G M E R E S O U R C E S L T D
ABN 62 009 260 315
ANNUAL REPORT
2009
CONTENTS
PAGE
CORPORATE DIRECTORY ............................................................
1
DIRECTORS’ REPORT ..................................................................
2-10
AUDITORS INDEPENDENCE DECLARATION ...............................
11
FINANCIAL REPORT .................................................................... 12-35
DIRECTORS’ DECLARATION ......................................................
36
INDEPENDENT AUDIT REPORT .................................................. 37-38
GME RESOURCES LTD
CORPORATE DIRECTORY
DIRECTORS
Chairman
Michael Delaney PERROTT AM B.Com
Managing Director
David John VARCOE B.Mining Engineering (Hons), M.AusIMM
Executive Director
James Noel SULLIVAN FAICD
Director
Peter Ross SULLIVAN BE, MBA
Director
Geoffrey Mayfield MOTTERAM B.MetE(Hons), M.AusIMM
COMPANY SECRETARY
Mark Pitts B.Bus CA
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
467 Canning Highway
Como WA 6152
PO Box 920
Applecross WA 6953
Telephone:
Facsimile:
E-Mail:
Web Site:
(08) 9313 2144
(08) 9313 2188
enq@gmeresources.com.au
www.gmeresources.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 Securities Exchange Limited
Ticker code: GME
STATE OF REGISTRATION
Western Australia
- 1 -
ANNUAL REPORT 2009
GME RESOURCES LTD
DIRECTORS’ REPORT
Your directors present their report of GME Resources Limited and its controlled entities for the
financial year ended 30 June 2009.
Directors
The names of directors in office at any time during or since the end of the year are:
Michael Delaney Perrott
David John Varcoe
James Noel Sullivan
Peter Ross Sullivan
Geoffrey Mayfield Motteram
(Non executive - Chairman)
(Managing Director)
(Executive Director)
(Non executive - Director)
(Non executive - Director)
Directors have been in office since the start of the financial year to the date of this report unless
otherwise stated.
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.
Operating and Financial Review
Operating Results
The net loss after income tax attributable to members of the Group for the financial year to 30
June 2009 amounted to $628,861 (2008: $460,137).
Overview of operating activity
The Company is developing the NiWest nickel laterite Heap Leach project in the NE Goldfields.
The Company has explored and developed a significant resource base containing over 1 million
tonnes of nickel metal. Due to the state of the world financial markets the Company has
suspended work on the NiWest Nickel feasibility study pending an improvement in the Nickel
market and the ability of financial markets to support major resource projects. The Company will
continue to review options for development, including joint venturing of the project. During the
reporting period the company undertook limited exploration and development work.
In 2008 the Company undertook a strategic review of the NiWest Project. Based on this work,
the Company believes that the optimal size of the NiWest Heap leach Project is 3.5 million
tonnes per annum (Mtpa) of ore processed, producing between 30,000 and 35,000 tonnes of
nickel metal per annum. The Company envisages constructing a world class Nickel and Cobalt
processing plant in the Northern Goldfields.
The Company was encouraged by the improvement in the Nickel price in the last quarter of the
financial year to levels that again make the proposed NiWest Heap Leach project an attractive
proposition. We believe that very few nickel producers would be profitable at sub $US5 per
pound prices and this price would not support any new investment in the industry. On the basis
of the improving metal price, lower sulphur input costs and a reduction in capital costs the
Company intends to revisit the economics of the Heap Leach project. The Company will actively
seek partners to jointly develop this world class project.
- 2 -
ANNUAL REPORT 2009
GME RESOURCES LTD
Financial Position
At the end of the financial year the consolidated entity had $356,187 (2008: $5,150,024) in cash
and at call deposits.
Carried forward exploration expenditure was $29,138,670 (2008: $25,119,793).
During the year issued capital increased from 253,173,931 to 253,373,931 shares at the end of
2009. The movement related to the issue of 200,000 ordinary fully paid shares by the company
as payment for the Jindalee Tenements.
Dividends
No dividends have been paid or declared since the start of the financial year. No
recommendation is made as to dividends.
Significant Changes in State of Affairs
There were no significant changes in the state of affairs of the consolidated entity during the
financial year.
After Balance Date Events
On 20 July 2009 Directors closed a 1 for 12 non-renounceable entitlement issue at 5 cents.
The Company received total acceptances for shares under the Entitlement Issue for 21,114,494
ordinary fully paid shares at 5 cents each to raise a total of $1,060,725 . The Directors were very
pleased with the support shown by shareholders with approximately 71.2% of available entitlements
being taken up.
The rights issue was not underwritten, but the Company had reserved the right to place the shortfall
of 6,071,254 shares. All shortfall shares were taken up by shareholders.
Other than the issue referred to above, no matters or circumstances have arisen since the end
of the financial year which significantly affected or may significantly affect the Group’s
operations, the results of those operations or the Group’s state of affairs in future financial
years.
- 3 -
ANNUAL REPORT 2009
GME RESOURCES LTD
Likely Developments
The consolidated entity’s areas of interest are in the exploration stage, and although the results
of work carried out to date are encouraging it is not possible to predict the likely developments.
The consolidated entity will continue its mineral exploration and investment activities with the
object of finding further mineralised resources and exploiting those already discovered.
The Board is following a strategic plan for the growth of the Group, however, further information
about likely developments future prospects and business strategies as they pertain to the
operations and expected results of those operations have not been included in this report, as
the Directors reasonably believe that disclosure of this information would be likely to result in
unreasonable prejudice to the Group.
Information on Directors and Company Secretary
Michael Delaney Perrott AM BCom FAIM
(Chairman) 63 Years
Director since 1996
Mr Perrott has been involved in the construction and contracting industry since 1969. He is
currently Chairman and director of various listed and unlisted public and private companies. Mr
Perrott is also a member of the Board of Notre Dame University and SANE Australia and a
council member for the State Ministerial Council for Suicide prevention.
Mr Perrott has been Chairman of the Company since his appointment as a director in 1996.
Other current directorships of listed companies
Director of Schaffer Corporation Limited since February 2005 and VDM Group Ltd since July
2009.
Former directorships of listed companies in last 3 years
Non executive chairman of Gage Roads Brewing Co Limited from November 2006 to October
2007. Director of Port Bouvard Limited from 1998 until March 2009, and Director of Portman
Limited from June 1997 until November 2008.
David John Varcoe B. Mining Engineering (Honours) MAusIMM
(Managing Director) 46 Years
Director since 2008
Mr Varcoe is a highly qualified mining engineer with over 20 years experience that includes
extensive senior managerial and technical positions with Australia and international resource
companies. His experience includes positions at Sons of Gwalia, Centaur, WMC, and Goldfields
St Ives and for the period prior to joining GME as Principal Consultant Rio Tinto Technical
Services based in the United Kingdom and Perth WA.
Mr Varcoe has not been a Director of any other public listed entities during the past three years.
- 4 -
ANNUAL REPORT 2009
GME RESOURCES LTD
James Noel Sullivan FAICD
(Executive Director) 48 Years
Director since 2004
Mr Sullivan has over 20 years experience in commerce providing services to the mining and
allied industries.
Mr Sullivan was instrumental in establishing and managing the Golden Cliffs Prospecting
Syndicate which acquired and pegged a number of prospective tenements in the Eastern
Goldfields. The Golden Cliffs Prospecting Syndicate was subsequently acquired by the
company in 1996. Mr Sullivan has extensive knowledge in mining and prospecting in the North
Eastern Goldfields and in particular on matters involving tenement administration, native title
negotiation and supply and logistics of services. Mr Sullivan’s practical knowledge in these
areas will be of great benefit to the Company as it seeks to develop its assets for the benefit of
its shareholders.
Mr Sullivan has not been a Director of any other public listed entities during the past three
years.
Peter Ross Sullivan BE, MBA
(Non Executive Director) 53 years
Director since 1996
Mr Sullivan is an engineer and has been involved in the management and strategic
development of resource companies and projects for more than 20 years.
Mr Sullivan has been a director of the Company since his appointment in 1996.
Other current directorships of listed companies
Mr Sullivan has been a director of Resolute Mining Limited since June 2001.
Former directorships of listed companies in last 3 years
Mr Sullivan was a Director of Valhalla Uranium Limited for the period September 2005 to September
2006.
Geoffrey Mayfield Motteram BMetE (Hons), MAusIMM
(Non Executive Director) 60 years
Director since 1997
Mr Motteram is a metallurgical engineer with over 30 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 Anaconda 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 a non executive director of the Company since 1997, and provides
technical support to the Company.
Other current directorships of listed companies
Mr Motteram has been a director of Mount Magnet South Limited since 31 May 2006.
- 5 -
ANNUAL REPORT 2009
GME RESOURCES LTD
Mr Mark Edward Pitts B.Bus CA
(Company Secretary) 47 Years
Mr Pitts was appointed to the position of Company Secretary in February 2009. Mr Pitts is a
Chartered Accountant with over twenty years experience in statutory reporting and business
administration. He has been directly involved with, and consulted to a number of public
companies holding senior financial management positions. He is a partner in the corporate
advisory firm Endeavour Corporate. Endeavour offers professional services focused on
Company Secretarial support, corporate advice, supervision of ASIC and ASX reporting and
compliance requirements, and commercial and financial support.
- 6 -
ANNUAL REPORT 2009
GME RESOURCES LTD
Remuneration report
The remuneration report is set out in the following manner:
• Policies used to determine the nature and amount of remuneration.
• Details of remuneration
• Service agreements
• Share based compensation
Remuneration policy
The Board of Directors is responsible for remuneration policies and the packages applicable to
the Directors of the Company. The broad remuneration policy is to ensure that packages
offered properly reflect a person’s duties and responsibilities and that remuneration is
competitive and attracts, retains, and motivates people of the highest quality.
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. Engagement and payment for such services are approved by the other directors
who have no interest in the engagement of services.
At the date of this report the Company had not entered into any packages with Directors or
senior executives which include performance based components.
Details of remuneration for Directors
Remuneration levels are competitively set to attract and retain appropriately qualified and
experienced Directors and senior executives. The Board of Directors obtains independent
advice as appropriate when reviewing remuneration packages.
Details of nature and amount of each element of the emoluments of directors and executives of
the Company (and each of the officers of the Company and the consolidated entity receiving the
highest remuneration) are:
2009
Executive Directors
David J Varcoe
James N Sullivan
Non-Executive Directors
Michael D Perrott
Geoffrey M Motteram
Peter R Sullivan
Executives
Bradley J Wynne (ceased 11
Feb 2009)
John R Harris (ceased 30 Nov
2008)
Mr Mark Pitts (appointed 11
Feb 2009
Short Term
Benefits
Salary &
Fees
$
Post Employment
Benefits
Long Term
Benefits
Superannuation
$
Options
$
174,818
24,000
30,000
27,600
24,000
91,017
82,275
23,750
477,460
12,755
-
-
-
-
8,192
7,405
-
28,352
Total
$
187,573
24,000
30,000
27,600
24,000
99,209
89,680
23,750
505,812
-
-
-
-
-
-
-
-
-
- 7 -
ANNUAL REPORT 2009
GME RESOURCES LTD
2008
Executive Directors
David J Varcoe
James N Sullivan
Non-Executive Directors
Michael D Perrott
Geoffrey M Motteram
Peter R Sullivan
Executives
Bradley J Wynne
John R Harris
Short Term
Benefits
Salary &
Fees
$
93,253
120,727
30,000
36,000
24,000
150,000
66,667
520,647
Post Employment
Benefits
Long Term
Benefits
Total
Superannuation
$
Options
$
9,325
-
-
-
-
13,500
6,000
28,825
$
102,578
120,727
30,000
36,000
24,000
163,500
72,667
549,472
-
-
-
-
-
-
-
-
The Company and its subsidiaries had no employees as at 30 June 2009.
Service agreements
There are no service agreements with any of the Company’s Directors.
Share based compensation
There is currently no provision in the policies of the consolidated entity for the provision of share
based compensation to directors. The interest of Directors in shares and options is set out
elsewhere in this report.
Directors and Executives Interests
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
Michael D Perrott
David J Varcoe
James N Sullivan
Peter R Sullivan
Geoffrey M Motteram
Ordinary Shares
Ordinary Shares
Opening
Balance
Net Change
Closing
Balance
12,317,182
75,000
12,129,676
11,737,481
4,862,356
-
-
25,000
-
-
12,317,182
75,000
12,154,676
11,737,481
4,862,356
- 8 -
ANNUAL REPORT 2009
GME RESOURCES LTD
Meetings of Directors
During the year, 7 meetings of directors were held. Attendances were:
Name
Michael D Perrott
David J Varcoe
James N Sullivan
Peter R Sullivan
Geoffrey M Motteram
Number
Eligible to
Attend
Number
Attended
7
7
7
7
7
7
7
7
7
7
Loans to Directors and Executives
There were no loans entered into with Directors or executives during the financial year under
review.
Related party transactions with directors and executives are set out in Note 17 to the Financial
Report.
Unlisted Options
At the date of this report the number of unlisted Options on issue were as follows:
•
2,000,000 Options exercisable at $0.70 each;
The options will expire on 30 September 2010.
Audit Committee
The Board reviews the performance of the external auditors on an annual basis and meets with
them during the year to review findings and assist with Board recommendations.
The Board does not have a separate Audit Committee with a composition as suggested in the
best practice recommendations. The full Board carries out the function of an audit committee.
The Board believes that the Company is not of a sufficient size to warrant a separate committee
and that the full board is able to meet objectives of the best practice recommendations and
discharge its duties in this area.
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.
- 9 -
ANNUAL REPORT 2009
GME RESOURCES LTD
Environmental Regulation
The consolidated entity’s exploration and mining tenements are located in Western Australia.
There are significant regulations under the Western Australian Mining Act 1978 and the
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.
Proceedings on Behalf of Company
No person has applied for leave of Court, pursuant to section 237 of the Corporations Act 2001,
to bring proceedings on behalf of the Company or intervene in any proceedings to which the
Company is a party for the purpose of taking responsibility on behalf of the Company for all or
any part of those proceedings.
The Company was not a party to any such proceedings during the year.
Non-audit services
The Company may decide to employ the auditor on assignments additional to their statutory
audit duties where the auditors’ expertise and experience with the Company or consolidated
entity are important.
During the year HLB Mann Judd, performed no other services in addition to their statutory audit
duties.
Auditors’ independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the
Corporations Act 2001 is set out on the following page.
This report is signed in accordance with a Resolution of Directors.
David J Varcoe
Managing Director
Perth, Western Australia
23 September 2009
- 10 -
ANNUAL REPORT 2009
Auditor’s Independence Declaration
As lead auditor for the audit of the financial report of GME Resources Limited for the year ended 30 June 2009,
I declare that to the best of my knowledge and belief, there have been:
a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to
the audit; and
b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of GME Resources Limited.
Perth, Western Australia
23 September 2009
W M CLARK
Partner, HLB Mann Judd
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 2 15 Rheola Street West Perth 6005 PO Box 263 West Perth 6872 Western Australia. Telephone +61 (08) 9481 0977. Fax +61 (08) 9481 3686.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a world-wide organisation of accounting firms and business advisers
- 11 -
GME RESOURCES LTD
INCOME STATMENT
FOR THE YEAR ENDED 30 JUNE 2009
Note
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
Revenue
2
248,037
797,462
143,180
515,644
Interest expense
-
23,545
-
Depreciation expense
234,302
34,598
234,302
23,545
34,598
Management and consulting fees
488,035
642,892
488,035
642,892
Administration expenses
320,977
556,564
320,785
556,553
Loss before income tax benefit
795,277
460,137
899,942
741,944
Income tax benefit
3
(166,416)
-
(166,416)
-
Loss from ordinary activities after
related income tax
Net loss attributable to members of the
parent entity
Earnings Per Share
Basic earnings per share
(cents per share)
628,861
460,137
733,526
741,944
628,861
460,137
733,526
741,944
16
(0.25)
(0.19)
The accompanying notes form part of these financial statements.
- 12 -
ANNUAL REPORT 2009
GME RESOURCES LTD
BALANCE SHEET
AS AT 30 JUNE 2009
Note
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
CURRENT ASSETS
Cash and cash equivalents
Receivables
Other financial assets
13(b)
4
5
356,187
7,291
8,250
5,150,024
230,023
8,250
200,754
5,034
8,250
4,928,834
247,974
8,250
TOTAL CURRENT ASSETS
371,728
5,388,297
214,038
5,185,058
NON CURRENT ASSETS
Receivables
Other financial assets
Plant and equipment
Exploration and evaluation
expenditure carried forward
6
7
8
9
-
-
493,995
-
-
727,948
10,282,448
2,615,950
493,995
9,245,709
2,615,950
727,948
29,138,670
25,119,793
16,047,396
13,139,101
TOTAL NON CURRENT ASSETS
29,632,665
25,847,741
29,439,789
25,728,708
TOTAL ASSETS
30,004,393
31,236,038
29,653,827
30,913,766
CURRENT LIABILITIES
Payables
10
102,756
713,540
1,524,989
2,059,402
TOTAL CURRENT LIABILITIES
102,756
713,540
1,524,989
2,059,402
TOTAL LIABILITIES
102,756
713,540
1,524,989
2,059,402
NET ASSETS
EQUITY
Issued capital
Financial assets reserve
Option reserve
Accumulated losses
29,901,637
30,522,498
28,128,838
28,854,364
11
11
11
44,526,381
(1,125)
740,796
(15,364,415)
44,518,381
(1,125)
740,796
(14,735,554)
44,526,381
(1,125)
740,796
(17,137,214)
44,518,381
(1,125)
740,796
(16,403,688)
TOTAL EQUITY
29,901,637
30,522,498
28,128,838
28,854,364
The accompanying notes form part of these financial statements.
- 13 -
ANNUAL REPORT 2009
GME RESOURCES LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2009
CONSOLIDATED
Note
ORDINARY
SHARES
FINANCIAL
ASSETS
RESERVE
OPTION
RESERVE
ACCUMULATED
LOSSES
TOTAL
Balance at 1 July 2007
26,480,932
(1,125)
91,396
(14,275,417)
12,295,786
Loss attributable to members of
the parent entity in 2008
Issue of unlisted options
-
-
Shares issued (net of costs)
11
18,037,449
-
-
-
-
(460,137)
(460,137)
649,400
-
-
-
649,400
18,037,449
Balance at 30 June 2008
44,518,381
(1,125)
740,796
(14,735,554)
30,522,498
Loss attributable to members of
the parent entity in 2009
Issue of unlisted options
-
-
Shares issued (net of costs)
11
8,000
-
-
-
-
-
-
(628,861)
(628,861)
-
-
-
8,000
Balance at 30 June 2009
44,526,381
(1,125)
740,796
(15,364,415)
29,901,637
PARENT
Balance at 1 July 2007
26,480,932
(1,125)
91,396
(15,661,744)
10,909,459
Loss attributable to members of
the parent entity in 2008
Issue of unlisted options
-
-
Shares issued (net of costs)
11
18,037,449
-
-
-
-
(741,944)
(741,944)
649,400
-
-
-
649,400
18,037,449
Balance at 30 June 2008
44,518,381
(1,125)
740,796
(16,403,688)
28,854,364
Loss attributable to members of
the parent entity in 2009
Issue of unlisted options
-
-
Shares issued (net of costs)
11
8,000
-
-
-
-
-
-
(733,526)
(733,526)
-
-
-
8,000
Balance at 30 June 2009
44,526,381
(1,125)
740,796
(17,137,214)
28,128,838
The accompanying notes form part of these financial statements.
- 14 -
ANNUAL REPORT 2009
GME RESOURCES LTD
CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2009
Cash flows from operating activities
Note
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
Cash receipts from customers
Cash paid to suppliers and employees
Interest received
Net cash from operating activities
13(a)
266,416
(5,207,693)
148,037
(4,793,240)
281,818
(5,947,894)
484,657
(5,181,419)
166,416
(4,016,711)
143,180
(3,707,115)
-
(4,836,803)
484,657
(4,352,146)
Cash flows from investing activities
Acquisition of Plant and equipment
Amounts paid on behalf of controlled
entities
Net cash from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceeds from sale of assets
Payment of costs associated with issue
of shares
(5,597)
(743,073)
(5,597)
(743,073)
-
(5,597)
-
(743,073)
(1,020,368)
(1,025,965)
(1,029,263)
(1,772,336)
-
5,000
10,403,967
-
-
5,000
10,403,967
-
(44,118)
-
(44,118)
Net cash from financing activities
5,000
10,359,849
5,000
10,359,849
Net increase/(decrease)in cash and
cash equivalents
(4,793,837)
4,435,357
(4,728,080)
4,235,367
Cash and cash equivalents at 1 July
5,150,024
714,667
4,928,834
693,467
Cash and cash equivalents at 30
June
13(b)
356,187
5,150,024
200,754
4,928,834
The accompanying notes form part of these financial statements.
- 15 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
1. STATEMENT OF ACCOUNTING POLICIES
GME Resources Limited (‘the Company’) is a listed public company, incorporated and domiciled in
Australia. The consolidated financial reports of the Company for the financial year ended 30 June
2009 comprise the Company and its subsidiaries (together referred to as ‘the Group’).
(a) Basis of Preparation
The financial report is a general-purpose financial report, which has been prepared in
accordance with the requirements of the Corporations Act 2001, Australian Accounting
Standards and Interpretations and complies with other requirements of the law. The financial
report has also been prepared on a historical cost basis, unless otherwise stated, except for
available for sale investments which have been measured at fair value.
The financial report is presented in Australian dollars.
The Company is a listed public company, incorporated in Australia and operating in Australia.
The entity’s principal activities are mineral exploration and investment.
(b) Adoption of new and revised standards
In the year ended 30 June 2009, the Group has adopted all of the new and revised Standards
and Interpretations issued by the AASB that are relevant to its operations and effective for
annual reporting periods beginning on or after 1 July 2008. Details of the impact of the
adoption of these new accounting standards are set out in the individual accounting policy
notes set out below.
The Group has also reviewed all new Standards and Interpretations that have been issued but
are not yet effective for the year ended 30 June 2009. As a result of this review the Directors
have determined that there is no impact, material or otherwise, of the new and revised
Standards and Interpretations on its business and, therefore, no change necessary to Group
accounting policies.
(c)
Significant accounting judgements and key estimates
The preparation of financial reports requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets,
liabilities, income and expense. Actual results may differ from these estimates.
The recoverability of the carrying amount of exploration and evaluation costs carried forward has
been reviewed by the directors. In conducting the review, the recoverable amount has been
assessed by reference to the higher of “fair value less costs to sell” and “value in use”. In
determining value in use, future cash flows are based on:
•
•
•
•
•
•
Estimates of ore reserves and mineral resources for which there is a high degree of
confidence of economic extraction.
Estimated production and sales levels.
Estimate future commodity prices.
Future costs of production.
Future capital expenditure.
Future exchange rates.
The cashflow model used to support the assessment is calculated over a period of 20 years,
being the estimated life of the mine. The discount rate is 8% and for the purpose of this
exercise, future nickel and cobalt prices of USD16,500 and USD44,000 per tonne respectively
have been assumed with a long term AUD/USD exchange rate of $0.80.
Variations to expected future cash flows, and timing thereof, could result in significant changes
to the impairment test results, which in turn could impact future financial results.
The accounting policies and methods of computation adopted in the preparation of the
financial report are consistent with those adopted and disclosed in the company’s 2008 annual
financial report for the financial year ended 30 June 2008.
- 16 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(d)
Going Concern
As disclosed in the financial report, the consolidated entity recorded an operating loss of $628,861
and a cash outflow from operating activities of $4,793,240 for the year ended 30 June 2009 and at
balance date, had net current assets of $268,972. These factors indicate significant uncertainty
whether the consolidated entity will continue as a going concern and therefore whether it will realise
its assets and extinguish its liabilities in the normal course of business and at the amounts stated in
the financial report.
The Board considers that the consolidated entity is a going concern and recognises that additional
funding is required to ensure that the consolidated entity can continue to fund its operations and
further develop its mineral exploration and evaluation assets during the twelve month period from
the date of this financial report. Such additional funding can be derived from sources including:
• The placement of securities under the ASX Listing Rule 7.1 or otherwise;
• An excluded offer pursuant to the Corporations Act 2001; or
• The sale of assets.
Accordingly, the Directors believe that subject to prevailing equity market conditions, the
consolidated entity will obtain sufficient funding to enable it and the consolidated entities to continue
as a going concern and that it is appropriate to adopt that basis of accounting in the preparation of
the financial report. Should the consolidated entity be unable to obtain sufficient funding as outlined
above, there is significant uncertainty whether or not the consolidated entity will be able to continue
as a going concern and therefore, whether it will realise its assets and extinguish its liabilities in the
normal course of business and at the amounts stated in the financial report.
The financial statements do not include any adjustments relating to the recoverability and
classification of recorded asset amounts or to the amounts and classification of liabilities that might
be necessary should the consolidated entity not continue as a going concern.
(e) Statement of compliance
The financial report was authorised for issue on 26th September 2009.
The financial report complies with Australian Accounting Standards, which include Australian
equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS
ensures that the financial report, comprising the financial statements and notes thereto,
complies with International Financial Reporting Standards (IFRS).
(f)
Principles of Consolidation
The consolidated financial statements comprise the financial statements of GME Resources
Limited and its subsidiaries as at 30 June each year (the Group).
The financial statements of the subsidiaries are prepared for the same reporting period as the
parent company, using consistent accounting policies
the consolidated
financial statements, all
In preparing
intercompany balances and
transactions, income and expenses and profit and losses resulting from intra-group
transactions have been eliminated in full. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group and cease to be consolidated from the date on which
control is transferred out of the Group. Control exists where the Company has the power to
govern the financial and operating policies of an entity so as to obtain benefit from its
activities.
- 17 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(f)
Principles of Consolidation (cont.)
The acquisition of subsidiaries has been accounted for using the purchase method of
accounting. The purchase method of accounting involves allocating the cost of the business
combination to the fair value of the assets acquired and the liabilities and contingent liabilities
assumed at the date of acquisition. Accordingly, the consolidated financial statements include
the results of subsidiaries for the period from their acquisition.
Minority interests represent the portion of profit or loss and net assets in subsidiaries not held
by the Group and are presented separately in the income statement and within equity in the
consolidated balance sheet
(g) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to
the Group and the revenue can be reliably measured. The following specific recognition
criteria must also be met before revenue is recognised:
Interest income
Interest revenue is recognised on a time proportionate basis that takes into account the
effective yield on the financial asset.
(h) Borrowing Costs
Borrowing costs are recognised as an expense when incurred except those that relate to the
acquisition, construction or production of qualifying assets where the borrowing cost is added
to the cost of those assets until such time as the assets are substantially ready for their
intended use or sale.
(i)
Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand. Cash
equivalents are short term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and
cash equivalents as defined above, net of outstanding bank overdrafts.
(j)
(k)
Receivables
Trade receivables, which generally have 30-90 day terms, are recognised and carried at
original invoice amount less an allowance for any uncollectible amounts. An allowance for
doubtful debts is made when there is objective evidence that the Group will not be able to
collect the debts. Bad debts are written off when identified.
Income Tax
Current tax assets and liabilities for the current and prior periods are measured at the amount
expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws
used to compute the amount are those that are enacted or substantively enacted by the
balance sheet date.
Deferred income tax is provided on all temporary differences at the balance sheet date
between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.
- 18 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(k)
Income Tax (cont.)
Deferred income tax liabilities are recognised for all taxable temporary differences except:
•
when the deferred income tax liability arises from the initial recognition of goodwill or of
an asset or liability in a transaction that is not a business combination and that, at the
time of the transaction, affects neither the accounting profit nor taxable profit or loss; or
•
when the taxable temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, and the timing of the reversal of the temporary
difference can be controlled and it is probable that the temporary difference will not
reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-
forward of unused tax assets and unused tax losses, to the extent that it is probable that
taxable profit will be available against which the deductible temporary differences and the
carry-forward of unused tax credits and unused tax losses can be utilised, except:
•
when the deferred income tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; or
when the deductible temporary difference is associated with investments in subsidiaries,
associates or interests in joint ventures, in which case a deferred tax asset is only
recognised to the extent that it is probable that the temporary difference will reverse in
the foreseeable future and taxable profit will be available against which the temporary
difference can be utilised.
•
The carrying amount of deferred income tax assets is reviewed at each balance sheet date
and reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet date and are
recognised to the extent that it has become probable that future taxable profit will allow the
deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to
apply to the year when the asset is realised or the liability is settled, based on tax rates (and
tax laws) that have been enacted or substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and not in
profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right
exists to set off current tax assets against current tax liabilities and the deferred tax assets and
liabilities relate to the same taxable entity and the same taxation authority.
Tax consolidation legislation
GME Resources Limited and its 100% owned Australian resident subsidiaries have
implemented the tax consolidation legislation. Current and deferred tax amounts are
accounted for in each individual entity as if each entity continued to act as a taxpayer on its
own.
GME Resources Limited recognises both its own current and deferred tax amounts and those
current tax liabilities, current tax assets and deferred tax assets arising from unused tax
credits and unused tax losses which it has assumed from its controlled entities within the tax
consolidated group.
- 19 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(k)
Income Tax (cont.)
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are
recognised as amounts payable or receivable from or payable to other entities in the Group.
Any difference between the amounts receivable or payable under the tax funding agreement
are recognised as a contribution to (or distribution from) controlled entities in the tax
consolidated group.
(l) Other taxes
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 balance sheet are shown
inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as
part of receivables or payables in the balance sheet.
(m) Plant and Equipment
Plant and equipment is stated at cost less accumulated depreciation and any accumulated
impairment losses. Such cost includes the cost of replacing parts that are eligible for
capitalisation when the cost of replacing the parts is incurred. Similarly, when each major
inspection is performed, its cost is recognised in the carrying amount of the plant and
equipment as a replacement only if it is eligible for capitalisation.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets
as follows:
Plant and equipment – over 4 to 5 years.
The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted
if appropriate, at each financial year end.
(i) Impairment
The carrying values of plant and equipment are reviewed for impairment at each
reporting date, with recoverable amount being estimated when events or changes in
circumstances indicate that the carrying value may be impaired.
The recoverable amount of plant and equipment is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset
For an asset that does not generate largely independent cash inflows, recoverable
amount is determined for the cash-generating unit to which the asset belongs, unless the
asset's value in use can be estimated to be close to its fair value.
An impairment exists when the carrying value of an asset or cash-generating units
exceeds its estimated recoverable amount. The asset or cash-generating unit is then
written down to its recoverable amount
For plant and equipment, impairment losses are recognised in the income statement in
the cost of sales line item.
- 20 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(m) Plant and Equipment (cont.)
(ii) Derecognition and disposal
An item of property, plant and equipment is derecognised upon disposal or when no
further future economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of the asset (calculated as the difference
between the net disposal proceeds and the carrying amount of the asset) is included in
profit or loss in the year the asset is derecognised.
(n)
receivables, held-to-maturity
Investments and other financial assets
Financial assets in the scope of AASB 139 Financial Instruments: Recognition and
Measurement are classified as either financial assets at fair value through profit or loss, loans
investments, as
and
appropriate. When financial assets are recognised initially, they are measured at fair value,
plus, in the case of investments not at fair value through profit or loss, directly attributable
transactions costs. The Group determines the classification of its financial assets after initial
recognition and, when allowed and appropriate, re-evaluates this designation at each financial
year-end.
investments, or available-for-sale
All regular way purchases and sales of financial assets are recognised on the trade date i.e.
the date that the Group commits to purchase the asset. Regular way purchases or sales are
purchases or sales of financial assets under contracts that require delivery of the assets within
the period established generally by regulation or convention in the marketplace.
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category ‘financial
assets at fair value through profit or loss’. Financial assets are classified as held for
trading if they are acquired for the purpose of selling in the near term. Derivatives are
also classified as held for trading unless they are designated as effective hedging
instruments. Gains or losses on investments held for trading are recognised in profit or
loss.
(ii) Held-to-maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity
are classified as held-to-maturity when the Group has the positive intention and ability to
hold to maturity. Investments intended to be held for an undefined period are not included
in this classification. Investments that are intended to be held-to-maturity, such as bonds,
are subsequently measured at amortised cost. This cost is computed as the amount
initially recognised minus principal repayments, plus or minus the cumulative amortisation
using the effective interest method of any difference between the initially recognised
amount and the maturity amount. This calculation includes all fees and points paid or
received between parties to the contract that are an integral part of the effective interest
rate, transaction costs and all other premiums and discounts. For investments carried at
amortised cost, gains and losses are recognised in profit or loss when the investments
are derecognised or impaired, as well as through the amortisation process.
(iii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market. Such assets are carried at amortised
cost using the effective interest method. Gains and losses are recognised in profit or loss
when the loans and receivables are derecognised or impaired, as well as through the
amortisation process.
- 21 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(n)
Investments and other financial assets (cont.)
(iv) Available-for-sale investments
Available-for-sale investments are those non-derivative financial assets that are
designated as available-for-sale or are not classified as any of the three preceding
categories. After initial recognition available-for sale investments are measured at fair
value with gains or losses being recognised as a separate component of equity until the
investment is derecognised or until the investment is determined to be impaired, at which
time the cumulative gain or loss previously reported in equity is recognised in profit or
loss.
The fair value of investments that are actively traded in organised financial markets is
determined by reference to quoted market bid prices at the close of business on the
balance sheet date. For investments with no active market, fair value is determined using
valuation techniques. Such techniques include using recent arm’s length market
transactions; reference to the current market value of another instrument that is
substantially the same; discounted cash flow analysis and option pricing models.
(o) Exploration and Evaluation Expenditure
Exploration and evaluation costs, including the costs of acquiring licences, are capitalised as
exploration and evaluation assets on an area of interest basis. Costs incurred before the
Group has obtained the legal rights to explore an area are recognised in the income
statement.
Exploration and evaluation assets are only recognised if the rights of the area of interest are
current and either:
(i)
(ii)
the expenditures are expected to be recouped through successful development
and exploitation of the area of interest; or
activities in the area of interest have not at the reporting date, reached a stage
which permits a reasonable assessment of the existence or other wise of
economically recoverable reserves and active and significant operations in, or in
relation to, the area of interest are continuing
Exploration and evaluation assets are assessed for impairment if:
•
•
sufficient data exists to determine technical feasibility and commercial viability,
and
facts and circumstances suggest that the carrying amount exceeds the
recoverable amount (see impairment accounting policy 1(m)).
For the purposes of impairment testing, exploration and evaluation assets are allocated to
cash-generating units to which the exploration activity relates. The cash generating unit shall
not be larger than the area of interest.
Once the technical feasibility and commercial viability of the extraction of mineral resources in
an area of interest are demonstrable, exploration and evaluation assets attributable to that
area of interest are first tested for impairment and then reclassified from intangible assets to
mining property and development assets within property, plant and equipment.
- 22 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(p)
Impairment of assets
The Group assesses at each reporting date whether there is an indication that an asset may
be
impaired. If any such indication exists, or when annual impairment testing for an asset
is required, the Group makes an estimate of the asset’s recoverable amount. An asset’s
recoverable amount is the higher of its fair value less costs to sell and its value in use and is
determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets and the asset's value in
use cannot be estimated to be close to its fair value. In such cases the asset is tested for
impairment as part of the cash-generating unit to which it belongs. When the carrying
amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or
cash-generating unit is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. Impairment losses relating to continuing
operations are recognised in those expense categories consistent with the function of the
impaired asset unless the asset is carried at revalued amount (in which case the impairment
loss is treated as a revaluation decrease).
An assessment is also made at each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated. A previously recognised impairment
loss is reversed only if there has been a change in the estimates used to determine the
asset’s recoverable amount since the last impairment loss was recognised. If that is the case
the carrying amount of the asset is increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior years. Such
reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which
case the reversal is treated as a revaluation increase. After such a reversal the depreciation
charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any
residual value, on a systematic basis over its remaining useful life.
(q) Trade and other payables
Trade payables and other payables are carried at amortised costs and represent liabilities for
goods and services provided to the Group prior to the end of the financial year that are unpaid
and arise when the Group becomes obliged to make future payments in respect of the
purchase of these goods and services.
(r)
Issued capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of
new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
- 23 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
1. STATEMENT OF ACCOUNTING POLICIES (CONTINUED)
(s) Earnings per share
Basic EPS is calculated as net result 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 result 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.
- 24 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
2. REVENUE AND EXPENSES
(a) Revenue
Operating Activities
Interest received
148,037
515,644
143,180
515,644
Proceeds from:
Facilitation fee for prospecting
rights
100,000
281,818
-
-
Total revenue
248,037
797,462
143,180
515,644
(b) Expenses:
Depreciation – plant and
equipment
234,302
34,598
234,302
34,598
3.
INCOME TAX
(a)
Income tax recognised in profit
and loss
The prima facie tax benefit on operating
result is reconciled to the income tax
provided in the financial statements as
follows:
Accounting
continuing operations
loss before
from
tax
(795,277)
(460,137)
(899,942)
(741,944)
Income tax benefit calculated at 30%
(238,583)
(138,041)
(269,982)
(222,583)
Non-deductible expenses
Adjustments to head entity in respect of
tax consolidation
Unused tax losses and tax offset not
recognised as deferred tax assets
Adjustments in respect of deferred
income tax of previous years
R&D tax concession
Unrecognised deferred tax assets /
(liabilities)
Under provision for income tax benefit in
prior years
Other
Tax refund received
Income tax benefit
-
-
(301,776)
(248,785)
2,543,274
2,869,707
2,543,274
2,869,707
491,654
-
491,654
(158,723)
285,000
(158,723)
285,000
(2,143,947)
(3,016,805)
(1,810,772)
(2,683,480)
(491,654)
(2,021)
(166,416)
(166,416)
-
141
-
-
(491,654)
(2,021)
(166,416)
(166,416)
-
141
-
-
- 25 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
3. INCOME TAX
(b) Unrecognised deferred tax
balances
Unrecognised deferred tax assets
comprise:
Losses available for offset against future
taxable income
Project pool differences
Capital raising costs
Provision for non-recovery of
investments
Accrued expenses and liabilities
Unrecognised deferred tax liabilities
comprise:
Exploration expenditure
Deductible prepayment
Accrued income
Capital allowance differences
Income tax expense not recognised
directly in equity:
Capital raising costs
9,672,923
-
13,586
1,169,023
3,000
10,858,532
8,741,601
-
-
123,347
8,864,948
6,657,676
1,008,113
20,179
1,168,635
7,837
8,862,440
7,535,938
15,868
9,269
179,081
7,740,156
9,672,923
-
13,586
1,169,023
2,400
10,857,932
4,814,219
-
-
123,347
4,937,566
6,657,676
1,008,113
20,179
1,168,635
7,237
8,861,840
3,941,730
15,868
9,269
179,081
4,145,948
98,191
98,191
98,191
98,191
Potential deferred tax assets attributable to tax losses and capital losses carried forward have not been
brought to account because directors do not believe it is appropriate to regard realisation of the future tax
benefit as probable.
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.
4. RECEIVABLES (CURRENT)
Sundry debtors
7,291
230,023
5,034
247,974
5. OTHER FINANCIAL ASSETS (CURRENT)
Available-for-sale
Listed investments
8,250
8,250
8,250
8,250
6. RECEIVABLES (NON CURRENT)
Loans to controlled entities (wholly
owned)
Provision for impairment loss
-
-
-
-
-
-
11,605,143
(1,322,695)
10,282,448
10,568,404
(1,322,695)
9,245,709
An existing provision for non recoverability has been reclassified as an impairment loss recognised against
loans to controlled entities. The provision is considered prudent as these entities have continued to incur
losses during the year. The provision allows for the possibility of these loans not being recoverable.
The recoverability of the carrying value of loans to controlled entities is dependent upon the successful
development and commercial exploitation or alternatively sale of the respective areas in which those
controlled entities have an interest , at amounts sufficient to recover the loans.
- 26 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
7. OTHER FINANCIAL ASSETS (NON CURRENT)
Unlisted Investments:
Controlled entities (refer note 12)
Provision for diminution in value
-
-
-
-
-
-
5,178,206
(2,562,256)
2,615,950
5,178,206
(2,562,256)
2,615,950
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 entities is dependent on the successful
development and commercial exploitation or, alternatively, sale of the respective areas in which those
controlled entities have an interest at amount sufficient to recover the investment.
8. PLANT AND EQUIPMENT (NON CURRENT)
Plant and equipment - at cost
Less accumulated depreciation
Total plant and equipment
781,697
(287,702)
493,995
781,348
(53,400)
727,948
781,697
(287,702)
493,995
781,348
(53,400)
727,948
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
727,948
5,597
(5,248)
(234,302)
19,473
743,073
-
(34,598)
727,948
5,597
(5,248)
(243,302)
19,473
743,073
-
(34,598)
493,995
727,948
493,995
727,948
9. EXPLORATION AND EVALUATION EXPENDITURE CARRIED FORWARD (NON CURRENT)
Deferred exploration and evaluation
expenditure - at cost
Movements:
Balance at beginning of the year
Direct expenditure
Less expenditure written off
25,119,793
4,018,877
12,440,384
12,679,409
13,139,101
2,908,295
1,570,782
11,568,319
29,138,670
-
29,138,670
25,119,793
-
25,119,793
16,047,396
16,047,396
13,139,101
-
13,139,101
The ultimate recoupment of the above deferred exploration and evaluation expenditure is dependent on the
successful development and commercial exploitation or, alternatively, sale of the respective areas at
amounts sufficient to recover the investment.
- 27 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
10. PAYABLES (CURRENT)
Trade payables and accruals
Unearned income
Amount payable to wholly owned entity
102,756
-
-
102,756
653,540
60,000
-
100,756
-
1,424,233
651,540
-
1,407,862
713,540
1,524,989
2,059,402
Trade payables and accruals are non interest bearing and normally settled on 30 day terms.
Details of exposure to interest rate risk and fair value in respect of liabilities are set out in note 18. There
are no secured liabilities as at 30 June 2009.
11. CONTRIBUTED EQUITY AND
RESERVES
Issued and paid up capital
253,373,931 (2008: 253,173,931)
ordinary shares, fully paid
Ordinary shares
44,526,381
44,518,381
44,526,381
44,518,381
Balance at the beginning of the year
44,518,381
26,480,932
44,518,381
26,480,932
Entitlement issue (a)
Costs associated with entitlement
issue
Issue of shares pursuant to
acquisition of tenements (b)
-
-
10,403,967
(44,118)
-
-
10,403,967
(44,118)
8,000
7,677,600
8,000
7,677,600
Balance at the end of the year
44,526,381
44,518,381
44,526,381
44,518,381
No of
Shares
No of
Shares
No of
Shares
No of
Shares
Balance at the beginning of the year
Entitlement issue
Issue of shares pursuant to
acquisition of tenements (a)
Balance at the end of the year
253,173,931
-
220,365,998
20,807,933
253,173,931
-
220,365,998
20,807,933
200,000
253,373,931
12,000,000
253,173,931
200,000
253,373,931
12,000,000
253,173,931
(a) During the year, the company issued 200,000 shares as consideration for the Jindalee tenement
package at an issue price of 4 cents per share.
- 28 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
11.
CONTRIBUTED EQUITY
AND RESERVES
Options over Unissued Capital
Balance at the beginning of the year
Expired
$0.70
2,000,000
-
$0.75
250,000
(250,000)
$0.80
100,000
(100,000)
Balance at the end of the year
2,000,000
-
-
Unlisted 75 and 80 cent Options expired on 30 June 2009. The unlisted 70 cent Options outstanding at year
end will expire on 30 September 2010.
Reserves
Nature and purpose
The financial assets reserve is used to record movements in the fair value of available for sale assets.
The option reserve is used to record the fair value of options issued.
12. CONTROLLED ENTITIES
Name of Controlled Entity/
(Country Of Incorporation)
Percentage
Owned
GME Sulphur Inc (USA)
GME Investments Pty Ltd (Australia)
Golden Cliffs NL (Australia)
NiWest Limited (Australia)
2009
%
100
100
100
100
2008
%
100
100
100
100
Company’s
Cost of
Investment
2009
$
2008
$
-
-
616,893
4,561,313
5,178,206
-
-
616,893
4,561,313
5,178,206
13. STATEMENT OF CASH FLOWS
(a) Reconciliation of cash flows
from operating activities
Loss from ordinary activities after tax
Depreciation / amortisation
Exploration costs capitalised (excluding
creditors)
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
(628,861)
234,302
(460,137)
34,598
(733,526)
234,302
(741,944)
34,598
(4,301,940)
(4,352,409)
(2,875,250)
(3,241,319)
Decrease/(increase) in receivables
191,744
(17,021)
242,938
(35,204)
Decrease/(increase) in other current
assets
Increase/(decrease) in sundry creditors
Other non cash transactions (including
issue of options)
(288,485)
(386,450)
(575,100)
(368,277)
-
-
-
-
(479)
-
Net cash flows from operating activities
(4,793,240)
(5,181,419)
(3,707,115)
(4,352,146)
- 29 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
13.
STATEMENT OF CASH FLOWS
(b) Reconciliation of cash and cash
equivalents
Cash balance comprises:
Cash at bank
Deposits at call
14. AUDITOR’S REMUNERATION
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 Group
- other services in relation to the
company and any other entity in the
Group
15. SEGMENT REPORTING
159,340
196,847
356,187
5,104,824
45,200
5,150,024
3,907
196,847
200,754
4,904,834
24,000
4,928,834
32,654
18,500
32,654
18,500
-
32,654
10,093
28,593
-
32,654
10,093
28,593
There are no individual segments to be reported as the Group’s operations are predominantly in the mining
industry in Australia.
Consolidated
2009
$
2008
$
16. EARNINGS PER SHARE
Basic and diluted loss per share (cents)
(0.25)
(0.19)
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
628,861
460,137
253,296,671
246,816,898
No adjustment was made for the 2,000,000 options on issue at 30 June 2009 (2008: 2,350,000) as they are
not considered to be dilutive.
- 30 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
17. DIRECTORS’ AND EXECUTIVES DISCLOSURES
a) Details of Key Management Personnel
(i) Directors
Michael Delaney Perrott
David John Varcoe
James Noel Sullivan
Peter Ross Sullivan
Geoffrey Mayfield Motteram
– Non executive Chairman
– Managing Director
– Executive Director
– Non executive Director
– Non executive Director
(ii) Executives
Bradley John Wynne - Chief Financial Officer (ceased 11 February 2009)
Mark Pitts - Company Secretary (commenced 11 February 2009)
John Richard Harris - Chief Geologist (ceased 30 November 2008)
(b) Compensation of Key Management Personnel
(i) Compensation Policy
The Board of Directors is responsible for remuneration policies and the packages applicable to the Directors
of the Company. The Board remuneration policy is to ensure that packages offered properly reflect a
person’s duties and responsibilities and that remuneration is competitive and attracts, retains, and motivates
people of the highest quality.
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. Engagement
and payment for such services are approved by the other directors who have no interest in the engagement
of services.
There are no retirement or termination benefits payable to the Board or senior executives.
At the date of this report the Company had not entered into any packages with Directors or senior executives
which include performance based components. The Company does not operate an employee share option
plan.
As part of his package, Mr David Varcoe is entitled to 2,000,000 options exercisable at $0.65, 500,000
options exercisable at $0.80, and 500,000 options exercisable at $1.00. These options have an expiry date
of 18 February 2012 and are subject to shareholder approval.
(ii) Compensation of Key Management Personnel for the year ended 30 June 2009
2009
Executive Directors
David J Varcoe
James N Sullivan
Non-Executive Directors
Michael D Perrott
Geoffrey M Motteram
Peter R Sullivan
Executives
Bradley J Wynne (ceased 11 Feb
2009)
John R Harris (ceased 30 Nov
2008)
Mr Mark Pitts (appointed 11 Feb
2009
Short
Term
Benefits
Salary &
Fees
$
174,818
24,000
30,000
27,600
24,000
91,017
82,275
23,750
477,460
Post Employment
Benefits
Long Term
Benefits
Total
Superannuation
$
Options
$
12,755
-
-
-
-
8,192
7,405
-
28,352
$
187,573
24,000
30,000
27,600
24,000
99,209
89,680
23,750
505,812
-
-
-
-
-
-
-
-
-
- 31 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
17. DIRECTORS’ AND EXECUTIVES DISCLOSURES (CONTINUED)
(iii) Compensation of Key Management Personnel for the year ended 30 June 2008
2008
Executive Directors
David J Varcoe
James N Sullivan
Non-Executive Directors
Michael D Perrott
Geoffrey M Motteram
Peter R Sullivan
Executives
Bradley J Wynne
John R Harris
Short Term
Benefits
Salary & Fees
$
Post Employment
Benefits
Superannuation
$
Long Term
Benefits
Options
$
93,253
120,727
30,000
36,000
24,000
150,000
66,667
520,647
9,325
-
-
-
-
13,500
6,000
28,825
Total
$
102,578
120,727
30,000
36,000
24,000
163,500
72,667
549,472
-
-
-
-
-
-
-
-
(c) Shareholdings of Key Management Personnel (Consolidated)
Michael Delaney Perrott
David John Varcoe
James Noel Sullivan
Peter Ross Sullivan
Geoffrey Mayfield Motteram
Ordinary
Shares
1/7/2008
12,317,182
75,000
12,129,676
11,737,481
4,862,356
Net Change
-
-
25,000
-
-
Ordinary Shares
30/6/2009
12,317,182
75,000
12,154,676
11,737,481
4,862,356
(d) Other transactions and balances with Key
Management Personnel
There were no other transactions with key management personnel during this financial year.
- 32 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
18. FINANCIAL INSTRUMENT DISCLOSURES
(a) Categories of financial instruments
2009
Weighted
Average
Effective
Interest Rate
Floating
Interest
Rate
Fixed Interest Rate
Maturing
Within 1
year
Over 1 year
Non-interest
Bearing
Financial Assets
$
$
$
$
Total
$
Cash assets
Other financial
assets
Receivables
Payables
2008
6.43%
159,340
196,847
-
-
-
-
-
159,340
-
-
196,847
-
-
-
-
Fixed Interest Rate
Maturing
-
-
-
-
-
-
-
356,187
8,250
7,291
15,541
8,250
7,291
371,728
102,756
102,756
102,756
102,756
Weighted
Average
Effective
Interest Rate
Floating
Interest
Rate
Within 1
year
Over 1 year
Non-interest
Bearing
Financial Assets
$
$
$
$
Total
$
Cash assets
Other financial
assets
Receivables
Financial Liabilities
Payables
7.28%
5,104,824
45,200
-
-
-
-
-
5,104,824
-
-
45,200
-
-
-
-
-
-
-
-
-
-
-
5,150,024
8,250
230,023
238,273
8,250
230,023
5,388,297
415,242
415,242
415,242
415,242
(b) Interest rate risk sensitivity analysis
The Company and the Group are exposed 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, in respect of the cash balances and deposits.
The sensitivity analyses below have been determined based on the exposure to interest rates for instruments at the
reporting date and the stipulated change taking place at the beginning of the financial year and held constant
throughout the reporting period. A 50 basis point increase or decrease is used when reporting interest rate risk
internally to key management personnel and represents management’s assessment of the change in interest rates.
At reporting date, if interest rates had been 50 basis points higher or lower and all other variables were held constant,
the Group’s net loss before tax and equity would increase by $1,781 and decrease by $1,781 respectively
(2008:$25,750).
The Group’s sensitivity to interest rates has increased during the current period due to an increase in funds in term
deposits.
(c) Liquidity risk
The Company manages liquidity risk by continually monitoring cash reserves and cash flow forecasts to ensure that
financial commitments can be met as and when they fall due.
- 33 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
18. FINANCIAL INSTRUMENT DISCLOSURES (CONTINUED)
(d) Capital management risk
The Company controls the capital of the Group in order to maximise the return to shareholders and ensure that
the Group can fund its operations and continue as a going concern.
The Company effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its
capital structure in response to changes in these risks and the market. These responses include the
management of expenditure and debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the group since
the prior year.
(e) 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.
19. COMMITMENTS AND CONTINGENT LIABILITIES
There were no capital commitments or contingent liabilities, not provided for in the financial statements of the Group
as at 30 June 2009, other than:
(a) Mineral Tenement Leases
In order to maintain current rights of tenure to mining tenements, the Group in its own right or in conjunction with
its joint venture partners may be required to outlay amounts of approximately $2,951,417 (2008: $1,715,449) 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 Group 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 Group’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 Group’s
operations.
Native title claims have been made over ground in which the Group 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 Group.
(c) Non Cancellable Operating Lease
Commitments
Within one year
One year or later and no later than
five years
Consolidated
Parent Entity
2009
$
2008
$
2009
$
2008
$
27,676
50,828
27,676
50,828
27,676
55,352
60,008
110,836
27,676
55,352
60,008
110,836
- 34 -
ANNUAL REPORT 2009
GME RESOURCES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2009
20. 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 19 – Commitments and Contingent Liabilities.
21. RELATED PARTIES
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
10,282,448
9,245,709
Current Payables
Loans
1,424,233
1,407,862
2009
$
2008
$
22. EVENTS SUBSEQUENT TO BALANCE DATE TO REVIEW
On 20 July 2009 Directors closed a 1 for 12 non-renounceable entitlement issue at 5 cents.
The Company received total acceptances for shares under the Entitlement Issue for 15,043,240 ordinary fully paid
shares at 5 cents each to raise a total of $752,162. The Directors were very pleased with the support shown by
shareholders with approximately 71.2% of available entitlements being taken up.
The rights issue was not underwritten, but the Company had reserved the right to place the shortfall of 6,071,254
shares. All shortfall shares were taken up by shareholders.
Other than the issue referred to above, no matters or circumstances have arisen since the end of the financial year
which significantly affected or may significantly affect the Group’s operations, the results of those operations or the
Group’s state of affairs in future financial years.
- 35 -
ANNUAL REPORT 2009
GME RESOURCES LTD
DIRECTORS’ DECLARATION
1.
In the opinion of the directors:
a).
the financial statements and notes of the company and of the Group are in
accordance with the Corporations Act 2001 including:
i.
giving a true and fair view of the company’s and Group’s financial position as at
30 June 2009 and of their performance for the year then ended; and
ii.
complying with Accounting Standards and Corporations Regulations 2001;
b)
there are reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable.
2.
This declaration has been made after receiving the declarations required to be made to the
directors by the Managing Director and the Chief Financial Officer, in accordance with Section
295A of the Corporations Act 2001, for the financial year ended 30 June 2009.
This declaration is signed in accordance with a resolution of the Board of Directors.
David J Varcoe
Managing Director
Perth, Western Australia
23rd September 2009
- 36 -
ANNUAL REPORT 2009
INDEPENDENT AUDITOR’S REPORT
To the members of
GME RESOURCES LIMITED
Report on the Financial Report
We have audited the accompanying financial report of GME Resources Limited (“the company”),
which comprises the balance sheet as at 30 June 2009, the income statement, statement of changes in
equity, cash flow statement and notes to the financial statements for the year ended on that date, and the
directors’ declaration for both the company and the consolidated entity as set out on pages 2 to 36. The
consolidated entity comprises the company and the entities it controlled at the year’s end or from time
to time during the year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation and fair presentation of the financial
report in accordance with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Act 2001. This responsibility includes establishing and
maintaining internal controls relevant to the preparation and fair presentation of the financial report that
is free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances.
In Note 1(e), the directors also state, in accordance with Accounting Standard AASB 101: Presentation
of Financial Statements, that compliance with the Australian equivalents to International Financial
Reporting Standards ensures that the financial report, comprising the financial statements and notes,
complies with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our
audit in accordance with Australian Auditing Standards. These Auditing Standards require that we
comply with relevant ethical requirements relating to audit engagements and plan and perform the audit
to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal controls relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
An audit also includes evaluating the appropriateness of accounting
of the entity’s internal controls.
policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
Our audit did not involve an analysis of the prudence of business decisions made by directors or
management.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations
Act 2001.
HLB Mann Judd (WA Partnership) ABN 22 193 232 714
Level 2 15 Rheola Street West Perth 6005 PO Box 263 West Perth 6872 Western Australia. Telephone +61 (08) 9481 0977. Fax +61 (08) 9481 3686.
Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au
Liability limited by a scheme approved under Professional Standards Legislation
HLB Mann Judd (WA Partnership) is a member of
International, a world-wide organisation of accounting firms and business advisers
- 37 -
Auditor’s Opinion
In our opinion:
(a)
the financial report of GME Resources Limited is in accordance with the Corporations Act 2001,
including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at
30 June 2009 and of their performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Regulations 2001; and
(b)
the financial report also complies with International Financial Reporting Standards as disclosed
in Note 1(e).
Continuation as a Going Concern
Without qualification to the opinion expressed above, we draw attention to Note 1(d) to the financial
statements which indicates that the company will require additional sources of funding to enable it to
carry out its objectives. If the company is unable to generate additional cash flows, there is significant
uncertainty whether the company will continue as a going concern and, therefore, whether it will realise
its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the
financial report.
Recoverability of Exploration and Evaluation Carried Forward
Without qualification to the opinion expressed above, we draw attention to Note 1(c) to the financial
statements which indicates the factors required for the group to recover the carrying value of exploration
and evaluation expenditure carried forward. If the factors for recoverability are not achieved in the
future, an impairment loss will be required to be determined and brought to account.
Report on the Remuneration Report
We have audited the Remuneration Report included on pages 15 to 16 of the directors’ report for the
year ended 30 June 2009. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Auditor’s Opinion
In our opinion the Remuneration Report of GME Resources Limited for the year ended 30 June 2009
complies with section 300A of the Corporations Act 2001.
HLB MANN JUDD
Chartered Accountants
Perth, Western Australia
23 September 2009
W M CLARK
Partner
- 38 -