014
$
2013
$
7,419
72,482
-
(119,054)
(237,567)
(276,720)
-
(276,720)
-
-
(276,720)
388,950
119,730
(695,745)
-
(1,459,995)
(1,647,060)
-
(1,647,060)
(2,694,373)
-
(4,341,433)
Basic and diluted loss per share
(0.001)
(0.019)
Cash flows from (used in) discontinued operation
Net cash used in operating activities
Net cash from investing activities
Net cash from financing activities
Net cash flows for the year
2014
$
2013
$
(244,372)
270,544
-
26,172
(395,520)
101,920
-
(293,600)
5 9
2014 Annual Report Notes to the Consolidated
Financial Statements
29. ACQUISITION OF CONTROLLED ENTITIES
During the year ended 30 June 2013, the Company acquired 100% of the issued capital of Equus Resources Limited.
In consideration for Equus Resources Limited the Company issued 108,940,951 ordinary shares (equivalent to a
consideration paid of fair value $6,536,457, based on the listed share price of the Company at 5 September 2012
of $0.06 per share) to the shareholders of Equus Resources Limited, a company incorporated in Australia. Equus
Resources Limited held an option agreement through its Chilean subsidiary Minera Equus Limitada to acquire the
Naltagua Copper project in central Chile. As at 30 June 2014, the Group decided not to proceed with the option and
impaired its investment in the Naltagua copper project.
The Group accounted the above transaction as an acquisition of assets rather than a business combination as Equus
Resources Limited has no business operations and its principal asset was its interest in the Naltagua copper project.
The following summarises the recognised amounts of identifiable assets acquired and liabilities assumed at the
acquisition date:
Cash
Property, plant and equipment
Exploration and evaluation assets
Other assets
Trade and other payables
Related party loan
Recognised fair value
on acquisition
$
119,392
18,138
6,591,096
48,810
(140,979)
(100,000)
6,536,457
The fair value of exploration and evaluation assets was determined as being the excess consideration paid over the
acquisition date fair value of the identifiable assets and liabilities of Equus Resources Limited.
Equus Resources Limited’s operations are subject to specific Chilean environmental regulations. The Group conducted
a preliminary assessment of site restoration provisions arising from these regulations, and determined that at the
acquisition date no site restoration provisions were required.
There were no associated acquisition costs.
6 0
EQUUS MINING LIMITED Directors’ Declaration
1. In the opinion of the Directors of Equus Mining Limited (the ‘Company’):
(a)
the consolidated financial statements and notes thereto, set out on pages 23 to 60, and the Remuneration
Report as set out on pages 17 to 20 of the Directors’ Report are in accordance with the Corporations Act
2001, including:
(i)
giving a true and fair view of the Group’s financial position as at 30 June 2014 and of its performance,
for the financial year ended on that date;
(ii)
complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
become due and payable.
The Directors have been given the declarations required under section 295A of the Corporations Act 2001 for the
financial year ended 30 June 2014.
The Director’s draw attention to Note 2(a) to the consolidated financial statements, which includes a
statement of compliance with International Financial Reporting Standards.
2.
3.
Signed at Sydney this 30th day of September 2014 in accordance with a resolution of the Board of Directors:
Norman A. Seckold
Director
Edward J. Leschke
Director
6 1
2014 Annual Report
Independent Auditor’s Report
Report on the financial report
We have audited the accompanying financial report of Equus Mining Limited (the ‘Company’), which comprises the Consolidated
Statement of Financial Position as at 30 June 2014, and Consolidated Statement of Profit or Loss and Other Comprehensive Income,
Consolidated Statement of Changes in Equity and Consolidated Statement of Cash Flows for the year ended on that date, Notes 1 to
29 comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the
Group comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the Company are responsible for the preparation 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 is free from material misstatement whether due to fraud or error. In
Note 2(a), the directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements,
that the financial statements of the Group 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. These Auditing Standards require that we comply with relevant ethical requirements relating to
audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s 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 entity’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 entity’s internal control. An audit
also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
the directors, as well as evaluating the overall presentation of the financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the
Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the
Group’s financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a)
the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i)
giving a true and fair view of the Group’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 financial report also complies with International Financial Reporting Standards as disclosed in Note 2(a).
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
6 2
EQUUS MINING LIMITED
Independent Auditor’s Report
Material uncertainty regarding continuation as a going concern
Without modifying our opinion, we draw attention to Note 2(d), “Going Concern”, in the financial report. The conditions disclosed
in Note 2(d), including the need to raise additional funding from shareholders or other parties, and/or the Group disposing of non-
core assets, and reducing expenditure in-line with available funding, indicate the existence of a material uncertainty which may
cast significant doubt about the Group’s ability to continue as a going concern and, therefore, whether it will realise its assets and
extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.
Report on the remuneration report
We have audited the Remuneration Report included in pages 17 to 20 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 auditing standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Equus Mining Limited for the year ended 30 June 2014 complies with Section 300A of the
Corporations Act 2001.
KPMG
30 September 2014
Adam Twemlow
Partner
Brisbane
6 3
2014 Annual Report
Additional Stock Exchange
Information
Additional information as at 31 August 2014 required by the Australian Stock Exchange Listing Rules and not disclosed
elsewhere in this report.
Home Exchange
The Company is listed on the Australian Stock Exchange. The Home Exchange is Perth.
Audit Committee
As at the date of the Directors’ Report, an audit committee of the Board of Directors is not considered warranted due
to the composition of the Board and the size, organisational complexity and scope of operations of the Group.
Class of Shares and Voting Rights
In accordance with listing rule 4.10.6 the voting rights attached to ordinary shares, as set out in the Company’s
Constitution, are that every member in person or by proxy, attorney or representative, shall have one vote on a show
of hands and one vote for each share held on a poll.
A member holding partly paid shares is entitled to a fraction of a vote equivalent to the proportion, which the amount
paid up bears to the issue price for the share.
Distribution of Shareholders
In accordance with listing rule 4.10.7, the total distribution of fully paid shareholders as at 31 August 2014, was as
follows:
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 and over
Total
Fully Paid
Ordinary Shares
13 November 2015
Options
$0.075
$0.150
$0.200
$0.250
271
348
384
772
272
2,047
1
1
1
1
1
1
1
1
Less than Marketable Parcels
In accordance with listing rule 4.10.8, as at 31 August 2014, 1,584 shareholders held less than marketable parcels of
45,455 shares.
On Market Buy Back
There is no current on-market buy-back.
Substantial Holders
The name of the substantial shareholders en Equus Mining Limited in accordance with listing rule 4.10.4 as advised to
the Company are set out below.
Augusta Enterprises Pty Ltd
Permgold Pty Ltd
Number of Ordinary Shares
34,619,471
31,877,420
6 4
EQUUS MINING LIMITED Additional Stock Exchange
Information
Twenty Largest Shareholders
As at 31 August 2014, the twenty largest quoted shareholders held 53.95% of the fully paid ordinary shares as follows:
Name
Number
%
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
Augusta Enterprises Pty Ltd
Permgold Pty Ltd
JP Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
Tetramin Pty Ltd
John Wardman & Associates Pty Ltd
ABN AMRO Clearing Sydney Nominees Pty Ltd
Bill Brooks Pty Ltd
Dr Glen Whisson and Mrs Tania Whisson
Sancoast Pty Ltd
Integral Admin Services Pty Ltd
Tendeka Holdings Pty Ltd
Rosignol Pty Ltd
Marc Samson
Levi Benjamin Spry
Cadden Nominees Pty Ltd
CRX Investments Pty Limited
BNP Paribas Noms Pty Ltd
UBS Nominees Pty Ltd
20
Berpaid Pty Ltd
The number of holders in each class of securities
34,619,471
31,877,420
28,366,740
20,264,224
8,000,000
6,100,000
3,967,231
3,442,962
3,100,000
3,000,000
2,890,616
2,800,000
2,795,308
2,550,668
2,400,000
2,319,661
2,082,943
2,033,400
2,010,150
1,942,962
11.21
10.32
9.19
6.56
2.59
1.98
1.29
1.11
1.00
0.97
0.94
0.91
0.90
0.83
0.78
0.75
0.68
0.66
0.65
0.63
As at 31 August 2014, the numbers of holders in each class of securities on issue were as follows:
Type of security
Ordinary shares
Unlisted options
Unlisted options
Unlisted options
Unlisted options
Number of
holders
Number of
securities
2,047
1
1
1
1
308,761,675
1,000,000
1,000,000
1,000,000
1,000,000
Substantial Optionholders in the entity
In accordance with listing rule 4.10.16, the names of the holders of 20% or more options in these unquoted securities
are listed below:
Name
Damien Koerber
Number of
options held
% of Options
Held
4,000,000
100.00%
6 5
2014 Annual Report Additional Stock Exchange
Information
Group Mineral Concession Interests at 31 August 2014
As per Listing Rule 4.10.15, the Company provides the following information regarding its mining tenements.
Tenement
Mina Rica 1
Mina Rica 2
Mina Rica 3
Mina Rica 4
Mina Rica 5
Mina Rica 6
Mina Rica 7
Mina Rica 8
Mina Rica 9
Mina Rica 10
Mina Rica 11
Mina Rica 12
Mina Rica 13
Mina Rica 14
Mina Rica 15
Mina Rica 16
Mina Rica 17
Mina Rica 18
Mina Rica 19
Mina Rica 20
Mina Rica 21
Mina Rica 22
Mina Rica 23
Mina Rica 24
Mina Rica 25
Mina Rica 26
Mina Rica 27
Mina Rica 28
Mina Rica 29
Mina Rica 30
Mina Rica 31
Rio Rubens Este 1
Rio Rubens Este 2
Rio Rubens Este 3
Rio Rubens Este 4
Rio Rubens Este 5
Rio Rubens Este 6
Rio Rubens Este 7
Rio Rubens 1
Rio Rubens 2
Rio Rubens 3
Rio Rubens 4
Rio Rubens 5
Rio Rubens 6
Rio Rubens 7
Rio Rubens 8
Rio Rubens 9
Rio Rubens 10
Rio Rubens 11
Location
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Project
Mina Rica
Rubens
6 6
Ownership
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Type of Tenement
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
EQUUS MINING LIMITED Additional Stock Exchange
Information
Project
Perez
Naltagua
Location
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Chile
Tenement
Rio Perez A
Rio Perez B
Rio Perez C
Rio Perez D
Rio Perez E
Rio Perez F
Rio Perez G
Rio Perez H
Ownership
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carbones de Sur1
Carmencita Siete 1
Carmencita Siete 11, 1-30
San Lorenzo 1, 1-34
San Lorenzo 2, 1-51
San Lorenzo 3, 1-52
Carmen Alto 2, 1-23
Carmen Alto 3, 1-26
Carmen Alto 4, 1-14
Carmen Alto 5, 1-30
Mater I, 1-30
Mater II, 1-10
Carmencita 1, 1-100
Carmencita 2, 1-114
MaterI II, 1-16
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Tsuyoshi Nishimura Matsumoto 100% 2
Type of Tenement
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Exploration
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining
Mining (in process)
Mining interest in African countries
Concession
name
Osenase
Location
Ghana 3
Asamankese Ghana 3
Ghana 3
Ghana 3
Pramkese
Kwatechi
Registered Holder
Osenase Prospecting Licence
Asamankese Prospecting Licence
Pramkese Prospecting Licence
Kwatechi PL3/64 Prospecting Licence
File Number /
Licence Type
Equus Mining 90%
Equus Mining 90%
Equus Mining 90%
Equus Mining 0% 4
Equus current
equity interest
N/A
N/A
N/A
7% 4
Concession
Type
Exploration
Exploration
Exploration
Exploration
Notes
1
2
3
4
The Company has secured the rights to acquire 100% of Andean Coal Pty Ltd (‘Andean’). The Company is earning
a 51% interest in Andean through the expenditure of AUD$0.2 million and has been granted a 2 year option
to acquire the remaining 49% for the consideration of 16 million shares in Equus. Equus has now assumed
management responsibility for Andean. Andean, through its 99.99% subsidiary Carbones del Sur Limitada,
holds exploration licences in three strategic locations within the Magallanes Basin in Chile.
The Group as at the date of this report has decided not to proceed with the option to acquire 100% of a
contiguous group of 14 mining licences in the Naltagua copper project
The governments of African countries in which the Company holds minerals interests are entitled to equity
in mining companies owning projects as follows – Ghana 10% and Guinea 15%. Equus’s quoted equity is
after allowance for that national interest, which occurs when a new project company is established prior to
commencement of mining.
Perseus Mining Limited, the current holder of a 16% interest, has the right to earn a further 60% interest in
the Kwatechi property by funding the development of the project to profitable production. In that case, the
Company and a local joint venture partner will each retain a 7% interest which is convertible to a 1.25% net
smelter royalty at the option of those parties within 30 days of completion of a feasibility study.
2014 Annual Report
6 7
2014
Annual Report
EQUUS MINING LIMITED
ABN. 44 065 212 679
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www.equusmining.com
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of members is to be convened at Suite 2, Level 3, 66
Hunter Street, Sydney, NSW, 2000 on 20 November 2014 at 11 am.
ORDINARY BUSINESS
Financial Statements
AGENDA
To receive and consider the Company's Annual Financial Report, the Directors' Report and the Auditor's Report
for the year ended 30 June 2014.
To consider and, if thought fit, pass the following resolutions, with or without amendment:
Resolution 1 Adoption of the Remuneration Report
'That the Remuneration Report for the year ended 30 June 2014 be and is hereby adopted.'
Resolution 2
Re‐election of a Director
'That Jürg Walker be and is hereby re‐elected as a Director.'
Resolution 3
Re‐lection of a Director
'That Mark H. Lochtenberg be and is hereby elected as a Director.'
Resolution 4
Ratification of Prior Issue of Shares
'That the issue of 22,500,000 fully paid ordinary shares in the Company on 2 September 2014 for A$0.01 per
share be and is hereby ratified for the purposes of ASX Listing Rules 7.4 and 7.5.'
Resolution 5
Ratification of Prior Issue of Shares
'That the issue of 12,534,000 fully paid ordinary shares in the Company on 3 October 2014 for A$0.01 per
share be and is hereby ratified for the purposes of ASX Listing Rules 7.4 and 7.5.'
To transact any other business that may be brought forward in accordance with the Company's Constitution.
By order of the Board
Marcelo Mora
Company Secretary
17 October 2014
Equus Mining Limited ABN 44 065 212 679
Level 2, 66 Hunter Street
Sydney NSW 2000
Australia
T +61 2 9300 3366
F +61 2 9221 6333
E info@equusmining.com
W www.equusmining.com
Explanatory Memorandum
to the Notice of Annual General Meeting
This Explanatory Memorandum has been prepared to assist members to understand the business to be put to
members at the Annual General Meeting to be held at Level 3, 66 Hunter Street, Sydney, NSW, on Thursday, 20
November 2014 at 11 am Eastern Daylight Saving Time (EDST).
Financial Report
The Financial Report, Directors' Report and Auditor's Report for the Company for the year ended 30 June 2014
will be laid before the meeting. There is no requirement for shareholders to approve these reports, however, the
Chair of the meeting will allow a reasonable opportunity to ask the auditor questions about the conduct of the
audit and the content of the Auditor's Report.
1. Adoption of Remuneration Report
The Remuneration Report, which can be found on pages 17 to 20 of the Company's 2014 Annual Report, contains
certain prescribed details, sets out the policy adopted by the Board of Directors and discloses the payments to
Directors.
In accordance with section 250R of the Corporations Act, a resolution that the Remuneration Report be adopted
must be put to the vote. The resolution is advisory only and does not bind the Directors or the Company.
However, if at least 25% of the votes cast are against the adoption of the Remuneration Report, the Company's
next Remuneration Report must explain the Board’s proposed action in response or explain why no action has
been taken.
In the following year, if at least 25% of the votes cast on the resolution that the Remuneration Report be adopted
are against adoption, shareholders will then vote to determine whether the Directors, excluding the Managing
Director, will need to stand for re‐election. If more than 50% of the votes cast on the resolution are in favour, a
separate re‐election meeting must be held within 90 days.
Voting Exclusion Statement
A vote on the resolution must not be cast (in any capacity) by or on behalf of any of the following persons:
• a member of the key management personnel details of whose remuneration are included in the
remuneration report;
• a close related party of such a member.
However such a person may cast a vote on the resolution if:
•
•
the person does so as a proxy appointed by writing that specifies how the proxy is to vote on the
proposed resolution; and
the vote is not cast on behalf of such a person.
The Directors recommend that you vote IN FAVOUR of this advisory Resolution 1.
The Chairman of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 1.
Equus Mining Limited ABN 44 065 212 679
Level 2, 66 Hunter Street
Sydney NSW 2000
Australia
T +61 2 9300 3366
F +61 2 9221 6333
E info@equusmining.com
W www.equusmining.com
2. Re‐election of Jürg Walker
Pursuant to Article 3.6 of the Company’s Constitution and the Corporations Act, Jürg Walker retires by rotation
and, being eligible, offers himself for re‐election.
Mr Walker is a European portfolio manager and investor. He has over 20 years experience in the Swiss banking
industry, operating his own portfolio management company after leaving his position as senior vice president of a
private bank in Zurich.
With Jürg Walker abstaining, the Directors recommend that you vote IN FAVOUR of Resolution 2.
The Chairman of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 2.
3. Election of Mark H. Lochtenberg
Pursuant to Article 3.5 of the Company’s Constitution and the Corporations Act, Mark Lochtenberg who was
appointed as a Director during the year retires in accordance with these requirements and, being eligible, offers
himself for re‐election.
Mark Lochtenberg graduated with a Bachelor of Law (Hons) degree from Liverpool University, U.K. and has been
actively involved in the coal industry for more than 25 years.
Mark Lochtenberg is the former Executive Chairman and founding Managing Director of ASX‐listed Cockatoo Coal
Limited. He was a principal architect of Cockatoo’s inception and growth from an early‐stage grassroots explorer
through to its current position as an emerging mainstream coal producer.
Mark was also formerly the co‐head of Glencore International AG’s worldwide coal division, where he spent 13
years overseeing a range of trading activities including the identification, due diligence, negotiation, acquisition
and aggregation of the coal project portfolio that would become Xstrata Coal.
Prior to this Mark established a coal “swaps” market for Bain Refco, (Deutsche bank) after having served as a
senior coal trader for Hansen Neuerburg AG and as coal marketing manager for Peko Wallsend Limited.
Mark has previously been a Director of ASX‐listed Cumnock Coal Limited and of privately held United Collieries Pty
Limited and is currently a Director of Australian Transport and Energy Corridor Pty Limited, (ATEC).
With Mark Lochtenberg abstaining, the Directors recommend that you vote IN FAVOUR of Resolution 3.
The Chairman of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 3.
Equus Mining Limited ABN 44 065 212 679
Level 2, 66 Hunter Street
Sydney NSW 2000
Australia
T +61 2 9300 3366
F +61 2 9221 6333
E info@equusmining.com
W www.equusmining.com
4. Ratification of Prior Issue of Shares
Resolution 4 seeks the ratification by shareholders of the issue of 22,500,000 fully paid ordinary shares in the
Company on 2 September 2014 for the purposes of ASX Listing Rules 7.4 and 7.5. This ratification will provide the
Company with the ability to raise further funds, if required, will maximise the flexibility of the Company’s funds
management and will facilitate planning for the Company’s ongoing activities.
Details of the issue, as required by ASX Listing Rule 7.5 are as follows:
• Number of securities allotted: 22,500,000.
•
• Terms:
Issue price:
A$0.01 per share.
Fully paid ordinary shares ranking pari passu with existing
fully paid ordinary shares.
• Names of allottees:
Allottees
Zahide Agar and Mr John Wardman
John Wardman
Elmscreek Pty Ltd
Lesley Wardman
Pegari Pty Limited
Serlett Pty Ltd
John Wardman & Associates Pty Ltd
Rigi Investments Pty Limited
Melbard Nominees Pty Limited
Ordinary shares
allotted
1,000,000
500,000
1,000,000
2,000,000
2,000,000
2,000,000
1,500,000
5,000,000
7,500,000
•
Intended use of funds:
To accelerate the Company’s strategy of further increasing its ground
dominance in the Magallanes thermal coal basin and working capital.
Voting Exclusion Statement
The Company will disregard any votes cast on Resolution 4 by:
• Participants in the placement and any of their associates.
However, the Company need not disregard a vote if:
•
•
it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on
the proxy form; or
it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance
with a direction on the proxy form to vote as the proxy decides
The Directors recommend that you vote IN FAVOUR of Resolution 4.
The Chairman of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 4.
Equus Mining Limited ABN 44 065 212 679
Level 2, 66 Hunter Street
Sydney NSW 2000
Australia
T +61 2 9300 3366
F +61 2 9221 6333
E info@equusmining.com
W www.equusmining.com
5. Ratification of Prior Issue of Shares
Resolution 5 seeks the ratification by shareholders of the issue of 12,534,000 fully paid ordinary shares in the
Company on 3 October 2014 for the purposes of ASX Listing Rules 7.4 and 7.5. This ratification will provide the
Company with the ability to raise further funds, if required, will maximise the flexibility of the Company’s funds
management and will facilitate planning for the Company’s ongoing activities.
Details of the issue, as required by ASX Listing Rule 7.5 are as follows:
• Number of securities allotted: 12,534,000.
•
• Terms:
Issue price:
• Names of allottees:
•
Intended use of funds:
A$0.01 per share.
Fully paid ordinary shares ranking pari passu with existing
fully paid ordinary shares.
Mr Mark Lochtenberg and Mrs Fiona Lochtenberg
To accelerate the Company’s strategy of further increasing its ground
dominance in the Magallanes thermal coal basin and working capital.
Voting Exclusion Statement
The Company will disregard any votes cast on Resolution 5 by:
• Mark Lochtenberg and Fiona Lochtenberg < The Rigi Super Fund> and any of their associates.
However, the Company need not disregard a vote if:
•
•
it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on
the proxy form; or
it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance
with a direction on the proxy form to vote as the proxy decides
The Directors recommend that you vote IN FAVOUR of Resolution 5.
The Chairman of the Meeting intends to vote undirected proxies IN FAVOUR of Resolution 5.
Equus Mining Limited ABN 44 065 212 679
Level 2, 66 Hunter Street
Sydney NSW 2000
Australia
T +61 2 9300 3366
F +61 2 9221 6333
E info@equusmining.com
W www.equusmining.com
THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY
FORM OF PROXY
I/we . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .
being a member/members of Equus Mining Limited HEREBY APPOINT
.
the Chair of the Meeting (mark box)
OR if you are not appointing the Chair of the Meeting as your proxy, please write the name of the person or body corporate
(excluding the registered shareholder) you are appointing as your proxy below
or failing him, the Chairman of the Meeting, as my/our Proxy to vote for me/us and on my/our behalf and to vote in
accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General
Meeting of Members of the Company to be held at 11 am on 20 November 2014 and at any adjournment thereof.
The Proxy is directed by me/us to vote as indicated by the marks in the appropriate boxes below:
RESOLUTIONS
1. Adoption of the Remuneration Report
2. Re‐election of Mr Jurg Walker
3. Re‐election of Mr Mark Lochtenberg
4. Ratification of Prior Issue of Shares
5. Ratification of Prior Issue of Shares
FOR
(cid:70)
(cid:70)
(cid:70)
(cid:70)
(cid:70)
AGAINST
(cid:70)
(cid:70)
(cid:70)
(cid:70)
(cid:70)
ABSTAIN
(cid:70)
(cid:70)
(cid:70)
(cid:70)
(cid:70)
Chairman of the meeting authorised to exercise proxies on remuneration related matter (Resolution 1): If I/we have
appointed the Chairman of the Meeting as my/our proxy or the Chairman of the Meeting becomes my/our proxy be default,
by signing and submitting this form I/we expressly authorise the Chairman of the Meeting to exercise my/our proxy in
respect of Resolution 1 (except where I/we have indicated a different voting intention above) even though Resolution 1 is
connected directly or indirectly with the remuneration of a member of key management personnel for Equus Mining
Limited, which includes the Chairman.
The Chairman of the Meeting intends to vote all undirected proxies in favour of each resolution (including Resolution 1).
If you have appointed the Chairman of the Meeting as your proxy (or the Chairman of the Meeting becomes your proxy be
default), and you wish to give the Chairman specific voting directions on an item, you should mark the appropriate box/es
opposite those resolutions above (directing the Chairman to vote for, against or to abstain from voting).
Signature of Securityholder(s) This section must be completed.
Signatures of Securityholder(s)
Individual or Securityholder 1
Securityholder 2
Securityholder 3
Sole Director and Sole Company Secretary
Director
Director
Dated this . . . . . . day of . . . . . . . . . . . . . . . . . . . . . . 2014
PROXY INSTRUCTIONS
1.
A member entitled to attend and vote is entitled to appoint not more than 2 proxies.
2. Where more than 1 proxy is appointed, each proxy must be appointment to represent a specified
proportion of the member's voting rights. If you appoint 2 proxies and the appointment does not specify
the proportion or number of your votes the proxy may exercise, each proxy may exercise half of the votes.
3.
4.
5.
The vote on the resolutions will be decided on a show of hands unless a poll is demanded. On a show of
hands, every shareholder who is present in person or by proxy, or by representative or by attorney, will
have one vote. Upon a poll, every shareholder who is present in person or by proxy, or by representative
or by attorney, will have one vote for each Share held by that shareholder.
A proxy need not be a member.
All joint holders must sign.
6. Where the company has a Sole Director and Company Secretary, that person must sign. Otherwise this
form must be signed by a Director jointly with either another Director or a Company Secretary.
7.
8.
9.
All executors of deceased estates must sign.
Corporate Representatives
If a representative of the corporation is to attend the meeting. The representative must bring to the
Annual General Meeting evidence of his or her appointment, including any authority under which it was
signed in accordance with section 253B of the Corporations Act 2001.
The Company has determined, in accordance with regulation 7.11.37 of the Corporations Regulations
2001 (Cth), that the Company's shares quoted on the ASX Limited at 7.00 pm Sydney time on 18
November 2014 are taken, for the purposes of the Annual General Meeting to be held by the persons who
held them at that time. Accordingly, those persons are entitled to attend and vote (if not excluded) at the
meeting.
10.
This Proxy form (and the original or certified copy of any power of attorney under which this proxy form is
signed) must be received at an address given below no later than 48 hours before the time appointed for
holding the meeting:
•
in person or by mail at the Company's registered office, Level 2, 66 Hunter Street, Sydney, NSW 2000
Australia; or
• by facsimile on +61 2 9221 6333.