GME RESOURCES LTD
ACN 009 260 315
Troika House, Level 2
129 Melville Parade, COMO
Western Australia 6152
Postal: Locked Bag 4
COMO WA 6952
Telephone: (08) 9474 1799
Facsimile: (08) 9474 2281
Email: enq@gme-resources.com.au
24 September 2004
BY EMAIL
The Companies Announcement Office
Australian Stock Exchange Ltd
Level 10, Exchange Centre
20 Bond Street
SYDNEY NSW 2000
Dear Sirs
ANNUAL REPORT
Please find attached a copy of the Annual Report for GME Resources Limited for the year ended
30 June 2004, duly signed by a director and the auditors.
Yours faithfully
NIELS J KROYER
Company Secretary
Enc: Annual Accounts for 2004
G:\GME\Announcements2005\ASX-4.Doc:24/9/04
G M E R E S O U R C E S L T D
ABN 62 009 260 315
ANNUAL REPORT
2004
CONTENTS
PAGE
CORPORATE DIRECTORY ...................................................................
1
CHAIRMAN’S LETTER .........................................................................
2
REVIEW OF OPERATIONS ..................................................................
3
CORPORATE GOVERNANCE .............................................................
7
DIRECTORS’ REPORT ........................................................................ 13
FINANCIAL INFORMATION ................................................................ 19
DIRECTORS’ DECLARATION ............................................................. 43
INDEPENDENT AUDIT REPORT ........................................................ 44
SHAREHOLDER INFORMATION ........................................................ 46
TENEMENT DIRECTORY .................................................................... 48
GME RESOURCES LTD
1. CORPORATE DIRECTORY
DIRECTORS
Chairman
Michael Delaney PERROTT B.Com
Managing Director
Peter Ross SULLIVAN BE, MBA
Technical Director
Geoffrey Mayfield MOTTERAM B.MetE(Hons), M.AusIMM
COMPANY SECRETARY
Niels J KROYER
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
Level 2, Troika House
129 Melville Parade
Como WA 6152
Locked Bag 4
Como WA 6952
Telephone:
Facsimile:
E-Mail:
Web Site:
(08) 9474 1799
(08) 9474 2281
enq@gme-resources.com.au
www.gme-resources.com.au
AUDITORS
HLB Mann Judd
Chartered Accountants
15 Rheola Street
West Perth WA 6005
SHARE REGISTRY
Computershare Registry Services Pty Ltd
Level 2, Reserve Bank Building
45 St George’s Terrace
Perth WA 6000
GPO Box D182
Perth WA 6001
Telephone:
Facsimile:
(08) 9323 2000
(08) 9323 2033
STOCK EXCHANGE LISTING
The Company’s shares are quoted on the
Official List of Australian Stock Exchange Limited
STATE OF REGISTRATION
Western Australia
- 1 -
ANNUAL REPORT 2004
GME RESOURCES LTD
2. CHAIRMAN’S LETTER
24 September 2004
Dear Shareholder
There were a number of significant developments in your Company during the past year.
When the opportunity to acquire the remaining shares in NiWest Limited, previously owned by
Western Metals Copper Limited, became available, the Board arranged for the capital to meet this
payment through a Rights Issue. The Rights Issue was strongly supported and your Company now
owns 100% of NiWest Limited.
Since the completion of the capital raising, additional funds have been expended on further infill
drilling and work has continued actively in negotiations to satisfy Native Title on regions which have
not yet had a mining lease approved.
Additional value has been attributed to the Company with these activities and the investment
community is more aware of the potential of your Company. The future of the Company appears
sound with 128 million tonnes of ore with a grading of 1% nickel and 0.06% cobalt all strategically
located close to the Murrin Murrin Joint Venture nickel refinery. The infill drilling currently underway
will provide a higher level of certainty to the high grade resources that exist on the Company’s
tenements and enable more detailed development plans to be investigated. Further details are
enclosed in the Annual Report.
Mr Jamie Sullivan was appointed General Manager of the Company during the year and on behalf of
the Board I would like to acknowledge the work carried out by Mr Sullivan. My gratitude is also
extended to my fellow Directors and our Advisers and Consultants, all of whom have participated
actively during the past financial year.
Yours faithfully
MICHAEL PERROTT
Chairman
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ANNUAL REPORT 2004
GME RESOURCES LTD
3. REVIEW OF OPERATIONS
NIWEST LIMITED
The key development over the past 12 months has been the acquisition of the remaining shares in
NiWest Limited that were held by Western Metals Limited (WML). In January 2004, GME received
notice from Price Waterhouse Coopers, receiver managers for WML, that they had received an offer
from Minara Resources Limited (MRE) to purchase the whole of WML’s shareholding and its debt in
NiWest for $2,715,025. Under the terms of the NiWest Shareholders Deed, GME held a pre-emptive
right to match that offer. On 15 January 2004, GME gave notice to PWC that it intended to exercise
that pre-emptive right. Subsequent to this, GME embarked on a capital raising to complete this
transaction. Funds raised were used in the acquisition of the NiWest shares, repayment of debt and
to provide for additional working capital required to advance exploration on the tenements. This
transaction was completed in April 2004. (Further details of the capital raising are discussed in
section 5.6 Significant Changes in State of Affairs.)
The NiWest nickel laterite resources which stand at 123.1 millions grading 1.00% nickel and 0.06%
cobalt are strategically located to the Murrin Murrin Joint Venture nickel refinery. The global resource
contains an inferred high-grade resource of 38.4 million tonnes of ore grading 1.28% nickel and 0.09%
cobalt. A summary of the resources is listed in tables 1 and 2.
In anticipation of the transaction settling in April, the board of GME appointed a General Manager to
oversee the progress of future operations on the NiWest nickel laterite resources.
A full review of the resources was carried out in May. The Company engaged the services of a
consulting geological firm to assist with planning of future infill drilling programmes and metallurgical
test work that will be carried out over the next twelve months. The exploration budget for the year
ending June 2005 is $750,000. The first reverse circulation infill drill programme commenced in late
July. Further drill programmes are planned and will be rolled out as results are accessed.
It is the company’s intention to actively continue infill drilling of this high-grade resource over the next
12 months. In addition to this, bulk sampling will be carried out on several of the high grade resources
to confirm previous testing that has indicated screening of certain ore can result in favourable
upgrading of nickel grades.
Following a review of a number of options that NiWest held over third party tenements, the Company
decided to exit all but Laverton Downs.
Native title negotiation has recommenced on the Waite Kauri project. Negotiations commenced in
January 2003, but stalled when WML went into receivership. It is anticipated that negotiations will be
commencing on the balance of the NiWest tenements that are not already cleared of Native Title in the
near future. At Eucalyptus Bore, the majority of the nickel resource is located on an approved mining
lease.
With the ownership issue of NiWest now behind us, the Company can look forward to exploring all
options open to the Company for the development of the NiWest nickel resources with the view to
maximising shareholder value.
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ANNUAL REPORT 2004
GME RESOURCES LTD
Resources Status
Total nickel resources are tabulated below on the basis of a 0.7% Ni lower cut-off grade.
Table 1:
NiWest global resource by project area
NiWest Resource at 0.7% Nickel cut-off grade (by project)
Tonnes
Project
Mertondale
Murrin Murrin North
Murrin Murrin Hepi
Mount Kilkenny
Waite Kauri
Waite Kauri
Macey Hill
Duck Hill
Eucalyptus Bore
Eucalyptus Bore
Laverton Downs
Total Inferred
Total Indicated
Total Measured
Combined Total
Category (millions) Grade Ni Grade Co
Inferred
Inferred
Inferred
Inferred
Measured
Inferred
Inferred
Inferred
Indicated
Inferred
Inferred
3.0
7.3
5.3
29.8
1.3
1.1
0.3
3.9
54.9
14.9
1.2
66.9
54.9
1.3
123.1
0.98%
0.97%
1.04%
1.00%
1.05%
0.97%
1.26%
0.96%
1.01%
1.00%
0.92%
99.00%
1.01%
1.05%
1.00%
0.08%
0.08%
0.08%
0.05%
0.05%
0.06%
0.12%
0.12%
0.06%
0.06%
0.07%
0.06%
0.06%
0.05%
0.06%
Table 2:
NiWest High Grade Resource by project area
NiWest Resource at 1.0% Nickel cut-off grade (by project)
Tonnes
Project
Mertondale
Murrin Murrin North
Murrin Murrin Hepi
Mount Kilkenny
Waite Kauri
Macey Hill
Duck Hill
Eucalyptus Bore
Combined Total
Category (millions) Grade Ni Grade Co
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
Inferred
(Inferred)
0.08%
0.11%
0.10%
0.07%
0.14%
0.15%
0.30%
0.09%
0.09%
1.24%
1.26%
1.26%
1.28%
1.33%
1.40%
1.27%
1.28%
1.28%
1.2
2.7
2.6
12
1.3
0.3
1.5
16.9
38.4
Table 3:
NiWest Resource at Various Cut-off Grades
NiWest Resource Summary
Tonnes
(millions)
38.4
123.1
217.4
Cut Off Grade
1.00%
0.70%
0.50%
Ni
1.28%
1.00%
0.81%
Co
0.09%
0.06%
0.05%
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ANNUAL REPORT 2004
GME RESOURCES LTD
Murrin Murrin (Minara)
M39/426, 456, 552 AND 569
Minara Resources Limited on behalf of the Murrin Murrin Joint Venture has rights to nickel-cobalt
mineralisation on the above tenements. GME retains the rights to precious metals or other base
metals discovered on these tenements, including nickel sulphides. To maintain these rights Minara
pays the company a fee of $100,000 per year and, in addition to this, a royalty of $0.20 cents per
tonne on all nickel laterite mined from the tenements. In June, the company received a royalty
payment of $495,715 from Minara for ore mined and processed from these tenements. The payment
included an amount of $97,515 for interest that has been accruing on the payment. Whist it is not
known exactly how many tonnes may be mined from the tenements, it is anticipated that a further
payment is possible in early 2005.
Statement of Resources located on Minara Resources Tenements
Deposit
MM4
MM4
MM4E
MM13
Total
Million
Tonnes
5.6
4.8
3.8
7.2
21.4
%Ni
1.03
0.97
1.07
1.11
1.05
%Co
0.07
0.07
0.09
0.07
0.07
Cut-off
%Ni
0.8
0.8
0.8
0.8
Resource
Status
Measured
Indicated
Inferred
Inferred
LEONORA – LAVERTON GOLD PROJECTS
LINDEN
P39/3417-18 GME 100%
P39/2974-76, MLA39/500 Haoma 90% GME 10%
A small drill programme carried out in the previous reporting period to test the mineralised system
below the known gold resource at the Devon and Olympic prospects returned mixed results. Whilst
the drilling did intersect the mineralised zone at approximately 80m below surface, the results were not
of the grade that has been encountered closer to the surface.
Based on previous drilling, an inferred undiluted gold resource of 240,000 tonnes at 7.15 g/t
(55,179 oz) has been calculated at the Devon deposit. Further work is required to collaborate the
authenticity of the database. Once this has been completed, it will be possible to construct an
accurate model and carry out pre-feasibility on the exploitation of the resource.
ABEDNEGO
PLACER 80% GME 20%
P39/2690-2691, P39/3732-3733, P39/3735-3741, P39/3743-3751
The Abednego Gold project is located adjacent to and adjoining the company’s Murrin Murrin and
Hepi projects. The project area covers approximately 30 square kilometres. Placer has now earned
an 80% interest in the project by spending $500,000. The project comprises five independent
prospect areas. All of the prospects have been drilled to varying degrees. Located at the historical
Federation/Homeward Bound mines in the centre of the project area, is a gold resource of 70,000
tonnes grading 2.7 g/t. The Sonex prospect, which is located in the south eastern portion of the
project area, has returned a number of encouraging drill intersections. The prospect has been drilled
along a 700-metre strike and is open to the south where the shear runs into the NiWest Hepi project
area. Discussions have been held with Placer as to the ongoing exploration on the project. Some of
the better intersections at the Sonex prospect are listed in the table below.
ARB29
ARB93
ARB24
5 metres @ 5.42 g/t
15 metres @ 3.2 g/t
3 metres @ 2.29 g/t
ARB13
ARB26
ARB60
5 metres @ 15.0 g/t
1 metre @ 6.66 g/t
6 metres @ 2.62 g/t
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ANNUAL REPORT 2004
GME RESOURCES LTD
OTHER LEONORA – LAVERTON GOLD PROJECTS
Joint Venture partner on the Leonora East project, Medusa Mining Limited made a successful ASX
listing in January 2004. Whilst exploration has been progressing on the project, there have been no
significant results reported.
In December 2003, the company disposed on its interest in the Stophanis Well Project. A number of
tenements were relinquished during this reporting period, including the several licences in Queensland
at the Clermont project.
There were no substantial field activities on the Chain Bore, Hawks Nest, Mt Morgans South and Pyke
Hill projects over the period.
OTHER REGIONAL PROJECTS
Ilgarari
EL52/1482 GME 100%
In April/May, a geochemical soil sample programme was carried out on the Ilgarari copper project
located in the Pilbara region of WA. The programme was designed to test for extensions to the known
copper mineralisation that exist on the prospect. Results from the sampling indicate that there are a
number of anomalies that require follow up work. The programme tested about one third of the
mineralised strike on the tenement.
The board is now evaluating this project and planning future work programmes.
NiWest Project Areas
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ANNUAL REPORT 2004
GME RESOURCES LTD
4. CORPORATE GOVERNANCE STATEMENT
4.1
Introduction
The Board of Directors of GME Resources Limited has adopted the following Corporate
Governance Principles and is responsible for the adherence to these Principles. These
Principles and Practices are reviewed regularly and upgraded or changed to reflect changes in
law and what is regarded as best practice. A description of the Company's main Corporate
Governance Principles and Practices is set out below.
4.2
Role of the Board
The Board has adopted the following Statement of Matters for which the Board will be
responsible:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Reviewing and determining the Company's strategic direction and operational
policies;
Review and approve business plans, budgets and forecasts and set goals for
management;
Appoint and remunerate Chief Executive Officer and Senior Staff;
Review performance of Chief Executive Officer and Senior Staff;
Review financial performance against Key Performance Indicators on a monthly basis;
Approve acquisition and disposal of tenements;
Approve exploration and mining programs;
Approve capital, development and other large expenditures;
Review risk management and compliance;
(10) Oversee the Company's control and accountability systems;
(11) Reporting to shareholders; and
(12)
Ensure compliance with environmental, taxation, Corporations Act and other laws and
regulations.
4.3
Managing Director
GME's most senior employee is the Managing Director who is appointed and subject to annual
reviews by the Board. The Managing Director recommends policies, strategic direction and
business plans for the Board's approval and is responsible for managing the Company's day-
to-day business.
4.4
Board Independence
The Board consists of three directors, but up to 10 directors can serve on the board. Currently
the three directors are:
(cid:131) Michael D Perrott
(cid:131) Peter R Sullivan
(cid:131) Geoffrey M Motteram
Chairman
Managing Director
Independent Director
58 years
48 years
55 years
Director since 1996
Director since 1996
Director since 1997
Mr Motteram is the only director considered Independent on the Board according to the
definitions by the Australian Stock Exchange Corporate Governance Council ("Council"). The
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ANNUAL REPORT 2004
GME RESOURCES LTD
Managing Director, Mr Sullivan is an Executive Director. He is also a substantial shareholder
of the Company. The Chairman, Mr Perrott, is not considered "Independent" by the definitions
of the Council as he is a director of a substantial shareholder in the Company and a director of
an entity supplying services to the Company.
As such, the Company does not comply with the Council's recommendation, Item 2.1, that the
majority of the Company's directors should be Independent Directors. The Board has
however adopted a series of safeguards to ensure that independent judgement is applied
when considering the business of the Board:
(1)
(2)
(3)
(4)
Directors are entitled to seek independent professional advice at the Company's
expense. Prior written approval of the Chairman is required but this is not
unreasonably withheld.
Directors having a conflict of interest with an item for discussion by the Board must
absent themselves from a board meeting where such item is being discussed before
commencement of discussion on such topic.
The Independent Director confers on a "needs" basis with the Chairman with such
discussion if warranted and considered necessary by the Independent Director.
The Board considers Non-executive Directors to be independent even if they have
minor dealings with the Company provided they are not a substantial shareholder.
Transactions with a value in excess of 5% of the Company's annual operating costs
are considered material. A director will not be considered independent if he has
transactions in excess of this materiality threshold.
4.5
Tenure of the Board
The Directors are expected to review their membership of the Board from time to time taking
into account the length of service on the Board, age, qualification and experience. In light of
the needs of the Company and direction of the Company together with such other criteria
considered desirable for composition of a balanced board and the overall interests of the
Company.
A director is expected to resign if the remaining directors recommend that a director should not
continue in office, but is not obliged to do so.
4.6
Chairman
The current Chairman is Mr Michael D Perrott, who is not considered strictly independent in
accordance with the principles recommended by the Council. Mr Perrott brings a wealth of
business experience, connections and drive to the Board and the other Directors, including Mr
Motteram who is independent, consider Mr Perrott to be the most suitable person to lead the
Board.
The Chairman's role is separated from the role of the Managing Director.
The Chairman's role includes:
(1)
(2)
(3)
(4)
(5)
Providing effective leadership on formulating the Board's strategy;
Representing the views of the Board to the public;
Ensuring that that the Board meets at regular intervals throughout the year and that
minutes of meeting accurately record decisions taken and where appropriate the
views of individual directors;
Guiding the agenda, information flow and conduct of all board meetings;
Reviewing the performance of the board of directors; and
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ANNUAL REPORT 2004
GME RESOURCES LTD
(6)
Monitoring the performance of the management of the Company.
4.7
Committees
Due to the small size of the Company and the number of board members, the Board does not
have a formal nomination committee structure. Any new directors will be selected according
to the needs of the Company at that particular time, the composition and the balance of
experience on the Board as well as the strategic direction of the Company.
Should the need arise to consider a new board member, some or all of the Directors would
form the committee to consider the selection process and appointment of a new director.
At each annual general meeting the following directors retire:
(1)
(2)
(3)
One third of directors (excluding the Managing Director);
Directors appointed by the Board to fill casual vacancies or otherwise;
Directors who have held office for more than three years since the last general
meeting at which they were elected.
4.8
Details on Current Directors
Details on current directors including their skills and experience are included in the Directors’
Report.
4.9
Ethical and Responsible Decision-making
In making decisions, the Directors of the Company, its officers and employees, take into
account the needs of all stakeholders:
(1)
(2)
(3)
(4)
(5)
(6)
Shareholders;
Employees;
Community;
Creditors;
Contractors; and
Government (Federal, State and Local).
The Directors, officers and employees of the Company are expected to:
(1)
(2)
(3)
(4)
(5)
(6)
Comply with the laws and regulations both by the letter and in spirit;
Act honestly and with integrity;
Avoid conflicts of interest by not placing themselves in situations which result in
divided loyalties;
Use the Company's assets responsibly and in the interests of the Company, not take
advantage of property, information or position for personal gain or to compete with the
Company;
To keep non-public information confidential except where disclosure is authorised or
legally mandated; and
Responsible and accountable for their actions and report any unethical behaviour.
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ANNUAL REPORT 2004
GME RESOURCES LTD
4.10
Trading in Company Securities
The Directors, officers and employees of the Company must not acquire or dispose of
securities in the Company whilst in possession of price sensitive information not yet released
to the market. Subject to this condition and the trading prohibition applying to periods prior to
major announcements, including announcement of drilling results, announcement of half-
yearly and full year results and the holding of a general meeting, trading can occur at any
time.
Directors must advise the Company which in turn advises the Australian Stock Exchange of
any transactions conducted by them in the Company's securities within five business days
after the transaction occurs.
4.11
Integrity of Financial Reporting
GME's Managing Director and Company Secretary report in writing to the Board:
(1)
(2)
That the Company's financial reports are complete and present a true and fair view, in
all material respects, of the financial condition and operational results of the Company
and Group; and
That the above statement is founded on a sound system of internal control and risk
management which implements the policies adopted by the Board and that the
Company's risk management and internal controls are operating efficiently in all
material respects.
4.12 Audit Committee
The Company does not have a formal audit committee as, in the opinion of the directors, the
scope and size of the Company’s operations do not warrant it. As such the Company is not in
strict compliance of the Council’s Recommendation 4.2 that the Board should establish an
audit committee. It should be noted however that when the Council’s Recommendation was
made it was emphasised that it was more relevant for large companies.
The Board regularly reviews the scope of audits, the level of audit fees and the performance of
auditors.
The Board also is continually assessing to ensure the independence of the external auditor is
maintained. The company will and does, if necessary, use other consultants to avoid any
potential independence issues.
4.13
Timely and Balanced Disclosure to Australian Stock Exchange
The Company has procedures in place to identify matters that are likely to have a material
effect on the price of the Company's securities and to ensure those matters are notified to the
Australian Stock Exchange in accordance with its listing rule disclosure requirements.
Information to the market and media is handled by the Chairman, the Managing Director or the
Company Secretary. In particular, the Company Secretary has been nominated as the person
responsible for communications with Australian Stock Exchange. This role includes
responsibility for compliance with the continuous disclosure requirements of the Australian
Stock Exchange Listing Rules and overseeing and coordinating information disclosures to
Australian Stock Exchange, analysts, brokers, shareholders the media and the public.
All disclosures to Australian Stock Exchange are posted on the Company's website soon after
clearance has been received from Australian Stock Exchange.
The Chairman, the Managing Director and Company Secretary are monitoring information in
the marketplace to ensure that a false market does not emerge in the Company's securities.
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ANNUAL REPORT 2004
GME RESOURCES LTD
4.14 Communication with Shareholders
It is the Company's communication policy to communicate with shareholders and other
stakeholders in an open, regular and timely manner so that the market has sufficient
information to make informed investment decisions on the operations and results of the
Company.
The information is communicated to the shareholders through:
(1)
(2)
(3)
(4)
(5)
(6)
Continuous disclosure announcements made to the Australian Stock Exchange;
Distribution of the annual report to shareholders together with a notice of meeting;
Posting of half-yearly results and all Australian Stock Exchange announcements on
the Company's website;
Posting of all major drilling results;
Posting of all media announcements on the Company's website; and
Calling of annual general meetings and other meetings of shareholders to obtain
approval for board action as appropriate.
On the Company's website, information about the Company's projects are shown.
The Company has always invited the Company's auditor to attend to annual General Meeting
and will continue to do so and allow sufficient time for the shareholders to ask questions of the
Company's auditor relating to the audit of the Company.
At annual general meetings and other general meetings of shareholders, shareholders are
encouraged to ask questions of the Board of Directors relating to the operation of the
Company.
4.15 Risk Management
Due to its size of operation and size of the board, there is no formal board committee to
identify, assess and monitor and manage risk. Responsibility for day to day control and risk
management lies with the Managing Director and Company Secretary (financial risk) with
reporting responsibility to the Board. The Board participate and monitor risks including but not
limited to compliance with development and environmental approvals, tendering, contracting
and development, pricing of products, quality, safety, strategic issues, financial risk, joint
venture, accounting and insurance. Any changes in the risk profile for the Company are
communicated to its stakeholders via an announcement to Australian Stock Exchange.
4.16 Performance
The Board has adopted a self-evaluation process to measure its own performance. The
Chairman evaluates the performance of each director and the Board evaluates the
performance of the Chairman. Performance of senior executives is evaluated by the
Managing Director in cooperation with the Chairman. All performance evaluations are
measured against budget, goals and objectives set.
All directors of the board have access to the Company Secretary who is appointed by the
Board. The Company Secretary reports to the Chairman, in particular to matters relating to
corporate governance.
Once a month an information package on the Company's performance is presented to Board
Members for their review and to assist them in their decision-making.
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ANNUAL REPORT 2004
GME RESOURCES LTD
All board members have access to professional independent advice at the Company's
expense provided they first have obtained the Chairman's approval which will not be
unreasonably withheld.
4.17 Remuneration
(1)
Managing Director and Non-executive Directors
The directors are remunerated for the services they render the Company and such
services are normally carried out under normal commercial terms and conditions.
Remuneration is also determined having regard to how directors are remunerated for
other similar companies, the time spent on the Company’s matters and the
performance of the Company. Engagement and payment for such services are
approved by the other directors with no interest in the engagement of services.
The Board has no retirement or termination benefits. Payments to all directors are set
out in the Director's Report.
(2)
Senior Executives
The remuneration of senior executives is discussed and determined by the Board
upon receiving advice from the Managing Director. The remuneration packages are
set at levels intended to attract and retain the executives capable of managing the
Company's operations.
The remuneration of senior executives is set out in the Directors’ Report.
(3)
General
Due to the staff size and the close involvement of the Board in the operations of the
Company, the Company does not operate a formal remuneration committee. All
remuneration paid to the Chairman, Non-executive Directors, Executive Director and
Senior Executives are all reviewed and discussed by the Board.
The Company does not operate an employee share option plan and there are no
options outstanding issued to directors, employees or former employees.
4.18
Interests of Stakeholders
It is the Company's objective to create wealth for its shareholders and provide a safe and
challenging environment for employees and for the Company to be a valuable member of the
community as a whole.
The Company's ethical and responsible behaviour is set out under the heading "Ethical and
Responsible Decision-making" (see 4.9).
The Company's core values are summarised as follows:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
Provide value to its shareholders through growth in its market capitalisation;
Act with integrity and fairness;
Create a safe and challenging workplace;
Be participative and recognise the needs of the community;
Protect the environment;
Be commercially competitive; and
Strive for high quality performance and development.
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ANNUAL REPORT 2004
GME RESOURCES LTD
5. DIRECTORS’ REPORT
Your directors present their report of GME Resources Limited and its controlled entities for the
financial year ended 30 June 2004.
5.1
Directors
The names of directors in office at any time during or since the end of the year are:
Michael Delaney Perrott
Peter Ross Sullivan
Geoffrey Mayfield Motteram
(Chairman)
(Managing Director)
(Technical Director).
Directors have been in office since the start of the financial year to the date of this report
unless otherwise stated.
5.2
Principal Activities
The principal activities of the consolidated entity are mineral exploration and investment.
No significant change in the nature of these activities occurred during the year.
5.3
Operating Results
The consolidated loss after income tax for the year ended 30 June 2004 was $491,788 (2003:
$2,034,721).
5.4
Dividends
No dividends have been paid or declared since the start of the financial year. No
recommendation is made as to dividends.
5.5
Review of Operations
A detailed review of operations for the financial year and up to the date of this report is
included in the annual report and should be read with this directors’ report.
5.6
Significant Changes in State of Affairs
The significant changes in the state of affairs of the consolidated entity during the financial
year were:
On 23 January 2004 the Company announced its intention to accept the offer from the
Receivers and Managers of Western Metals Copper Limited to acquire the 62% interest in
NiWest Limited that it did not already own for a total cost of $2,715,025. The Company also
announced a fully underwritten one for two renounceable Rights Issue at $0.08 per share to
raise approximately $4,993,000; the funds of which were to be applied to meet the acquisition
cost of the 62% interest in NiWest Limited as well as tidying up the Company’s balance sheet
and providing for future working capital needs. As a result of this Rights Issue in late March,
in early April 2004 a total of 60,185,278 shares at $0.08 per share were allotted raising a total
of $4,814,822.
On 6 February 2004 the Company allotted 3,888,889 shares to Retirewise Capital Australia
Pty Ltd: 3,333,333 shares (issued at 6 cents per share) relating to the redemption of a
convertible note of $200,000; and the balance of 555,556 shares (issued at 6.5 cents per
share) to the issue of shares on the same terms as the 1998 Rights Issue. The agreement
with Retirewise Capital Australia Pty Ltd allows them to exercise their right to subscribe for
shares as if they had participated in any rights issue since the date of the convertible note.
The Deed under which the Convertible Notes were issued was approved by the shareholders
in a meeting held on 26 August 1997.
- 13 -
ANNUAL REPORT 2004
GME RESOURCES LTD
On the 31 March 2004 the Company announced that it had exercised its pre-emptive right to
acquire
from Western Metals Copper Limited (Receivers and Managers Appointed)
(In Liquidation) the whole of its shares in NiWest Limited and to take an assignment of the
whole of the loan account owed to it.
The Company paid the full purchase consideration of $2,715,025 for the acquisition of the
Shares and the Assignment of the Debt which also includes payment of the $200,000 Royalty
on behalf of NiWest Limited to Murrin Murrin East Pty Ltd.
As a result of this transaction the Company is now the owner of all the issued shares of
NiWest Limited. Similarly the Company has acquired debt of approximately $1,265,025
formerly owed to Western Metals Copper Limited (Receivers and Managers Appointed)
(In Liquidation) and thus all shareholder debts of NiWest Limited are now held by the
Company.
On 24 June 2004 the Company announced it had received its first payment from Minara
Resources Limited totalling $495,781 as royalties on nickel laterite ore tonnes mined and
processed from a group of tenements transferred to Minara Resources under an agreement
made in September 1995. Included in the payment figure was $95,781 of interest accrued on
the royalties.
5.7
After Balance Date Events
Since 30 June 2004, the following significant events have occurred:
On 1 July 2004 the Company announced the appointment of Grange Securities Limited as
Corporate Adviser to the Company for a period of 12 months.
In lieu of paying a corporate advisory fee, the Directors of the Company resolved to issue
5,000,000 Options as follows to Grange Securities Limited:
•
•
•
2,000,000 Options exercisable at $0.20 each;
2,000,000 Options exercisable at $0.30 each; and
1,000,000 Options exercisable at $0.40 each.
All of the above Options will expire on 30 June 2007.
Other than those matters discussed above no other matters or circumstances have arisen
since the end of the financial year which significantly affected or may significantly affect the
consolidated entity’s operations, the results of those operations, or the consolidated entity’s
state of affairs in future financial years.
5.8
Likely Developments
The consolidated entity will continue its mineral exploration and investment with the object of
finding further mineralised resources and exploiting those already discovered.
- 14 -
ANNUAL REPORT 2004
GME RESOURCES LTD
5.9
Information on Directors and Company Secretary
Director
Qualifications and Experience
Michael Delaney Perrott
BCom
(Director)
58 Years
Peter Ross Sullivan
BE, MBA
(Engineer)
48 years
Geoffrey Mayfield Motteram
BMetE(Hons), MAusIMM
(Metallurgical Engineer)
55 years
Niels Johannes Kroyer
CMA
Mr Perrott has been involved in industries associated with
construction, contracting, mining and land development
since 1969. He is currently Chairman of Port Bouvard
Limited, Bone Medical Limited and Canning Vale Weaving
Mills Limited and a Non-Executive Director of Portman
Limited. He is a member of the Board of Notre Dame
University and a council member of National Advisory
Council for Suicide Prevention and the State Ministerial
Council for Suicide Prevention.
Mr Perrott has been Chairman of the Company since his
appointment as a director in 1996.
Mr Sullivan is an engineer and has been involved in the
development of resource companies and projects for more
than 15 years.
His project engineering experience was followed by four
years in corporate finance with an investment bank and two
years in a corporate development role with an Australian
resource group. Mr Sullivan has considerable experience in
the management and strategic development of resource
companies. He is currently Managing Director of Resolute
Mining Limited.
Mr Sullivan has been Managing Director of the Company
since his appointment as a director in 1996.
Mr Motteram is a metallurgical engineer with over 25 years’
experience in the development of projects in the Australian
resources industry.
He has extensive experience in gold and base metals having
been involved with WMC’s Kwinana Nickel Refinery and
Kalgoorlie Nickel Smelter. He subsequently joined BHP, and
later Metals Exploration, where he was involved in the
evaluation of gold and base metal projects. Since 1989 he
has acted as a Mining Project and Metallurgical Consultant.
He was involved in the formation of Minara Resources
Limited (formerly Ananconda Nickel Limited) in 1994 and
controlled the technical development of the Murrin Murrin
Joint Venture until the end of 1997. He is a former director
of Minara Resources Limited.
Mr Motteram has been technical director of the Company
since 1997.
Mr Kroyer has been the company secretary of the Company
since 1995. Mr Kroyer has more than 10 years’ experience
as company secretary for listed public companies and has
extensive management experience both internationally and
locally. He is an accountant by training and an alumnus of
INSEAD Business School.
- 15 -
ANNUAL REPORT 2004
GME RESOURCES LTD
5.10 Directors’ and Executives’ Emoluments
The Managing Director and Non-executive Directors are remunerated for the services they
render to the Company and such services are carried out under normal commercial terms and
conditions. Remuneration is also determined having regard to how directors are remunerated
for other similar companies, the time spent on the Company’s matters and the performance of
the Company. Engagement and payment for such services are approved by the other
directors who have no interest in the engagement of services.
The remuneration of senior executives is discussed and determined by the Board upon
receiving advice from the Managing Director. The remuneration packages are set at levels
that are intended to attract and retain the executives capable of managing the Company's
operations.
Due to the staff size and the close involvement of the Board in the operations of the Company,
the Company does not operate a formal remuneration committee. All remuneration paid to the
Chairman, Non-executive Directors, Executive Director and Senior Executives are all reviewed
and discussed by the Board.
There are no retirement or termination benefits payable to the Board or senior executives.
The Company does not operate an employee share option plan and there are no options
outstanding issued to directors, employees or former employees.
Details of nature and amount of each element of the emoluments of each director of the
Company (and each of the officers of the Company and the consolidated entity receiving the
highest remuneration) are:
Non – Executive Directors
Michael D Perrott
Geoffrey M Motteram
Executive Director
Peter R Sullivan
Executive Officer
James N Sullivan (appointed General
Manager 23 March 2004)
The Company had no employees as at 30 June 2004.
5.11 Directors’ Interests
Fees
$
30,000
18,000
Fees
$
24,000
Fees
$
19,773
The relevant interests of directors either directly or through entities controlled by the directors
in the share capital of the company as at the date of this report are:
Director
Ordinary Shares
Options
Michael D Perrott
Peter R Sullivan
Geoffrey M Motteram
17,012,294
11,540,147
3,885,050
-
-
-
- 16 -
ANNUAL REPORT 2004
GME RESOURCES LTD
5.12 Meetings of Directors
During the year, 13 meetings of directors were held. Attendances were:
Name
Michael D Perrott
Peter R Sullivan
Geoffrey M Motteram
Number
Eligible to Attend
Number
Attended
13
13
13
13
12
13
5.13 Share Options
At the date of this report the number of Options on issue (all of which were issued subsequent
to year end) are as follows:
•
•
•
2,000,000 Options exercisable at $0.20 each;
2,000,000 Options exercisable at $0.30 each; and
1,000,000 Options exercisable at $0.40 each.
All of the above Options will expire on 30 June 2007.
5.14 Audit Committee
The Company does not have an audit committee as, in the opinion of the directors, the scope
and size of the Company’s operations do not warrant it.
5.15
Indemnifying Officers or Auditors
The company has not, during or since the financial year, in respect of any person who is or
has been an officer or the auditor of the Company or of a related body corporate:
•
•
indemnified or made any relative agreement for indemnifying against a liability
incurred as an officer or auditor, including costs and expenses in defending legal
proceedings; or
paid or agreed to pay a premium in respect of a contract insuring against a liability
incurred as an officer or auditor for the costs or expenses to defend legal proceedings.
5.16 Environmental Regulation
The consolidated entity’s exploration and mining tenements are located in Western Australia
and Queensland. There are significant regulations under the Western Australian Mining Act
1978 and the Queensland Mineral Resources Act 1989 and both states’ Environmental
Protection Acts that apply. Licence requirements relating to ground disturbance, rehabilitation
and waste disposal exist for all tenements held.
The directors are not aware of any significant breaches during the period covered by this
report.
- 17 -
ANNUAL REPORT 2004
GME RESOURCES LTD
STATEMENTS OF FINANCIAL PERFORMANCE
FOR THE YEAR ENDED 30 JUNE 2004
Note
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
Revenues from ordinary activities
Interest expense
Carrying value of tenements sold
Depreciation expense
Write down in value of carried forward
exploration expenditure
Write down in value of investments
2
3
3
3
3
3
794,600
240,382
198,533
140,382
62,984
80,707
62,984
80,707
6,359
43
-
-
6,359
43
-
-
74,212
346,467
74,212
166,467
896,466
1,673,122
896,466
1,673,122
Management and consulting fees
149,625
132,000
145,500
132,000
Other expenses from ordinary activities
96,699
42,807
89,527
42,807
Loss from ordinary activities before
income tax expense
Income tax expense relating to ordinary
activities
4
491,788
2,034,721
1,076,558
1,954,721
-
-
-
-
Loss from ordinary activities after
related income tax
Net loss attributable to members of the
parent entity
491,788
2,034,721
1,076,558
1,954,721
16
491,788
2,034,721
1,076,558
1,954,721
Earnings Per Share
Basic earnings per share
(cents per share)
Diluted earnings per share
(cents per share)
21
21
(0.43)
(1.94)
(0.43)
(1.94)
The accompanying notes form part of these financial statements.
- 19 -
ANNUAL REPORT 2004
GME RESOURCES LTD
STATEMENTS OF FINANCIAL POSITION
AS AT 30 JUNE 2004
CURRENT ASSETS
Cash assets
Receivables
Other financial assets
Other
Note
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
18(b)
5
6
7
1,823,419
41,218
10,125
2,395
152,534
13,839
-
-
1,808,315
35,097
10,125
2,395
152,534
13,608
-
-
TOTAL CURRENT ASSETS
1,877,157
166,373
1,855,932
166,142
NON CURRENT ASSETS
Receivables
Investments accounted for using the
equity method
Other financial assets
Plant and equipment
Exploration costs carried forward
8
9
10
11
12
-
753,710
2,465,152
753,710
-
-
599
6,028,300
1,464,923
-
-
1,622,513
-
2,615,950
599
1,022,118
-
2,080,523
-
1,052,560
TOTAL NON CURRENT ASSETS
6,028,899
3841,146
6,103,819
3,886,793
TOTAL ASSETS
7,906,056
4,007,519
7,959,751
4,052,935
CURRENT LIABILITIES
Payables
Interest bearing liabilities
13
14
312,307
425,152
800,917
623,003
1,352,695
425,152
1,248,256
623,003
TOTAL CURRENT LIABILITIES
737,459
1,423,920
1,777,847
1,871,259
TOTAL LIABILITIES
737,459
1,423,920
1,777,847
1,871,259
NET ASSETS
EQUITY
Contributed equity
Accumulated losses
TOTAL EQUITY
7,168,597
2,583,599
6,181,904
2,181,676
15
16
20,630,217
(13,461,620)
15,553,431
(12,969,832)
20,630,217
(14,448,313)
15,553,431
(13,371,755)
7,168,597
2,583,599
6,181,904
2,181,676
The accompanying notes form part of these financial statements.
- 20 -
ANNUAL REPORT 2004
GME RESOURCES LTD
STATEMENTS OF CASH FLOWS
FOR YEAR ENDED 30 JUNE 2004
Cash Flows From Operating Activities
Proceeds from mining royalties
Payments for:
Exploration and evaluation
Administration
Proceeds from reimbursement of
exploration and evaluation
Proceeds from facilitation fee for
prospecting rights
Interest received
Interest paid
Proceeds from sale of shareholder
rights
Payment of proceeds of shareholder
rights
Other
Net Operating Cash Flows
Note
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
400,000
(255,796)
(228,436)
-
-
-
(84,597)
(107,597)
(33,534)
(224,311)
(80,095)
(107,597)
-
15,000
-
15,000
100,000
134,770
(207,503)
61,370
(61,370)
579
(56,386)
100,000
7,439
-
-
38,704
(207,503)
-
61,370
-
133,075
63,320
(61,370)
579
(426,065)
18(a)
Cash Flows Related to Investing Activities
Payments for:
Equity investments (net of cash
acquired)
Plant and equipment
Proceeds from sale of prospects
Loans to associated entity
Loans repaid on behalf of controlled
entity to other entity
Net Investing Cash Flows
17
(1,244,266)
(642)
7,500
(77,247)
(1,265,025)
(2,579,680)
-
-
-
(172,422)
-
(172,422)
(1,255,048)
(642)
7,500
(77,247)
(1,265,025)
(2,590,462)
Cash Flows Relating to Financing Activities
Proceeds from issue of shares
Payment of costs associated with issue
of shares
Loans funds from wholly owned entities
Loan funds to wholly owned entities
Loans repaid to other persons
Net Financing Cash Flows
4,814,822
(234,407)
-
-
(273,464)
4,306,951
-
-
-
-
-
-
4,814,822
(234,407)
605,781
(240,424)
(273,464)
4,672,308
-
7,439
-
-
-
133,075
(32,178)
-
-
-
(172,422)
-
(172,422)
-
-
100,000
(4,502)
-
95,498
Net Increase/(Decrease) in Cash Held
1,670,885
(109,102)
1,655,781
(109,102)
Cash at the Beginning of the Year
152,534
261,636
152,534
261,636
Cash at the End of the Year
18(b)
1,823,419
152,534
1,808,315
152,534
The accompanying notes form part of these financial statements.
- 21 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
1. STATEMENT OF ACCOUNTING POLICIES
The financial report is a general purpose financial report that has been prepared in accordance
with Accounting Standards, Urgent Issues Group Consensus Views, other authoritative
pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.
The financial report covers the consolidated entity of GME Resources Ltd and controlled entities,
and GME Resources Ltd as an individual parent entity. GME Resources Ltd is a listed public
company, incorporated and domiciled in Australia.
The financial report has been prepared on an accruals basis and is based on historical costs and
does not take into account changing money values or, except where stated, current valuations of
non-current assets. Cost is based on the fair values of the consideration given in exchange for
assets.
The following is a summary of the material accounting policies adopted by the consolidated entity
in the preparation of the financial report. The accounting policies have been consistently applied,
unless otherwise stated.
(a) Principles of Consolidation
The consolidated financial statements have been prepared by combining the financial
statements of all the entities that comprise the consolidated entity, being the Company (the
parent entity) and its controlled entities as defined in AASB1024, “Consolidated Accounts”.
A list of controlled entities appears in Note 17. Consistent accounting policies have been
employed in the preparation and the presentation of the consolidated financial statements.
The consolidated financial statements include the information and results of each
controlled entity from the date on which the Company obtains control and until such time as
the Company ceases to control such entity.
In preparing the consolidated financial statements, all inter Company balances and
transactions, and unrealised profits arising within the consolidated entity are eliminated in
full.
(b) Exploration and Development Expenditure
Exploration, evaluation and development expenditure incurred is accumulated in respect of
each identifiable area of interest. These costs are only carried forward to the extent that
they are expected to be recouped through the successful development of the area or
where activities in the area have not yet reached a stage which permits reasonable
assessment of the existence of economically recoverable reserves.
Accumulated costs in relation to an abandoned area are written off in full in the year in
which the decision to abandon the area is made.
- 22 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(b) Exploration and Development Expenditure (Continued)
When production commences, the accumulated costs for the relevant area of interest are
amortised over the life of the area according to the rate of depletion of the economically
recoverable reserves.
A regular review is undertaken of each area of interest to determine the appropriateness of
continuing to carry forward costs in relation to that area of interest.
Costs of site restoration are provided over the life of the facility from when exploration
commences and are included in the costs of that stage. Site restoration costs include the
dismantling and removal of mining plant, equipment and building structures, waste
removal, and rehabilitation of the site in accordance with clauses of the mining permits.
Such costs have been determined using estimates of future costs, current legal
requirements and technology on an undiscounted basis.
Any changes in the estimates for the costs are accounted on a prospective basis. In
determining the costs of site restoration, there is uncertainty regarding the nature and
extent of the restoration due to community expectations and future legislation. Accordingly
the costs have been determined on the basis that restoration will be completed within one
year of abandoning the site.
(c)
Income Tax
The consolidated entity adopts the liability method of tax-effect accounting whereby the
income tax expense is based on the operating result before income tax adjusted for any
permanent differences.
Timing differences which arise due to the different accounting periods in which items of
revenue and expense are included in the determination of operating result before income
tax and taxable income are brought to account as either a provision for deferred income tax
or an asset described as future income tax benefit at the rate of income tax applicable to
the period in which the benefit will be received or the liability will become payable.
Future income tax benefits are not brought to account unless realisation of the asset is
assured beyond reasonable doubt. Future income tax benefits in relation to tax losses are
not brought to account unless there is virtual certainty of realisation of the benefit.
The amount of benefits brought to account or which may be realised in the future is based
on the assumption that no adverse change will occur in income taxation legislation and the
anticipation that the consolidated entity will derive sufficient future assessable income to
enable the benefit to be realised and comply with the conditions of deductibility imposed by
law.
- 23 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(d) Plant and Equipment
Plant and equipment is measured on the cost basis.
The depreciable amount of plant and equipment is depreciated over the estimated useful
life of each asset commencing from the time the asset is held ready to use. Predominantly,
the straight line method of depreciation has been used.
Class of fixed assets
Depreciation rate
Plant and equipment
20 - 27%
(e)
Investments
Shares in listed companies held as current assets are valued by directors at those shares’
market value at each balance date. The gains or losses, whether realised or unrealised,
are included in result from ordinary activities before income tax.
Non-current investments are measured on the cost basis. The carrying amount of non-
current investments is reviewed annually by directors to ensure it is not in excess of the
recoverable amount of these investments. The recoverable amount is assessed from the
quoted market value for listed investments or the underlying net assets of other non-listed
investments.
(f)
Investments in Associates
Investments in associate companies are recognised in the financial statements by applying
the equity method of accounting.
(g) Cash
For the purpose of the statements of cash flows, cash includes deposits which are readily
convertible to cash on hand and which are used in the cash management function on a day
to day basis, net of outstanding bank overdrafts.
(h) Revenue Recognition
Interest revenue is recognised on a proportional basis taking into account the interest rates
applicable to the financial assets.
Other revenue is recognised when all obligations by the consolidated entity have been
fulfilled and the right to the revenue has been established.
(i)
Converting Financial Instruments
Convertible notes are recorded as a liability. On conversion, ordinary shares issued are
recognised at the aggregate of the carrying amounts of the liability, together with any
amount received on conversion.
- 24 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(j) Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where
the amount of GST incurred is not recoverable from the Australian Tax Office. In these
circumstances the GST is recognised as part of the cost of acquisition of the asset or as
part of an item of the expense. Receivables and payables in the statement of financial
position are shown inclusive of GST.
(k) Earnings per share
Basic EPS is calculated as net profit attributable to members, adjusted to exclude costs of
servicing equity (other than dividends) and preference share dividends, divided by the
weighted average number of ordinary shares, adjusted for any bonus element.
Diluted EPS is calculated as net profit attributable to members, adjusted for:
•
•
•
costs of servicing equity (other than dividends) and preference share
dividends;
the after tax effect of dividends and interest associated with potential dilutive
ordinary shares that have been recognised as expenses; and
other non-discretionary changes in revenues or expenses during the period
that would result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and potential dilutive ordinary
shares, adjusted for any bonus element.
(l)
Adoption of Australian Equivalents to International Financial Reporting Standards
Australia is currently preparing for the introduction of International Financial Reporting
Standards (IFRS) effective for financial years commencing 1 January 2005. This requires
the production of accounting data for future comparative purposes at the beginning of the
next financial year.
The consolidated entity’s management, along with its consultants, are assessing the
significance of these changes and preparing for their implementation.
The directors are of the opinion that the key differences in the economic entity’s accounting
policies which will arise from the adoption of IFRS are:
Impairment of Assets
The consolidated entity currently determines the recoverable amount of an asset on the
basis of undiscounted net cash flows that will be received from the assets use and
subsequent disposal. In terms of Australian International Standard AASB 136: Impairment
of Assets, the recoverable amount of an asset will be determined as the higher of fair value
less costs to sell and value in use. It is likely that this change in accounting policy will lead
to impairments being recognised more often than under the existing policy.
- 25 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(l)
Adoption of Australian Equivalents to International Financial Reporting Standards
(Continued)
Income Tax
Currently, the consolidated entity adopts the liability method of tax-effect accounting
whereby the income tax expense is based on the accounting profit adjusted for any
permanent differences. Timing differences are currently brought to account as either a
provision for deferred income tax or future income tax benefit. Under the Australian
International Standard AASB 112: Income Taxes, the consolidated entity will be required to
adopt a balance sheet approach under which temporary differences are identified for each
asset and liability rather than the effects of the timing and permanent differences between
taxable income and accounting profit.
Exploration and Development Expenditure
An Australian International Standard on extractive industries has not yet been issued.
Consequently, the consolidated entity is unable to determine the change in policies and
related impacts, if any, that may arise on adoption of Australian International Standard on
its extractive-related operations and balances at reporting date.
Share Based Payments
After the balance date, the Company has issued options in lieu of paying corporate
advisory fees. Such share based payments will be required to be recognised as an
expense in respect of services received under the new Australian International Standard
AASB 2: Share-Based Payment. Under current accounting policies such payments are not
expensed.
- 26 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
2. REVENUE FROM ORDINARY ACTIVITIES
Operating Activities
Interest received
134,771
7,304
38,704
7,304
Proceeds from:
Facilitation fee for prospecting
rights
Royalty fees
100,000
533,000
100,000
133,000
-
133,000
-
133,000
Other revenue
579
78
579
78
768,350
240,382
172,283
140,382
Non Operating Activities
Proceeds from disposal of
tenements
26,250
-
26,250
-
Total revenue
794,600
240,382
198,533
140,382
3. LOSS FROM ORDINARY ACTIVITIES
Loss from ordinary activities
before income tax has been
determined after:
(a) Charging as an expense:
Depreciation – plant and
equipment
Write down in value of carried
forward expenditure
Interest – other persons
Carrying value of tenements sold
Write down in value of
investments
(b) Net gains
43
-
43
-
74,212
62,984
6,359
346,467
80,707
-
74,212
62,984
6,359
166,467
80,707
-
896,466
1,673,122
896,466
1,673,122
Profit on sale of tenements
19,891
-
19,891
-
- 27 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
4.
INCOME TAX
(a) The prima facie tax on operating
result is reconciled to the income
tax provided
financial
in
statements as follows:
the
Prima facie tax benefit on operating loss
before income tax at 30%
Tax effect of permanent differences:
Non-deductible expenditures
Regarding capital raising, corporate
advice etc
Profit on sale of tenements
Tax loss on sale of tenements
Tax loss on abandoned tenements
Write down in value of investments
Exploration expenditures written off
Exploration expenditures incurred
Overprovision for income tax in prior
year
Tax effect of timing differences
(144,233)
(610,416)
(322,967)
(586,416)
3,973
(5,967)
(28,388)
(24,136)
268,940
22,264
(11,632)
17
80,838
900
81,738
-
-
-
229
-
-
501,936
103,940
(21,779)
18,285
(7,805)
190
(7,615)
-
-
7,615
-
3,973
(5,967)
(28,388)
(24,136)
268,940
22,264
(11,505)
17
(97,769)
900
(96,869)
(81,738)
178,607
-
-
229
-
-
501,936
49,940
(20,428)
285
(54,454)
190
(54,264)
-
46,649
7,615
-
Benefit of prior year losses recouped
(81,738)
Tax losses transferred
Future Income tax benefits not brought
to account
Income tax expense
(b) The directors estimate that the
potential future income tax benefits
not brought to account are:
837,998
919,736
798,163
879,901
The potential future income tax benefit will only be obtained if:
(i) the relevant company derives future assessable income of a nature and an amount sufficient to enable
the benefit to be realised;
(ii) the relevant company continues to comply with the conditions for deductibility imposed by the law; and
(iii) no changes in tax legislation adversely affect the relevant company in realising the benefit.
There are no franking credits available.
Tax Consolidation
Effective 1 July 2003, for the purposes of income taxation, the Company and its 100% wholly-owned
subsidiaries formed a tax consolidated group. The head entity of the tax consolidated group is GME
Resources Limited; the Australian Taxation Office will be notified of this decision when it lodges its 30 June
2004 consolidated tax return.
- 28 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
5. RECEIVABLES (CURRENT)
Sundry debtors
41,218
41,218
13,839
13,839
35,097
35,097
13,608
13,608
6. OTHER FINANCIAL ASSETS (CURRENT)
Listed investments
Provision for diminution in
investments
18,750
(8,625)
10,125
Listed shares are carried at current market value.
7. OTHER (CURRENT)
Prepayments
2,395
2,395
-
-
-
-
-
18,750
(8,625)
10,125
2,395
2,395
-
-
-
-
-
8. RECEIVABLES (NON CURRENT)
Loan to associated entity
Loans to controlled entities (wholly
owned)
Provision for non recovery
-
-
-
-
753,710
-
753,710
-
753,710
3,787,847
(1,322,695)
2,465,152
1,322,695
(1,322,695)
753,710
The loan to associated entity balance in 2003 was a non interest bearing unsecured loan to NiWest
Limited in which the Company previously held an equity interest. On 30 March 2004 the Company
acquired the remaining shareholding interest in NiWest Limited and as such NiWest Limited became a
wholly owned subsidiary of the Company and has since been consolidated into the Company’s accounts
(see note 17 for more details).
- 29 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
9.
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (NON CURRENT)
Associated Company
The consolidated entity’s share of
aggregate assets and liabilities as
disclosed by the associates is:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
-
-
-
-
-
-
-
-
-
1,464,923
1,464,923
12,415
2,217,699
2,230,114
2,257
762,934
765,191
1,464,923
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
The associated company balances above resulted from the sale of nickel tenements on 14 September
2000 to NiWest Limited (“NiWest”). NiWest is principally involved in mineral exploration. In direct
exchange for the tenements sold, the Company was issued 40% of the issued capital in NiWest. The cost
of the investment was accounted for as the carrying value of the tenements sold to NiWest at the time,
plus incidental costs.
On 30 March 2004 the Company acquired the remaining shareholding interest in NiWest Limited and as
such NiWest Limited became a wholly owned subsidiary of the Company and has since been consolidated
into the Company’s accounts (see note 17 for more details).
10. OTHER FINANCIAL ASSETS (NON CURRENT)
Unlisted Investments:
Associate entities (refer note 9)
Controlled entities (refer note 17)
Provision for diminution in value
-
-
-
-
-
-
-
-
-
5,178,206
(2,562,256)
2,615,950
3,138,045
616,893
(1,674,415)
2,080,523
All investments comprise ordinary shares and no shares held in related corporations are listed on a
prescribed stock exchange.
The recoverability of the carrying value of shares in controlled and associated entities is dependent on the
successful development and commercial exploration or, alternatively, sale of the respective areas in which
those controlled entities have an interest.
- 30 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
11. PLANT AND EQUIPMENT (NON CURRENT)
Plant and equipment - at cost
Less provision for depreciation
Total Plant and Equipment
Reconciliation of the carrying amount
of plant and equipment:
Carrying amount at the beginning of
the year
Additions
Disposals
Depreciation
Carrying amount at the end of the
year
642
(43)
599
-
642
-
(43)
599
3,140
(3,140)
-
-
-
-
-
-
642
(43)
599
-
642
-
(43)
599
3,140
(3,140)
-
-
-
-
-
-
12. EXPLORATION EXPENDITURE CARRIED FORWARD (NON CURRENT)
Deferred exploration expenditure - at
cost
Movements:
Balance at beginning of the year
Acquisition through entity acquired
Direct expenditure
Less carrying value of tenements sold
Less exploration expenditure written
off
1,622,513
4,414,699
71,659
6,108,871
(6,359)
(74,212)
6,028,300
1,888,735
-
80,245
1,968,980
-
(346,467)
1,622,513
1,052,560
-
50,129
1,102,689
(6,359)
(74,212)
1,022,118
1,143,284
-
75,743
-
1,219,027
-
(166,467)
1,052,560
The ultimate recoupment of the above deferred exploration expenditure is dependent on the successful
development and commercial exploitation or, alternatively, sale of the respective areas.
- 31 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
Consolidated
Parent Entity
Note
2004
$
2003
$
2004
$
2003
$
13. PAYABLES (CURRENT)
Sundry creditors
Unearned income
Loan from related parties
(i)
Amount payable to wholly owned entity
252,307
60,000
-
-
312,307
467,453
60,000
273,464
-
250,000
-
-
1,102,695
467,453
-
273,464
507,339
800,917
1,352,695
1,248,256
(i) The loan from MR, PR, DA and JN Sullivan (“Vendors”) arose as a result of a purchase of a number of
tenements (approved by shareholders on 20 June 1996). PR Sullivan is a director of the Company. On
1 April 2004, the loan and total interest accrued, which was accruing at the rate of 12% per annum, was
paid out in full.
14. INTEREST BEARING LIABILITIES (CURRENT)
Unsecured convertible note
Unsecured Loan
(i)
(ii)
300,000
125,152
425,152
500,000
123,003
623,003
300,000
125,152
425,152
500,000
123,003
623,003
(i) On 6 February 2004 the Company allotted 3,333,333 shares to Retirewise Capital Australia Pty Ltd, at 6
cents per share relating to the redemption of a convertible note of $200,000.
The convertible note was issued on 30 June 1997 to Retirewise Capital Australia Pty Ltd. Under the
original terms of the note the funds were to be advanced unsecured for a period of five years expiring
on 29 June 2002. Since then Retirewise Capital Australia Pty Ltd has four times agreed to extend the
term of the Convertible Note, the most recent time being on 24 May 2004 where they agreed to extend
the Convertible Note 12 months to 29 June 2005. During the extended period Retirewise Capital
Australia Pty Ltd will have the right to convert the note at 6 cents per share in the Company (originally
14 cents per share). Interest is payable half yearly at a rate of 7% per annum on the Convertible Note.
(ii) The unsecured loan carries interest at the Bank Bill Rate plus three per cent per annum. The loan may
be satisfied at the lender’s option by the issue of shares in the Company, should the Company have
insufficient financial resources. However, the lender may at its discretion extend the payment date for
the loan.
- 32 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
Consolidated
Parent Entity
Note
2004
$
2003
$
2004
$
2003
$
15. CONTRIBUTED EQUITY
Issued and paid up capital
180,555,834 (2003: 107,806,334)
ordinary shares, fully paid
Ordinary shares
Balance at the beginning of the
year
(a)
Issue of shares for services
(b)
Conversion of convertible note
(c)
Rights issue
Costs associated with Rights Issue
Issue of shares in lieu of accrued
interest and part satisfaction of
debt
Balance at the end of the year
20,630,217
20,630,217
15,553,431
15,553,431
20,630,217
20,630,217
15,553,431
15,553,431
15,553,431
260,260
236,111
4,814,822
(234,407)
15,463,431
-
-
-
-
15,553,431
260,260
236,111
4,814,822
(234,407)
15,463,431
-
-
-
-
-
20,630,217
90,000
15,553,431
-
20,630,217
90,000
15,553,431
No of
Shares
No of
Shares
No of
Shares
No of
Shares
Balance at the beginning of the
year
Issue of shares for services
Conversion of convertible note
Rights issue
Issue of shares in lieu of accrued
interest and part satisfaction of
debt
Balance at the end of the year
(a)
(b)
(c)
107,806,334
8,675,333
3,888,889
60,185,278
104,806,334
-
-
-
107,806,334
8,675,333
3,888,889
60,185,278
104,806,334
-
-
-
-
180,555,834
3,000,000
107,806,334
-
180,555,834
3,000,000
107,806,334
- 33 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
15. CONTRIBUTED EQUITY (CONTINUED)
(a) On 8 December 2003, the Company allotted 8,675,333 shares (issued at 3 cents per share) to Troika
Securities Limited, Hardrock Capital Pty Ltd and Geomett Pty Ltd to extinguish $260,260 of debt to
those director related entities for normal consulting fees and other services dating back as far as August
2001. The shares were only allotted after Shareholder Approval at the Company’s Annual General
Meeting held on 28 November 2003.
(b) On 6 February 2004 the Company allotted 3,888,889 shares to Retirewise Capital Australia Pty Ltd:
3,333,333 shares (issued at 6 cents per share) relate to the redemption of a convertible note of
$200,000; and the balance 555,556 shares (issued at 6.5 cents per share) to the issue of shares on the
same terms as the 1998 Rights Issue.
(c)
In late March, early April 2004 a total of 60,185,278 shares (issued at $0.08 per share) were allotted as
the result of a fully underwritten one for two renounceable Rights Issue which raised $4,814,822.
(d) Holders of ordinary shares are entitled to receive dividends as declared from time to time and are
entitled to one vote per share at shareholders’ meetings.
(e)
In the event of winding up of the Company, ordinary shareholders rank after all other shareholders and
creditors and are fully entitled to any proceeds of liquidation.
Options over Unissued Capital
At 30 June 2004, no options were on issue. On 1 July 2004, the Company appointed Grange Securities
Limited as Corporate Adviser to the Company for a period of 12 months. In lieu of paying a corporate
advisory fee, the Directors of the Company issued 5,000,000 Options as follows to Grange Securities
Limited:
2,000,000 Options exercisable at $0.20 each;
2,000,000 Options exercisable at $0.30 each; and
1,000,000 Options exercisable at $0.40 each.
All of the above Options will expire on 30 June 2007.
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
16. ACCUMULATED LOSSES
Accumulated losses at the
beginning of the year
12,969,832
10,935,111
13,371,755
11,417,034
Net loss for the current year
491,788
2,034,721
1,076,558
1,954,721
Accumulated losses at the end of
the year
13,461,620
12,969,832
14,448,313
13,371,755
- 34 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
17. CONTROLLED ENTITIES
Name of Controlled Entity/
(Country Of Incorporation)
Percentage
Owned
2004
%
100
100
100
100
2003
%
100
100
100
38
GME Sulphur Inc (USA)
GME Investments Pty Ltd (Australia)
Golden Cliffs NL (Australia)
NiWest Limited (Australia)
Controlled Entity Acquired
Company’s
Cost of
Investment
2004
$
2003
$
-
-
616,893
4,561,313
5,178,206
-
-
616,893
3,138,045
3,754,938
On 30 March 2004 the parent entity acquired the remaining 62.43% of NiWest Limited from Western
Metals Copper Limited (Receivers and Managers appointed) (in liquidation). The total consideration
payable was $1,423,268, including estimated stamp duty and other acquisition costs. As part of the
acquisition the parent entity was also assigned the vendors loan balance from NiWest Limited and was
immediately required to repay the loan balance to vendor of $1,265,025.
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
Details of the acquisition are as follows:
Fair value of net assets of
controlled entity acquired
Cash assets
Receivables
Carried forward exploration
expenditure
Sundry creditors
Borrowings (external)
Borrowings (from parent entity)
Less: Carrying value of investment
in controlled entity prior to final
acquisition
Total cost of investment
Less: amounts still due for
payment
Cash consideration
Outflow of cash to acquire
controlled entity, net of cash
acquired
10,782
35,166
4,414,699
(371,185)
(1,265,025)
(824,087)
2,000,350
(577,082)
1,423,268
(168,220)
1,255,048
Total cash consideration
Less: cash balances acquired
Outflow of cash
1,255,048
(10,782)
1,244,266
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,255,048
-
1,255,048
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 35 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
18. STATEMENT OF CASH FLOWS
(a) Reconciliation of the loss from
ordinary activities after tax to the
net cash flows from operations
Loss from ordinary activities after tax
(491,788)
(2,034,721)
(1,076,558)
(1,954,721)
Depreciation
Write off of exploration expenditure
Exploration costs capitalised (excluding
creditors)
Reimbursement of exploration cost
capitalised (excluding debtors)
43
74,212
-
346,467
43
74,212
-
166,467
(12,532)
(115,676)
(4,041)
(96,173)
-
15,000
-
-
Write down in value of investments
896,466
1,673,122
896,466
1,673,122
Non cash interest paid
-
44,016
-
44,016
Net gain from sale of non current assets
(excluding creditors and debtors)
Accrued loan interest refinanced as loan
debt
Royalty income converted to loan debt
Decrease/(Increase) in receivables
Decrease/(Increase) in other current
assets
19,891
38,259
-
7,788
(2,395)
-
19,891
-
3,875
-
22,074
38,259
(133,000)
(21,489)
3,875
-
22,074
-
(2,395)
-
Increase/(Decrease) in sundry creditors
(586,330)
109,163
(217,453)
109,162
Net Cash Flows from Operating
Activities
(b) Reconciliation of Cash
Cash balance comprises:
Cash at bank
Deposits at call
(c) Non Cash Financing and Investing
Activities
(i) Conversion of convertible note debt
to equity
(ii) Conversion of accrued loan interest
to equity
(iii) Conversion of principal loan to
equity
(iv) Conversion of accrued loan interest
to loan principal
(v) Outstanding cash calls offset as
result of decision to dilute interest in
associated entity rather than contribute
funds
(56,386)
63,320
(426,065)
(32,178)
1,812,419
11,000
141,534
11,000
1,797,315
11,000
1,823,419
152,534
1,808,315
141,534
11,000
152,534
200,000
-
200,000
-
-
44,016
-
44,016
36,111
45,984
36,111
45,984
38,259
3,875
38,259
3,875
-
790,333
-
790,333
- 36 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
19. AUDITORS’ REMUNERATION
Amounts paid for auditors, KPMG of
subsidiary accounts
Amounts received or due and receivable
by the auditors of GME Resources Ltd
for:
- an audit or review of the financial
statements of the company and any
other entity in the consolidated entity
- other services in relation to the
company and any other entity in the
consolidated entity
Consolidated
Parent Entity
2004
$
2003
$
2004
$
2003
$
2,000
-
-
-
12,325
9,000
12,325
9,000
3,193
17,518
3,500
12,500
3,193
15,518
3,500
12,500
20. SEGMENT REPORTING
There are no individual segments to be reported as the Company’s operations are predominantly in the
mining industry in Australia.
Consolidated
2004
$
2003
$
21. EARNINGS PER SHARE
Basic and diluted earnings (loss) per share (cents)
(0.43)
(1.94)
Loss used in calculation of basic and diluted earnings
per share
Weighted average number of ordinary shares
outstanding during the year used in calculation of basic
and diluted earnings per share.
491,788
2,034,721
113,299,496
105,077,567
- 37 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
22. DIRECTORS’ AND EXECUTIVES DISCLOSURES
Names and positions held of parent entity directors and specified executives in office at any time
during the financial year are:
Parent Entity Directors
MD Perrott - Chairman
PR Sullivan - Managing Director
GM Motteram - Technical Director
Specified Executives
JN Sullivan - General Manager
Parent Entity Directors’ Remuneration
MD Perrott
PR Sullivan
GM Motteram
2004
Fees
$
30,000
24,000
18,000
72,000
2003
Fees
$
30,000
24,000
18,000
72,000
Amounts outstanding at balance date to director related entities in respect
of unpaid fees:
Trade and other creditors and accruals
41,076
255,310
The only remuneration received by the directors is fee income.
Specified Executives’ Remuneration
JN Sullivan (appointed 23 March 2004
on a consultancy basis)
The parent entity and its subsidiaries have no employees.
Shareholdings
Number of Shares held by Parent Entity Directors and Specified Executives
19,773
-
Parent Entity Directors
MD Perrott
PR Sullivan
GM Motteram
Specified Executives’ Remuneration
JN Sullivan
Balance
1/7/03
4,676,580
6,793,430
1,446,384
6,090,055
19,006,449
Received
as
Remun-
eration
Net
Change
Other*
Balance
30/6/04
-
-
-
-
-
12,335,714
4,746,717
2,438,666
17,012,294
11,540,147
3,885,050
3,218,077
9,308,132
22,739,174
41,745,623
* Net change other – refers to shares purchased or sold during the financial year, shares acquired as a part
of a general rights issue and shares issued in lieu of past services provided (see note 27 for further
details)
- 38 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
22. DIRECTORS’ AND EXECUTIVES DISCLOSURES (CONTINUED)
Remuneration Practices
The remuneration structure for executive officers, including executive directors, is based on a number of
factors, including length of service, particular experience of the individual concerned and overall performance
of the Company. The contracts for service between the Company and specified directors and executives are
on a continuing basis and reviewed annually.
Transactions with Director Related Entities
All transactions were made under normal commercial terms and conditions unless otherwise stated.
Interest of $24,724 accrued during the year (2003: $32,816) on a loan from MR, PR, DA and JN Sullivan. PR
Sullivan is a director of the Company. The loan of $273,464 arose as a result of a purchase of a number of
tenements (approved by shareholders on 20 June 1996). The loan principal of $273,464 and total accrued
interest of 207,503 was paid out in full on 1 April 2004. For more details regarding the loan refer to Note 13
Payables (Current).
Office management services, which includes administration support, office facilities, accounting and company
secretarial services were provided during the year from Troika Management Ltd, an entity of which Mr Perrott
is associated, to the value of $60,000 (2003: $60,000).
In order to preserve cash on 8 December 2003, the Company allotted 8,675,333 shares (issued at 3 cents
per share) to Troika Securities Limited, Hardrock Capital Pty Ltd and Geomett Pty Ltd to extinguish $260,260
of debts to the director related entities for normal consulting fees and other services dating back as far as
August 2001. The shares were only allotted after Shareholder Approval at the Company’s Annual General
Meeting held on 28 November 2003.
Details of the issue were as follows:
Related Director
Recipient Entity
Michael Perrott
Peter Sullivan
Geoff Motteram
Troika Securities Limited
Hardrock Capital Pty Ltd
Geomett Pty Ltd
Number of
shares Issued
Debt
Extinguished
$
6,325,000
1,320,000
1,030,333
8,675,333
189,750
39,600
30,910
260,260
- 39 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
23. FINANCIAL INSTRUMENT DISCLOSURES
(a)
Interest Rate Risk
The consolidated entity’s exposure to interest rate risk, which is the risk that a financial instrument’s value will
fluctuate as a result of changes in market interest rates, and the effective weighted average interest rates on
those financial assets and financial liabilities, is as follows:
2004
Weighted
Average
Effective
Interest Rate
Floating
Interest
Rate
Fixed Interest Rate
Maturing
Within 1
year
Over 1 year
Non-interest
Bearing
Total
Financial Assets
$
$
$
$
$
Cash assets
Receivables
4.95%
1,812,419
-
1,812,419
11,000
-
11,000
Financial Liabilities
Payables
Interest bearing
liabilities
7.2%
-
125,152
-
300,000
125,152
300,000
-
-
-
-
-
-
-
41,218
41,218
1,823,419
41,218
1,864,637
312,307
-
312,307
425,152
312,307
737,459
2003
Weighted
Average
Effective
Interest Rate
Floating
Interest
Rate
Fixed Interest Rate
Maturing
Within 1
year
Over 1 year
Non-interest
Bearing
Total
Financial Assets
$
$
$
$
$
Cash assets
Receivables
3.5%
141,534
-
11,000
-
141,534
11,000
Financial Liabilities
Payables
Interest bearing
liabilities
(b) Credit Risk
12.0%
7.2%
-
123,003
273,464
500,000
123,003
773,464
-
-
-
-
-
-
-
767,549
152,534
767,549
767,549
920,083
527,453
-
800,917
623,003
527,453
1,423,920
The maximum exposure to credit risk, excluding the value of any collateral or other security, to recognised
financial assets is the carrying amount as disclosed in the balance sheet and notes to the financial statements.
The consolidated entity does not have any material credit risk exposure to any single debtor or group of
debtors under financial instruments entered into by the consolidated entity.
(c)
Net Fair Values
The net fair value of the financial assets and financial liabilities approximates their carrying value. Other than
listed investments that are measured at the quoted bid price at balance date adjusted for transaction costs
expected to be incurred, no financial assets and financial liabilities are readily traded on organised markets in
standardised form.
The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in
the balance sheet and in the notes to and forming part of the financial statements.
- 40 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
24. COMMITMENTS AND CONTINGENT LIABILITIES
There were no capital commitments or contingent liabilities, not provided for in the financial statements of the
consolidated entity as at 30 June 2004, other than:
(a) Mineral Tenement Leases
In order to maintain current rights of tenure to mining tenements, the consolidated entity in its own right
or in conjunction with its joint venture partners may be required to outlay amounts of approximately
$521,820 (2003: $773,600) per annum on an ongoing basis in respect of tenement lease rentals and to
meet the minimum expenditure requirements of the Western Australian and Queensland Mines
Department. These obligations are expected to be fulfilled in the normal course of operations by the
consolidated entity or its joint venture partners and are subject to variations dependent on various
matters, including the results of exploration on the mineral tenements.
(b) Claims of Native Title
Legislative developments and judicial decisions (in particular the uncertainty created in the area of
Aboriginal land rights by the High Court decision in the “Mabo” case and native title legislation) may
have an adverse impact on the consolidated entity’s exploration and future production activities and its
ability to fund those activities. It is impossible at this stage to quantify the impact (if any) which these
developments may have on the consolidated entity’s operations.
Native title claims have been made over ground in which the consolidated entity currently has an
interest. It is possible that further claims could be made in the future. However, the Company has not
undertaken the considerable legal, historical, anthropological and ethnographic research which would
be necessary to determine whether any current or future claims, if made, will succeed and, if so, what
the implications would be for the consolidated entity.
25. INTERESTS IN BUSINESS UNDERTAKINGS - JOINT VENTURES
The Company has entered into a number of agreements with other companies to gain interests in project
areas. These interests will be earned by expending certain amounts of money on exploration expenditure
within a specific time. The Company can however, withdraw from these projects at any time without penalty.
The amounts required to be expended in the next year have been included in note 24 – Commitments and
Contingent Liabilities.
26. RELATED PARTIES
Transactions with controlled entities
During the year, the Company received royalty income from NiWest Limited to the value of $133,000 (2003:
$133,000) prior to NiWest Limited becoming a controlled entity.
Total amounts receivable and payable from entities in the wholly-owned group at balance date:
Non-Current Receivables
Loans net of provisions for non recovery
Current Payables
Loans
2004
$
2003
$
2,465,152
753,710
1,102,695
507,339
- 41 -
ANNUAL REPORT 2004
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2004
27. AFTER BALANCE DATE EVENTS
Since 30 June 2004, the following significant events have occurred:
On 1 July 2004, the Company announced the appointment of Grange Securities Limited as Corporate
Adviser to the Company for a period of 12 months.
In lieu of paying a corporate advisory fee, the Directors of the Company resolved to issue 5,000,000 Options
as follows to Grange Securities Limited:
• 2,000,000 Options exercisable at $0.20 each;
• 2,000,000 Options exercisable at $0.30 each; and
• 1,000,000 Options exercisable at $0.40 each.
All of the above Options will expire on 30 June 2007.
Other than those matters discussed above no other matters or circumstances have arisen since the end of
the financial year which significantly affected or may significantly affect the consolidated entity’s operations,
the results of those operations, or the consolidated entity’s state of affairs in future financial years.
The financial effect of the issue of the above Options (if any) has not been brought to account for the
financial year ending 30 June 2004.
- 42 -
ANNUAL REPORT 2004
INDEPENDENT AUDIT REPORT
To the members of
GME RESOURCES LIMITED
Scope
The financial report and directors’ responsibility
The financial report comprises the statement of financial position as at 30 June 2004,
statement of financial performance, statement of cash flows and accompanying notes to the
financial statements for the year then ended, and the directors’ declaration of GME
Resources Limited (“the company”). The financial report includes the consolidated financial
statements of the consolidated entity comprising the company and the entities it controlled
at the year’s end or from time to time during the financial year.
The directors of the company are responsible for the preparation and true and fair
presentation of the financial report in accordance with the Corporations Act 2001. This
includes responsibility for the maintenance of adequate accounting records and internal
controls that are designed to prevent and detect fraud and error, and for the accounting
policies and accounting estimates inherent in the financial report.
Audit approach
We conducted an independent audit in order to express an opinion to the members of the
company. Our audit was conducted in accordance with Australian Auditing Standards, in
order to provide reasonable assurance as to whether or not the financial report is free of
material misstatement. The nature of an audit is influenced by factors such as the use of
professional judgement, selective testing, the inherent limitations of internal control, and the
availability of persuasive rather than conclusive evidence. Therefore, an audit cannot
guarantee that all material misstatements have been detected.
We performed procedures to assess whether in all material respects the financial report
presents fairly, in accordance with the Corporations Act 2001, including compliance with
Accounting Standards and other mandatory financial reporting requirements in Australia, a
view which is consistent with our understanding of the company’s and the consolidated
entity’s financial position, and of their performance as represented by the results of their
operations and cash flows.
We formed our audit opinion on the basis of these procedures, which included:
• examining, on a test basis, information to provide evidence supporting the amounts and
disclosures in the financial report, and
• assessing the appropriateness of the accounting policies and disclosures used and the
reasonableness of significant accounting estimates made by the directors.
HLB Mann Judd (WA Partnership)
15 Rheola Street West Perth 6005. PO Box 263 West Perth 6872 Western Australia. DX 238 (Perth) Telephone +61 (08) 9481 0977. Fax +61 (08) 9481 3686.
Email: hlb@mjwa.com.au. Website: http://www.hlb.com.au
Partners: Ian H Barsden, Terry M Blenkinsop, Litsa Christodulou, Wayne M Clark, Lucio Di Giallonardo, Colin D Emmott, Trevor G Hoddy, Norman G Neill, Peter J Speechley
HLB Mann Judd (WA Partnership) is a member of
International and the HLB Mann Judd National Association of independent accounting firms
Independent Audit Report
While we considered the effectiveness of management’s internal controls over financial
reporting when determining the nature and extent of our procedures, our audit was not
designed to provide assurance on internal controls.
Independence
In conducting our audit, we followed applicable independence requirements of Australian
professional ethical pronouncements and the Corporations Act 2001.
Audit opinion
In our opinion, the financial report of GME Resources Limited is in accordance with:
(a)
the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the company’s and consolidated entity’s financial
position as at 30 June 2004 and of their performance for the year then ended;
and
complying with Accounting Standards in Australia and the Corporations
Regulations 2001; and
(b) other mandatory financial reporting requirements in Australia.
HLB MANN JUDD
Chartered Accountants
Perth, Western Australia
24 September 2004
N G NEILL
Partner
GME RESOURCES LTD
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 17 September 2004.
A.
Distribution of Securities
(a) Analysis of numbers of shareholders by size and holding:
Category
(size of holding)
Ordinary
Shares
-
1
-
1,001
-
5,001
10,001
-
100,000 and over
1,000
5,000
10,000
100,000
319
187
109
376
166
1,157
(b) There were 467 holders of less than a marketable parcel of ordinary shares.
(c) The percentage of the total holding of the twenty largest shareholders is:
Ordinary Shares
64.1%
B.
Voting Rights
The voting rights attaching to each class of shares are set out below:
(a)
Ordinary Shares:
On a show of hands, every member present in person or by proxy shall have one vote and
upon a poll each share shall have one vote.
C.
Substantial Shareholders
Substantial shareholders who have notified the Company as at 17 September 2004, are:
Name
Retirewise Capital Pty Ltd
Troika Securities Ltd
Guiness Peat Group plc, Mid-East Minerals
Limited and Retford Resources NL
Peter Ross Sullivan
ANZ Nominees Ltd
James Noel Sullivan and Associated Entities
%
18.15
9.42
5.63
6.20
5.43
5.06
- 46 -
ANNUAL REPORT 2004
GME RESOURCES LTD
SHAREHOLDER INFORMATION
The names of the 20 largest security holders of each class of equity security as at 17 September 2004
are listed below:
ORDINARY SHARES
Name
Retirewise Capital Pty Ltd
Troika Securities Ltd
Retford Resources NL
ANZ Nominees Limited
Hardrock Capital Pty Ltd
James Noel Sullivan
Peter Ross Sullivan
Geomett Pty Ltd
Armada Trading Pty Ltd
Perpetual Trustee Company Limited
Donald Anthony Sullivan
Clodene Pty Ltd
Tunza Holdings Pty Ltd
Mervyn Ross Sullivan
Warnford Nominees Pty Limited
Ingot Capital Management Pty Ltd
Douglas Stuart Butcher
Suzanne Maree Walley
K Biggs Enterprises Pty Ltd
Topsfield Pty Ltd
Number
Issued Shares Held
%
32,777,351
17,012,294
10,166,002
9,802,070
6,699,584
5,698,645
4,495,313
3,885,050
3,000,000
3,000,000
3,000,000
2,400,000
2,136,438
2,090,625
1,750,000
1,699,746
1,600,000
1,515,340
1,500,000
1,500,000
18.15
9.42
5.63
5.43
3.71
3.16
2.49
2.15
1.66
1.66
1.66
1.33
1.18
1.16
0.97
0.94
0.89
0.84
0.83
0.83
115,728,458
64.10
- 47 -
ANNUAL REPORT 2004
GME RESOURCES LTD
TENEMENT DIRECTORY
Project
Tenements
Company Interest
Comments
Abednego West
P39/2690 - 2691 converted to MLA39/427
All tenements 20%
P39/3732 - 3733
P39/3735 - 3741 converted to MLA39/824
P3743 - 3746 converted to MLA 39/825
P39/3751 converted to MLA39/823
Chain Bore
MLA37/581
Clermont
EPMA11575, EPMA11806, EPMA12164
100%
40%
All tenements Delta
Gold 80%
Joint Venture with
Australian Gold Fields
NL (in Liquidation)
Duck Hill
Eucalyptus
E31/100 converted to MLA31/214
50%
GME 50%, Zuks 50%
P39/3459 - 3460 converted to MLA39/744
ELA39/703
E39/256 converted to MLA39/666
P39/2445 - 2446 converted to MLA39/430 and MLA39/344
E39/386 converted to MLA39/665 - 666 and MLA 39/674
M39/313
Anglo 100%
NiWest 100%
NiWest 100% nickel
rights
E39/480 converted to MLA39/803 - 804
Oldcity 100%
E39/368 converted to MLAs 39/568, 39/570, 39/616 and 39/802
NiWest 100% nickel
rights
M39/289
Hawks Nest
M38/218, P38/2515 converted to MLA 38/683
Ilgarari
E52/1452
Laverton Downs
E38/506 converted to MLA38/587 - 588 and 38/782 - 784
Leonora East
P37/4106 converted to MLA37/566
P37/5330 - 5333, P37/5477 converted to MLA37/1059
MLA37/876
Linden
P39/3417 - 3418 converted to MLA39/797 - 798
Macey Hill
Mertondale
Mt Kilkenny
P39/2974 - 2976 converted to MLA 39/500
P39/3815 converted to MLA39/845
P37/4201 - 37/4205 converted to MLA37/591
E39/688 converted to MLA39/878 - 879
Mt Morgan South
MLA39/702 - 703, MLA 39/481, MLA39/777
Murrin Murrin
(Golden Cliffs)
Murrin Murrin
(Minara
Resources)
MLA39/554 and MLA39/457
MLA39/426, 456, 552, 553 and 569
Murchison Copper
Mines Option to
purchase copper rights
only
Montrose earning 70%
Montrose earning 70%
90% Haoma Mining NL
100%
100%
100% nickel rights
only
All tenements
100%
100%
10%
100%
100%
100%
100%
100%
All tenements
100% rights to non
nickel laterite
Nickel laterite royalty 20
cents per tonne
- 48 -
ANNUAL REPORT 2004
GME RESOURCES LTD
Tenements
Company Interest
Comments
Project
Murrin Murrin
HEPI
Murrin Murrin
North
P39/3366, 3369, 3372 - 3375 converted to MLA 39/717 - 718
P39/3742 converted to MLA39/819
P39/3515 - 3517 converted to MLA39/758
MLA39/757 and MLA39/759
Pyke Hill
ELA39/633
White Kauri
P37/4149 converted to MLA37/580
P37/5264 converted to MLA37/1091
PLA37/5555
All tenements
100%
All tenements
100%
100%
All tenements
100%
LEGEND:
E:
Exploration Licence
P:
Prospecting Licence
EPM:
Exploration Permit for Minerals
M: Mining Lease
ELA: Exploration Licence
Application
EPM
A:
Exploration Permit for Minerals
Application
PLA: Prospecting Licence
Application
MLA: Mining Lease Application
- 49 -
ANNUAL REPORT 2004